With the pending purchase of Alcatel-Lucent, Nokia gets a strong position in the emerging SDN market. But will Nokia value what Nuage has to offer?
Nokia Corp. (NYSE: NOK) said Wednesday it plans a €15.6 billion (US$16.6 billion) takeover of Alcatel-Lucent (NYSE: ALU), approved by both companies' boards of directors. As part of the Alcatel-Lucent package, Nokia gets ownership of Nuage Networks , a wholly owned AlcaLu subsidiary that's been making strides in SDN. (See Nokia & Alcatel-Lucent: What's Going On? and Nokia Makes €15.6B Bid for Alcatel-Lucent.)
It's like buying a used car and finding a nice set of golf clubs in the trunk.
"Nuage can only be helped by having the weight of Nokia behind it," says Roz Roseboro, Heavy Reading senior analyst. "Nokia doesn't have a similar product, nor a very compelling SDN/data center story, on its own, so no worry about anything getting rationalized away."
The acquisition will also help Nokia beef up its NFV offerings, Caroline Chappell, Heavy Reading principal analyst, says.
"On the NFV front, Nuage can and will work with any third-party vendor's NFV MANO stack as well as AlcaLu's own CloudBand. Nokia, however, needed to flesh out its NFV MANO stack -- it developed a VNF Manager very early on but didn't have the full orchestration capabilities of CloudBand and knew it needed to develop them," Chappell says. "The merger will mean it no longer has to -- it will be able to augment its own [OpenStack talent] with AlcaLu's considerable CloudBand expertise -- and given the difficulties of finding and keeping OpenStack talent, that has to be good news. Also excellent for CloudBand -- one fewer potential orchestration rival and access to Nokia's base of NFV customers."
In other words, Nuage is kind of a big deal in SDN.
Brief history Nuage launched its Virtualized Services Platform in 2013, automating the data center network and creating secure "slices" for each user group or tenant while reducing provisioning time from days to seconds. The VSP controls both virtualized and non-virtualized infrastructures, allowing network operators to set policies across the network. It's designed to help service providers and enterprises implement cloud services.(See Alcatel-Lucent Spins Up Its SDN and Nuage Unveils SDN Gateway.)
Since then, Nuage has scored a few nice customer wins.
Last year, Numergy selected Nuage's SDN platform and AlcaLu's 7750 service router for two data centers, with ten more to come in the next three years. Numergy is looking to the Nuage/AlcaLu technology to automate data center operations and make them more programmable and efficient. (See Numergy Taps Nuage SDN for Cloud.)
Health system UPMC deployed Nuage technology on its backup network, and launched a multi-year transition to Nuage for the rest of its data center network infrastructure. (See Nuage Scores SDN Deal.)
OVH tapped Nuage for data centers in Europe and Canada to enable dedicated cloud services for their customers. (See OVH Taps Nuage for SDN.)
Late last year, Nuage introduced a version of its platform designed to help carriers drive downmarket, automating connections to branch offices. Instead of sending out a technician to install and configure networking equipment and software, carriers can just drop-ship gear to a customer site and activate service remotely. (See Nuage Looks to Help Carriers Drive Downmarket With SDN.)
Big loser The "big loser here" will be Juniper Networks Inc. (NYSE: JNPR), which Nokia chose as its SDN partner, says Chappell.
Roseboro agrees. "Juniper is the one to worry about. It has been having trouble building a community around its OpenContrail solution, so having Nokia (almost certainly) exiting the partnership is not a welcome situation."
Juniper declined to comment.
Does Nokia know? Does Nokia know what it's getting?
In announcing the acquisition, Nokia focused on assets in 4G LTE, fixed broadband, and core networking capabilities such as IMS/VoLTE, and customer experience, device and subscriber management, as well as IP routing and services including professional services, network integration and customer care. (See Nokia to Claim #2 Carrier Vendor Ranking.)
The vendors cited strength in SDN and NFV, with Nuage and CloudBand, as assets for the future, along with developments related to IoT and plans to create a 5G R&D center of excellence in France.
Cited as assets in the press release announcing the merger are AlcaLu's Bell Labs, Nokia's FutureWorks, as well as Nokia Technologies, along with the combined companies' 40,000 R&D employees and €4.7 billion ($4.9 billion) R&D spend in 2014. The researchers will develop future technologies including 5G, IP and SDN, cloud, analytics, and sensors and imaging. (See Nokia & Alcatel-Lucent to Combine.)
Nokia's press release doesn't mention Nuage at all, and only mentions SDN in passing.
What does Nokia have to say? "Right now it's too early for us to talk about how the business and technology strategies will be rolled into the new company, including how and where Nuage and the other Alcatel-Lucent businesses will be integrated," says a spokesman. "The CEOs today both said that transition teams are being set up immediately to take care of those issues, and the companies will provide an update on progress as soon as it is appropriate to do so."
Nuage's future will be something to watch in the combined companies going forward. I'm sure Sunil Khandekar, Nuage CEO and founder, as well as the whole team there and its customers are doing just that, and biting their nails too.