Appledore Research Group attended NOKIA’s annual Global Analyst Forum, held at the firm’s experience center in Espoo Finland. The event covered nearly two full days, and spanned the (extensive) scope of Nokia’s portfolio, from software to consumer products (via licensing and partners).
Appledore Research Group is primarily focused on the software, processes and business transformations essential to wring the most business benefit from virtualization (or a likely hybrid future); so I’ll concentrate on the topics closest to that theme.
My first observation is that Nokia has, to a significant degree, successfully integrated its pre-existing and Alcatel-Lucent products and resources. Today, not that long after the merger, there is little evidence of the two pre-existing firms, and all signs – both overt and subtle – indicate that a truly cooperative combination has, and is occurring. It is worth noting that many of the Alcatel-Lucent leaders, ways of working and strategic directions remain at the forefront – embraced as strengths rather than being rejected as ‘Foreign bodies”. This bodes well for the combined organization, which clearly values and draws on its rich diversity of strengths.
Marcus Weldon, President of bell Labs, set the tone with a set of fundamental technology and economic trends, which he believes, and we agree, will set the rules for the industry and define possible opportunities. Beside that, listening to Marcus is always mind expanding 🙂
Above: Weldon: if we are not careful, flexibility drives costs up; automation brings them down.
Building on this theme, Bhaskar Gorti, president of “Applications and Analytics” (Nokia’s name for its consolidated OSS/BSS/Analytics/MANO portfolio) gave what I felt was a compelling presentation on his a) strategy and b) execution for that business group. Bhaskar’s essential strategy is to build a true software business, independent of hardware, at scale. To accomplish this he is investing in core assets and transformations that allow software to be built and designed efficiently, such that he can be cost effective, profitable as well as delivering agile products and solutions.
I apologize if I sound like a Dilbert cartoon, with that string of buzz-words. I want to emphasize that I was impressed. A&A is building a library of re-usable software components that will allow them to develop software products faster, with higher quality. The unspoken secret if they are successful is that their maintenance and regression testing costs could plummet. This is not rocket science in the software biz, but it has rarely been implemented successfully in large, staid telecom NEPs. According to Bhaskar’s data, they are about 30% along in the transformation of products to the new architecture; and will achieve 100% by the end of 2018. That folks, is astounding. I’ll probably ask for the fine print somewhere toward the end of next year, but its impressive nonetheless.
Component based software implements efficient “manufacturing” methods, applied to software. But anyone in the telecom OSS business (forgive my “old” term, its used to make the point) knows that software itself is only a small percentage of the total cost and complexity of delivery. The balance falls in a) selling the right thing (important! Not always done!) and in b) efficient delivery, integration, data migration, configuration and training.
Historically, there is vastly more money spent on these closely tied services around OSS than on the core software, and in new technology areas the trend is even more so. Moreover, this is where solutions can be “made or broken” – with an extensible architecture or one too focused on the initial service at hand and therefore insufficiently flexible. Nokia, according to Bhaskar and his lieutenants, is investing in automation that makes their delivery more efficient and repeatable, and also in the skills to help their SP clients implement and achieve automation. We look forward to evidence and success stories from the field, but this is the right approach.
There was a similar story from Basil Alwan and his extended team. There is a broad and aggressive story from his “IP and Optical” BU, but I’d like to focus on a few related topics (see also our research note on this topic, under the “research” tab): the new FP4 service router family, Network Services Platform (their SDN+ engine), and the Deepfield analytics software. Core to ARG’s focus, Deepfield is becoming a core asset for all of these technical platforms (both hardware and software), delivering the deep network+service intelligence needed to make better, automated decisions. NSP, and SR-series routers then become the decision-making and execution engines to effect grooming, cleansing, path optimization and healing. The topics are far too deep and broad to be covered here, but IP/Optical is working toward a set of assets and process flows that allow networks to be much more flexible, agile (quick), efficient (use of capacity) and resilient (via smart, potentially mass, healing and grooming). These are the things of cost efficiency combined in a happy mix with potentially better resiliency and customer satisfaction.
Our opinion here at Appledore is that this matters greatly to the core of our industry – Service Providers. Efficiency with quality is the lifeblood of competitiveness, both in terms of margins, but also in retaining and winning back business from enterprises, OTTs and Webscale competitors. I hope what we were shown at a high level proves its mettle in deployment, and that SPs embrace the technology, process and mindset changes necessary to reap the full rewards of cloud technology and operations.