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Nokia Targets High-Growth Markets to Offset Sluggish Demand

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Mar. 26 2018, Updated 9:02 a.m. ET

Growth in IP routing business

Nokia (NOK) continued to roll out its FP4-based IP (Internet protocol) routing product in 4Q17. The company believes its product is 12–18 months ahead of other competitive offerings. Nokia’s IP routing business has grown in the last two quarters excluding third-party product sales, which the company is currently ramping down. Nokia’s optical portfolio also saw a revenue rise in 4Q17, and it expects a revenue rise in 1Q18 as well.

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The applications and analytics business has been renamed Nokia Software, reflecting the company’s progress and long-term focus on this vertical. Peer companies Cisco (CSCO) and Juniper (JNPR) are also banking on software revenue growth to drive their revenues. Nokia’s Global Services segment has continued to focus on discipline, automation, and execution, according to the company’s management. Nokia announced a large managed services deal with Optus earlier this year.

Nokia is targeting innovative service offerings such as a worldwide IoT (Internet of Things) network grid, or WING. This is IoT as a managed service for service providers. Nokia won the world’s first major software-defined access network (or SDAN) project in December 2017 and is working with Australia’s NBN. According to CEO Rajeev Suri, “Working with nbn in Australia, our solution will be used to manage Nokia nodes in the network as well as those of other suppliers.”

Partnerships with China Unicom and Saudi Arabia

Earlier in this series, we learned that Nokia had bagged a contract with China Unicom (CHU). Nokia is supplying technology to enable China Unicom to improve the quality of its voice services and prepare its network for evolution to 5G (fifth-generation) technology.

Saudi Arabia aims to reduce its dependency on oil revenue and has outlined a plan called Vision 2030 whereby it will focus on sectors such as hospitality, telecom (telecommunications), and information technology along with the general digitization of the economy. Nokia aims to help Saudi Arabia upgrade its networks and has won several network improvement contracts with domestic telecom companies.

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