NSN looks to a challenging future

Nokia Siemens Networks held a press day last week as a slightly late celebration of its creation just over a year ago. CEO Simon Beresford-Wylie didn't make light of the challenges facing vendors in the current climate. He hammered home the point that businesses need to make sustainable profits and underlined the difficulty in doing so when:

In mature markets, margins are typically at 30 to 35%

In high tech growth areas opex runs at 27 to 33%

Leaving earnings before interest and tax (EBIT) at 0 to 5%

Last year NSN pulled out of a GSM infrastructure deal with India's Bharat Sanchar Nigam Limited (BNSL) on the grounds that it would not be possible to make a profit from it.

The trouble is, of course, that the likes of Chinese companies ZTE and Huawei appear not to care about such trivia as making money, as they have deep, state-backed pockets and are more interested in building market share in the short to medium term at least. Ericsson's last quarter results was much better than expected, but otherwise most infrastructure vendors are having a very tough time.

How will NSN triumph‾ According to Beresford-Wylie, "By taking a good hard look at our portfolio, from now on it will reflect our R&D focus," but he declined to give further details about forthcoming products.

He acknowledged that cost control was a hugely important factor, saying, "It's very important you don't have a victim mindset about the changing competitive landscape. You have to manage the transition and cut operational expenses without endangering the portfolio. We "˜re now applying a second wave of attention to processes."

Marc Rouanne, head of radio access, fought shy of detail too. Although Sprint's WiMAX initiative was highlighted several times ("plus 18 other references") during his presentation, he wouldn't comment, when asked specifically by telecomseurope.net, on what was going on with the stalled deployment in the US.

He also looked confused when asked about what his company had chosen to be the headline of the day - NSN has replaced 18,000 base stations in 22 operators' networks across 22 countries. He didn't know if that included any NSN base stations (according to the PR company, it doesn't) and couldn't say how many NSN base stations have been replaced by competitors in the same period of time, beyond, "Not very many".

Anne Larilahti, head of environmentally sustainable business, stressed that energy used by mobile operators is their third most significant opex item (according to ABI Research) and that as the price of oil soars, they are keen to gain more predictability about expenditure.

Despite much fanfare about NSN's commitment to green initiatives, however, it turns out that the company is simply offering the same Flexi base stations, which it claims are the smallest and most energy efficient on the market, although no proof was produced.

Energy saving measures encouraged by the company include turning of the air conditioning. According to Larilahti, until recently (very recently indeed by the sound of it) most base station sites were air conditioned to keep them at or below 25ºC, whereas they only need to be kept below 40ºC.

 

Bingo, operators reduce energy consumption by 30%. NSN is also looking at efficient ways of shutting down many components of a mobile network between midnight and 6am, when they carry very little traffic.

This is all good thinking if not rocket science, and while NSN is proud of being admitted to the WWF Climate Savers programme, it is not a member of the Home Gateway Initiative and indeed Larilahti didn't seem to know of its existence, nor the energy saving initiative it launched the previous day.

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