NSN: Be-All Model Can't Survive
Nokia Siemens Networks (NSN) is practically a shell of its former self.
It sold off its microwave backhaul operations to DragonWave, its fixed line division to Adtran and its WiMAX business to NewNet Communication Technologies. And then it cut nearly one-quarter of its remaining workforce.
And it's not done shedding. "We know we want to do more divestitures," Nokia Siemens Marketing Chief Barry French said during a Tuesday briefing with media.
French didn't elaborate on which of NSN’s remaining divisions are on the chopping block.
The sell-offs are part of a larger shift away from "low-end" businesses like managed services – the vendor recently walked away from a deal for a Norwegian public safety network – and focus on more lucrative deals like its newly announced LTE contract with T-Mobile USA.
Nokia Siemens decided it couldn't continue as an all-inclusive vendor providing products and services for all areas of the network, and thinks others can't either, French said. "The be-all model can't survive," he said.
And as predicted by French, Nokia Siemens won't be the last vendor to figure that out. "Getting value from doing those deals is going to be limited," he said. French expects other vendors will eventually be forced to abandon less-profitable ventures, narrowing their offerings as Nokia Siemens has done.
By comparison, getting value from its contract with T-Mobile should be a cinch. Financial specifics of the $4 billion project have not been announced and NSN isn't the exclusive vendor –Ericsson has been hired to provide equipment and services as well – but "a large part" of the budget is being allocated to Nokia Siemens, said Rick Corker, head of its North American operations.
NSN will basically "replace the existing network completely" with its evolved packet core platform, including its Flexi network server and network gateway, and its Flexi multiradio 10 base station, Corker said. T-Mobile also will use Nokia Siemens' NetAct network management system, self-organizing network technology and a separate multi-vendor performance manager, in addition to network planning, optimization and implementation services.
The contract is a lifeline for the company, which has suffered nearly continual losses since it was formed as a joint venture between Nokia and Siemens in 2007. During the first quarter of this year, its sales dropped 7 percent and its operating losses ballooned to $1.3 billion.
Corker was cautiously optimistic about NSN’s chances of landing additional contracts in the United States despite missing out on LTE builds with AT&T and Verizon Wireless. "We haven't given up on them just yet," he said.