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China is one of the world ’s largest 5G markets, and the current development of China ’s 5G has entered the fast lane. Under such a background, Nokia “accidentally” missed the key first wave of 5G base station construction, which is really intriguing. At present, the mainstream opinion analysis believes that Nokia was eliminated due to its technology / product lagging behind other equipment manufacturers. However, to a certain extent, Nokia’s exit is also a choice it has made with helplessness.

Successively out of the game, one bid has not been won

“There is no doubt that 5G is extremely important for any manufacturer. We accept and respect China Mobile ’s decision, and we need to emphasize that we will continue to serve China Mobile unwaveringly. China Mobile is our global The strategy of one of the most important partners remains unchanged. “-Ma Boze, CEO of Shanghai Nokia Bell

“We have learned that China Telecom and China Unicom have announced the results of the 5G wireless network master equipment collection in 2020, and we respect the decisions of China Telecom and China Unicom.”-Nokia Bell, Shanghai, “About China Announcement of Announcement of the Announcement on the Result of Centralized Acquisition of 5G Wireless Network Main Equipment in China Telecom and China Unicom in 2020 “

After losing successive orders for 5G base stations from China Mobile, China Telecom and China Unicom, Nokia twice lonely expressed its respect for the three operators ’decisions.

Nokia’s sense of presence in China’s communications field will become lower and lower, and its Chinese market business will shrink significantly, which has become a fact that cannot be ignored.

In 2020, 5G is the common business development focus of the three major operators. According to the annual report, China Mobile is expected to invest 100 billion yuan for 5G in 2020, and strive to accumulate a total of 300,000 5G base stations by the end of 2020, and achieve 5G commercial use in prefecture-level cities nationwide.

The 5G capital expenditures of China Unicom and China Telecom are expected to reach 35 billion yuan and 45.3 billion yuan respectively. Both parties will strive to complete the plan to jointly build 250,000 5G base stations in the third quarter of this year, and strive to achieve them throughout the year The goal of 300,000 5G base stations. Overall, the capital expenditures of the three major operators on 5G in 2020 will reach 180.3 billion yuan, a year-on-year increase of more than 3 times, and the total number of 5G base stations will exceed 600,000.

Returning to the three major operators ’bidding for 5G wireless main equipment centralized procurement, a total of 520,000 5G base stations were involved, of which China Mobile ’s 5G phase 2 new construction + expansion part required the purchase of more than 270,000 5G base stations. China Unicom needs to purchase a total of 250,000 5G base stations through joint networking. The final winning bidders are Huawei, ZTE, Ericsson and China Xinke (Datang Mobile) , the industry expects Huawei and ZTE’s two shares exceed 80%.

On April 23, Wen Ku, director of the Information and Communication Development Department of the Ministry of Industry and Information Technology, said at the press conference of the State Council ’s new office that as of the end of March, 198,000 5G base stations had been built nationwide and more than 50 million 5G package users. Ministry of Industry and Information TechnologyEnterprises are required to further optimize their work processes, seize the deadline, and concentrate resources to accelerate the construction of 5G networks. At a time when China’s 5G construction is in full swing, Nokia’s “out” is particularly noticeable.

Is it eliminated or given up?

There are many discussions on the network about the reasons for Nokia ’s outage. Among them, the view that “Nokia 5G R & D and product progress lags behind friends” has been recognized by many people.

“ Research and development cannot keep up, without our efforts and unresolute investment. ” Some operators have commented on Nokia ’s failure to win the bid.

An industry analyst pointed out to InfoQ that Nokia ’s relatively lagging layout in the independent networking (SA) is the main reason for its lag.

But according to the “Daily Economic News” report, Nokia Bell executives denied that they did not pay enough attention to independent networking: the world is moving towards independent networking, which is a major trend, not the main reason why Nokia products are slow . The main reason is that China ’s 5G network has a wide spectrum and correspondingly requires high transmission power of equipment. However, only China needs such a large transmission power in the world, resulting in different requirements for China ’s 5G base station equipment and global equipment. The construction of the equipment was completed in the third quarter, and Nokia could not keep up with this time.

Nokia insiders further explained to InfoQ, “Because China will focus on 5G development this year, it is currently accelerating its development. But generally speaking, major technological changes like 5G require a cycle. Like us In the past, when designing, first there will be a laboratory verification test, a first-stage verification test, a second-phase verification test, and then a large-scale network deployment. This year’s 5G deployment has suddenly accelerated. In fact, for major equipment vendors, Including Nokia is a big technical challenge, because it requires products and systems to be ready in a very short time. “

But the person bluntly stated that Nokia’s investment in research and development in recent years, especially in the Chinese market, is indeed not enough. This is related to Nokia’s experience in recent years.

“Because Nokia has taken some detours on the 5G route, the product is” slower “than others. If it is slow, it will be chased, but in the case of already in trouble, it is necessary to focus on certain markets to chase. < strong> And Nokia chose the high-margin marketField . Although the Chinese market has relatively large shipments, due to fierce competition, the profit margin has been low. Not just Nokia, but also Ericsson. Even if we ship in large quantities in the Chinese market, we may not be able to make money. In many cases, we may lose money. “

“In order to support other markets with higher profit margins, to a certain extent, the support for the Chinese market has also been consciously reduced.” The Nokia source said.

The so-called “detours” on the 5G technology route mainly refer to Nokia’s early selection of FPGA in the base station architecture < / strong> (Field Programmable Gate Array) Scheme, but the cost of FPGA is relatively high, which results in obvious shipment restrictions.

