Nokia introduced a standalone software business way back in 2016 as part of a grand plan to target new vertical markets and buck a decline in its main addressable market.

In 2020, Nokia Software was then brought into the Cloud and Network Services division under Raghav Sahgal as part of a wider shuffle implemented by Pekka Lundmark, who has been intent on resetting the Finnish equipment maker he has led since August 2020.

At the time, Lundmark signaled a shift into higher-value, "network-as-a-service" business models, with a greater focus on software- and cloud-oriented solutions. Nokia then announced late in 2021 that it was introducing software-as-a-service (SaaS) services to enable carriers to launch services more quickly and effectively.

Figure 1: Lock it down: Nokia is expanding its SaaS offering with new security and analytics services, with more to come in 2022 and 2023.
(Source: Paweł Czerwiński on Unsplash)

The vendor kicked off this strategy with the launch of Nokia Data Marketplace "as a service" in early 2021. Since then, it has been in discussions with several carriers and service providers about what other services it could offer in SaaS form.

As the vendor puts it, ​​SaaS-based services are designed to help enterprises and carriers shift to "an agile model based on software consumed purely on demand through a subscription, and away from customized software run on costly, complex, on-premise infrastructure."

New SaaS offerings

Nokia has now just announced two new SaaS offerings in the areas of security and analytics. The first is iSIM Secure Connect, which is designed to enable carriers to manage machine-to-machine and consumer device subscriptions for embedded SIM (eSIM) and integrated SIM (iSIM)-enabled devices.

The second is an analytics offering from Nokia's AVA (AI & Analytics, Virtualization and Automation) portfolio. Nokia AVA Network Data Analytics Function (NWDAF) is designed to enhance network operations with AI/ML driven closed-loop automation, in order to improve the customer experience and drive new sources of revenue. Notably, NWDAF is part of the 5G standalone architecture.

Nokia said AVA NWDAF will be commercially available in a SaaS delivery model later this quarter, while the iSIM Secure Connect is currently expected to be available as a SaaS later in 2022, and will still be offered to customers in other deployment models.

Nokia's SaaS-based NetGuard Cybersecurity Dome and Nokia Anomaly Detection, both announced in November 2021, will be available later this quarter. The vendor also plans to introduce other new SaaS services in the areas of core, digital operations, monetization, and private wireless in 2022 and 2023.

Balancing act

Nokia will be hoping that this enhanced SaaS focus will translate into revenue growth in the Cloud and Network Services division. In the fourth quarter (Q4) of 2021, net sales were flat year-on-year. Revenue also remained broadly unchanged in 2021 as whole at just over €3 billion (US$3.4 billion).

The vendor noted that the Q4 net sales performance in the division reflected slight declines in both cloud and cognitive services and core networks, which was largely offset by double-digit growth in enterprise solutions, particularly in Europe.

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Lundmark said Cloud and Network Services "continued to rebalance its portfolio and saw encouraging growth in its key focus areas." During the earnings call in February, he explained that the vendor has chosen to focus on six areas which are currently showing double-digit growth.

Nokia expects the addressable market for the division to expand in 2022, rising from €26 billion ($29.5 billion) in 2021 to €28 billion ($31.7 billion) this year.

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— Anne Morris, contributing editor, special to Light Reading