Nokia is to undergo a major internal restructure in its bid to secure as much of the telco and enterprise 5G market as possible, the major casualty of which is the ‘end-to-end’ ethos that has underpinned its strategy to date.
The Finnish networking giant is locked in a fiercely contested battle with other Network Equipment Providers (NEPs) such a Ericsson and Huawei and had pitched itself as the only vendor to have a portfolio that extends across the radio, transport and core layers of the network.
However, the company has struggled with the high cost of developing 5G technologies, while the end-to-end messaging has perhaps struggled to resonate with operators and their multi-vendor approaches to next-generation networks.
These struggles led to job cuts and the appointment of a new CEO in Pekka Lundmark. However, the company has enjoyed greater success in recent months, becoming one of the main beneficiaries of measures taken by some governments against Huawei.
Going forward, Nokia will have four main business groups – Mobile Networks, IP and Fixed Networks, Cloud and Network Services, and Nokia Technologies – each of which will have their own priorities and underpinned by a horizontal customer experience organisation.
Nokia will seek technology leadership in all four categories rather than push the end-to-end narrative and all will have to demonstrate clear shareholder return as a key metric. Lundmark says the funding is there for any of its divisions if it can achieve those ambitions.
“Our industry is undergoing profound changes. Industrial automation and digitalization are increasing customer demand for high-performance networks, with a trend towards open interfaces, virtualization, and cloud native software. This will revolutionize how we design, deploy, manage and sell our products and solutions,” he said.
“As we work to renew our strategy, we will ensure we are well positioned to leverage these trends, improve our performance and position the company for long-term value creation.”
“Our goal is to better align with the needs of our customers, and through that increase accountability, reduce complexity and improve cost-efficiency. Going forward, we will have a more rigorous approach to capital allocation and will invest to win in those segments where we choose to compete.”
The new structure will come into effect from January 1 and is the first of three phases that comprise Nokia’s transformation programme. More details will be revealed in the coming months.