NSN Hangs Its Future on the Liquid Net
When Nokia Networks completes its latest restructuring program, a process that's set to see the company shrink its portfolio and lose at least (if not more than) 17,000 staff, what will the resulting company look like? (See NSN Could Lose More Than 17,000 Staff, Analysts: NSN Focus Makes Sense and NSN to Cut 17,000 Staff.)
Well, it'll need to be operationally profitable. Corporate parents Nokia Corp. (NYSE: NOK) and Siemens AG (NYSE: SI; Frankfurt: SIE) are locking their wallets after having stumped up €1 billion (US$1.3 billion) between them earlier this year. "We don’t expect further cash from Nokia or Siemens and believe we can execute our new strategy without further cash from them," a NSN spokesperson tells Light Reading. (See NSN Gets $1.36B & New Leader.)
NSN believes that operational profitability can come from being a slimmer, more focused company. While it has been well reported that NSN's focus will be on mobile broadband, customer experience management (CEM) and services, what does that actually mean?
Well, that comprises more than it might seem and NSN's Liquid Net proposition provides a guide to what it hopes service provider customers will want in terms of network functionality.
Earlier this year NSN outlined its vision of the next-generation network, called Liquid Net, which, the vendor believes, will be more suited to a market characterized by the "explosive and unpredictable consumption of data." In essence it's the vision of a virtualized network that's able to "share" capacity and be planned and managed to average rather than peak loads. (See NSN Dives Into Liquid Net .)
The key idea revolves around unleashing spare capacity and making it available where it's needed. Obviously that's something that can't be done with current network architectures, which, according to NSN, have a lot of dormant capacity. (According to the vendor, massive amounts of capacity lay dormant in existing fixed and mobile networks every day.)
The Liquid Net comprises Liquid Radio, Liquid Core and Liquid Transport.
Liquid Radio involves the de-coupling of the antenna and baseband elements of the radio access network (RAN) and having a centralized pool of baseband capacity shared by multiple antennas. That sort of topography requires an optical connection from the antenna to the baseband pool, some very sophisticated broadband management capabilities.
Liquid Core, meanwhile, involves the housing of multiple network core elements -- serving gateway, packet gateway, mobility management entity (MME), home location registry (HLR), Policy and Charging Rules Function (PCRF), softswitches and other IMS elements -- on shared AdvancedTCA (ATCA) hardware systems that need only be added to as the overall demand for Service Provider Information Technology (SPIT) capabilities increases. That contrasts with the current practice of having fields of under-utilized servers for each function.
Liquid Transport is all about achieving the most efficient optical connections between various points, with a heavy focus on intelligent control of capacity management and wavelength provisioning.
So what does NSN need to have in its product portfolio if it wants to deliver the Liquid Net in a post-restructuring world?
The 'mobile broadband' proposition
This is about more than just the radio access network (RAN). NSN is retaining (most of) the products it needs to deliver a complete mobile broadband network, including transport. And it's not just about next-generation mobile, either: For NSN this includes GSM, CDMA, WCDMA, CDMA EV-DO, HSPA, both "flavors" of Long Term Evolution (LTE) (FDD and TDD) and beyond. In other words, it's 2G-4G.
As well as the RAN equipment right at the edge of the network, the portfolio includes the core (including all the elements and capabilities to be found in the Liquid Core) and the necessary optical transport, from long-haul 100Gbit/s down to the next-generation optical access (NGOA) technology currently under development. Backhaul capabilities will come from partners, most notably DragonWave Inc. (AIM/Toronto: DWI; Nasdaq: DRWI), which recently agreed to acquire NSN's backhaul business. (See DragonWave to Buy NSN Unit.)
NSN, therefore, is looking to hold on to and take advantage of its investments in optical transport as well as mobile network technology and is forming an Optical Networks Unit as part of its Mobile Broadband business. (See NSN Makes Optical Advances and NSN Unleashes Single-Carrier 100G.)
However, its Carrier Ethernet portfolio, part of the NSN family since late 2007, is surplus to requirements and will either be offloaded or mothballed (put in maintenance mode). (See NSN Unveils Its Kill List , Nokia Siemens to Acquire Atrica and Nokia Siemens Shares Ethernet Secrets.)
Services and CEM
NSN's Global Services business, which provides a broad range of services (including planning and optimization, consulting, systems integration, implementation and managed services) and currently accounts for around 40 percent of its revenues, is being maintained, which is not surprising given the operators' greater tendency toward outsourcing.
Customer Experience Management (CEM), though, is far less straightforward and even NSN has yet to pin down exactly what its CEM offer will include in terms of products. Currently it includes its One-NDS subscriber data management system, a range of Serve atOnce software tools (for device management and customer data gathering), the Charge@once business analytics tool, but elements of its BSS portfolio (especially, it seems, around charging capabilities) could still be saved. The BSS portfolio in general is part of NSN's "Kill List."
This is an area of NSN's business that is likely to see a lot of new development, though, rather than just rely on a set of defined products. For example, the company recently announced an application that will help turn Facebook into a potential customer experience portal for service providers. (See NSN Gives Facebook a New Status.)
Sidelined ... but what of the cloud?
NSN isn't hanging around in its efforts to pare down its portfolio. Having identified a set of business areas that are no longer core to its strategy -- fixed-line VoIP, WiMax, traditional voice, Carrier Ethernet, business support systems (BSS), and communications and entertainment solutions (CES, including IPTV capabilities) -- it has already announced a deal to sell its WiMax assets. (See NSN to Sell WiMax Biz .)
But where does this all leave NSN in terms of the emerging cloud services enablement sector that Alcatel-Lucent (NYSE: ALU) and Cisco Systems Inc. (Nasdaq: CSCO) have grabbed by the horns? (See Analyst: AlcaLu Could Have a Cloud Hit.)
The vendor tells Light Reading that helping service providers become cloud services players is part of its strategy. In an answer to questions about its cloud plans, NSN said its Liquid Core includes capabilities that are the "first elements" in its "carrier cloud" offering that will "go beyond" Alcatel-Lucent (NYSE: ALU)'s proposition.
Now, there's a challenge!
— Ray Le Maistre, International Managing Editor, Light Reading