A process of development

Michael Matthews is head of strategy and business development at Nokia Siemens Networks (NSN). He joined the firm in September 2008 from Amdocs, where he was the chief marketing officer. He shares his views on the industry and the future of NSN with telecoms.com.

What does it say about NSN that a software specialist has been put in charge of strategy and business development?

We’ve said when we’ve talked about driving the strategy of the company that, if it’s about helping our customers deliver value to their customers, then we have to deliver network systems that work; which are market leaders in terms of mobile broadband performance, capacity, latency and manageability.

But increasingly if we’re going to help our customers get more money, it’s going to be about getting new services into the marketplace quickly. And about helping them get insight into their customers and leverage that insight to either retain their customers for longer or sell them more services-and that’s all software.

So equipment sales is becoming less of a focus?

We ended 2009 pretty well. We did sell 29 3G networks and we did get seven new LTE contracts, so we know that we’re doing well in that network part of the business. But we also sold 37 managed service contracts, which are all about helping our customers manage things better. And we ended the year with over one billion subscribers being managed by our subscriber data management system, which is helping our customers gain insight.

We have a consulting organisation that is increasingly being asked to help the operators. When you sell a managed services contract, which is a long term deal and involves us taking on the running of the network, it is about showing operators the business model rather than the technology model. We all understand the technology; now it’s about how can we make it work better for the carriers and that’s a business discussion.

If carries are unsure of the business model for mobile data, do you worry that they’ll hold back from investing in new networks?

It was interesting that [Vodafone CEO] Vitorrio Colao said during his keynote at Mobile World Congress that he feels the industry is strong and that Vodafone will continue investing because it needs to. Then Mike Lazaridis from RIM complained that he’s going to run out of network capacity and people will stop buying his boxes if we didn’t make the networks work better. There clearly appears to be demand.

And will that demand feed every mouth in the value chain?

The point that Vitorrio made is that we’re all going to be under pressure. But if that picture of the future of the world that we all believe in – where it’s not just about people being connected but devices and machine to machine communication as well – if that vision is going to continue to progress then there needs to be a healthy value chain.

It’s not just about Apple or Google making lots of money because those guys won’t make any money if the networks aren’t in place; and the network guys won’t make any money if guys like us aren’t there to help them make the network. So if we’re going to deliver what the end user wants then each of us needs to be in a healthy, rational state.

Can you foresee an environment where you expand your portfolio and customer base so that you could be offering products to a company like Google, or will you always be focused on serving the carrier community?

I don’t think any company should say they’re bound to any model forever. That would be folly. However, I do know that one of the principle strengths of our company is the relationship we have with our customers. They trust us and they rate the relationship with us as one of the single most positive parts of doing business with us. And I know that if we were to undertake a valuation of NSN, that would be one of the single most valuable things we have in the company.

So we need to work out what the trade-off is, and how we can create more value by making our customers more relevant to their customers. There is a battle out there for the hearts and minds of the consumer. Look at the public fight in the US between Apple and AT&T; ATT is losing that fight from a PR perspective and footing the bill.

We need to help our customers recognise that they can leverage their network by making their network APIs available. There is stuff that the network knows that can be made available to write cloud-based applications that will be a different class of apps but also extremely valuable to consumers.

Do the carriers have to band together to see off external threats, or can these kind of things be used by operators to differentiate themselves from one another?

I think there may be things they work together on. They may aggregate location and physical movement information, but they may offer individual services based on what they know from that aggregated data.

I live in Munich; It’s got a fabulous airport but there’s a lot of fog, so there are often delays. I hate waking up early and then finding out the plane is delayed. But if I had a service that knew I was on the 7am flight, knew the flight was delayed and used that information to rebook the car that was picking me up and reset my alarm and told me about the delay when I woke up, I’d pay money for that. A lot of people would and I think there will be thousands of services like that which someone can offer and I think having the network is going to make it easier to offer than doing it just on a device.

Can these kinds of things be done with the networks as they are at the moment?

NSN throws down gauntlet on smartphone signalling burden

These capabilities are inherent in what well put together 3G networks can do with smartphones today. The problem at the moment is the smartphone debate seems to be around speed. And that’s got nothing to do with it. It’s more about the signalling capacity and what happens to battery life. BlackBerry handsets are so famous for being efficient at battery usage but if you load Google maps on a BlackBerry it sucks it dead in less than a day. And part of that is all of the signalling that’s going back and forth.

There are many options available in terms of understanding how to communicate with the device and those optimisations are best done on the network side. We know how to do that and are doing that for some of the customers who have the iPhone. We know what an iPhone can do to an Ericsson base station. It can kill it. Ours run differently and can be managed differently.