at the whole supply chain, it makes
more sense—especially when you
talk about the high value products—
to have the manufacturing closer to
where the demand is because the
technology choices are getting more
and more integrated. Plus, the added
value element of manufacturing is going
down over time while, simultaneously,
the transportation and logistics
costs are increasing. So having a
manufacturing location in Europe, to
serve Europe, is a better business case
for us than having a centre further out,
even though the manufacturing costs
would be somewhat lower.”
Nonetheless, the mergers that created
NSN and Alcatel Lucent were
probably driven in part by the cost
competitiveness of the newer players.
There has been much speculation as
to whether more consolidation in the
vendor market will be forthcoming.
So what does Vehviläinen think about
this prospect?
“It’s difficult to say. But the situation
with the smaller players is not
something to envy. You see more announcements
coming about various
types of co-operation. The driver is
to try and somehow create enough
scale to be able to invest in the next
generation technologies,” he says. “The
investment required to be competitive
in the next generation is likely to be
huge and I think it’s very difficult for
the players who are sub-scale to be
competitive in that.”
The integrated technology choices
that Vehviläinen references will be
key to NSN going forward, he says.
As big turnkey contracts diminish in
number, being a total communications
player is essential. “More and more
of the world is covered by wireless
networks,” he says. “But there are a lot
of places that are only operating 2G
and we have a lot of 3G opportunities
remaining. Then, down the road, there
are WiMAX and LTE deployments. So
there are big infrastructure contracts
coming up.”
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career history
» Mika joined Nokia in 1991, and has held several
management positions in sales and marketing, strategy
and business development of Nokia’s product businesses
in Asia, North America, and Europe.
» He will ensure that Nokia Siemens Networks provides
reliable performance and support in all of its operations.
Mika has a reputation for building strong teams of dynamic,
open-minded, and customer-focussed employees.
» He was born in 1961, in Finland and holds an Advanced
Management Program (AMP) degree from Harvard
Business School and a Master of Science (Economics)
degree from the Helsinki School of Economics.
» Mika is married and has three children. He enjoys sports
and the outdoors, playing tennis, skiing, and hiking.
There is perhaps greater opportunity
on the fixed side, however. “The penetration
of fixed broadband is really small,”
he says, “so there is huge potential for
that to go up.” The need for Nokia to
have a greater strength in fixed was, he
says, “one of the primary bits of logic
behind the merger. Fixed and mobile are
converging around core management
systems. And if you look at the operator
community, you see more and more fixed
and mobile organisations converging;
looking for synergies. So having a fixed
side is important for us,” he says.
As NSN gears up for LTE and WiMAX
deployments, what are Vehviläinen’s
feelings about the opportunities for
the two technologies? “There is room
for all technologies but they do have
slightly different user cases. From a
technological point of view, WiMAX is
much further ahead than LTE. It has
its own ecosystem, while LTE is further
down the road. I think we need to be
realistic about LTE timelines, because
it will come at a different pace. It will
be like 3G, which appeared in the
Japanese market a long time before it
became widespread.
MCI INTERVIEW
“LTE will first appear by about
2010, I think. But it will not be mass
market. One key thing that we see is
that the CDMA operators are clearly
coming to the end of the road in terms
of their technology and they are moving
in the LTE direction. They are
probably more in a hurry to get there
than those operators who have the
3G evolution to rely on. So it will be
the Japanese players and the CDMA
players first, with the 3GSM operators
following on.”
If vendors are exercised by the
challenges of cost management, their
carrier customers have plenty to occupy
their own minds. The vendors are
a natural sounding board for operators
wondering how they are going to
evolve their business. “I think everyone
has a question mark about the future
business model of the operators and
the impact of the internet on the mobile
industry,” Vehviläinen says.
“What role will the operators have
and how will they monetise their
value? That’s the big strategic issue.
Technically the capacity challenge for
the mobile players is not in the radio
side, it’s in the backhaul.”
Vehviläinen is optimistic about the
mobile carriers’ opportunities, though.
“I think they have several very strong
things in their favour at the moment.
They have a great subscriber base and
very healthy cash flow and profitability.
The information they have about
the end user would be an envy for any
business looking to understand the
subscriber base.
“So how do you leverage and take
value out of that? Probably, going forward,
there will be more ways of doing
that than there are today. Today it’s
more subscription based but I think
in future you’ll see more transaction
based business ideas,” he says.
In the meantime, Vehviläinen has
the task of ensuring that Nokia Siemens
Networks positions itself as an
enabler of as many of those evolving
business cases as possible. �
23
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