Differentiation in telecommunications is difficult to do, especially in the competitive vendor space. But the "new Nokia" reckons it has a key differentiating factor in its arsenal – quality of service and improving the end-user experience. The company told analysts in Hanoi this month that the quality of both its products and services is fundamental. We are proponents of Nokia's push for quality – we think it helps the company stand out.
Nokia gives telcos veto rights as quality assurance
Product quality differentiation at Nokia is something that largely came over from Motorola, whose network assets Nokia acquired in mid-2010. Nokia has built on that foundation, putting into action an end-to-end customer-centric approach to quality management and improvement. Today, this focus on quality as a differentiator around services is being extended across the new Nokia now that it has absorbed Alcatel-Lucent.
On the services front, that means working with telcos on network quality monitoring and conducting network quality gap benchmark testing. The goal is to improve the operators' competitiveness in the market and ultimately the telcos' Net Promoter Scores (Nokia did share several cases of NPS improvement). It claims that it is not just tier-1/2 customers that value network quality, but challengers in a market too. For them, the endgame is still about getting a return on the subscriber acquisition cost and churn management, both of which can be more difficult for challengers, given their more volatile customer base.
Second, Nokia measures the perceived customer value of its telco customers. This includes how telco customers view Nokia (measured via its value index tool). Nokia even has a dedicated independent internal group that has "a right of veto" if that team deems quality requirements for new product releases are not being met. Under this veto arrangement, that independent team can take the product back to the development stage. The latter shows that Nokia is taking its commitment to quality seriously.
The vendor differentiation lines are drawn. We see Huawei no longer differentiating on price but on technology, with ZTE the price differentiator. In Singapore, Ericsson recently defined its differentiators as manyfold: R&D investment, services, and technical strength.
"Ericsson hopes a leaner company also means a company with more profit and revenue growth," TE0006-001372 (March 2017)
Nicole McCormick, Practice Leader, Broadband and Multiplay