With $500 million revenue, is optical networking biz complimentary to NSN’s mobile broadband plans?

Telecom Lead India: Nokia Siemens Networks has sold its optical networking business. But it surprises analysts.

Dana Cooperson, practice leader network infrastructure telecoms, Ovum, said: “When Nokia Siemens Networks announced its updated strategy about a year ago, it said it was focusing its business on mobile broadband but needed to keep its optical group as a complement.”

Nokia Siemens Networks has been ranked 10th globally in the $14.9 billion market with just under $500 million annual sales is in the network core, where there is little connection with MBB.

Furthermore, NSN’s optical business has been slipping for years with no clear plan to improve; it has not done the kind of fundamental R&D that its main competitors (e.g., Alcatel-Lucent, Ciena, Cisco Systems, Huawei Technologies) are doing.

The details of the transaction were not released, so it is difficult to gauge Marlin’s commitment to turning the optical business around. Competition in the market is keen; margins are under constant pressure.

Competitors will take advantage of this ownership change and related confusion to gain any advantage in NSN’s accounts. Marlin’s goal may be to sell the optical business to another vendor, for example Juniper Networks.

Ovum’s 2020 research points to market evolution to a structure comprising two kinds of vendors: Full-service vendors that provide a wide range of products and services to customer partners; and specialist vendors. Three years ago Nokia Siemens Networks looked like one of the 5-7 possible full-service contenders, but it since became obvious that specialism was their strongest course; as few as 3 vendors will make the leap to full-service.

Dana Cooperson, practice leader network infrastructure telecoms, Ovum
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