Nokia to replace CEO Rajeev Suri

With Nokia’s turnaround still seemingly distant, the Finnish networking vendor has decided it’s time for some fresh leadership.

Current Nokia CEO Rajeev Suri (pictured) will hand over the reins to Pekka Lundmark on 1 September of this year. Lundmark, who is Finnish, presumably has to work out six months notice at his current employer Fortum, one of the region’s biggest energy companies, where he is currently CEO. Lundmark also did some time at Nokia between 1990-2000.

“After 25 years at Nokia, I have wanted to do something different,” said Suri. “Nokia will always be part of me, and I want to thank everyone that I have worked with over the years for helping make Nokia a better place and me a better leader. I leave the company with a belief that a return to better performance is on the horizon and with pride for what we have accomplished over time. Pekka is an excellent choice for Nokia. I look forward to working with him on a smooth transition and wish him the best success in his new role.”

“I am honoured to have the opportunity to lead Nokia, an extraordinary company that has so much potential and so many talented people,” said Lundmark. “Together we can create shareholder value by delivering on Nokia’s mission to create the technology to connect the world.

“I am confident that the company is well-positioned for the 5G era and it is my goal to ensure that we meet our commitments to our customers, employees, shareholders and other stakeholders. Strong values, leading innovation and unflinching commitment to our customers have always been core to Nokia and I want to put this even more at our centre as we move forward.”

“With the acquisition of Alcatel-Lucent behind us and the world of 5G in front of us, I am pleased that Pekka has agreed to join Nokia,” said Risto Siilasmaa, Nokia Board Chair. “He has a record of leadership and shareholder value creation at large business-to-business companies; deep experience in telecommunications networks, industrial digitization, and key markets such as the United States and China; and a focus on strategic clarity, operational excellence and strong financial performance.”

“On behalf of the entire Board of Directors I would like to thank Rajeev for his many contributions to Nokia, where he has served with both honour and distinction. Rajeev’s loyalty, commitment, and deep personal integrity have served as an example to all of Nokia. I know that Rajeev will, like myself, always have Nokia blue running through his veins.”

That last sentence was presumably a nod to the fact that Siilasmaa is also calling it a day after eight years chairing the Nokia board, to be replaced by current Vice-Chair Sari Baldauf at the Nokia AGM in a month’s time. So this year will see the two people most individually responsible for Nokia’s current strategy and position leave the company. That’s a fairly major strategic rethink right there.

Suri oversaw a massive transformation of Nokia in his time heading up first Nokia Siemens Networks, from 2009-2014, then the whole company from 2014 until now. When Nokia bought Siemens out of their networking JV in 2013 it became clear that was the direction the company was headed in. This was confirmed when Nokia sold its shockingly diminished handset division to Microsoft the next year, along with its CEO at the time, Stephen Elop, which created the perfect platform for Suri to move into the top job.

He wasted little time in making his big strategic move: the acquisition of fixed-line giant Alcatel-Lucent to create an ‘end-to-end’ networking player. That was the narrative at the time and continues to be Nokia’s main unique selling point but, after an initial uplift, Nokia’s share price has slowly declined since then, implying all those lovely synergies have been slow to materialise. Share price reaction to this news seems neutral.

So the inference from Suri’s statement, that he’s just a bit bored and fancies a change, doesn’t really ring true. Chatting to industry figures about the news, the sense we get is that it was just time for a change. We haven’t heard any severe criticisms of Suri, just a sense that he may have run out of ideas. It could be argued that his job was to transform the company into a networking specialist and, having done so, it’s now time for someone else to take the ball and run with it.

Veteran telecoms Analyst John Strand reckons the Huawei situation has played a big part in Nokia’s current situation and thus Suri’s departure. One reason is what Strand characterises as “indirect government subsidies” in China, which have resulted in Huawei and ZTE now having a near monopoly among the Chinese MNOs. Recent industry estimates we have seen have Nokia’s share of that market as low at 3%.

Strand’s other point concerns the PR battle being waged by Huawei, in which it has become increasingly strident in its public statements in the face of US accusations. “He is a victim of a Chinese propaganda war,” Strand told us, indicating he thinks a stronger public performer is required now.

