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13 November 2019

Nokia’s Azure alliance compounds the threat to MNOs from private 5G

One of the biggest potential risks for 5G operators is that some of the high value business will be taken away by alternative providers, especially companies targeting industrial and IoT services via private networks. Of course, MNOs can and do support private networks where an industry requires something more specific and optimized than the public network can support – and in future, some aim to enhance the model with the flexibility of on-demand network slicing. But shared spectrum and virtualized networks also make it easier for non-MNOs to enter this space, and the operators will see their traditional suppliers helping the new entrants to achieve their goals.

Nokia has been the most open about the potential to bypass its own key customers in some industrial contexts, especially since Ericsson pulled back from direct-to-enterprise activities. The Finnish vendor has built hosted and cloud-based private network offerings, as well as platform such as its WING IoT system, which can be used by enterprise specialists to deliver services more easily. Now it is bringing its 5G and IoT technology to the Microsoft Azure cloud, in a strategic alliance that could help enable a new wave of challengers to the MNOs.

The alliance is targeting ‘Industry 4.0’ applications in areas like manufacturing, logistics and transportation, whose processes are set to be transformed by a combination of cloud and edge computing, AI and machine learning, and next generation connectivity. The two vendors will upgrade several Nokia services, such as its Digital Automation Cloud (DAC), by moving them to Azure, and Nokia’s 5G-ready private cellular radio will also be powered by Azure.

This shows the 5G vendors, like some operators (see TIM article below) moving towards use of the webscale cloud platforms, as a more cost-efficient approach than building their own clouds. The networks and industrial services that Nokia and others need to support for enterprise customers are extremely demanding on cloud infrastructure, and the required scalability and optimization may often be best left to the leading platforms.

The new combined approach will harness several Azure assets including its cloud infrastructure, plus Azure IoT, AI and ML suites. These will support Nokia’s 4G and 5G-ready private network equipment, as well as its IoT, industrial automation and SD-WAN offerings. The DAC will be upgraded with on-premise Azure elements.

As well as DAC, Azure Virtual WAN (vWAN) integration has been added to Nokia’s Nuage SD-WAN 2.0, promising more reliable connections to software-as-a-service (SaaS) applications like Office 365.

Nokia’s World IoT Network Grid will now support Azure IoT Central, promising to enable seamless and simple on-boarding, deployment, management and support of IoT devices. And its Analytics, Virtualization and Automation cognitive services platform will also migrate to Azure cloud.

“Bringing together Microsoft’s and Nokia’s expertise in cloud, AI, IoT and networking will unlock new connectivity and automation scenarios,” said Jason Zander, EVP of Microsoft Azure, in a statement.

Combinations like these can benefit established telcos and traditional Nokia customers while improving Microsoft’s access to these operators. For instance, the UK’s BT is the first managed service provider to say publicly that it will offer the Azure/Nokia services. BT customers will be able to access them through the Microsoft Lighthouse software suite, allowing the telco to manage both Azure vWAN and Nuage Agile Connect SD-WAN.

But these platforms can just as easily support non-telcos, which may be more expert in targeting large enterprise roll-outs, using their own industrial spectrum, where that has been allocated; shared spectrum such as the USA’s CBRS; or paying fees for an MNO’s spectrum, a deal which would still reduce that operator to being a bit-pipe. For operators which see the enterprise and industrial IoT markets as the main way to escape consumer price wars and drive high value revenues into their new networks, this is a very real risk to the 5G business case – and one which may be compounded by the activities of their own traditional suppliers.

“We are thrilled to unite Nokia’s mission-critical networks with Microsoft’s cloud solutions,” said Kathrin Buvac, president of Nokia Enterprise and chief strategy officer, in a statement. “Together, we will accelerate the digital transformation journey towards Industry 4.0, driving economic growth and productivity for both enterprises and service providers.”