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Managed Services

Analysts: NSN Focus Makes Sense

The decision by Nokia Networks to drastically slim down its product portfolio so as to focus on mobile broadband, customer experience management (CEM) and professional services is finding favor with industry analysts at Heavy Reading , though they believe the vendor has a lot of work (and convincing) to do if the new strategy is to have a positive outcome.

On Wednesday the joint venture firm announced a restructuring program that will result in a headcount reduction of 17,000 (about 23 percent of the total workforce) and a focus on very particular parts of the vendor's business. The net result will be a smaller company with lower costs, greater focus and far fewer product lines. (See NSN Unveils Its Kill List , NSN to Cut 17,000 Staff, NSN to Restructure and NSN's New Tradition.)

And there seems little doubt that NSN has chosen the strongest parts of its business to maintain: Its mobile broadband portfolio is well regarded, as is its CEM strategy, while it is among the leading players in the global telecom professional services sector (including managed services), where it is second only (in many people's eyes) to Ericsson AB (Nasdaq: ERIC). 213735

The principal focus of the new NSN on mobile broadband is one that makes sense, says Heavy Reading senior analyst Gabriel Brown. "In mobile broadband NSN has well regarded products, it is technically strong, and has good market share," he states. (See NSN Adds to Liquid Radio, Indosat, NSN Trial 1800 MHz LTE and NSN Adds LTE-Advanced to RAN.)

"There is not too much surprise that non-mobile assets are being cut away," Brown continues. "The company has been heading in this direction for some years and appears comfortable acting as a channel and integrator for wireline OEMs. On balance, operators would prefer to see a focused, sustainable mobile broadband business, than a loss-making integrated vendor," adds the analyst.

However, "overall there is still too much corporate uncertainty around NSN. Plans for its long-term ownership structure, its geographic focus, and the timeline for this restructuring must be communicated to the market more quickly and with more certainty," Brown concludes.

Concerns over the uncertain outcome of NSN's extensive restructuring program are also highlighted by Heavy Reading's chief analyst Graham Finnie. He says the new focus "seems like a sensible move but it will likely spook a lot of customers, as that's a lot of staff to get rid of. Some customers will be concerned about whether they can be properly supported."

And with so many staff leaving there are other manpower concerns too, says Finnie. "NSN needs to keep developing and the question is, will it still have the resources it needs to do that properly? Getting rid of 17,000 staff will lead to a lot of questions," says the analyst.

Finnie also notes that NSN's main competitors will smell blood and seek to capitalize on the joint venture's vulnerability. "Rivals will exploit this situation ruthlessly, no doubt," he adds.

— Ray Le Maistre, International Managing Editor, Light Reading

gtchavan 12/5/2012 | 4:47:53 PM
re: Analysts: NSN Focus Makes Sense

Telco's are succesfully putting another supplier out of business and and these analysts are saying it makes sense.  Yes it makes sense to go out of business because Telco's don't nurture any of their suppliers and there is always another idiot that wants to sell to them thinking they can do better than Alcatel, Lucent, Nortel, NSN, Ciena.


The question is why sell to Telco's to begin with?  In every one of their capital expendure plans, they allocate twice more capital to the unoin workers that go out in the field and install the equipment than the actual equipment they purchase.  On top of that they have huge demands on their hardware suppliers that effectively will make the hardware so expensive that is not profitable to make.  If they can do better, have them develop their own hardare and software using their union workers and lets see how far they can go.


Cisco is smart, they treat Telcos as take-it-or-leave-it customers and they don't seem to have any trouble making their quarters.  


 

shygye75 12/5/2012 | 4:48:01 PM
re: Analysts: NSN Focus Makes Sense

Four words: Independent contractors. Happy Thanksgiving.

digits 12/5/2012 | 4:48:02 PM
re: Analysts: NSN Focus Makes Sense

NSN will have 47,000 staff after the restructuring process -- is that enough for its global professional services (including managed services), CEM and mobile broadband businesses, including customer support?


 


The company is going to sell, close or put in 'maintenance mode' a numbe of business lines but it doesn't seem that will account for 17,000 jobs, so it does seem likely that some staff currently in core business areas will be shed...


 

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