Whether or not Lundmark is such a person remains to be seen. He has been CEO of Fortum for five years and was CEO of Finnish crane company Konecranes for a decade before that. Among his executive positions at Nokia were VP of Strategy at Nokia Networks. So he certainly has the CV for the job, but this job marks a significant step up in terms of public profile.

Lundmark can presumably count on the full support of the board, though. Incoming Chair Sari Baldauf has not only been on the Nokia board since 2018 but was on the Fortum board for seven years prior to that and will have been his boss for a couple of years when she headed up the Nokia Networks business from 1998-2005.

So it looks like Nokia has decided it’s time for a fresh start and has put in place an experienced Finnish double act to do so. It would be odd for the company to make any other major strategic moves prior to Lundmark’s first day, but he will be hoping the quarterlies remain stable until he get’s the chance to make his mark.

White label, sub brands and MVNO, what is the right model? periodically invites expert third parties to share their views on the industry’s most pressing issues. In this piece Lynda Burton, Director of Wholesale at Three UK, discusses white labeling, operator’s MVNO and diversification strategy.

There will be many interesting debates happening at MVNOs Europe this November. One of the most fascinating will be on the future of sub brands and the value they will bring to an operator’s MVNO strategy over the next three to five years.

We’ve seen two significant launches this year: SMARTY by Three and Vodafone’s Voxi. It’s evidence that operators still need ways to diversify through multiple brands if they are to appeal to customers they wouldn’t otherwise attract. It’s an extension of the widely held belief that MVNOs are crucial for stretching a network’s assets. Of course, the case for sub brands remains simple and compelling – create a brand you control as an operator, and target specific customer segments. It limits the risk of cannibalisation and provides economies of scale as the sub-brand operates within the operator.

All of the best practice, systems and commercial relationships can be easily harnessed and exploited. SMARTY exists for this very reason and has been a commercial success as a result. But success is always hard fought. Launching a new brand requires precision marketing, and well-negotiated channels to market. These are overheads that don’t come cheaply and can potentially undermine the savings and aspects of control that such a ‘parental’ arrangement has.

It’s why traditional MVNOs still have their place in our market. Granted the argument that revenues are naturally lower does exist, but people often overlook the fact that the marketing costs are lower too.

iD by Carphone Warehouse is an example of an MVNO getting the balancing act of investment in infrastructure and marketing spend right. Its customer numbers show that there is room for MVNOs in the market, announcing 800,000 customers with plans well underway to hit 1 million. All healthy incremental customer numbers for Three.

CPW knows what its customers need inside out and has built a service that is differentiated and targeted. It’s taken full advantage of its existing distribution strength and combined it with Three’s award winning network, and ability to deliver innovative MVNO services such as VoLTE and voice and text over wifi.

But the setup and ongoing investment in the infrastructure to support an MVNO can be high, and Three has seen that there is a better way…

What is it? White labeling.

The best example is Superdrug, which launched 3 months ago and  is leading the way on the win/ win of a a white label platform.  In this new white label model, the systems and technical relationships are managed by the operator. It takes the heat out of the expense of set up, and frees up the cash to get the proposition and marketing just right. In short, the risk diminishes.

As such, Superdrug was in a strong position to take full advantage of our experience of taking new brands to market and combine it with its very powerful customer loyalty programme and distribution network.

Superdrug understood what its customers wanted from its wealth of customer insight and developed a service it knew people would buy, and rewarded them when they did. And in turn, it gave the board assurances that the business case could and would work.

Is there a retail board that would turn down the chance to extend its well-loved brand in such an economical way? White label MVNOs are a very interesting and exciting way to compete in the current tough trading circumstances.
It’s these pressures brands face to improve revenue and keep customers loyal that will drive the MVNO market over the coming year. In particular, we’ll see brands realise that they can achieve their goals via a white label partnership. Brands, which have all the kudos but struggled to make the MVNO numbers work before now, will see there is a viable way to make their brand work harder.

