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CEO Rajeev Suri defends 2012 restructuring, talks up scale benefits of Alcatel-Lucent deal and reiterates interest in handsets.
Nokia CEO Rajeev Suri on Sunday talked up the scale benefits wrought by his €15.6 billion acquisition of Alcatel-Lucent, as the Finnish vendor unveiled what it claims is a ‘5G-ready’ base station.
Called AirScale, it is the successor to Nokia’s Flexi range of base stations. It supports 2G, 3G, TDD-LTE, FDD-LTE, LTE Advanced, LTE Advanced Pro, as well as carrier-grade WiFi. Multiple baseband units (BBUs) can be chained to increase capacity, it works with Nokia’s cloud RAN and cloud base station server, and it incorporates mobile edge computing technology to support low latency services.
With AirScale, Nokia will "maintain [its] leadership in the 5G era and beyond," Suri said.
Suri also revealed that Nokia has agreed to acquire Canadian security software maker Nakina. The deal will help Nokia’s operator customers mitigate security threats and comply with legal and regulatory requirements relating to data security, he said. The transaction is expected to close during the first quarter; financial details were not disclosed.
Furthermore, Suri announced that Nokia’s venture capital arm, Nokia Growth Partners, has created a US$350 million fund focused on finding and financing budding entrepreneurs in the Internet of Things (IoT) space.
Suri made the announcements at a press conference during which he introduced the world to what he called "the new, new Nokia," referring to the major restructuring undertaken in 2012 that created the new Nokia, and last year’s acquisition of Alcatel-Lucent.
Before the acquisition, Nokia’s addressable market was worth $80 billion, Suri said. The addition of Alcatel-Lucent expands that addressable market to $141 billion, he said.
Nokia’s 2012 restructuring led to the divestment of its fixed access, transport, and BSS assets, among others. Last year’s Alcatel-Lucent deal gives Nokia a big presence in the fixed access, transport, and BSS markets.
During the press conference, Suri defended his decision to sell off those chunks of the company, because "they were weak, unprofitable, sub-scale businesses."
He explained that Nokia’s old fixed access business had a 2.5% global market share, whereas the addition of Alcatel-Lucent’s fixed access assets propels it to top spot.
"If you have that kind of scale then you can invest in those kind of technologies," Suri said.
On the other hand, the businesses that Nokia sold had "no chance to get to long-term profitability, [and] they had no chance to get to scale," he said. "If you’re sub-scale, you might as well exit."
Another business that Suri is still interested in returning to is mobile handsets.
Last year, Nokia revealed it was looking for an OEM partner to which it could license its brand and collaborate with on devices.
"We think it’s a good business model," Suri said, adding that there is still value in the Nokia handset brand.
He envisions Nokia playing a key role in designing and developing handsets, but relying on a third-party to manufacture and distribute devices.
"All that is in play…we’re waiting for the right partner," Suri said. "It could happen in 2016, it could happen later."
