Nokia gets in bed with Tencent and Baidu cloud business units

Nokia has announced an expanded relationship with two existing customers, to provide data centre interconnect (DCI) network solutions for expanding cloud computing business units.

While Tencent and Baidu are primarily focused on the Chinese market for the moment, which is hardly a bad thing, some might suspect these are two organisations which might have more international ambitions. This could scale into a very useful customer win for a business which has been struggling to maintain its credibility in the Chinese market.

“We continue to expand our relationship with China’s webscale giants,” said Markus Bochert, President of Nokia Greater China.

“Our leading DCI product portfolio and technology innovations in photonics and SDN controllers are key, as well as our strong R&D capabilities, globalized supply chain and highly responsive service teams. These latest contracts with Baidu and Tencent consolidate our presence in the webscale market in China, which we are confident will continue to flourish in the coming years.”

As part of the deal, Nokia will provide various solutions to connect data centres around the world and build out their software-defined DCI infrastructure. This is an industry which is currently super-charged due to COVID-19 enforced digital transformation projects, but also long-term trends towards mobility and edge compute services.

In a poll to readers, 84% of respondents said the work from home dynamic would continue post COVID-19. Some employees will be recalled to the office, but at least a portion of the existing demands for the cloud industry will remain. This is an encouraging shift in working practise for anyone involved in the cloud and data centre markets.

Nokia is certainly in a handy position, which is a plus when its Chinese woes in the mobile market are considered.

Back in April, Bochert wrote an open letter apologising for Nokia’s performance in the Chinese mobile market and a knee-jerk accusation from one of its employees. Having missed out on valuable Radio Access Network (RAN) contracts with China Mobile and China Unicom, two of the world’s largest telecoms operators, an anonymous employee suggested ‘drastic price cuts’ were the reason Nokia was snubbed as a supplier.

While the enforced apology from Bochert is somewhat of an embarrassing chapter of this tale, the main story line was taken a perilous turn for the Finnish vendor. With Huawei, ZTE and Ericsson collecting the rewards, Nokia’s position in the market was being called into question.

This announcement may not make up for the financial rewards of supplying tens of thousands of base stations, but it does somewhat demonstrate the resilience of Nokia as a business. It is after all one of the leading infrastructure vendors in the broadband and data centre segments as well as mobile.

One final element of this story to bear in mind is the international ambitions of the Chinese telecoms and technology champions. The domestic market is of course a very lucrative place to be, however a dominant position in China can certainly be used as a springboard to achieve success in the international markets. Should Tencent and Baidu be successful in such a strategy, one would presume Nokia would also benefit.

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