We’ll see the existing MVNO brands re-evaluate their approach to running a network and switch their models to white label services to cut costs.That’s where the real debate will be and it’s the operators who are most in tune with these evolving dynamics that will win out.


A headshot of Lynda Burton, Director of Wholesale at Three Mobile UK and speaker at MVNOs Europe 2018Lynda Burton is Director of Wholesale for Three UK, she owns MVNO, white-label partnerships, bulk messaging, carrier services and international roaming functions. Lynda has led Three’s rapid growth strategy in wholesale which has included delivering the UK’s fastest growing postpaid MVNO, iD Mobile, winning B2B MVNO Gamma Mobile and providing the connectivity solution in the UK for Google’s Project Fi MVNO. She has also driven the delivery of innovative new services including OTT virtual numbers that allow appVNOs, high bandwidth IOT solutions and supporting Three’s Feel at Home roaming proposition with unrivalled cost economics.In June 2018 Lynda announced a new white label partnerships model that allows brands to launch MVNOs simply and with limited investment in technology, the first brand to launch was Superdrug Mobile.Prior to heading up the Wholesale division, Lynda was Director of Programme and Operations. She has extensive experience in the telecommunications market across both the UK and Australasia.

Hear from Lynda at the MVNOs Europe 2018, taking place in London, 6 – 7 November 2018. Book your tickets now.

Inside Ericsson

Ericsson invited me to hang out with them in Stockholm for a couple of days so I did and here’s what I got up to.

Towards the end of Ericsson’s Q1 quarterly earnings call, Head of Marketing Helena Norrman and I indulged in a spot of light banter, during which she reflected on how nice Stockholm is at that time of year. I responded that I haven’t been there for ages because Ericsson doesn’t seem to do press trips anymore, at which point Norrman called my bluff and invited me over. Before long the excellent Minako Nakatsuma Olofzon had sorted everything out and off I went.

The last time I was in Stockholm was for an Ericsson analyst day and the trip was so brief I didn’t really get to see much of the place. This time I decided to stay for three nights so I wouldn’t be in a hurry. I can definitely recommend the Haymarket by Scandic, which is a converted art deco department store in the Norrmalm district, which seems to be where a lot of the cool kids hang out. If you don’t believe me, check out the bar (which isn’t cheap).

Ericsson tour bar

My first meeting was with Helena, who have me the top line on Ericsson’s current situation, strategy, etc. The long and short of it is that Ericsson was spread too thin by the time the Hans Vestberg era came to an end. In its desperation to compensate for declining revenues in its core markets Ericsson had got carried away with diversification and entered into too many ill-advised deals.

New CEO Börje Ekholm noted all this and decided the first thing that needed doing was some pretty serious pruning, in the form of disposing of some of Ericsson’s more peripheral and/or under-performing businesses and a headcount reduction of around 20%, including a fair few senior execs. The new streamlined company now focuses its efforts on four main silos: networks, managed services, digital services and emerging business (which seems to include ‘others’ like Red Bee).

I wasn’t able to bring a video crew with me for this visit so I decided to record some video on my Samsung Galaxy S7 phone, using a selfie stick/tripod and some clip-on microphones. This was a bit of an experiment and to say it was an unconditional success would be a definite overstatement, but hopefully it added some value. Here’s me chatting to Helena – you will notice this was recorded just as the football World Cup was started, so you get to the benefit of hindsight from which to judge our expectations.

We then went on a tour of the Ericsson Studio, which is a kind of permanent manifestation of Ericsson’s Mobile World Congress stand in so much as it features a bunch of demonstrations of Ericsson’s latest cleverness. My guide was Jon Gamble and my camera operator was Minako, so I’ll let this video clip, in which I get virtually knocked off my bike, speak for the Studio.

Back to the meeting room and a chat with Peter Laurin, the head of the aforementioned managed services silo. I hadn’t realised how active Ericsson is in the field maintenance of networks, it apparently manages the field forces of most of the UK operators. But it looks like it has been a bit too active, because this division has been losing money and part of the turnaround strategy has been to exit some ill-advised contracts. Here’s Peter to tell you more.

