San Francisco-based Rapid, with its API management system, has been acquired by Nokia to form part of its Network as Code platform.
Ericsson's $6.2 billion takeover of Vonage in July 2022 was not followed by an equally big Nokia deal. Both equipment vendors see an opportunity in network APIs, the monetizable glue between telco infrastructure and the applications that use it. Ericsson decided ownership of a big developer-facing platform was critical. Nokia's preference was to quietly build its Network as Code platform from scratch. But that has not stopped it from shopping around for a bolt-on, and it has now gobbled up a San Francisco-based company called Rapid.
Far less prominent than Vonage, Rapid boasts a public API marketplace and community of about 4 million developers. What seemed to most interest Nokia, however, was the API management system that Rapid has built. "If you're dealing with APIs, you'd better have the best management system for APIs, because that's what you've got to deliver at the end of the day to create that developer experience," said Raghav Sahgal, the president of Nokia's cloud and network services business group, on a call with Light Reading. "We probably have the strongest API management system now with Rapid and the technology and people they bring."
Nokia is not disclosing the financial or other terms of this deal, which indicates it is considerably smaller than Ericsson's Vonage takeover. Rules on stock market disclosure suggest Nokia is paying well below €100 million ($106 million) for Rapid, according to one estimate supplied to Light Reading.
But this would imply its valuation has slumped since March 2022, when it reportedly raised $150 million in a Series D funding round led by Japan's SoftBank and was reckoned to be worth as much as $1 billion. Other investors participating in that round included Andreessen Horowitz, Microsoft, Viola Growth, Green Bay and Grove Ventures, according to TechCrunch.
Its valuation seemed to rocket from just $355 million in April 2021, but it may subsequently have cratered. In April last year, another report from TechCrunch said Rapid was cutting headcount by 50% or around 115 employees after trying to expand too fast. A broader downturn in the APIs market sent the share price of Twilio, another well-known player, tumbling from more than $300 in November 2021, when Ericsson announced its Vonage bid, to less than $43 a year later. Since acquiring Vonage, Ericsson has taken impairment charges of about $4 billion against it.
Nokia, by contrast, seems to be making a relatively small acquisition at a low point for the market. Its plan is to integrate Rapid into its Network as Code platform, where it will play a distinctive role. "There is no overlap with Network as Code," said Sahgal. "There is no duplication of anything that we have invested in. This is just enhancing a particular part of the Network as Code platform and making it better."
Speeding up
Omdia, a sister company to Light Reading, predicts the market for network API transactions will generate almost $9 billion in 2029, up from just $161 million last year. Developers are expected to pay the likes of Vonage and Nokia for access to consumable APIs that expose useful features of 5G networks. An initiative known as Camara, overseen by the Linux Foundation, is working to ensure APIs are harmonized across the industry. The idea is to give developers the confidence their applications will function on multiple networks.
But Network as Code, strengthened by the Rapid takeover, is positioned quite differently by Sahgal than Vonage is by Ericsson. Nokia's Swedish rival has moved the aggregation platform part of Vonage into a joint venture (JV) with 11 Tier 1 telcos. The goal of that is to function as a kind of super aggregator between networks and developer-facing platforms, including Vonage. Through Network as Code, Nokia's main ambition is seemingly to play the same role of intermediary between telcos and other platforms.
"Our goal is not to build a Google marketplace or an Infobip marketplace," said Sahgal, referring to a couple of the best-known platforms that exist. "Our goal is to build the enabling platform, and we are very, very focused on that. We want to make sure that we don't compete but that we enable anything and everything across a horizontal frame. The strategy is different from that perspective."
Nokia today boasts an ecosystem of 27 companies, including numerous telcos and application vendors, and Sahgal points out that some of the names on the list are also stakeholders in Ericsson's new JV. "There are multiple ecosystems that are going to be out there, and we are now integrated into multiple telcos," said Sahgal. "We're a platform that actually enables a multitude of ecosystems and this Rapid acquisition strengthens the API framework."
France's Orange is one telco to have emphasized the need for more than a single ecosystem, expressing concern that Ericsson's JV would be too powerful in the absence of a rival. "We don't want the JV to create a lock-up situation for customers," said Bruno Zerbib, Orange's chief technology officer, at a press briefing in London last month.
Sahgal's unit, which also has responsibility for the development of 5G core network applications and other products, reported sales of €702 million ($746 million) for the recent third quarter, down 5% year-over-year, along with an operating profit of €65 million ($69 million), up from €36 million ($38 million) the year before. Capturing a decent share of the revenues forecast by Omdia would be meaningful.
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