Nokia CEO Rajeev Suri admitted the Nokia brand had become “tarnished” but argued the company has certain key strengths that place it in an exclusive club of just three leading network vendors.
Speaking this morning at the company’s Capital Markets Day, Suri (pictured) said: “Six primary competitors focus on wireless but only three have credible claim to global scale.”.
Aside from Nokia Networks, the other two world players are Ericsson and Huawei, he said.
Suri was speaking just six months after the sale of Nokia’s devices businesses to Microsoft. The handsets unit has fallen a long way from its heights at the turn of the century.
So far has the brand devalued that Microsoft recently announced its first non-Nokia branded smartphone.
Suri’s mission was to spell out his vision for the remainder of the company to investors.
Interestingly, it was also Nokia’s first Capital Markets Day since 2009. “Since then, almost everything has changed,” conceded Suri.
The level of remorseless competition in networks was illustrated by one of his slides that showed 34 companies scrapping as recently as 2000.
Looking at today’s market, spend remains “flatish”, he said, despite the transition to 4G. Gains from 4G are being cancelled by a drop-off in orders for older 2G technology.
However this trend does not make growth impossible. The trick is targeting “pockets of growth” while keeping a tight control of costs, he said. Nokia’s strong areas are 4G, including LTE-A, and small cells. VoWi-Fi was also cited as an opportunity.
Speaking about 5G — a subject which has generated much speculation recently — Suri took a gradualist view: “Let there be no doubt: Change is coming but change never comes as fast as we think it does. 4G will co-exist with 5G for many, many years.”
He forecast the first pre-standard 5G trial would take place in Korea in 2018.
“It’s no secret that since 2011 we have retrenched considerably,” said Suri. But since the start of 2014, the company has changed back to growth within its existing portfolio.
Opportunities exist in radio networks, the cloud and virtualisation, he said.
And the so-called ‘internet of things’ is high on Suri’s agenda. “The rapidly evolving world of technology provides the context for Nokia’s vision and strategy: now it’s about connecting things as well as people, and we expect to see more than 50 billion connected things – devices, modules and sensors – by 2025,” he said. “We believe we have a powerful role to play in this world, a role of expanding the human possibilities of technology.”
Suri stated that Nokia targets to grow Nokia Networks’ net sales slightly faster than the
market over the long-term.
Turning to the HERE mapping business, Suri sought for an upbeat message for a business that is showing revenue growth but is only breaking even.
He explained the three opportunities on offer: car navigation, asset management for the enterprise sector and selling mapping information to big internet players such as Amazon and Microsoft which would rather not be reliant on HERE’s only serious rival — Google. “This approach will limit risk of taking Google on directly”.
The company’s third arm —Nokia Technologies — has four activities: patent, technology and brand licensing, as well as the incubation of products and services.
Suri talked up the hidden growth within Nokia Technologies. “We have not tapped its full potential. Many patents we have not sought to monetise.”
However licensing agreements typically take 18 months to come to fruition, and litigation can take even longer. He urged caution on timing.
All three divisions are expected to see growth in net sales on a year-on-year basis for the full year 2015.