Nokia Aims for Big IMPACT in Enterprise IoT

The Finnish vendor's evolving IoT platform is absolutely critical to its latest growth strategy.

Iain Morris, International Editor

January 31, 2017

6 Min Read
Nokia Aims for Big IMPACT in Enterprise IoT

It might be called the Internet of Things (IoT), but it sometimes looks more like a growing collection of disparate networks that have very little to do with one another.

That, at least, is the assessment of Finland's Nokia Corp. (NYSE: NOK), which reckons this lack of real interconnectedness is one of the chief reasons that IoT is still not living up to its promise. "What we've been doing is building a bunch of machine-to-machine use cases without networking, without creating the IoT," says Jason Collins, Nokia's vice president of IoT marketing. "That is really the problem that Nokia is trying to address."

It is doing so through a platform called IMPACT (which handily stands for Intelligent Management Platform for All Connected Things). When it was introduced last summer, IMPACT seemed like a nifty way of providing management support for a multitude of devices working on various network technologies. But since late 2016 it has taken on a whole new significance, becoming integral to the future role that Nokia wants to play.

Troubled by a slowdown in its traditional telco markets, the Finnish vendor in November announced a pivot toward the enterprise sector -- a market in which it has previously been weak. While not about to neglect its telco partners, Nokia thinks that capturing new enterprise customers will drive its future growth. In tandem, it also wants to build its rather small software business into a "significant" standalone entity, with the margin profile of large software companies. (See Nokia to Create Standalone Software Biz, Target New Verticals and Nokia's New Software Unit to 'Redesign' Company.)

Those related goals arguably make IMPACT -- with its vertical-market appeal and software basis -- one of Nokia's most critical bets. And the stakes got even higher this week after Nokia announced some important developments to the IoT platform. Satisfied with the "horizontal" capabilities of the technology it has designed, the vendor is introducing a number of so-called "starter packs" for specific vertical markets. It has also developed connectivity-layer support for NB-IoT and LoRa, two of the low-power, wide-area (or LPWA) network technologies now making waves in the IoT market.

Want to know more about the Internet of Things? Check out our dedicated IoT content channel here on Light Reading.

The starter packs essentially comprise applications tailored to the needs of specific vertical-market customers. Using machine-learning technology, a new video-analytics package could, for example, help to address the challenge of monitoring a multitude of city cameras with a limited number of staff, highlighting an operator's attention to specific anomalies, such as a sudden rush of people through a train station. Nokia is also introducing smart-parking and smart-lighting applications, as well as vehicle software to improve maintenance and fuel efficiency.

If none of this sounds particularly new, Nokia thinks it has some big advantages over other platform players. For one thing, it already reckons it is the largest device-management vendor in the world, claiming to offer some degree of support for as many as 1.5 billion devices globally. That kind of expertise on its own should spur interest in IMPACT.

Next page: Verticals meet verticals

Verticals meet verticals
Perhaps more important, however, is how this ties in with Nokia's vision of the IoT. The real value in that market, according to the vendor, lies not in discrete applications serving a specific purpose but in linking those applications to others. The smart lighting software, for instance, could be used in conjunction with the smart parking application to direct traffic to a particular place. And ensuring technologies in one vertical sector can interact with those in another might give rise to even bigger opportunities.

"There is possibly a new class of business that will be opened up for data brokering," says Collins. "You can imagine data marketplaces being built around this kind of thing where a city exposes its parking and lighting data to other vendors in whole or in part."

The real challenge for Nokia is arguably not a technical one but on the cultural and business side. While it will not cite details of specific IMPACT customers, the vendor has already made some progress with telcos catering to the enterprise sector. But it is still early days when it comes to serving enterprises directly, Collins acknowledges. "Enterprise business has been a bit slower to develop but we will get there -- it is more about how we are structured to go after it," he says.

Indeed, in addressing that opportunity, Nokia will essentially have to become more of a service provider, further shaking off its historical role as an equipment maker. It has previously indicated it is making investments in new sales channels that are aligned with these vertical markets. But it may also find itself going head-to-head against some of its long-standing telco customers for enterprise business. Persuading carriers to buy its products while competing against them may not always be easy. (See Nokia: A Global Network Operator for the Enterprise?)

The other doubt is over the market's readiness for more sophisticated IoT offerings. Collins cites advanced carmaker Tesla as an example of software nous within a sector typically regarded as a hardware play, but he concedes that other organizations need educating more about IoT benefits. Last February, Nokia set up an IoT community aimed partly at fostering such understanding, and membership has grown from just 30 companies to more than 100 over the past year. "It is a pretty unique ecosystem because it is about experimenting with new business models instead of just technology, and how we engage with customers in a more collaborative way," says Collins.

Measuring the success of IMPACT financially will mean keeping a close eye on the Applications & Analytics division that has responsibility for the platform. In last year's July-to-September quarter, that generated just €372 million ($400 million) in sales -- roughly 6% of the company total and, somewhat disappointingly, about 12% less than in the year-earlier period. Nokia quietly blamed that setback on a boom in sales of software licenses in 2015. But its new enterprise and software focus will put the spotlight firmly on Applications & Analytics in the quarters ahead.

— Iain Morris, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, News Editor, Light Reading

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About the Author(s)

Iain Morris

International Editor, Light Reading

Iain Morris joined Light Reading as News Editor at the start of 2015 -- and we mean, right at the start. His friends and family were still singing Auld Lang Syne as Iain started sourcing New Year's Eve UK mobile network congestion statistics. Prior to boosting Light Reading's UK-based editorial team numbers (he is based in London, south of the river), Iain was a successful freelance writer and editor who had been covering the telecoms sector for the past 15 years. His work has appeared in publications including The Economist (classy!) and The Observer, besides a variety of trade and business journals. He was previously the lead telecoms analyst for the Economist Intelligence Unit, and before that worked as a features editor at Telecommunications magazine. Iain started out in telecoms as an editor at consulting and market-research company Analysys (now Analysys Mason).

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