Yesterday, Nokia and Alcatel-Lucent combined, and as a company name at least the latter is no more. The question now is whether the merger will accomplish anything. Many, myself included, have wondered if the Alcatel-Lucent combination wasn’t one of the classic cases where the whole ended up being a lot less than the sum of the parts. Can Nokia avoid that, and if so what will they have to do?
The first and most obvious point is that Nokia has to avoid the “It’s not going to happen to me” syndrome. The fact is that the forces that made the Alcatel-Lucent marriage difficult are forces that Nokia will almost surely face too. Complacency will be fatal.
The big risk to Nokia in this area has already arrived. Go to the website and read their mission statement; it’s the sort of thing any company hack could have produced. Do they think they have no need to communicate a real vision? If that is the case they probably have about six months to get smart, after which the fate of this deal will be sealed.
Second, Nokia needs to understand that even the combined company cannot win in a commoditizing market. Huawei is the company who wins in those conditions, period. Since mergers are usually driven in large part by the notion that greater efficiencies that arise from them will be an appropriate response to a commoditizing market, it’s likely Nokia is falling prey to this point. Is the purpose of the deal to just live a little longer? If so then just do whatever you like. If not then you need a plan to address commoditization.
Which brings me to the third point. The senior partner has little in the way of game-changing assets to play here. If Alcatel-Lucent had ended up on top, I’d shake my head at their decades-long struggle for unity but I’d at least believe that the new company had the pieces needed to win and an understanding of the process. Nokia is the senior partner. Can their management now tell all their product units that their role is to fade gracefully as technology generated in their new partner gradually takes over? That’s a tall order.
Nuage is a great SDN story that Alcatel-Lucent has hidden under a bushel from the first. Will Nokia now bring it into the Light? Alcatel-Lucent’s NFV strategy is one of six that could make the business case. Huawei has another, and you know Huawei is going to push theirs forward. SDN and NFV are two technologies that could address that commoditizing market, but can Nokia drive either or even want to?
There’s not a lot of time to find that out, which introduces point four. If an elephant takes a long time to turn, two tied together will take even longer. Alcatel-Lucent has been frustratingly slow to respond to market conditions. Nokia has given them a run for their money in the un-agility race. How will the two companies do together? Management decisions of great import will have to be made right now and those decisions implemented just as fast.
It is very obvious that SDN and NFV are trying to mature as a market. Yes, vendors either don’t like the idea of either of the two at all, or at the least are happy to let the old earth take a couple of whirls before anything happens. Yes, operators are still groping for a path forward. Despite all this, we are seeing small steps toward a respectable position on both SDN and NFV, and we surely will achieve Enlightenment in 2016. Will Nokia be able to lead as the market picks up?
Or inspire, bringing us to point five. Alcatel-Lucent and Nokia fought it out for the title of Least Inspiring Marketing and Positioning just as they’ve fought for the Turtle Award for Agility. Rival Huawei isn’t holding records for inspiring marketing either, but they are the price leaders in a commoditizing market and they’re leading in the technologies that could arrest commoditization. Who needs to sing and dance? Nokia does, because they have to make a point to buyers that they know what’s happening and how to make it happen better. Neither Alcatel-Lucent nor Nokia separately could do this. Can the new company, with everyone watching their backs and jobs, do better?
Which brings me to the last point, the tension between bureaucracy and leadership. If a camel is a horse designed by committee, both Nokia an Alcatel-Lucent have distinguished themselves by designing those committees. Market leadership, as Apple has consistently shown, is not a consensus process. Somebody has to emerge as the inspirational leader, not launch another study, yet the only technically strong and politically unified group in the new organization is Bell Labs. Will they inspire, or study as usual?
Alcatel-Lucent and Nokia are not truly symbiotic because they don’t really complement each other by filling in critical voids in the other’s position. Despite this, they are now one, and two cohabiting organisms really have only three possible relationships—symbiotic, parasitic, and indifferent. Nokia needs to reflect on this, and take a path that accentuates the relationship outcome they want even knowing it’s not the natural course. The other two relationship options would make this merger just another step on the path to marginalization.
There were once three independent companies here, then two, and now only one. You don’t have to be a mathematics genius to see where that progression is leading. Few consolidations driven by commoditization are survivable in the long term, and Nokia will have to demonstrate very quickly that this one is different.