Nokia targets triple growth in Global Enterprise division

Nokia targets 3x growth in direct enterprise sales; seeks to define future partnership role with network operators

Nokia wants to treble the size of its Global Enterprise business as it diversifies income streams from its network operator base.

Chris Johnson, who has been heading up the Global Enterprise business since September 2017, would not put a date on the growth target, but said that the division will be a key growth engine for Nokia as the vendor waits for real revenues from 5G to arrive. The company is adding vertical-specific sales and technical support staff as it targets gains from selling network equipment to support industrial and public sector communications and IoT use cases.

Speaking from the company’s new London digs in the mobile-operator friendly Paddington Basin (Vodafone and EE both have space nearby) Johnson said that the company needed to diversify revenues as 5G becomes a disruptor both to mobile network operators and established NEPs. 

“5G came along a bit faster than we were expecting, due to a lot of hype from US and Chinese markets and the leadership in those economies hyping coverage and making that into a competition.

“So that has speeded the whole market up. But it is difficult to predict when revenue will happen – the sort of real revenue we report to the Markets – so the diversification to enterprise revenue is important now and it is going to be even more important in the future.”

Johnson said that the enterprise connectivity market “is huge and it’s ripe”, with IoT the phenomenon that is “driving connectivity as a differentiator.”

The unit has three main target customer groups,  all of which entail “selling telco-grade networks into markets where there is an element of human life at risk.” These are transport, energy and public safety.

In transport, where Nokia is strong in GSM-R, the company is “trying to transplant the big success we have had in Europe in the rest of the world.” Announcements are imminent for two projects in EMEA, and there are “three to four big projects” in China. In technical terms the next move is into LTE-R.

“In public safety the market is definitely Private LTE at this point. In the electricity distribution market there’s a human safety aspect dealing with power plant machinery and secondly the impact of renewables is forcing the energy industry to think much more about operational efficiency. So Private LTE networks start to help them think about gaining those efficiencies.”

Into unlicensed private LTE

Although Nokia currently sells telco products to enterprises, Johnson says there could be more specific enterprise-focussed products yet to come.

“At the moment we are incubating a cloud-based mobile services – somewhere between LTE and WiFi – that will be more replicable and easy to roll out than Private LTE, which still needs to be fairly customised.”

This sounds like the proto-pitch Nokia will make for its Multe Fire and perhaps CBRS assets – private LTE networks that do not require a licensed spectrum anchor – and therefore no operator “host”.

There’s whole layers of value in this, and we are trying to develop ‘this is you, this is us, and we can go to market together’

My customer’s customer is my… customer?

The potential conflict is this: Nokia sells services and connectivity equipment (including unlicensed spectrum solutions such as MulteFire) to large enterprises. Meanwhile, these same large enterprises are the target demographic for mobile network operators’ IoT and 5G Vertical offers. In fact, it goes a little further than that. Industry verticals are essential, some say, to the commercialisation of 5G. Operators must monetise 5G investments by offering enterprises and industry verticals service-specific slices. So how much value will telcos be happy to see shift to their own suppliers?

And how does Nokia avoid looking like it is competing for the customers of its operator customers?

Johnson: “The demand for private mobile networks is huge – the question is how to play with telcos on this. I am very clear in my mind – telcos are a vital partnership and route to market for us.

“Typically we do need spectrum, unless we are in unlicensed which we are not today. Everything to date we are working with the telco. Yeah you are right we have the tech to build this stuff, and the telcos want to go way beyond offering spectrum as a wholesaler; they want to add value and use their brand, and in return we want to leverage their brand. Nokia has a great brand but we don’t have a long, strong traditional brand in enterprise. So there’s things we can both get from this. There’s whole layers of value in this, and we are trying to develop ‘this is you, this is us, and we can go to market together’”.

“I think where we are going to be useful is some go to market help, we are stimulating the markets, talking to end users and aiding in the selling,” Johnson added. Vertical sales needs to be non-generic, specific to the vertical, and you certainly could certainly argue this sort of vertical-specific sales capability is something operators have always lacked. 

Smart Cities

One area where this sort of thinking can all come together is the Smart City, says Johnson. Here, he says, the hype is running far ahead of reality. That’s because actually piecing together different tactical elements and slices of budget into something overall and coherent has not happened. Nokia sees the the Smart City as a “platform” that has a 20 year blueprint with connectivity at its heart. The platform has to be open to all – MNOs, private cloud providers, IoT platforms etc –  and non-government financed. Getting that in place will make Smart City strategies immune to cyclical budget and political restraints, Johnson argued.