Nokia's WLAN Wonderings
The Finnish vendor’s CEO, Jorma Ollila, yesterday told analysts gathered at its fourth-quarter results briefing that the company could be prepared to splash out on purchases later this year (see Nokia Hits Higher Targets).
“When we are looking at building our enterprise sector, we will be looking at smaller acquisitions,” he revealed. “There is nothing major on the table today or in the works… but I have not ruled out us doing something like that.”
Despite being one of the early movers in the wireless LAN space, Nokia has so far largely focused on public access applications rather than enterprise infrastructure. The firm was the first major vendor to commercially market a combined GPRS/802.11b (11-Mbit/s over 2.4GHz) card. But its Operator Wireless LAN hotspot kit offering, launched in 2002, has experienced mixed interest from carriers (see The Long Wait for WLAN/WAN, Nokia Demos WiFi Kit, and Nokia Does Irish WLAN).
Nokia itself admits that it needs to focus on the enterprise sector. “It is vital to encourage the mobile corporate sector to use broadband data and applications, as this is the same segment that will use 3G data services,” notes a company statement.
“It is surprising they haven’t aggressively gone into WiFi or articulated a real strategy,” notes Pyramid Research’s European analyst Nick McQuire.
Analysts believe the vendor could benefit from buying or partnering with one -- hell, maybe even two -- of the glut of startups crowding the corporate market. Such a move would instantly boost Nokia's presence in the fast-growing 802.11 enterprise sector.
Infonetics Research Inc.’s directing analyst for wireless LAN, Richard Webb, argues that the crowded nature of the 802.11 switch market means Nokia would “arguably have its pick.” Potential names on the shortlist include Trapeze Networks Inc., Vivato Inc., and Aruba Wireless Networks.
Indeed, Unstrung has already heard some suggestions of a tie-up between Nokia and Trapeze. Trapeze's new CEO, Jim Vogt, told us this week that he is actively looking for more partnership opportunities for the startup (see Trapeze's New Swinger). But Vogt got more coy when asked to name names. "There's nothing specific in that area yet," he said.
Infonetics's Webb argues that Nokia would have to buy or license enterprise WLAN technology -- rather than build it -- in order to get in the game fast. “This expertise isn’t something a traditional vendor would be able to click their fingers at and come up with a product overnight,” he notes. “Nokia seems to have left it a bit late, so, in short, it makes sense for them and would enable them to target the enterprise market.”
“A move wouldn’t surprise me,” agrees Pyramid’s McQuire. “The more they can complement their existing activities in enterprise mobility, the better. It is what they would be looking to do.”
Of course, actually raising the funds for acquisitions is unlikely to be a problem, as the Finnish giant isn’t short of a few Euros. “Nokia sits on a large amount of cash and could afford a reasonably priced acquisition,” notes Ovum Ltd.’s research director Richard Dineen.
Of course, what happens after that is another matter. Nokia doesn't have a great track record of successfully integrating people and products from startups it buys. Consider the evidence: In the last few years, Nokia has bought edge router hopeful Amber Networks (defunct); Ipsilon Networks (missing in action); InTalk Corp. (cleverly snatching up obsolete 802.11 technology just as the world started to move towards the b standard); and Rooftop Communications (as a WLAN alternative to DSL and cable -- where are they now?). (See Nokia Kills Amber Router, Nokia Claims Intelligence , and Mesh Gathers Momentum.)
— Justin Springham, Senior Editor, Europe, Unstrung