Nokia’s Uitto sees strategic play in O-RAN embrace

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During its Capital Markets Day, Nokia positioned 2021 as a "reset" year. (Nokia)

As Nokia leadership on Thursday outlined plans for a turnaround, head of Mobile Networks business Tommi Uitto pointed to the embrace of open RAN as key strategic avenue for the Finnish vendor.

Speaking at Nokia’s Capital Markets Day, Uitto noted that out of the 27 large operators in the O-RAN Alliance, 23 are Nokia RAN customers.

“Therefore, this is a highly strategic topic for us,” said Uitto, president of Nokia’s Mobile Networks business. Nokia was an early endorser and contributor to the O-RAN Alliance, and he indicated that unlike some of its competitors, the vendor sees more opportunity in having O-RAN and vRAN compatible SoCs and platforms than in shying away from the technology.

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“We believe that by being leaders in O-RAN and vRAN, endorsing and defining them when some of our competition is not, we can win more share and margin than we would lose, simply by opening base station interfaces,” Uitto said.

Nokia also is ready to face competition from newer entrants, he added, and “can take share from those who refuse or hesitate to comply with O-RAN and vRAN.”

Ericsson has been slower to get on board with the push toward open RAN but plans to offer a cloud RAN product, while Huawei hasn’t jumped on the O-RAN/vRAN trend. Samsung has pushed forward, using vRAN as a competitive advantage in some markets.

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Still, Uitto suggested that the technology is not fully mature and there are technical and operational challenges to figure out, but he expressed confidence in engineering ability to find solutions.

“It’s better to be part of solving those challenges than to be on the fence,” he said.

Alongside O-RAN, Nokia is pursuing vRAN – including experimenting with webscalers to run the vendor’s radio software in public service clouds, he noted. Just this week Nokia announced partnerships with cloud players AWS, Microsoft and Google. It also ties back into the mobile network strategy for enterprise, according to Uitto – a key focus for Nokia currently and going forward.

Software is another important focus, and Uitto said value will shift from baseband hardware to software. In vRAN, he said that Nokia “might not even sell any baseband hardware, and our mission becomes pure software.”

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As for timeline, this year Nokia plans to launch vRAN2.0 and O-RAN solutions, capitalize on early O-RAN and vRAN in 2022-2023, with an expectation of profiting from leadership in the technology longer-term.

During the Capital Markets Day presentation, Uitto acknowledged that Nokia had a difficult start in 5G and was not as competitive as it wanted to be. Last year the mobile networks business suffered a loss of share in North America when it failed to convert its 4G footprint with Verizon to 5G. It also saw fewer 4G volumes in China, where it didn’t secure major 5G RAN contracts.  

Excluding mainland China, the vendor’s success rate for converting 4G to 5G has been around 90%, according to Uitto and going forward is focused on investing more in 5G R&D. Since 2019 Nokia secured 22 new CSP RAN customers, and increased RAN share with 20 customers.

In the U.S. Nokia has signed new 5-year network deals with T-Mobile and AT&T, the latter announced today involving the carrier’s planned C-band deployments.

RELATED: Nokia cites mobile progress but braces for challenges in 2021

Nokia positioned 2021 as "reset year," and in mobile networks expects operating margins to roughly break even at -1% to 2%. By 2023 it expects to return margins to between 5-8%, and longer-term increase to above 10%.

Part of that plan involves continuing to reduce product costs and to reset fixed base costs. Earlier this week, Nokia disclosed expectations to cut between 5,000 and 10,000 jobs overall over two years to lower costs while upping R&D investment.

Nokia’s mobile networks turnaround strategy calls for continued conversion of 4G customers to 5G; winning new CSP customers; leading in enterprise and private wireless segment; and technology improvements on 5G product platform.

It also involves helping shape the market with cloud capabilities and open RAN.

“We will make O-RAN a commercial reality to gain share and margin,” Uitto said.