Menu
INSIGHT: Is Nokia’s acquisition of Alcatel-Lucent a “marriage of desperation”?

INSIGHT: Is Nokia’s acquisition of Alcatel-Lucent a “marriage of desperation”?

Is this a “marriage of desperation” or two network solution vendors coming together to work on a broader vision for an increasingly connected world?

Nokia and Alcatel-Lucent have entered into a memorandum of understanding under which Nokia will make an offer for Alcatel-Lucent in an all-share transaction.

The deal values Alcatel-Lucent at €15.6 billion: Alcatel-Lucent shareholders will own 33.5%, with Nokia shareholders owning 66.5%.

The key question according to Dan Bieler, research analyst, Forrester Research, is whether this a “marriage of desperation” or two network solution vendors coming together to work on a broader vision for an increasingly connected world?

“The combination of two relatively small network solutions vendors won’t automatically translate into the formation of a new network solutions powerhouse,” Bieler observes.

“Most importantly, will the new Nokia truly differ from its main rivals Huawei and Ericsson as an end-to-end carrier network solution provider?

“Nokia’s competitors will not only face a larger new competitor but also experience the formation of a different one.”

For Bieler, this deal will mean that Nokia joins the small club of converged network solutions vendors.

“Customers expect experiences that support multiple screens and applications; equipment vendors must deliver solutions for the Internet of Things (IoT) and industrial Internet requirements by offering next-generation network technology and services,” Bieler says.

“Nokia can’t cater to this market demand alone.”

Furthermore, Bieler believes the acquisition ensures Nokia rejoins the premier league of network solutions providers.

“The deal means that Nokia’s total pro-forma 2014 revenues will more than double to €25.9 billion,” he explains.

“The new Nokia will be the second-largest provider of carrier-grade telecoms networking solutions, with revenues in this segment of €25.0 billion, just behind Ericsson (€25.1 billion) but ahead of Huawei (€23.5 billion).

“With its newfound size, Nokia will gain access to scale benefits.”

The deal also sees Nokia strengthen its position in the mobile broadband market but remarkably, as part of the deal, Nokia will abandon its successful mobile-broadband-only strategy.

“But this makes sense because in this fast-changing world, it would be risky not to change direction as the market context shifts,” Bieler warns.

“Nonetheless, the deal will help Nokia defend its strong position as a force to be reckoned with in the 4G and 5G space.”

Following completion of the acquisition, Bieler believes Nokia also gains a well-distributed geographic presence.

Read more: Size matters in mobile, but Nokia may find bigger isn't better

In particular, the deal will turn Nokia into the largest carrier network vendor in North America, a region where it has struggled to date.

Of Nokia’s major competitors, only Ericsson has a similarly balanced geographic revenue distribution.

“The deal highlights the further consolidation of the network infrastructure market,” Bieler adds. “This might bring some respite to the price wars, but it also has wider implications for Nokia’s competitors.

“For Ericsson, the deal means that it must boost its services and solutions offerings — and use this window of opportunity to push its solutions to carrier clients while Nokia is preoccupied with integration challenges.

“For Huawei, it means that its approach of playing two smaller European competitors off against each other will be tougher to pursue. For Cisco, it means that it must strengthen its carrier-focused solutions portfolio.

“For Alcatel-Lucent, the deal is a lifeline for survival.”


Follow Us

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Tags mobileNokia4galcatel-lucent5G

Featured

Slideshows

Malwarebytes shoots the breeze with channel, prospects

Malwarebytes shoots the breeze with channel, prospects

A Kumeu, Auckland, winery was the venue for a Malwarebytes event for partner and prospect MSPs - with some straight shooting on the side. The half-day getaway, which featured an archery competition, lunch and wine-tasting aimed at bringing Malwarebytes' local New Zealand and top and prospective MSP partners together to celebrate recent local successes, and discuss the current state of malware in New Zealand. This was also a unique opportunity for local MSPs to learn about how they can get the most out of Malwarebytes' MSP program and offering, as more Kiwi businesses are targeted by malware.

Malwarebytes shoots the breeze with channel, prospects
EDGE 2019: Channel forges new partnerships during evening networking

EDGE 2019: Channel forges new partnerships during evening networking

Partners, vendors and distributors reconnected during a number of social gatherings during EDGE 2019. The first evening saw the channel congregate for a welcome party at the Hamilton Island yacht club, while the main poolside proved to be the perfect stop for a barbecue on the final night.

EDGE 2019: Channel forges new partnerships during evening networking
Show Comments