Monday, March 5, 2012

NSN buoyant on its liquid net

I was with Rajeev Suri, CEO of NSN, together with about 150 of my esteemed colleagues from the press and analyst community on February 26 at Barcelona's world trade center drinking NSN's Kool Aid for 2012. As it turns out, the Liquid Net is not hard to swallow.

The first trend highlighted is about big data, big mobile data that is. NSN's prediction is that by 2020, consumers will use 1GB per day on mobile networks.
When confronted with these predictions, network operators have highlighted 5 challenges:
  1. Improve network performances (32%)
  2. Address decline in revenue (21%)
  3. Monetize the mobile internet (21%)
  4. Network evolution (20%)
  5. Win in new competitive environment (20%)
Don't worry if the total is more than 100%, either it is was a multiple choice questionnaire or NSN's view is that operators are very preoccupied.

Conveniently, these challenges are met with 5 strategies (hopes) that NSN can help with:

  1. Move to LTE
  2. Intelligent networks and capacity
  3. Tiered pricing
  4. Individual experience
  5. Operational efficiency
And this is what has been feeding the company in the last year, seeing sales double to 14B euros in 2011 and turning an actual operating profit of 225m euros. The CEO agrees that NSN is not back yet and more divestment and redundancies are planned (8,500 people out of 17,000 will leave) for the company to reach its long term target of 10% operating profit. NSN expects its LTE market share to double in 2012.

Liquid Net
Liquid networks is the moniker chosen by NSN to answer to the general anxiety surrounding data growth and revenue shrinkage. It promises 1000 times more capacity by 2020 (yes, 1000) and the very complex equation to explain the gain is as follow: 10x more cell sites (figures...), 10 times more spectrum and 10 times more efficiency.

The example chosen to illustrate Liquid net, was I think, telling. NSN has deployed its network at an operator in the UK where it famously replaced Ericsson last summer. It has been able since to detect devices and capabilities and adapt video resolutions with Netflix for instance that resulted in 50% less engorgement in some network conditions. That is hard to believe. Netflix being encrypted, I was scratching my head trying to understand how a lossless technique could reach these numbers.
The overall savings claimed for implementing liquid networks were 65% capacity increase, 30% coverage gain and 35% reduction in TCO.

Since video delivery in mobile networks is a bit of a fixation of mine, I decided to dig up more into these extraordinary claims. I have to confess my skepticism at the outset. I am familiar with NSN, having dealt with the company as a vendor for the last 15 years and am more familiar with its glacial pace of innovation in core networks.

I have to say, having gone through a private briefing, presentation and demonstration, I was surprised by the result. I am starting to change my perspective on NSN and so should you. To find out why and how, you will need to read the write up in my report.

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