BARCELONA, Spain – Competition in the vendor space is as hot as ever as various parties vie to supply the networks needed to keep up with the exploding demand for mobile data services. Whether it’s the large, established players looking to grow, if not maintain, market share or the new players looking to leverage their perceived cost efficiencies, the space is not for the meek.
Nokia Siemens Networks could be viewed as part of the former group, having established itself in the top tier of vendors following the 2006 merger of Nokia and Siemens network operations to better compete in the market. At this week’s Mobile World Congress event in Barcelona, Spain, NSN CEO Rajeev Suri outlined the company’s plans to capture a piece – hopefully a growing piece – of that market.
It’s tough for vendors looking to chase a piece of the pie,” Suri explained, adding “The business of 10 years ago has gone forever. It has been replaced with one that is much tougher.”
Suri said NSN expects consumers to gobble up 1 gigabyte of data per day by 2020 over carrier-operated cellular networks, which he likened to one hour of high-definition video streaming. To support such demand, Suri claimed carriers needed to maximize the efficiency of their current spectrum holdings both for capacity and to maintain their business models.
“The message to carriers is affordable quality or else,” Suri said. “Customers are not afraid to churn.”
While Ericsson is considered the top player in the space, Suri claimed that NSN was in a strong No. 2 position that gave it the scale necessary to be a viable competitor. While the company has not seen as much commercial success in the United States, Suri noted that the company does have a strong with Verizon’s IMS deployment, and that it sees strong opportunities in the U.S. market
NSN said it has so far signed 52 LTE contracts, which it claims are far more than any other vendor, and that at the end of January it was part of 49 live LTE network deployments around the world.
“We expect to have a strong No. 2 revenue position in the next few years,” Suri added.
That revenue growth will also be bolstered by success in Japan, where NSN expects to have a significant hand in LTE network deployments by the country’s three largest carriers, similar to what it has seen in South Korea. Suri added that this adoption in Asia came without the need for acquisitions or joint ventures, taking a dig at some of its rivals that have partnered in some of those regions on infrastructure deals.
In tackling the hot topic of small cells, Suri said NSN has been rejuvenated through its acquisition of Motorola Solution’s network assets. The company forecasts the need for 10-times more cell sites to meet consumer demand, with 80% of those new sites being small cells. Also needed to meet that consumer demand is an expected 10-times increase in spectrum, which with the move towards LTE-Advanced will be boosted by the ability to aggregate spectrum assets across bands.
NSN is also moving aggressively forward in the managed services space, claiming it was now working with 180 operators serving 700 million customers, including 170 of those networks employing multi-vendor network solutions.
During a question and answer exchange, Suri noted that the current top 5 vendors was probably 1 too many, though he would not be baited into predicting which one would be the odd-man out.
Following the failed attempts by LightSquared to develop a wholesale LTE network in the United States, a plan that was originally tied to a $7 billion infrastructure deal with NSN, Suri said he did not think the model itself had much of a future.
“I don’t think it will pick up speed,” Suri said. “On paper it’s a good model, but I don’t think it’s practical. … It’s more hype than substance.”
Suri noted that while NSN has not garnered the same publicity for network deals in the United States, he did point out that the company has been very successful with optical equipment with both Verizon and AT&T, and could be a player in T-Mobile USA’s recent network enhancement plans.
“We are cautiously optimistic and expect some short-term breakthroughs,” Suri said.
As for other network modernization opportunities, Suri said NSN is looking towards the Middle East and Africa as potential bright spots. NSN is also looking closely at the Latin America market, and specifically moves in Brazil that could require a local value addition to network contracts. NSN is also moving forward with TD-LTE plans, citing a not-yet published agreement in India, as well as commercial trials with China Mobile in 3 provinces.
In an attempt to calm fears about NSN’s future, Suri noted the recent infusion of $1 billion in new capital from its parent companies as well as with $1.4 billion in bank guarantees to help fund operations.
NSN is also moving forward on planned job cuts that are expected to pare 17,000 names from its payroll and help re-size the company for the future.
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