Facing stiff competition in target areas such as 5G, Nokia has announced that it plans strategy changes that it will reveal in three phases. Setting up implementation of these changes is a business reorganization that will take effect on January 1, 2021.
The company says it will begin unveiling the strategy changes December 16, 2020, and at Capital Markets Day on March 18, 2021. The changes are the result of a strategic review, led by recently named President and CEO Pekka Lundmark (see "Pekka Lundmark to replace Rajeev Suri as Nokia’s president and CEO"), that has reached four conclusions:
- Technology leadership must be the top priority
- The company’s current customer base of communications services providers and enterprises (including webscale companies) offers “a solid platform for value creation”
- There is a longer-term opportunity to move into higher-value “network-as-a-service” business models
- Rather than focusing on being an end-to-end provider, the company will take a more focused approach, with the company’s four new business groups leading the way.
The four new business groups will include:
- Mobile Networks, which will comprise mobile network products, network deployment and technical support services, and related network management. Net sales from these operations for the past four quarters were approximately €10 billion. Tommi Uitto, who leads the current counterpart, will become president of this business group.
- IP and Fixed Networks, which will include IP routing, optical networks, fixed networks, and Alcatel Submarine Networks. Net sales of such products and services over the last four quarters were approximately €7 billion. Federico Guillén, current president of customer operations, EMEA and APAC, will be president of this business group. The future roles, if any, of current IP/Optical co-presidents Basil Alwan and Sri Reddy are unclear.
- Cloud and Network Services, which will include the existing Nokia Software business (excluding Mobile Networks network management), Nokia’s enterprise offerings, core network products including both voice and packet core, and managed and advanced services from its current Global Services unit. This unit will also act as a delivery channel of certain products from other business groups to enterprise customers. The net sales of these businesses in the last four quarters were approximately €3 billion. Raghav Sahgal, current president Nokia Enterprise, will be President.
- Nokia Technologies will remain largely unchanged with Jenni Lukander continuing as President. The net sales of this business group in the last four quarters were approximately €1.4 billion.
There also will be a new Customer Experience organization. This group will include Nokia’s customer teams, region and country management, and marketing personnel. The organization will be led by Ricky Corker, current president of customer operations, Americas. Meanwhile, the company also has established four “corporate functions” that will include Finance, led by Chief Financial Officer Marco Wirén; Legal and Compliance, led by Chief Legal Officer Nassib Abou-Khalil; People, including human resources functions, operating model management and real estate, led by Chief People Officer Stephanie Werner-Dietz; and Strategy and Technology, which will include strategic planning, long-term research including Nokia Bell Labs, and IT and digitalization. Nokia has not yet named a leader for this last function.
“Our industry is undergoing profound changes. Industrial automation and digitalization are increasing customer demand for high-performance networks, with a trend towards open interfaces, virtualization, and cloud native software. This will revolutionize how we design, deploy, manage and sell our products and solutions,” said Lundmark. “As we work to renew our strategy, we will ensure we are well positioned to leverage these trends, improve our performance and position the company for long-term value creation.
“Our goal is to better align with the needs of our customers, and through that increase accountability, reduce complexity and improve cost-efficiency. Going forward, we will have a more rigorous approach to capital allocation and will invest to win in those segments where we choose to compete,” said Lundmark added.
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Stephen Hardy | Editorial Director and Associate Publisher, Lightwave
Stephen Hardy is editorial director and associate publisher of Lightwave and Broadband Technology Report, part of the Lighting & Technology Group at Endeavor Business Media. Stephen is responsible for establishing and executing editorial strategy across the both brands’ websites, email newsletters, events, and other information products. He has covered the fiber-optics space for more than 20 years, and communications and technology for more than 35 years. During his tenure, Lightwave has received awards from Folio: and the American Society of Business Press Editors (ASBPE) for editorial excellence. Prior to joining Lightwave in 1997, Stephen worked for Telecommunications magazine and the Journal of Electronic Defense.
Stephen has moderated panels at numerous events, including the Optica Executive Forum, ECOC, and SCTE Cable-Tec Expo. He also is program director for the Lightwave Innovation Reviews and the Diamond Technology Reviews.
He has written numerous articles in all aspects of optical communications and fiber-optic networks, including fiber to the home (FTTH), PON, optical components, DWDM, fiber cables, packet optical transport, optical transceivers, lasers, fiber optic testing, and more.
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