My final interview of the day was with Håkan Andersson, Head of Technology Strategy, who took me through the current technological environment and what Ericsson’s strategy is for capitalising on it. As you would expect it’s all about the 5G and Andersson gave me a pretty deep dive, so before filming the clip below I had the temerity to muck about with his slide deck in order to distil it down to what I thought was the most interesting stuff. Thanks for putting up with my control freakery Håkan.

In the evening I had the pleasure of hanging out with Helena, Minako and Head of Corporate Comms Peter Olofsson. We jumped on a boat and went out to the first of a group of small islands known as the Archipelago, to have dinner in a restaurant with great views and an even better selection of aquavit called Fjäderholmarnas Krog & Magasin. Here we are on said boat having a cheeky beer to get things going – I had to help Minako with hers – followed by a cool view of Gamla Stan (the old town) from our returning boat.

Ericsson tour boat beers

Ericsson tour old town

The next day I met up with Peter Olofsson again to check out a really interesting exhibit that’s hidden away from the rest of the world in a back room of the police museum. The company was created by Lars Magnus Ericsson back in 1878 to bring telephones to the Swedes. Somehow they managed to preserve his original boardroom and transport it to darkest Östermalm, where now only people who know the secret Ericsson password get to see it. It’s like stepping into a time machine and a great reminder of the dizzying progress the telecoms industry has made over the past century or so.

Ericsson tour boardroom

A cab ride back to Ericsson Towers in Kista led to a chat with Matilda George, who runs Ericsson Garage. While this isn’t another piece of ill-advised diversification it is symbolic of need to not stand still either. The Garage is essentially an in-house incubator where Matilda and her colleagues get a free rein to hang out with startups, support them and maybe even get involved for the long term. It was especially pleased to see the array of bean bags, primary colours and foosball tables that everyone knows are essential to fostering a startup environment.

Ericsson tour garage

Following a spot of lunch in the impressively large and well-stocked Ericsson canteen I met with Mikael Halén, Director of Government and Industry Relations. I decided not to keep filming because I wasn’t sure how the experiment was going, but Mikael filled me in on how companies like Ericsson interact with governments and regulators as trusted technology advisers.

We walked through the pros and cons of the three main 5G spectrum bands, with 700 MHz being used mainly for coverage, mmWave for capacity and 3.5 GHz having a more general purpose role in dense environments. A big issue is spectrum harmonization, especially in the 3.5 GHz band, with big contiguous chunks of it needed to deliver the best capacity outcomes. In that context we also discussed the pros and cons of spectrum being licensed and concluded spectrum availability is one of the biggest factors affecting the speed of 5G rollout.

Next I met Gustav Brismark, Chief Intellectual Property Officer, who was carrying a patent the length of an entire hardback book that covered 5G NR. This seems to be a pretty big deal for Ericsson and, which takes pride in being the biggest contributor to mobile standards. We chatted about the standardization process and the need for FRAND licensing, to ensure major contributors to standards are not able to hold the rest of the industry to ransom.

My final meeting was with Thomas Norén, head of 5G Commercialization, who took me through some of the business cases for 5G. The grid in the photo below organises for key features of 5G according to how easy they are to both sell and deploy, with enhanced mobile broadband easy on both counts and critical machine type communications conversely tricky.

Ericsson tour Noren

Thomas was keen to emphasise some of the technological advantages the reckons Ericsson has over its competitors, with the ability to easily upgrade its latest kit to 5G uppermost among the competitive trump cards in its deck. I asked if that’s why Nokia CEO Rajeev Suri decided to brief against exactly such a feature and let’s just say Thomas made his disagreement perfectly clear.

I didn’t get to meet Börje Ekholm on that trip as he was off flying around the world doing all kinds of important CEO stuff like signing deals and hatching plans, presumably. More recently, however, a few telecoms hacks got to share a beer with him in London, which was fun. I couldn’t resist dangling the Nokia FUD carrot to him too and he diplomatically side-stepped the issue by noting they must be doing something right if their competitors publicly brief against them. You can hear more about those drinks on this podcast and here’s a photo of me hanging out with the main man.

