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Summary

Competition between vendors for leadership in 5G is becoming keener as launch dates for the first networks draw closer. In a declining equipment market, the service provider business remains the key battleground for the major network suppliers, and technology readiness is a point of contention. Nokia CEO Rajeev Suri used the company's Global Analyst Forum in Helsinki this month as an opportunity to refute, once again, a recent claim made by Ericsson that it has the only 5G-ready baseband platform in the market.

Architecture is the differentiator, while technology still underpins Nokia's 5G strategy

Citing the Swedish vendor more than once in his presentation, Suri said that Nokia's AirScale radio platform and 5G core network are fully 5G-ready and clearly ahead of others in the market. Massive capacity in the baseband unit, which is a prerequisite for 5G, makes it possible for Nokia's 4G customers to move to 5G with just a software upgrade, Suri said, although only adding extra capacity on an as-required basis could avoid unnecessary investment. According to Suri, this is one of the competitive advantages of AirScale.

However, with 5G expected to drive wholesale change in the way networks are built and run, Nokia believes the scope for differentiation extends beyond issues of pure technology. The vendor claims it is unique in adopting an architecture-driven approach to 5G that not only delivers radio access scale and performance, but also emphasizes a cloud-native network model, and computing capabilities that drive innovations in areas such as small cells, transport, and multi-access edge computing, as well as baseband capacity and performance.

For Cloud-RAN, the vendor has a virtualized single RAN approach with a split architecture to allow all the software to reside in the cloud. Everything the company designs is cloud native and energy efficient, according to the vendor.

Carrier-grade radio technology is still at the heart of Nokia’s strategy. Although it is roughly comparable to Huawei in terms of revenue size, the Finnish vendor believes it can build on both having the technology edge and being a trusted brand.

Alongside its architecture-driven approach, it is a strategy that will be tested over the next two to three years as Nokia attempts to reverse the impact of a decline in global equipment capex on its CSP business. Suri estimates that Nokia's primary addressable market will decline by around €11.7bn between 2015 and 2018. Nokia expects that CSP capex will start returning to growth in 2019 and increase in 2020, but only after another flat year in 2018.

Appendix

Further reading

2018 Trends to Watch: Radio Access Networks, SPT002-000023 (December 2017)

"Nokia-led consortium will develop 5G platform-as-a-service to run over software-mediated networks" TE0006-001425 (August 2017)

Author

Julian Bright, Senior Analyst, Next Generation Infrastructure

julian.bright@ovum.com

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