Carrier ethernet, CES, WiMax, broadband access, fixed VoIP, BSS all to go in NSN clearout
Nokia Siemens Networks has outlined plans to focus on just a few core elements, with all non-core lines of business to be sold or put into “maintenance”. The decision will result in 17,000 job cuts and a proposed €1 billion opex and overhead savings by 2013.
NSN’s official position is that the Mobile Broadband (including optical), CEM (including subscriber data management technology) and Services businesses are core, and therefore will be staying — supported by increased investment. Everything else is non-core, and will either be sold or mothballed.
At NSN’s press conference CEO Rajeev Suri appeared reticent to identify the exact areas of business that NSN would be walking away from. Yet Mobile Europe has seen extracts from what it was told was an internal company email that outline just what units will go.
That internal communication said: “perfect voice (fixed-line VoIP), broadband access, WiMAX, narrowband, carrier Ethernet, business support systems (BSS), and communications and entertainment solutions (CES) – will be targeted for exit (possibly through divestment) or put in maintenance mode.”
On the press conference, although pushed for details, Suri would only commit to saying that NSN’s “fixed line” assets would now be non-core. (The microwave business has already been sold in a deal with Dragonwave).
With 17,000 jobs due to be cut by 2013, NSN was clearly keen not to get drawn into specifics of where and when jobs would go – especially as it has not yet started negotiating with the relevant parties, unions or governments.
The company, however, told its employees that the business will be separated into four categories: lead, attach, adapt and exit or maintain:
Its businesses break down within that proposed structure like this – with the businesses facing an exit clearly listed.
Mobile Broadband and Customer Experience Management will be the lead businesses, where NSN will maintain or increase investments.
Care and Network Implementation – both part of Global Services – will be attached closely to, and expected to perform in parallel with, NSN’s lead businesses.
Managed Services and Consulting and Systems Integration – also both part of Global Services – will be adapted to meet NSN’s narrower portfolio and deliver greater profitability. Optical Networks will also be in this category, with a focus on building a strong base of select customers and leveraging its strong linkage to mobile broadband.
EXIT or MAINTAIN
A wide range of other businesses – such as perfect voice (fixed-line VoIP), broadband access, WiMAX, narrowband, carrier Ethernet, business support systems (BSS), and communications and entertainment solutions (CES) – will be targeted for exit (possibly through divestment) or put in maintenance mode. Our recently announced plan to sell microwave transport to Dragonwave is an example of this approach.
Suri told journalists that the company was well-placed to benefit from this new, focussed strategy, and he predicted that others would be forced to follow. Any line of business where the company was not placed first or second by market share made R&D investment in that business difficult to justify, Suri said.
“We are the first company to decide to focus on this sector (mobile broadband) while others remain committed to that [end to end approach]. The industry does not any longer allow for end to end players to be successful. So this give us a clear opportunity to differentiate,” Suri said.
“Our customers have welcomed these changes. We are the first company to make these difficult choices, and they are looking for others to do the same,” he said.
Defending the company’s strategic turnaround since the lows of the 2008-2009 financial crash, Suri said the company thinks it is a strong second place in mobile broadband, with 1.3 times and 1.7 times the share of the third and fourth placed companies, respectively.
Liquid Net has established the company as a leader of innovation, and is the benchmark of network architecture globally, Suri said. In CEM and SDM, NSN is recognised as having the “smartest toolbox” and has made a significant breakthrough in SaaS innovation, he added. The services business is taking a new base station on air every 95 seconds, and has taken multi-vendor network management mainstream – with some 60% of its managed network elements multivendor in nature.
The company has delivered five quarters of year-on-year sales growth, and in seven out of the last eight quarters NSN achieved an operating profit, although Suri said “we are far from satisfied with our profitability”.