Summary Bullets:
- Nokia continues to expand its partner and channel initiatives to better pursue enterprise opportunities, including a strategic alliance with Infosys announced in November.
- The company sees major opportunities in the enterprise but may ultimately have to decide if pursuing them is worth alienating traditional CSP customers.
Over the past year, Nokia has been stepping up its focus on moving outside its traditional target market of communication service providers (CSPs) in a bid to diversify its revenue stream and tap into growth opportunities to offset flat or declining CSP spending. Based on the company’s ‘Future X for Industries’ vision, it believes there will be a EUR 22 billion market by 2023 for digital automation in the enterprise segment.
From a solution perspective, Nokia brings a number of important components, including high-performance networking; a stepped-up focus on the enterprise edge and industrial automation; and a growing number of business applications aimed at targeted enterprise verticals and ‘extreme’ industrial automation.
What it lacks, however, is long-established customer relationships, at least compared to its traditional CSP customer base. That’s where partners come in.
To that end, Nokia announced a strategic alliance with Infosys on November 7 to drive digital transformation engagements in vertical markets including transportation, energy and manufacturing, media and entertainment, and education. Initial focus areas will include:
- Digital asset management solutions that can streamline maintenance procedures and reduce downtime and unnecessary repairs;
- Solutions that digitalize business and operational processes for communications, media, and entertainment companies; and
- Digital smart campus/smart classroom solutions that take advantage of wireless broadband, cloud, and IoT solutions.
The alliance is symbiotic on a number of levels. Nokia has expanded its focus on artificial intelligence and extreme automation; Infosys has established strong AI credentials that should boost Nokia’s AI value proposition. From an account perspective, Infosys can provide Nokia with access to significant client relationships in non-CSP markets. In contrast to Nokia, which only generates around 5% of its current business from non-CSP customers, Infosys draws significant revenue streams from customers in manufacturing, hi-tech, and energy segments.
In addition to the Infosys partnership, Nokia has also expanded its channel strategy to better reach emerging market segments through channel partners, distributors, and value-added resellers. And it is likely not done pursuing major alliances like the Infosys deal. Having a robust, multi-partner approach will be crucial to reaching anything close to that EUR 22 billion market opportunity it envisions for digital automation in the enterprise segment.
There is obviously one major cautionary note to Nokia’s increasingly high-profile expansion into the enterprise. The company still relies on CSPs for the vast majority of its revenue; that’s not likely to change overnight. And many of its operator customers are also targeting enterprise opportunities; a case in point is Nokia’s partnership with China Unicom to jointly support digital manufacturing capabilities for BMW Brilliance in China. As Nokia moves more aggressively into the enterprise, it will need to tread carefully. At some point down the road, Nokia and its operator customers may conclude they have ‘irreconcilable differences’ pursuing enterprise opportunities.