NSN Goes Green to Woo Operator Hearts and Minds

| Nov 30, 2007 | Wireless Infrastructure | Competitive Intelligence Report

| Analysts: Peter Jarich

Current Perspective: Positive
Vendor Importance: High
Market Impact: High

Event Summary

On November 20th NSN launched its Energy Efficiency solution. Focused on profitable, environmentally sustainable business models, the solution includes four key elements: minimizing the number of network sites; energy efficient base stations; limiting base station cooling requirements; network usage optimizing software. In tandem, an “energy efficient” deployment with China Mobile was announced and NSN signaled energy efficiency as a core component of the company’s operating strategy.

Analytical Summary

• Current Perspective: Very positive on Nokia Siemens Networks’ (NSN) new Energy Efficiency initiative. By implementing incremental equipment changes (ambient cooling, coverage enhancing software) along with sound business practices, the vendor is in a position to tap operator concerns over the environment. More importantly, the moves address operator business concerns (deliver OpEx savings) and come with a commercial endorsement (a deployment with China Mobile). Ultimately, however, limited details on how efficiency gains are obtained may leave some operators doubting their credibility while a deeper focus on conservation will require NSN to focus on more than just wireless products.

• Vendor Importance: High to NSN, because energy efficiency is increasingly important to mobile network operators. Like most companies, cellcos are looking to be good corporate citizens and limit their impact on the environment, if only to look good to their customers. And, in an effort to keep OpEx in check, energy efficient networks are a prime candidate for cost cutting. NSN had to respond to these demands if only to match the efforts of Ericsson, a fellow GSM/UMTS leader who has already taken the time to highlight its efforts to be “green.”

• Market Impact: High on the wireless infrastructure market, because with market leaders including NSN and Ericsson both moving to highlight their focus on the environment and energy efficiency, it’s only a matter of time before competitors need to follow suit. NSN’s win with China Mobile aside, it is too early to know how a focus on energy efficiency will impact its sales.

Recommended Competitor Actions

• Alcatel-Lucent needs to follow suit. The year-old vendor still hopes to be a major WCDMA player, and has a foundation of deals and products to execute on the goal. At the same time, it has played up 2G momentum in emerging markets, momentum that could support future 3G success. As energy efficiency becomes an important network buying criteria, ALU must be ready to respond.

• Huawei and ZTE should begin highlighting their energy efficiency plans and capabilities. On the one hand, the Chinese vendors should be able to deliver energy-efficient solutions given access to low-cost R&D and a focus on newer platforms. On the other hand, with a strong position in emerging markets, these vendors must be able to support the lean OpEx requirements of cash-strapped operators in the developing world.

• All WiMAX vendors should consider making energy efficiency a component of their network R&D and marketing. Out of the gate, low power consumption may be a lot to ask of a new technology. Still, as with 2G and 3G, some claim to efficiency will be important for keeping in line with operator demands, particularly in the emerging markets which are expected to fuel early WiMAX builds.

• Ericsson needs to expand its green messaging. The vendor took an early lead down this path by playing up its biofuel trials, its position on the Climate Disclosure Leadership Index, and its Tower Tube site solution, which reportedly reduces power consumption needs by eliminating the need for external cooling and installing RF components at the top of the tower. For operators looking at more traditional deployments, Ericsson needs to explain how it is embracing energy efficiency within its current base station portfolio.

• All competitors should consider making energy efficiency the core of a specific professional services offer. Every telecom vendor has a professional services group. All have an interest in growing these businesses. By offering to improve an operator’s energy efficiency (and cut its OpEx) simply by optimizing its network or tweaking its business practices, a vendor could carve out new revenue sources, even if energy efficiency isn’t a component of their product plans.

Recommended End User / Customer Actions

• NSN customers need to seek details on the efficiency gains available in the near-term, without major network upgrades or expenditures. New coverage-enhancing software and energy-efficient base stations are a clear way to improve power consumption. However, if NetAct (which has already been deployed) and new business practices (which can be easily implemented) can deliver similar results more quickly and more cheaply, operators should be looking at them as a good place to start.

• Operators concerned about their impact on the environment should look beyond the impact of their networks. While the mobile network sucks up a lot of energy, so too do user devices. Pushing vendors to deliver more efficient devices would further improve the operator’s green image. At the same time, more efficient devices should result in longer battery life and more usage, directly impacting an operator’s bottom line.

• Mature market operators need to seek details on NSN’s coverage-enhancing software. Depending on the costs, this enhancement could be valuable for supporting applications ranging from remote access to improved in-building penetration. Broad-coverage base stations are often associated with emerging market operator requirements (mature market operators often build for density not coverage), but their value extends outside the developing world.

• Mobile network operators should consider using energy efficiency as a buying criterion across their network components. Most vendors have a wide array of mobile network products aimed at meeting a wide array of capacity and coverage requirements. Beyond capacity and coverage, focusing on energy efficiency could help to improve network economics while creating room for negotiation on network pricing.

CLIENTS ONLY

Current Perspective

Competitive Positives and Concerns

Recommended Vendor Actions

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