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What’s Nokia Seeking with Its Dedicated Enterprise Group?

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Core telecom market expanding 1.0% annually

Nokia (NOK) has created a dedicated group that will be responsible for serving enterprise customers outside its core telecommunications market. The new Enterprise Business Group will be led by Nokia’s current chief strategy officer, Kathrin Buvac, and will officially begin operations in January 2019.

Back in 2016, Nokia detailed plans to diversify its business beyond the telecommunications sector—its main market but a slow-grinding one. The company expects its primary addressable telecom market to be worth ~$128 billion in 2016. It went on to say that it was expecting the market to expand at a rate of just 1.0% annually in the next five years.

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Addressable non-telecom market expanding 18% annually

In contrast, Nokia said its addressable market outside the primary telecommunications sector was worth $20.4 billion in 2016 and that the so-called adjacent market would expand at a rate of 18% annually in the next five years.

With the dedicated enterprise group, Nokia appears to be hoping to boost its diversification efforts and accelerate its chase for commercial opportunity in the adjacent market, which should be worth ~$46 billion by 2021.

Revenue down at Nokia

Nokia generated revenue of $6.1 billion in the third quarter, down 1.0% YoY (year-over-year). Revenue rose 8.9% at Ericsson (ERIC) in the same period. Network systems vendors Cisco Systems (CSCO) and Arista Networks (ANET) reported revenue growth of 5.9% and 28.7% YoY, respectively, in the third quarter. Juniper Networks’ (JNPR) revenue fell 6.2% YoY in the same period.

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