While the troubles besieging network gear and smartphone giant Huawei may be a headache for its Chinese management, for Nokia chief executive Rajeev Suri, they could provide the Finnish company with a much-needed boost.
At an annual shareholders’ meeting last week, Suri said that there could be a “long term opportunity” for Nokia due to Huawei’s US regulatory problems, which include restricting the company from buying American technology. “But more than that, it’s hard to say at this point,” he said.
Given the current impasse for Huawei after it was added to a US trade black list, investors may be taking another look at how, under Suri’s leadership, Nokia could start reeling in Huawei, the world’s largest telecommunications gear company which last year raked in over US$100 billion in revenue.
Suri, who has worked at Nokia for over two decades, is credited with turning Nokia and Siemens’ telecommunications equipment joint venture from a loss-making division into a subsidiary that now makes up 90 per cent of Nokia’s revenues.
Nokia, once the world’s largest mobile phone maker before its Symbian devices were overpowered by iPhones and Android-powered smartphones, is now No 2 in terms of telecommunications gear globally.
It had a 17 per cent market share in 2018, behind Huawei’s 28 per cent and Ericsson’s 13 per cent, according to research firm Dell’Oro Group. All three are competing to secure commercial contracts for upcoming, superfast 5G mobile networks.
Huawei’s regulatory troubles, as well as the US campaign against the security of Huawei’s equipment, could give Nokia and Ericsson a leg up when it comes to securing 5G contracts.
Whether Suri can ensure that Nokia catches up with, or even exceeds Huawei in 5G, remains to be seen. Suri is known for his bold moves – not only has he helped cement Nokia’s position in the top 3 for telecommunications gear, he is also credited with efforts to bring the Nokia brand back to mobile devices.
Nokia sold its mobile phone business to Microsoft in 2014 after it failed to innovate and saw the decimation of its mobile device market share first by Apple’s iPhone and then by Android smartphone makers such as HTC and Samsung. Under Suri’s leadership, Nokia has re-entered the smartphone industry, licensing its brand to HMD Global in 2016, which allowed the latter to launch Nokia smartphones and bring back Nokia’s classic 3310 phone model.
Nokia is now the world’s 9th smartphone maker globally, shipping 17.5 million devices in 2018 – a 126 per cent increase from the previous year, according to data by Counterpoint Research. Although Nokia holds only 1 per cent market share, it is one of the few smartphone brands that have seen an increase in shipments, compared to larger smartphone brands such as Samsung and Apple, whose market share has been receding.
In the 5G space, Huawei confirmed that as of early March it had signed 30 5G contracts – 18 in Europe, 9 in the Middle East, and 3 in Asia-Pacific. Ericsson has publicly announced 16 5G contracts, according to its official website, 5 of them within Europe. Nokia has signed 37 commercial 5G contracts, Suri said at last week’s AGM.
While Huawei has its work cut out after the US ban, only time will tell if Suri can seize the opportunity and return Nokia to its former glories.
“5G is not the future any more. It is here, and Nokia is leading it,” said Suri recently.
“We have been in the midst of one of the most radical technology transitions ever, as 4G gives way to 5G, “ said Suri in response to a request for comment on this article. “Thanks to our end-to-end portfolio, we can benefit from a virtuous circle of investment as networks are upgraded to meet the demands of 5G.”
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