InfoTech Analysts Available For Nokia/Siemens Comment

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TelecomWeb.com today reported that Nokia and Siemens have agreed to merge their communication-service-provider businesses to create a global fixed/mobile convergence industry giant.

TelecomWeb.com today reported that Nokia and Siemens have agreed to merge their communication-service-provider businesses to create a global fixed/mobile convergence industry giant with $20 billion in annual sales, thus positioning them to take on arch-rival and market leader Ericsson.

The new operation, to be called Nokia Siemens Networks, will be 50-50 owned by Nokia and Siemens. It will combine what is now Nokia’s Networks Business Group and Siemens’ carrier-related operations for fixed and mobile networks. Olli-Pekka Kallasvuo, Nokia’s CEO, will serve as chairman of the joint venture, while Simon Beresford-Wylie, currently executive vice president and general manager of networks at Nokia, will become CEO. Headquarters will be in Helsinki, Finland, with a “strong” regional headquarters in Munich, Germany, where three of the five divisions comprising the joint venture will be based.

The following comments can be attributed to analysts at TelecomWeb’s sister division InfoTech:

  • Jeanine Sterling, vice president/InfoTrack for Enterprise Mobility – “Last December, when we asked our enterprise panel where their companies stood on the implementation of fixed-mobile convergence, over half of the respondents said they already had it on their short-term radar – either actively investigating, planning or implementing.”

“This Nokia-Siemens merger is a good competitive move and should help service providers better meet growing end-user demand in this area. It creates a larger player to combat the combined Lucent-Alcatel, and it will wring out some cost and help margins as pricing gets sharper. And each entity should gain from the others expertise in complementary areas.”

  • Warren Williams, vice president/InfoTrack for Enterprise Services – “There is a lot of synergy in the Nokia-Siemens merger that will provide an end-to-end fixed-mobile convergence solution that includes mobile devices. I expect that as Nokia-Siemens and Alcatel-Lucent face off in the marketplace, prices will be driven lower, and other mobile end-point manufacturers will respond with rapid product improvements that will provide a range of offer choices for service providers. Possibly more than anything else, the Nokia-Siemens merger may be a harbinger that the fixed-mobile convergence market is about to accelerate.”
  • Terry White, vice president/InfoTrack for Converged Communications – “The major network service providers are all committing to implement IMS (IP Multimedia Subsystem), and one of the primary services that IMS facilitates is fixed mobile convergence. Nokia has a significant position in the wireless carrier equipment market, but not on the fixed wireline side. I believe that Siemens has a stronger position on serving the wireline side of service providers than it does on the wireless side. As a result, it was a logical move to combine the two businesses.”

“The proposed deal frees Nokia to concentrate on its primary business – the wireless device market. The real question, then, is what will happen to the enterprise communications business of Siemens? Over a year ago, there were rumors that Siemens was interested in making an acquisition to strengthen its position in the enterprise communications market. More recently, the rumors switched gears. There has been speculation that Siemens was looking to sell its enterprise communications business. I think the Siemens-Nokia joint venture increases the probability that Siemens will seek to exit the enterprise communications business as well.”

Sterling, Williams and White are available for additional comment on this developing story.

About The Telecom Intelligence Group

The Telecom Intelligence Group includes market intelligence provider InfoTech; TelecomWeb and TelecomWeb news break; newsletters Wireless Business Forecast, Broadband Business Forecast and Telecom Policy Report; tariff consultancy Tarifica; and the Web-based business-telephony-product database TelecomTactics.

Contacts:

Jeanine Sterling, vp and program director, 586/228-0687

Warren Williams, vp and program director, 800/610-3109

Terry White, vp and program director, 800/610-3109

Sharon Valencik, marketing director, 800/610-3109

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