Finland's Nokia is giving its service capabilities a good workout with the launch of an analytics-as-a-service (or AaaS) product for telcos that want to derive insight from analytics without having to invest in their own analytics capabilities.
Usually not one to pass up the opportunity for an acronym, Nokia Corp. (NYSE: NOK) has come up with the fairly humdrum Analytics Services label for its latest product. But Dennis Lorenzin, the vice president of network planning and optimization for the company's Global Services division, described it as an analytics-as-a-service move during a press briefing in London this week, perhaps unintentionally exposing AaaS to the wider world.
The Finnish vendor has become increasingly reliant on innovation in software and services for earnings growth and last year said its ambition was to create a "significant" standalone software business with the margin profile of a large software company. (See Nokia to Create Standalone Software Biz, Target New Verticals.)
Nokia's overall operating margin was 10.2% in the recent April-to-June quarter. Software giant Microsoft had an operating margin of 22.7% during the same period.
Today's launch ties in with a broader company strategy of persuading telcos to focus on their marketing and customers and leave the running of the networks to Nokia. (For more details, see this story on our sister site, Telecoms.com.)
"Through automation and analytics and artificial intelligence, we are driving operators to do less network planning and optimization in house," says Igor Leprince, the head of Global Services for Nokia. "We can run networks much more efficiently than an independent network provider." (See Nokia's Leprince Wants to Be King of Enterprise.)
Nokia's AaaS sits on top of a software platform called AVA, which uses crowd-sourced data and machine learning to generate insights into network performance.
Another component of the service is a so-called "augmented intelligence" system called Nokia Shannon Intelligence, which the Finnish vendor appears to have inherited with its €15.6 billion ($18.3 billion) takeover of Alcatel-Lucent last year.
Originally developed by the Bell Labs research and development unit, Shannon Intelligence is basically designed to make sense of data trends that could aid decision-making within telco organizations.
"It's a commercial model that has zero capex for customers," says Lorenzin. "Customers benefit without having to invest in infrastructure servers and these kinds of things."
Lorenzin says the service works by taking data from the operator's network and combining this with other sources of data outside its premises to produce useful intelligence.
Such insight could help to reduce dropped calls by up to 35%, claims Nokia, and lead to improvements of between 20% and 40% when it comes to resolving network problems.
The analytics offering sounds like it would hold greater appeal for smaller network operators that lack their own global resources, but Nokia insists that some of the industry giants are looking to it for innovation in this area as well.
Leprince says that many operators have balked at the capital investment required to develop similar analytics capabilities.
"This is a three-digit-million-dollar investment for us every year," he says. "Vodafone and Verizon can afford that but it is a lot of investment."
One potential concern is over data privacy, acknowledges Lorenzin, but Nokia is taking care to "anonymize" data whenever this is a requirement.
"Data privacy is the first or second topic that comes up on the table," he says. "There are use cases where operators don't really bother too much about exposing data and others where they might want to retain privacy. It's a use-case-specific approach."
The Global Services division, which underwent a restructuring earlier this year, today accounts for about a quarter of group sales, which hit €5.6 billion ($6.6 billion) in the recent April-to-June quarter. Global Services then reported stable revenues, compared with the year-earlier period, with the overall networks business suffering a 5% decline. (See Nokia to Split Mobile Biz, Rejig Management After Mobile Boss Quits.)
While the Finnish vendor has grand ambitions for its applications and analytics software division, this accounted for just 6% of group sales in the second quarter, although its revenues were up 9% year-on-year.
Nokia says it is in discussions with telcos about the latest analytics offering.
— Iain Morris, News Editor, Light Reading