Our recent article on NSN (The future of NSN: a happy-end at last?) has been a blockbuster of sort. It has attracted more than 3,500 readers since publication at the end of April 2012, from Germany, Finland, Portugal, India as well as many other countries. We have been very surprised by the interest that the article has generated. There was nothing new in the article that was not in the public domain already, and the financial numbers were taken straight from the Nokia web site.
We have reasons to believe that many readers must have been NSN employees trying to decide what to do now, in the view of the various outplacement and redundancy programs set up by the company. Also a former NSN employee indicated that “the NSN management would never point out the series of multi-hundred-million annual loss so clearly”! If this means that the NSN management has lacked transparency towards its own employees in the past, then this is rather worrying.
There are reasons to be concerned about the future of Nokia Siemens Networks (NSN). Since the merger of the Nokia and Siemens telecoms infrastructure businesses in 2007, the Joint Venture never had a single profitable year: operational losses were
-€1.3bn, -€0.3bn, -€1.6bn, -€0.7bn, -€0.3bn
in the years 2007, 2008, 2009, 2010 and 2011 respectively. The cumulative operational loss over 5 years is -€4.2bn. The average annual loss amounts to -€0.847bn over the period.
So something radical had to happen. It did. In November 2011, NSN announced that it would refocus its business on mobile broadband. As part of the re-organisation and strategic shift, the company announced that it would get rid of 17,000 employees worldwide. A few thousands more will be transferred to other firms with the carving out and selling of a number of product lines. In total, about 1 employee out of 3 should go.
Recently, we have noticed something interesting. Go to the web sites of the top telecom suppliers and check in which order the words “products”, “solutions” and “services” appear there.
We have done the check:
- Nokia Siemens Networks (NSN): products, solutions, services
- Huawei: solutions, products, services
- Alcatel-Lucent (ALU): solutions, products, services
- IBM: solutions, services, products
- Cisco: products & services
- Ciena: products & services
Interestingly, IBM is the only company that puts ‘products’ last. And NSN, ALU and Huawei seem to put a strong focus on ‘solutions’. But are they really ‘solutions’ companies? Well, not in the IBM sense. Finally, Cisco and Ciena don’t even talk about solutions, at least at the top level.