- Nokia is focusing on mission-critical private networking going forward
- The difference between enterprise campus edge private network contracts and mission-critical contracts can be a multi-million dollar difference, SNS's Asad Khan noted.
- AvidThink's Chua thinks this will lead to "more measured" market share growth for Nokia
Nokia’s CEO indicated a major change in the vendor’s approach to private networking during the vendor’s Capital Markets Day roundtable yesterday. “We’re moving the enterprise and campus edge business into portfolio companies,” new CEO Justin Hotard said.
This will probably result in part of Nokia’s private network business being sold off in around a year after a review.
“It’s a good business, but candidly, it’s a place where most of the business is oriented around delivering systems integrations and solutions versus our core technology,” Hotard said. “Now, we will continue to serve mission-critical enterprise, which are things like utilities and rail that build discreet private networks, but that’s separate.”
This move by Nokia, which is currently the Western vendor with the largest market share, represents a backing away from the wider private network market. “The broader enterprise business, we think, is a great opportunity for our operators,” Hotard opined.
Private network unit sell-off coming?
“Nokia has basically moved its Enterprise Campus Edge unit, along with its FWA CPE, microwave radio and site implementation business units, to portfolio businesses,” SNS Telecom & IT’s Asad Khan said. “There will be a review of around 12 months to assess the best path for these businesses after which the most likely outcome is that Enterprise Campus Edge solutions will be divested,” he stated.
"Nokia [currently]...essentially has two separate types of private LTE/5G offerings,” said Khan. “The first category is business and operations-critical campus networks delivered by Nokia’s Enterprise Campus Edge business unit.”
“These networks use compact EPC/5GC implementations and small cells for localized wireless coverage, including multi-site projects, at facilities such as factories and ports. Most individual deals don’t tend to go beyond single-million dollar figures. In addition to Ericsson’s Enterprise Wireless Solutions business, there are dozens of smaller private 5G specialists that compete with Nokia within this segment,” the analyst stated.
Of course, the larger, mission-critical projects where public safety organizations and utilities build large private networks represent the big bucks and prestige for the Finnish vendor. Notably projects like utilities are still very much on the private networking menu.
A more measured market share ahead
Khan also noted Nokia’s new focus on wide area private networks for mission-critical sectors like public safety, utilities and railways. “These networks are delivered by Nokia’s Mobile Infrastructure and use the same infrastructure platforms as larger public mobile operator networks with macro-grade RAN products and core networks capable of supporting millions of UE endpoints,” he said to Fierce in an email.
“Deals tend to be in multi-million dollar figures, with some of the nationwide public safety broadband networks going beyond $100 million (for example, those that are operational in countries such as Qatar, Oman and South Korea),” he explained. “There are strong expectations for large-scale FRMCS contracts from 2027-2028. In most national markets, Ericsson is Nokia’s primary competitor in this segment. There are exceptions such as South Korea, where Samsung is the primary RAN and core equipment supplier for public safety and railway networks.”
This shift reinforces the importance and pertinence of private wireless for specific use cases, AvidThink principal Roy Chua told us. “A horizontal go-to-market strategy that works for Wi-Fi doesn't work for private wireless. That narrower focus likely portends a more measured growth rate for Nokia's private wireless business,” he stated.