UPDATED 00:48 EDT / NOVEMBER 19 2015

NEWS

Nokia’s Suri says Cisco-Ericsson partnership validates his Alcatel-Lucent takeover

Nokia Oyj CEO Rajeev Suri said the recently announced partnership between Cisco Systems Ltd and Ericsson AB that will see the two companies resell each other’s products and services and develop new ones jointly, confirms that his decision to acquire Alcatel-Lucent SA was the right one.

Suri’s comments came as Nokia formally commenced its share offer to purchase Alcatel-Lucent’s outstanding shares, ahead of the merger’s expected completion next year.

“That announcement is a validation of our strategy,” Suri told the Wall Street Journal in an interview.

Nokia, which was roundly beaten in the ‘smartphone wars’ earlier this decade before selling its handset business to Microsoft, is now trying to reinvent itself as a general purpose network equipment provider. The company is already strong in wireless networking, and the Alcatel-Lucent acquisition will boost its strength in IP networks, routing and switching.

Suri’s comments were contradicted by Cisco’s executive chairman and former CEO John Chambers in a presentation earlier this month, when he said that partnerships delivered many of the same benefits provided by Nokia and Alcatel-Lucent’s marriage, only without having to go through a protracted and potentially messy merger.

Chambers further stressed his belief that the Nokia – Alcatel-Lucent would most likely fail, citing the merger that created Alcatel-Lucent in 2006, and Nokia’s deal with Siemens AG to create a joint venture in 2007. However, Suri said Chamber’s analogy was flawed.

“When those deals came, the road maps [for LTE] were already on the way — they were too late,” he told the WSJ. “Now, the new round of deals is coming ahead of the definition of 5G networks, which will require more converged network solutions, lower latencies and a focus on the Internet of Things. Widespread commercial deployments of 5G are not expected until around 2020 or 2021.”

Suri declined to argue the toss over whether an acquisition or a partnership is better, however he said both deals reflect a desire among vendors to stay ahead of the curve in a world where networking technologies are rapidly converging. “This market is converging rapidly, much faster than you think, and in order to serve operators that are becoming more and more converged, you need to have a portfolio that is end-to-end,” Suri told Reuters in a separate interview.

“We will be able to have one converged 5G offering rather than each of us building our own 5G network and then having to align them if we consolidated in two years,” Suri reasoned. “We are just ahead of the curve.”

Nokia’s bid to takeover Alcatel-Lucent has now been given the approval of French antitrust and government bodies, and is expected to formally close in Q1 2016.

Image credit: Hermann via pixabay.com

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