Ericsson tour Ekholm

Public relations has become a lot more streamlined over the past decade or two and visits like these are increasingly rare. The vast majority of what I write is derived from some single written source such as a press release, but it’s good to put a human face on the companies we cover from time to time and maybe even introduce a spot of nuance to my coverage.

Ericsson is a big company, humbled by its reversals of recent years. Everyone I met reflected that humility and I get the impression Swedes are generally quite understated. But at the same time there’s a lot of pride and ambition on show and I think they’re looking forward to a time when they can be a bit less humble. There are signs of recovery now and it would be cool to go back to Stockholm and check in with them in a year or two, if only to visit another island in the archipelago and have a bit more aquavit.

Ericsson tour aquavit

Nokia’s new Technology Committee – good idea, poor execution

With the dust settled following Nokia’s Annual General Meeting now is the time to look at whether any of the changes will have a meaningful impact on the business.

Nine of the board members have been re-elected, each receiving a handsome payment of at least €160,000, and one new member has been introduced, the former Head of Nokia Networks Sari Baldauf. A dividend payment of €0.19 per share for the 2017 financial year has been set, and all the committees reporting into the board have been settled. Interestingly enough, the business has also decided to introduce a new one, the Technology Committee, but is it worth paying attention to?

The committee currently features six members, Bruce Brown, Jeanette Horan, Louis Hughes, Edward Kozel, Olivier Piou and Risto Siilasmaa, with Kozel acting at the Chair, and a mission statement to review Nokia’s innovation and technology strategies. The committee will meet at least twice a year, with the agenda being defined by the Chair in conjunction with the Nokia management team. The four objectives of the team will be as follows:

  • Provide opinion and advice on Nokia’s approach to major technology innovations
  • Assess trends which may result in disruption or opportunity
  • Evaluate risk and opportunity in the Nokia R&D programme
  • Judge Nokia’s technological competitiveness

When we first saw the news about the committee we liked the idea, but now we are not too sure. The theory is sound, but the execution seems to be poor.

On the surface the concept of an independent technology committee evaluating strategic and R&D decisions is a nice idea. When evaluating your own work, there is a tendency to be biased; a fresh eyes and minds to provide feedback is a sound theory, and could provide alternative thoughts to improve the foundation and direction of strategies. It takes a very mature person to open themselves up to critique from outside influences, but ultimately it can prove to be an excellent way to do business. Unfortunately, Nokia doesn’t seem to have done this.

The current committee is made up of individuals who were already working with Nokia in one form or another, being full-board members or contributors to another committee. This is a fresh perspective on the definition of ‘independent’, as most of these individuals would have already contributed to the Nokia strategy, directly or indirectly, in one form or another.

Brown has been a board member since 2012, Horan since 2017, Hughes since 2016, Kozel since 2017, Piou since 2017, while Siilasmaa is the current Chair of the Board of Directors having served since 2008. Nokia is essentially asking for validation on strategic thinking from its own cogs. Rubber stamping its own work offers questionable benefits.

Secondly, when you look at the individuals who are on the board, you also have to question whether this is the most innovative thinkers available to the business. There is no doubt these individuals are incredibly intelligent and astute businessmen and women, however looking at the CVs raises some questions. Brown is the former CTO of Procter & Gamble Company, Horan was a MD at IBM prior to the positive turnaround, Hughes’ experience was at Lockheed Martin and GM, Siilasmaa was CEO at F-Secure until 2006 before hitting the Board of Director circuit. These will all be very accomplished individuals, but whether this is the right experience to dig Nokia out of its slump and make it competitive again is another question.

Bringing Kozel and Piou onto the committee look like good moves however. Piou was CEO of Gemalto until 2016, while Kozel held various management team positions in the likes of Range Networks, Open Range and Deutsche Telekom over the years. This is the sort of experience which might provide alternative thinking to the Nokia norm, creating more creative and assertive decisions.

Nokia had an opportunity to do something very interesting with the technology committee, but after digging a little deeper it looks like little more than window dressing. We wouldn’t expect anything too revolutionary to come out of this apparent PR exercise.

