NSN Targets Greater Market Share
Nokia Networks is to focus on retrieving lost market share as part of its upcoming revamp, a move that will include more aggressive pricing, the company revealed Monday.
NSN spent its first 18 months (having been formed in April 2007) focusing on cash conservation and profitability, exiting various markets in which it thought it couldn't be a market leader or turn a profit. (See NSN Backs Away From WiMax, Nokia Siemens CEO Slams 'Silly Pricing', and Nokia Siemens Gets Ruthless on R&D Focus.)
But that strategy, along with the economic downturn and reduction in operator capex, lead to a string of disappointing quarterly results, and market share loss in key areas such as mobile infrastructure and optical (especially to its Chinese rivals). (See Huawei Ousts NSN in Belgium, Huawei, ZTE Buck Optical Trend, No Sign of Recovery for Nokia Siemens, and Slump Slams Nokia Siemens .)
Now, though, the company is looking for a turnaround in its fortunes under new CEO Rajeev Suri, who has instigated a corporate program involving a new company structure based around three, instead of five, business units, and a renewed focus on reviving its growth prospects. (See Nokia Siemens Replaces Its CEO and Nokia Siemens Revamps, Cuts Jobs.)
Suri had been hoping for some growth through acquisitions in North America, where NSN bid unsuccessfully for some Nortel optical and wireless assets. (See Nortel's MEN: Winners & Losers, Ciena Beats NSN to Buy Nortel's MEN, and Ericsson Delivers Knockout Blow to NSN.)
But while NSN is now very focused on growth, that drive is not the company's only concern, as some reports have suggested.
Reuters reported Sunday that Finnish newspaper Helsingin Sanomat had published an interview with Suri, during which he stated that the vendor plans to focus "solely" on "market share."
NSN says that's a mistranslation, and that the company will not be focused on gaining market share at the expense of everything else.
The company, though, says Suri did tell Helsingin Sanomat that "it is time to move on from that strategy [the previous focus on profitability and cash] and really to drive for growth. Not growth for growth's sake, but to drive for market share. And that drive comes from deal momentum."
NSN says the company, under the new strategy, will be focused on being more customer-centric, building its market share, and positioning itself as a "cost leader."
The drive to gain market share means NSN will prioritize growth over profitability, a strategy that will result in NSN being more aggressive with its pricing strategies and marketing, a spokesman confirms.
NSN has walked away from potential opportunities in the past where rivals, particularly (but not exclusively) Huawei Technologies Co. Ltd. , have driven prices so low that profits seem unattainable. Now the vendor might be prepared to tough out some of the less favorable market conditions to win key accounts, especially in the increasingly important emerging market for LTE infrastructure. NSN is already lagging behind Ericsson AB (Nasdaq: ERIC) and Huawei in this market, although it has been named alongside its rivals in key trials and pilots. (See APAC Operators Commit to LTE, NSN, LG Test LTE,Telefónica Kicks Off LTE Trials, and Huawei Bags Another Euro LTE Gig.)
The spokesman adds that NSN's plan includes a concerted effort to highlight NSN's strong position in professional services (which now generates about half the vendor's revenues), and its developments in mobile broadband. (See Services Now 45% of NSN Revenues.)
Suri is expected to hammer home these points, and perhaps elaborate further, during this week's Nokia Corp. (NYSE: NOK) Capital Markets Day, when he will address investors and analysts on Wednesday at 3 p.m. Central European Time (2 p.m. London, 9 a.m. Eastern).
— Ray Le Maistre, International News Editor, Light Reading