Nokia's Revival: Is the Finnish Vendor Already Benefiting from Huawei's Absence?

Nokia is one of the pioneers of the mobile industry but it has been struggling in recent years. The company’s mobile access division still dwarfs its other business units and it has yet to fully reap the benefits of the 2016 acquisition of Alcatel-Lucent. Clearly, the process of transforming Nokia from a mobile-only infrastructure provider into a broader based end-to-end communications infrastructure player has taken longer than expected.

Leveraging Long-term Trends

Nevertheless, Nokia is well-positioned to benefit from the 5G investment spending cycle of communication service providers (CSPs) and enterprises. It will also be buoyed by other macro trends such as COVID-19 related bandwidth demands (both in mobile and fixed networks) as well as the trend towards converged and multi-use networks. While all vendors should benefit from Huawei’s absence, particularly in Europe and the US, Nokia should benefit more as it is an end-to-end supplier like Huawei.

Short-term Risks

However, there are some execution risks in the short term. Profits at Nokia remain thin and margins may be under pressure during the next few months. Also, it is imperative that the ReefShark FPGA-to-SoC transition is kept on track and is not impacted by supply-chain or other factors. This is crucial as it will enable Nokia to better compete on price against its rivals. With Huawei banned from several markets, Nokia must demonstrate that it can increase its RAN market share over the next few months and years in the face of stronger competition from Samsung Networks and open RAN new entrants.

Non-RAN Growth Opportunities

As well as benefiting from the 5G RAN opportunity, Nokia is also focused on diversification away from its core MNO customer base. Backed by the world renowned Bell Labs, the company has significant competitive strengths in technology, including in-house silicon expertise. In particular, its FP-4, PSE-3 and Quillion chipsets offer a significant USP and enable differentiation compared to rivals. This provides Nokia with some strong product offerings, particularly in its fixed products portfolio. Counterpoint Research believes that the company holds market leading positions in fixed access, IP routing and optical networking as well as in software solutions and private networks.

As a result, major growth opportunities exist in the DCI switch market (particularly with web scalers), 5G optical transport market as well as with fixed CSPs (cable, DSL, whole-home Wi-Fi, FWA, etc.) and enterprise customers (via its private network solutions). This should enable Nokia to win contracts in new market segments and with non-traditional customers.

Is Nokia’s Turnaround on Track?

Counterpoint Research believes that Nokia is broadly on track to revive its 5G RAN business in the short term. “Although the loss of the Verizon contract in the US was clearly disappointing, the company has won several RAN contracts since then, including a major contract to replace Huawei at BT,” said Gareth Owen, Associate Research Director at Counterpoint Research. “Perhaps just as important – and a pointer to the future – is the fact that Nokia has won several strategic non-RAN contracts from high-profile players during the past few months. These include Apple, Baidu, Tencent, Dish Networks and most recently Equinix. I expect these type of contract wins to accelerate over the next year or so,” he added.

However, with the transition to cloud RAN and the introduction of open RAN, the mobile industry ecosystem will witness unprecedented changes over the next 5-10 years with many new entrants, including small software players and long-established IT leviathans. To survive in this new world, incumbents such as Nokia must urgently address this challenge and adapt accordingly. The company’s efforts to lead in the open RAN space are clearly an example of this.

Recommendations for Nokia

With a strategic review already underway, there will be changes at Nokia in 2021 as new CEO Pekka Lundmark implements his vision to reposition the company for the future. Counterpoint Research believes that Nokia needs to urgently increase R&D investment, especially in 5G, including sorting out any 5G product performance and quality issues. “Outside its main Networks division, the company should increase focus and investment in its Software and Enterprise divisions to benefit from two major trends – the migration to cloud-native software and the Industry 4.0 automation revolution. This should include acquisitions,” said Peter Richardson, Vice President of Research at Counterpoint Research. “In addition, Nokia should focus strongly on developing new 5G service-based businesses based on emerging technologies such as network slicing and edge computing in partnership with key CSP and enterprise partners,” he added.

However, funding this investment will not be easy. Nokia will need to dispose of some assets, perhaps its Technologies division, as well as consider other funding and strategic options.

Related Posts

5G MEC Ecosystem – Stakeholders Partner in Mad Rush to the Edge

Wi-Fi 6/6E – A Viable Alternative to 5G NR for Low Latency Applications?

The Race to Open RAN will be a Marathon, Not a Sprint

Gareth has been a technology analyst for over 20 years and has compiled research reports and market share/forecast studies on a range of topics, including wireless technologies, AI & computing, automotive, smartphone hardware, sensors and semiconductors, digital broadcasting and satellite communications.

Term of Use and Privacy Policy

Counterpoint Technology Market Research Limited


In order to access Counterpoint Technology Market Research Limited (Company or We hereafter) Web sites, you may be asked to complete a registration form. You are required to provide contact information which is used to enhance the user experience and determine whether you are a paid subscriber or not.
Personal Information When you register on we ask you for personal information. We use this information to provide you with the best advice and highest-quality service as well as with offers that we think are relevant to you. We may also contact you regarding a Web site problem or other customer service-related issues. We do not sell, share or rent personal information about you collected on Company Web sites.

How to unsubscribe and Termination

You may request to terminate your account or unsubscribe to any email subscriptions or mailing lists at any time. In accessing and using this Website, User agrees to comply with all applicable laws and agrees not to take any action that would compromise the security or viability of this Website. The Company may terminate User’s access to this Website at any time for any reason. The terms hereunder regarding Accuracy of Information and Third Party Rights shall survive termination.

Website Content and Copyright

This Website is the property of Counterpoint and is protected by international copyright law and conventions. We grant users the right to access and use the Website, so long as such use is for internal information purposes, and User does not alter, copy, disseminate, redistribute or republish any content or feature of this Website. User acknowledges that access to and use of this Website is subject to these TERMS OF USE and any expanded access or use must be approved in writing by the Company.
– Passwords are for user’s individual use
– Passwords may not be shared with others
– Users may not store documents in shared folders.
– Users may not redistribute documents to non-users unless otherwise stated in their contract terms.

Changes or Updates to the Website

The Company reserves the right to change, update or discontinue any aspect of this Website at any time without notice. Your continued use of the Website after any such change constitutes your agreement to these TERMS OF USE, as modified.
Accuracy of Information: While the information contained on this Website has been obtained from sources believed to be reliable, We disclaims all warranties as to the accuracy, completeness or adequacy of such information. User assumes sole responsibility for the use it makes of this Website to achieve his/her intended results.

Third Party Links: This Website may contain links to other third party websites, which are provided as additional resources for the convenience of Users. We do not endorse, sponsor or accept any responsibility for these third party websites, User agrees to direct any concerns relating to these third party websites to the relevant website administrator.

Cookies and Tracking

We may monitor how you use our Web sites. It is used solely for purposes of enabling us to provide you with a personalized Web site experience.
This data may also be used in the aggregate, to identify appropriate product offerings and subscription plans.
Cookies may be set in order to identify you and determine your access privileges. Cookies are simply identifiers. You have the ability to delete cookie files from your hard disk drive.