Ericsson CEO plays the ‘strong and stable’ card

Börje Ekholm, CEO of Ericsson, laid out his updated strategy at this company’s AGM and seems to have taken inspiration from the world of politics.

A lot of what Ekholm said echoed what we heard in our interview with his second-in-command Fredrik Jejdling. Last year was all about consolidation, streamlining and trying to sort the wheat from the chaff. “We are confident that the strategic choices we have made will create a strong and successful Ericsson over time,” said Ekholm. “But as you know, we are not there yet.”

Ekholm seems to be a fan of the ‘rule of three’. While the title of his AGM presentation was ‘stabilize and simplify’, he explained the strategy is all about three cornerstones: technology leadership, product-led solutions, and global scale and skill. All this is designed to help service providers with their three big challenges: decreasing the cost per gigabit, becoming fully digital, and finding new revenues.

Ericsson sales were down 10% last year and Ericsson shelled out SEK 40 billion on restructuring costs, impairment, provisions and adjustments in customer projects. “2017 was a tough year with a continued declining market,” said Ekholm. “We are far from satisfied with our performance and have taken a number of actions to turn around the development and improve profitability, to build a strong Ericsson for the long term.”

Here are some of those actions:

  • 42 non-strategic contracts identified in Managed Services, of which 23 has been either exited or renegotiated during the year.
  • In Digital Services, product roadmaps and project delivery have been stabilized, and 45 non-strategic or unprofitable contracts have been identified, of which around 50 percent should be either concluded or exited during 2018.
  • Large cost savings in the media business, a majority of Media Solutions divested.
  • Ericsson Power Modules and around 20% of the US number portability business divested.
  • Completely or partly left non-strategic areas, including fiber roll-out, field services, and Industry & Society.

The underlying narrative is all about a change of momentum, with declines in both the underlying markets and Ericsson’s relative performance starting to head back into positive territory. “We have been working hard to turn around the development,” said Ekholm. “It is therefore satisfying that we, after several years of decreasing market share, have started to increase our share, and doing so with improved gross margin.”

Ekholm’s concluding comment was a summary with an underlying plea for continued patience as he tries to turn the supertanker around. “In 2017 we stabilized and simplified the company, we took out significant costs, and invested in the future,” he said. “We have a clear strategy and clear targets for turning Ericsson to profitability and a strong long-term development.”

Verizon builds its own mini-Ericsson by making Rima Qureshi Chief Strategy Officer

Further evidence that operators are increasingly looking to go it alone on networking tech as Rima Qureshi joins her old Ericsson boss at Verizon.

Qureshi threw in the towel at Ericsson back in May of this year and apparently negotiated four months of gardening leave, down from the presumed six, presumably because Verizon is not a direct competitor to Ericsson. That status may change, however, if Verizon keep stockpiling former networking execs.

At the same time former Ericsson CEO Hans Vestberg was escorted from the building at Ericsson last year, Qureshi was demoted from her Chief Strategy Officer role and put in charge of North America, which included giving CPR to the struggling Cisco partnership. Vestberg, of course, ended up at Verizon in March of this year and seems to have wasted little time in asking Qureshi how she felt about her demotion.

Not great, it seems, and Qureshi clearly missed the strategy game as she has accepted the CSO gig at Verizon too, replacing the excellently-named Roy Chestnutt. She won’t be reporting to Vestberg this time, though, as her remit seems to cover the whole company, not just networking, and she’ll be reporting direction to Verizon CEO Lowell McAdam.

“We thank Roy for his leadership and strategic focus, which have helped transform Verizon into a major player in next-generation markets,” said McAdam. “The addition of Rima is another game-changer for Verizon. She’s a visionary leader, with a global perspective and a thorough understanding of our industry and where it’s headed.”

Qureshi didn’t offer a canned comment but we can safely assume she’s pleased, excited, pumped, etc. Verizon is clearly tooling-up to be increasingly self-reliant in the 5G era. AT&T is already very proactive in this area and there is a global trend of operators being increasingly disinclined to wait for vendors to solve their technological problems. That’s something the likes of Ericsson, Huawei and Nokia should be very concerned about.