Around a month and a half ago, as part of the financial report for the third quarter of 2020, Nokia announced a new operating strategy, or to be more precise – the first phase of the new strategy.
Nokia’s previous strategy was focused on offering end-2-end solutions, while with a new business division structure, Nokia will focus on key areas that are split in Mobile Networks, Network Infrastructure (previously IP and Fixed Networks), Cloud and Network Services, and Nokia Technologies. Details about each segment follow down below:
- Mobile Networks’ immediate focus will be on executing its turnaround and regaining 5G leadership. It will focus on leadership in ORAN and vRAN, maintaining scale with CSP customers and growing its enterprise-dedicated Private Wireless Networks business. It is expected to deliver comparable* operating margin of around zero percent in 2021, and significant improvement over the longer term.
- Network Infrastructure (previously IP and Fixed Networks) will focus on the building blocks and essential solutions of critical networks, using its technology leadership in IP Networks, Optical Networks, Fixed Networks, and Alcatel Submarine Networks to drive digitalization across all industries. It is expected to deliver comparable* operating margin in the high single digit range in 2021, and gradual improvement over the longer term.
- Cloud and Network Services creates value for both service providers and enterprise customers as demand for critical networks accelerates, leading the transition to cloud-native software and as-a-service delivery models. It is expected to deliver comparable* operating margin in the mid-single digit range in 2021, and significant improvement over the longer term.
- Nokia Technologies will continue to monetize and grow the value of Nokia’s intellectual property and licensing revenue by investing in innovation and its world-leading patent portfolio as well as pursuing other licensing opportunities. It is expected to deliver a slight improvement in comparable* operating profit in 2021, relative to 2020, and stable performance over the longer term.
- Group Common and Other, which predominately consists of corporate costs, is expected to be run in a lean manner, with costs directly embedded into the business groups whenever possible. Group Common and Other is expected to deliver a comparable* operating loss of approximately €200 million in 2021.
Nokia will provide new financial reports for these units by mid-March of 2021, so investors will have a better view on how each of the new division is doing financially.
Nokia is moving away from the “monolithic” system towards an “as-a-service business model”, with silicone, software and services in focus, with the goal of technology leadership in all segments the company chooses to play in.
You can check more details in the press release here.