Nokia's 2017 strategy targets new revenues from select vertical market segments that are well aligned with Nokia's traditional strengths. At the company's annual Nokia Services Analyst Days in London on October 3 and 4, the company provided an update on the progress it is making with Global Services offers targeting these key verticals. That Nokia Global Services plays a crucial role in expanding Nokia's progress in verticals is not surprising. Global Services represents a major share of Nokia revenue -- 26% of the company's 2016 revenue -- and even marginal gains in vertical segments can have long-term beneficial impact as the company gains the trust of new customers.
The London event brought together Igor Leprince, President of Global Services, his leadership team and industry analysts tracking the company's services business strategy. Mr. Leprince recapped the strategic pillars guiding Nokia's Global Services vision:
- Drive professional services for communications service providers (CSPs)
- Expand to selected verticals sharing characteristics with CSPs(Transportation, energy, public safety and webscale)
- Develop new Internet of Things (IoT) services offers
- Engage selectively in IT services
As Global Services tackles challenges presented by these pillars, Nokia's services arm aims to disrupt the industry by bringing innovation in service delivery. The company is driving capabilities such as extreme software automation, cognitive analytics and artificial intelligence to make this a reality. The pillars represent a continuation of the group's strategy, but this year's analyst event put the spotlight on progress made with the vertical segments.
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Asad Rizvi, Vice President for Vertical Markets, reported on progress expanding Nokia's presence in the key verticals. In the public sector market alone -- government broadband, smart cities, defense and public safety -- Nokia claims over 240 reference accounts thanks to the addition of Alcatel-Lucent's business. In the energy sector, Nokia points to more than 200 references while its presence in transportation continues to grow with more than 100 references. These reference accounts include those buying products as well as services.
Over the last year, Mr. Rizvi's team has brought a suite of services portfolio offers to market to address the needs of public safety organizations around the globe. Incorporated as components of the company's ViTrust critical communications portfolio, recently announced offers include the Integrated Operations Center, device software customization service and care for public safety. The announcements help focus market attention on Nokia's Global Services organizational capabilities available to government agencies working to bring the benefits of broadband data to their public safety field force.
Nokia Vertical Market Efforts Gaining Momentum
Nokia's execution of its long-range vision for the vertical segment is showing signs of progress. That said, the company's efforts remain in early days, and the company continues to flesh out its leadership and offers. A significant change is a stepped-up effort to recruit domain experts from outside Nokia's traditional lines of business. The recent appoint of Chris Johnson from Hewlett Packard Enterprise (HPE) to head sales into the vertical market segments is an example of early moves to bolster the company's prospects outside its traditional base. As part of this executive shift, Nokia is also smartly separating out sales efforts aimed at webscale players and large enterprises, leaving Mr. Johnson with a tight focus on mission-critical and business-critical communications networks opportunities.
Even in these early days, however, Nokia can point to significant progress. On the product front, the company's Advanced Mobile Networks Solutions group has made gains addressing public safety, transportation and energy sector requirements. The unit brought its Ultra Compact Network to deliver mission-critical LTE rapid deployment capabilities needed by public safety agencies, won a private LTE network deal in Finland and provided solutions for air-to-ground LTE. Furthermore, the company's LTE radio access network equipment is present in most significant public safety LTE networks operating today or the near future. Examples of Nokia's public safety LTE footprint include AT&T's network serving FirstNet, EE's network serving the UK Emergency Services Network, South Korea's SafeNet, Dubai's Needaa network and the ALTÁN Redes network in Mexico.
The natural next step is to extend this momentum into an expanding range of professional and managed services offers. The event in London showed Nokia's commitment to do just that, with the ultimate impact bringing deeper, valued relationships between Nokia and its vertical segment customers.