IBC 2018: Nokia moonwalking explained by Velocix CEO

The video segment has been claiming scalps faster than Conan the Barbarian recently, but Velocix thinks it’s a move which makes perfect sense for Nokia.

While many at IBC 2018 this week have been complaining fragmentation in the industry is making business harder to conduct, Velocix feel this is the very factor which will oil the cogs and get the machine running smoothly again. Following the announcement Nokia would be divesting its interest in the video segment, we took the opportunity to have a quick chat with Nokia’s Paul Larbey in search of a more detailed explanation for the backtracking.

“The video segment requires a level of specialism from the technology through to sales which becomes difficult to do when you’re in a big company,” said Larbey, current CEO of the Nokia video business and future CEO of the newly formed Velocix. “Sales cycles are different, customer management is different. The separation allows for agility in a much more dynamic industry.”

But like Cisco and Ericsson, Nokia haven’t managed to exit the troublesome video segment completely. Nokia will still have a minority, and undisclosed, stake in the business, and will continue to act as a Velocix reseller. Larbey highlighted this relationship will be important in the first instance to manage relationships with customers, but also to maintain credibility with some more prickly accounts. Velocix will be a much smaller player, and the security of Nokia will comfort some.

The video segment has never been a particularly lush pasture for Nokia. Having entered the market, it exited, selling assets to Accenture, only to have another crack years later. Recent years have been somewhat of a struggle, though Larbey feels the Nokia business simply wasn’t right for the world of video.

Taking the explanation with a pinch of salt, according to Larbey, none of the buyers in the video space like buying end-to-end solutions, a Finnish speciality. The emphasis in the video segment is to purchase best in class solutions and products, most likely from smaller organizations, patching together their own supply chain. The trend has never leant towards purchasing a complete end-to-end, most likely proprietary, solution from a single vendor. Nokia likes to lock-in customers, and despite trying for years, it wasn’t able to strong-arm the industry into its own way of thinking.

With Volaris, Larbey and his team have an opportunity to operate as a smaller, more agile organization, which can make more responsive R&D decisions. It is the specialist service offering which the video segment craves.

Looking forward, Larbey will remain in charge of the Nokia video business until January 1 when he will take over as the CEO of Velocix. Aside from delivering the same experience for customers in the OTT and MNO segments, the team will also be aiming to expand, serving more customers in the programming and broadcast space. These are buoyant markets, which Nokia was unable to crack; it was too far removed from the traditional networking business.

While this is news enough for today, it is worth keeping an eye out for new product launches during the early months of 2019. Larbey was unable to give any specific details, though the sights have been set on launching offerings which will allow for a more personalised user experience for streaming.

The spin is whirlwind like, but the message does make sense in an unusual way. Video will not compensate for the Nokia struggles in the core business, and while momentum seems to be shifting in the right direction, perhaps it is a sensible decision to remove distractions. Nokia is a network business and it needs to sort out the cash cow before spending too much time on differentiation.