& cplSiteName &

Nokia Lands Non-Telco SDN Deal in China

Iain Morris

Nokia has landed a strategically important non-telco customer in the perennially hard-to-crack Chinese market through its Nuage Networks software-defined networks (SDN) business.

China Pacific Insurance Company (CPIC) is to use Nuage Networks technology at two data centers as it looks to reduce IT costs and provide a boost to research and development activities, said Nokia in a statement.

The deal provides a welcome sign of Nokia's continued progress outside the slow-growing telco market: Last year, the Finnish vendor said it would pursue opportunities in enterprise markets where it believes there is strong demand for networking products and services.

While the financial services sector is not one of the industries it is specifically targeting under its new strategy, Nokia Corp. (NYSE: NOK) hailed the CPIC deal as evidence of its growing clout with organizations that are not telcos.

Nokia executives will also be delighted to have whisked another Chinese deal from under the noses of local rivals Huawei Technologies Co. Ltd. and ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763), both of which are also targeting enterprise customers and investing heavily in the development of SDN and network functions virtualization technologies.

"Working with a top insurer like CPIC serves as an excellent reference for the broader industry, and we see this as an opportunity to win more large enterprise projects in China, continuing Nokia's push into vertical markets beyond the telecom space," said Jin Jian, the head of the enterprise and public sector unit at Nokia Shanghai Bell, in a company statement.

Under the deal announced today, CPIC will use Nuage's virtualized services platform (VSP) at one data center to support IT needs across 82 different branch offices, which have until now relied on what Nokia describes as "dispersed IT systems." The VSP will be used at another data center for R&D purposes.

Want to know more about the emerging SDN market? Check out our dedicated SDN content channel here on Light Reading.

Nokia's recent results indicate just why the enterprise-sector expansion has become such a priority for the Finnish supplier.

The IP routing group in which Nuage sits reported an 11% year-on-year fall in sales in the April-to-June quarter, to about €1.28 billion ($1.5 billion), with Nokia partly blaming a decline in the communications service provider market for the setback.

It has previously indicated that it expects industry sales in its main addressable market to increase at a compound annual growth rate (CAGR) of just 1% between 2016 and 2021. The enterprise markets it is targeting are expected to grow at a CAGR of 13% over the same period. (See Nokia's Leprince Hails Enterprise Growth.)

Nokia still generates the bulk of its sales in Europe and North America but has a solid presence in China thanks to Nokia Shanghai Bell, a joint venture with a local company called China Huaxin that took formal shape earlier this year.

The business combines Nokia's China assets with the former Alcatel-Lucent Shanghai Bell, which Nokia acquired as part of its €15.6 billion ($18.4 billion, at today's exchange rate) takeover of Alcatel-Lucent last year. Nokia controls 50% plus one share of Nokia Shanghai Bell, with China Huaxin owning the remainder.

Yet despite having a local partner, Nokia witnessed a 7% year-on-year drop in revenues from China in the April-to-June quarter, to €627 million ($738 million), amid spending cuts by China's big three operators and fierce competition from Huawei and ZTE.

China accounted for about 13% of Nokia's network sales in the April-to-June quarter.

Despite the slowdown, Nokia CEO Rajeev Suri has said he is seeing "catalysts" in China that point to "an acceleration of 5G and the commencement of meaningful rollouts in 2019."

Moreover, CPIC is not the only non-telco customer that Nokia has landed in China this year. It is also building a 4G network for the Shanghai Oriental Pearl Group that will support a range of smart city and public safety applications.

— Iain Morris, News Editor, Light Reading

(1)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
User Rank: Light Sabre
10/5/2017 | 11:53:22 AM
These are the kinds of deals that Nokia certainly needs. They've made a big bet on the future of 5G, and getting these kinds of customers is key.
Featured Video
From The Founder
Light Reading is spending much of this year digging into the details of how automation technology will impact the comms market, but let's take a moment to also look at how automation is set to overturn the current world order by the middle of the century.
Flash Poll
Upcoming Live Events
November 1, 2017, The Royal Garden Hotel
November 1, 2017, The Montcalm Marble Arch
November 2, 2017, 8 Northumberland Avenue, London, UK
November 2, 2017, 8 Northumberland Avenue – London
November 10, 2017, The Westin Times Square, New York, NY
November 16, 2017, ExCel Centre, London
November 30, 2017, The Westin Times Square
May 14-17, 2018, Austin Convention Center
All Upcoming Live Events
With the mobile ecosystem becoming increasingly vulnerable to security threats, AdaptiveMobile has laid out some of the key considerations for the wireless community.
Hot Topics
Muni Policies Stymie Edge Computing
Carol Wilson, Editor-at-large, 10/17/2017
'Brutal' Automation & the Looming Workforce Cull
Iain Morris, News Editor, 10/18/2017
Is US Lurching Back to Monopoly Status?
Carol Wilson, Editor-at-large, 10/16/2017
Pai's FCC Raises Alarms at Competitive Carriers
Carol Wilson, Editor-at-large, 10/16/2017
Worried About Bandwidth for 4K? Here Comes 8K!
Aditya Kishore, Practice Leader, Video Transformation, Telco Transformation, 10/17/2017
Animals with Phones
Selfie Game Strong Click Here
Latest Comment
Live Digital Audio

Understanding the full experience of women in technology requires starting at the collegiate level (or sooner) and studying the technologies women are involved with, company cultures they're part of and personal experiences of individuals.

During this WiC radio show, we will talk with Nicole Engelbert, the director of Research & Analysis for Ovum Technology and a 23-year telecom industry veteran, about her experiences and perspectives on women in tech. Engelbert covers infrastructure, applications and industries for Ovum, but she is also involved in the research firm's higher education team and has helped colleges and universities globally leverage technology as a strategy for improving recruitment, retention and graduation performance.

She will share her unique insight into the collegiate level, where women pursuing engineering and STEM-related degrees is dwindling. Engelbert will also reveal new, original Ovum research on the topics of artificial intelligence, the Internet of Things, security and augmented reality, as well as discuss what each of those technologies might mean for women in our field. As always, we'll also leave plenty of time to answer all your questions live on the air and chat board.

Like Us on Facebook
Twitter Feed
Partner Perspectives - content from our sponsors
The Mobile Broadband Road Ahead
By Kevin Taylor, for Huawei
All Partner Perspectives