In response to this, Nokia announced the “reversal of the bow” when it released its third-quarter financial report last year and decided to use SoC instead of FPGA to develop 5G chipsets. Sandro Tavares, head of Nokia ’s global mobile network marketing, said that Nokia chose FPGAs because it has the flexibility to program through firmware, but at the same time FPGAs have pushed up the unit price of 5G network equipment and consume more power than SoCs. Equipment is higher.

In addition to the technical route selection mistakes, some analysts believe that Nokia ’s acquisition of Alcatel-Lucent has not completed complete control of the latter, which also affects the speed of its 5G chip development.

Does Nokia still have a chance in China?

On April 30, just past, Nokia released its financial report for the first quarter of 2020. The financial report shows that Nokia’s revenue in the first quarter was 4.913 billion euros, a year-on-year decline of 2%; the net loss was 117 million euros, which was narrower than the same period last year. The epidemic in the first quarter had a negative impact on the company’s revenue of approximately 200 million euros.

It is worth noting that its Greater China revenue fell by 29% year-on-year in the first quarter. Nokia CEO Rajeev Suri said: “We still hope to play an important role in China in the future.We have also achieved some victories. “

Rajeev Suri said that Nokia Bell, together with Huawei and ZTE, won an order for China Unicom ’s 5G core network, and stated that Nokia is China Unicom ’s only foreign supplier of 5G core networks, accounting for about 10% of China Unicom ’s 5G core network. The share of virtualized IMS is approximately 17%.

At the same time, Rajeev Suri said that in the 5G base station equipment market, China accounts for a large part of the global market, but from a revenue perspective, it is not so important. “In the medium term, this part of the profit share is negligible in the global market.” At the financial report meeting, Suri emphasized that Nokia is currently pursuing the versatility and economics of products rather than localized customization strategies for specific markets.

In short, although there is no bid for China ’s 5G base station order, Nokia is more concerned about profits. InfoQ understands that the performance of Nokia devices in the 4G era is far inferior to that of Huawei and ZTE. “Nokia ’s functions, including interconnection with other manufacturers, are not good. Its equipment often has some strange problems, and the operation page is still in English until now. It feels like a command line. For Chinese engineers Not particularly friendly. In contrast, Chinese equipment manufacturers will have more functions and optimizations. “Operator engineers have feedback.

Although Suri also stated that Nokia is not completely hopeless to return to China’s 5G wireless market, the fact is that if you miss this tender, it will be difficult to participate again in the future. In other words, Nokia is basically out of China ’s 5G wireless access network market .

“The first batch of operators abandoned it (Nokia) , the second batch is difficult to include it again, after all There are three others. “Communication industry analyst Ma Jihua told InfoQ that there is only one communication standard now, and there were several standards before. Everyone still has more opportunities, but now there are several communication standards in dispute, and even Datang is a relatively small-scale manufacturer, so the opportunity for Nokia is getting smaller and smaller.

The above-mentioned operator engineers also believe that, “Looking at the base station, Nokia is basically squeezed out.”

The engineer told InfoQ that continuity is very important in the communications industry. Generally speaking, each country / region will use the brand of the previous generation when choosing the next generation of communication products and equipment, and will also try to build or expand later.Choosing equipment from the same manufacturer will generally not change the brand. Replacing the brand is usually a difficult or even forced decision.

“The same is true for operators. Now the 5G wireless equipment standard for 2020 by China Mobile, China Unicom, and Telecom is a major standard, and it is to build 5G base stations in all prefecture-level cities to achieve continuous coverage of 5G networks in the main urban area. If I use Huawei equipment now, and then I built Nokia equipment again, this network is basically obsolete, so it must not be done like this. Unless there are deeper reasons, or there are some non-technical reasons behind it, No operator will choose to do this. “

Wind and rain

In China, Nokia is no longer as glorious as ever. But in the international market, Nokia is still quite rewarding. As of April 30, Nokia had signed 70 5G commercial contracts worldwide, ranking behind Huawei and Ericsson.

Despite this, Nokia ’s situation is still not very optimistic. Since March 2019, Nokia’s stock price has fallen by 46%. Due to mistakes in the choice of technology route, the company’s business has suffered serious losses, and even once announced the suspension of dividend payment to invest in 5G.

In early March, Nokia announced that its current CEO Rajeev Suri will step down on August 31, and his post will be replaced by Pekka Lundmark, former president and CEO of Forfin Energy Company Fortum. Suri said, “After working at Nokia for 25 years, I want to do something different.”

Just a few days before the announcement of the above personnel changes, Bloomberg reported that under the pressure of fierce market competition, Nokia is exploring a series of strategic options, including the sale of some business assets in possible merger transactions.

For Pekka Lundmark, Nokia ’s Board of Directors sentHigh hopes that he will “continue to provide strong shareholder returns and reshape the company’s strategy.”

China Merchants Securities ’previous research report pointed out that the competition among equipment manufacturers is actually an all-round competition in technical capabilities, delivery capabilities, and product capabilities. To maintain the glory of the 4G era, Nokia still needs to continue to increase investment in R & D in the 5G field To enhance core competitiveness.

Xi Yushan, Director of Research and Research at Jibang, said that Huawei, Ericsson, Nokia, Samsung, ZTE and other equipment vendors are currently actively launching end-to-end (end-to -end) The solution is attacking the market and continuously improving network functions and features.

This article comes from WeChat public account: InfoQ (ID: infoqchina) , author: Luo Yanshan, editor: Cai Fangfang