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Posted on Saturday, November 10, 2018

Trying to infer industry trends from a vendor’s analyst event is a mugs game: the vendor is naturally communicating its marketing priorities which do not necessarily align with a statistical view of where the market is today. Still, Nokia’s Global Analyst Forum reopened the debate about whether 5G will be driven by the enterprise or consumer markets, at least among my fellow Industry Analysts.

Nokia always puts on a great event, not just logistically but from an information viewpoint. The analyst community gets exposure to the company’s senior executives who clearly explain corporate strategy and, within the limitations of securities laws and competitive common sense, give honest answers to our questions on key topics.

This is not a time for press announcements – we are important but not that important – although Nokia did happen to make several during the week. (Probably because they were simultaneously holding a customer and partner event, where good news does help cement relationships.)

There are many opportunities for dialog ranging from open Q&A sessions to small group ‘breakout’ sessions to 1 on 1 (or 2 or 3) more intimate conversations to coffee breaks where the senior execs will make themselves available (schedules permitting). Although there is a lot of PowerPoint, the flow is not entirely in one direction.

However, the company (obviously) controls that dialogue by deciding what it is going to talk about – we can ask questions and make comments, but it would be hard to jump off topic and bring up something out of left-field. Nokia is paying the bill; they get the right to decide what is going to be discussed.

Which is why I said above that vendors communicate their marketing priorities which may not necessarily be aligned with the current state of the industry. Sales cycles are long in this business and implementation cycles as well. Vendors have to looking at where they think the industry is going, not where it is. As well, they will emphasize strategies that they think we need to understand – especially strategies that go in a somewhat different direction than the traditional.

Having just integrated Alcatel-Lucent’s enterprise business and with mobile penetration showing every sign of approaching saturation, it was not surprising that the focus this year was on B2B.

CEO Raveev Suri said they estimated that the enterprise market would be €22B by 2023 or roughly the size of the carrier market today. Their own business had grown 18% year-over-year in the most recent quarter versus more modest growth in other segments. Only the 5G-happy North American market had also grown in double digits.

Just before the event, the company had reorganized and, in January, current Chief Strategy Officer, Kathrin Buvac will head up the Enterprise organization. Not surprisingly, her presentation was long on B2B topics like the Industrial Internet of Things (IIoT) and Private LTE. I was lucky enough to be assigned one of her small group sessions where Private LTE was again the focus but also questions about channel. She said over half of the division’s revenue was direct and the philosophy was Carrier First’. But in my opinion, the direct percentage will likely increase over time as it will be easier for a global organization like Nokia to maintain the vertical industry specialists that the ‘Brave New World!’ of IIoT and digital transformation will require. ‘Carrier First’ may mean the traditional CSPs processing the PO and billing or contributing spectrum but doing little more than that.

The event was held at Nokia’s iconic Bell Labs site in Murray Hill, NJ and even Marcus Weldon’s speech was titled Future X Network (for Industries) – with the parenthesis in the original. Future X for Industries was a press release during the show and we all received a long  Exclusive Chapter Preview on Mining, bundled with what can only be described as a children’s book on the “Allwhere” network (which was also about industrial networking) using a wrapper that said “What to read in your driverless car”. The whimsy quotient was unusually high for a vendor presentation, even for a Marcus Weldon presentation.

Bell Labs is launching a spectacular lab / demo center call the ‘Future X Lab’ and we were given a guided tour. All of the applications were B2B. Weldon’s speech started with showing that productivity had stagnated for the past 20 or 30 years and he lamented “We have built all these networks and what have they been used for? Sending pictures of cats and online shopping.”

There were three client keynotes and a separate client panel. The panel was organized by the Enterprise group so no surprise where it was focused.  Among the keynotes, AT&T’s Chris Penrose is the head of the mega-carrier’s IoT business and he was not talking about fitness devices. Gabriela Styf Sjöman, VP of Networks for Telia, said she did not want to be the first with 5G but the first to make money with 5G and then proceeded to talk almost exclusively about IIoT and Ultra Reliability Low Latency (URLL) applications. Only Neville Ray from T-Mobile talked mostly about the consumer market (consistent with the brand’s equity) but even he said he was “excited” about the IIoT opportunity.

Enterprise is where Nokia sees its path to growth, so it makes sense that they would spend this opportunity talking to us about that.

And I would say they did a good job of convincing us they can compete in this market. They have the product suite, they have existing direct channels, they have relationships with carriers who are coming around to a similar need to re-emphasize the B2B market and, most importantly to my way of thinking, they have a vertical / application mindset. Conversations with enterprise clients have to be around their business, what they need to do. Technology is the answer to their needs but cannot be the starting point of the dialogue. Understanding the use cases, understanding vertical business needs is the start of a productive selling relationship.

However, I would be remiss if I did not say that we also heard the word (Symbol? Brand? Logo?) ‘5G’ repeated in every presentation, every breakout session, at least once (even in that by Federico Guillen who runs the fixed network business). But even the 5G focus was B2B, the IIoT and URLL use cases I talked about above.

This juxtaposition of ‘5G’ and ‘Enterprise’ got lunchtime (and beer time) conversations to conclude that the 5G business case depended on the enterprise market – despite the American carriers’ race to launch consumer-market 5G as fast as they possibly can.

If this is the case, then if Mr Businessman does not decide to pay for 5G, we are going to have a challenge – to put it mildly.

More on this in Part 2, in the next blog.

(Title reference: From Talking Head’s Wild Wild Life. It was never a big hit but I am big Talking Heads fan – a big New Wave fan to be more complete – and this line has always been stuck in my own (non-talking) head.)

NOTE: The Thursday blog is moving permanently to Friday like today. There simply was not enough time between Tuesday and Thursday, either for me or, I imagine, readers.

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