Nokia announced on April 15, 2015 that it had agreed to an all-stock deal to acquire Alcatel-Lucent valuing ALU at $16.6 billion. The combined company is expected to become the world’s second-largest telecom equipment manufacturer behind Ericsson, with global revenues totaling $27 billion and operations spread across Asia, Europe and North America.
Why now? The telecom industry is in the midst of a major transformation both in terms of business models and technology. Virtualization, cloud computing, mobility, and big data analytics are significant technology transformation drivers creating entirely new markets. This is facilitating rapid changes in how communication services are ordered, provisioned, and delivered. Virtualization offers the promise of 10x-100x improvements in cycle time and operational expenses during the Lead-to-Service process interval, and a similar benefit in support for customized and on-demand product packages. It’s about agility – creating a new offer and delivering the service in hours not months. Programmable networks abstract the network intelligence into the software layer and eliminate cumbersome business process that in the past would take 6 – 9 months to complete a service order.
Appledore Research Group forecast that NFV and SDN technology spending will reach $72 Billion in 2020. A massive substitution will take place over the next 5 years from purpose built hardware to programmable network elements running on commodity based generic hardware. Nokia and Alcatel Lucent will not only compete with traditional competitors such as Ericsson, Cisco, and Huawei but also new IT companies such as HP, IBM, Oracle, and EMC.
The market shift towards virtualization and software defined networking will impact broad areas of the management stack. In particular virtualization greatly impacts: service creation, Policy, analytics, charging/business model definition, self-service, and, of course the domains defined by ETSI MANO. In evaluating the assets of Alcatel Lucent and Nokia in this context we highlight the portfolio against the Appledore Research Group market taxonomy. The two figures below provide a high level overview of each companies MANO product portfolio. For more insight into how the portfolios should be combined, please read Grant’s analysis in the blog posted at: <URL>