Final word on this fascinating Nokia narrative, this time from the independent analyst community – about how the Finnish firm is losing a little to Ericsson in its 5G heartlands, but also switching it up with clever short- and long-term gambles in new AI-geared telecoms; plus how it might have something up its sleeve in AI-RAN – for enterprises.
In sum – what to know:
Pressure points – Nokia’s public 5G position is under pressure, as rival Ericsson secures larger contract shares – though analysts suggest outcomes reflect strategy choices as much as outright losses. (See part 1)
Strategic plays – Nokia is repositioning around AI infrastructure, pairing a near-term push in optical networks for data-center interconnect with a longer-term bet on AI-RAN fabrics and 6G-era differentiation. (See part 1)
Radio shows – Nokia’s private 5G retreat is not absolute, but it leaves the door open for Ericsson; equally, it has a focus on big-ticket segments, and a clever sounding ploy to place AI-RAN with enterprises. (See part 2)
Note, this article was supposed to be quick, and still got out of hand. As such, it has been broken into two sections; the second part is linked at the bottom.
Warning: this is going to upset somebody, but hey…
RCR wrote earlier this week about Nokia’s mixed fortunes (still winning, winning less) at Virgin Media O2 (VMO2) in the UK – versus Ericsson at least. The message from its Swedish counterpart, implicit and triumphant, was that it had won more than Nokia of a new 5G SA upgrade project with the UK operator, valued at about £700 million. Such deals are rare, and prized – especially in Europe. Ericsson has the “majority” of the work, it said. The notion of a marginal 55/45 split did the rounds in the UK trade press on Tuesday (March 31; following a report elsewhere), only for Ericsson and VMO2 to ring around on Wednesday (April 1) to call it ‘fake news’.
“Ericsson is the primary partner, and the quoted figure is significantly off,” said Ericsson. Clearly, a ‘significant’ error on a narrow-ish 55/45 split is not a margin call; the logical conclusion, then, is that Ericsson has taken even more – at Nokia’s expense. “We won’t be sharing details, but 55/45 is not a split we recognise,” said VMO2. RCR wrote an op/ed on Tuesday night to rate Nokia’s luck in the 5G market – against its oldest rival’s. It is an obvious comparison to make; their histories and fortunes are intertwined, and their different strategies are shown in relief. It drew ire from certain quarters – probably just on the grounds RCR dared to map-in Nokia’s niche private 5G story besides.
Of course, RCR (or just me) has been on Nokia’s case since it decided to quit the private networks scene at the end of last year, and put its ‘enterprise campus edge’ (ECE) business up for sale (alongside certain other extra-curricular ‘portfolio’ concerns). But RCR was on its case when Nokia was winning, too – in private 5G (and 4G), for years, even while it was losing public 5G contracts to Ericsson (and Samsung, sometimes). And both ways, RCR has sought to understand and explain its strategy, and also to report its successes. Not to blow smoke up its radio mast, but because the market is speculative and consequential, and its bold little private 5G endeavour was a good one.
Nokia was calling the tune in industrial 5G. Which sounds like a grand defense; it is not. Regular readers know this already. But it provides a way to open and extend the discussion, as well – by asking expert analysts to weigh in, and also by considering another Nokia deal, about AI-RAN in enterprise venues (for enterprise workloads) – which is more interesting than the VMO2 stuff, and dovetails with its own messaging on AI-RAN for telcos. It is worth pursuing because Nokia is a touchstone business in telecoms, which – understand it or not – might be just about the boldest of them all, even as it sells and sacks, and switches horses.
Bold strategies
These are troubled times, both sides of the 5G supply line; but they are also changing. And Nokia is arguably less conservative than others.
So what do analysts make of it? Is Ericsson winning in public 5G? “It is certainly making bigger inroads in public cellular,” says James Moar, principal analyst at Kaleido Intelligence. But the two are “aiming for different things”, he says. Nokia is in a “more experimental mode with regards to AI and mobile networks”, he suggests, and “might be happy with a reduced footprint into more experimental and pilot-type deployments – if it can showcase strong specialized capabilities.” Which sounds like a bitter pill, but chimes with the idea above about its boldness, perhaps, and directly references its work with Nvidia on AI-RAN – discussed below.
Luke Pearce, senior analyst at CCS Insight (also in charge of research at GSA), comments: “Ericsson has the stronger position in public 5G, and continues to secure high-profile wins – including the larger share [with] VMO2.” But does the VMO2 split say very much, actually? “It is not a winner-takes-all market,” says Pearce. “Nokia remains a major global supplier with deep relationships.” Moar responds: “I’m not convinced that win in particular says Ericsson has a decisive lead – both companies still have contracts with VMO2; it has just tipped the scale in Ericsson’s favor. It is reflective of divergent strategies between the two vendors, more than anything else.”
Reflective of, or justification for – in Nokia’s case? Is its headline pivot to AI-RAN in mobile access networks with its Nvidia investment, plus its beefed-up focus on optical transport in interconnect and longhaul fiber with its Infinera acquisition, a smart move or a saving grace, in the circumstances? It is a loaded question, perhaps, but it is intended to put focus on its new differentiation with its oldest competitors. “It is repositioning around areas where it sees future differentiation, particularly AI-driven networks. Its partnership with Nvidia and developments like its new ‘Doksuri’ radios signal a clear focus on AI-RAN, where Nokia is aiming to establish an early advantage ahead of the 6G cycle.”
That’s Pearce; here is Moar, saying much the same: “Nokia’s increased focus on fiber is indicative of how AI is moving. Mobile edge AI is taking time to shake out, and is more likely to reside in data centers than base stations if it is to be economical at scale. [With] fiber, Nokia can control more of the AI transmission stack, as inference retreats from the base station. It is definitely moving more to be an ‘AI company’, but it needs to [succeed] in mobile to own as much of the edge AI stack as possible.” So Nokia is hedging, between the two: a reliable near-term bet on data center interconnects, and a longer-term gamble on 5G/6G-embedded AI in the public mobile networks.
His line about inference workloads retreating to the cloud seems strange, given all the talk about physical AI in AI grids; but the point is these are are mid/long-term architectural concepts, and that AI inference at scale, as yet, is cheaper and easier in data centres in central locations – in metro hubs, regional hubs, cloud hubs. Selling optical componentry to connect these AI zones looks strategically “bankable”, while its longer-term wager on AI-RAN plays out. Which all seems very fair, of course – that Ericsson, the last western pure-play 3GPP vendor, is taking business in familiar channels in the late-5G era, while Nokia jockeys for position elsewhere, and gambles on a future 6G stack.
Strange decisions
So what about private 5G – and the fact that the one place Nokia is winning is the one place it is quitting?
This article is continued here…
