Can NSN turn CDMA customers into LTE customers?

I asked Nokia Siemens Networks (NYSE:NOK, NYSE:SI) head of North America Sue Spradley on Monday whether it would be “weird” to start selling CDMA after being a champion of the GSM family of technology for so long. That probably wasn’t my most insightful question ever, and Spradley laughed it off. After all, Spradley is the former president of Nortel Networks’ global services and operations, where she sold plenty of CDMA products in her tenure there.

But Spradley got into the spirit of the question. If no one outbids NSN’s $650 million offer to acquire Nortel’s (TSE:NT) CDMA and long-term evolution (LTE) assets, NSN will become the second-largest CDMA vendor in the world — a strange new role for the European networks giant. Spradley acknowledged that NSN would be a much different company, particularly in her region of operations. NSN would jump from being a relatively small player in the North American wireless market to the No. 2 spot, would take on a completely new product line it has never developed, sold or supported, and would inherit a deep roster of new customers foreign to the ways of the Finnish-German supplier.

NSN obviously will lean heavily on Nortel’s current CDMA organization, Spradley said, rather than trying to shoehorn the CDMA assets and business into its current GSM operator­–focused sales and support structure. While the CDMA group eventually will be incorporated into the culture and structure of the company, NSN is counting on those Nortel employees to maintain their close relationships with customers. In fact, cultivating those customers is the primary aim of the acquisition.

The CDMA market today is a healthy one — but one that’s certainly in decline, as more and more CDMA operators stake their future on 4G. On Monday, NSN CEO Simon Beresford-Wylie admitted that NSN wasn’t after Nortel’s 3G assets for the sake of supporting yet another wireless technology. NSN is more interested in Nortel’s broad array of CDMA customers and extensive reach in North America. Sure, CDMA will be a nice steady profit stream in the coming years, but ultimately NSN wants to turn those CDMA operators into LTE operators — LTE operators that use NSN networks.

By buying relationships, NSN is banking on future 4G business. NSN, by many accounts, is getting a bargain, but $650 million still is no paltry sum, especially considering that those incumbent relationships may no longer be so important in the new 4G world. Ericsson (NASDAQ:ERIC) is Exhibit A: Verizon Wireless (NYSE:VZ, NYSE:VOD) handed the Swedish vendor a massive LTE contract without having bought so much as a box of Girl Scout cookies from Ericsson in the past. Ericsson isn’t the exception, either. NSN itself won part of that contract — though not as big a part — to supply elements of Verizon’s IP multimedia subsystem architecture. Landing that deal, though, wasn’t easy.

“An established relationship with a customer isn’t a requirement to be successful, but it’s certainly helpful,” Spradley said. “I’m certainly not taking it lightly.” NSN and its competitors have shown that a new arrival can break into a new market and land a new customer through determination, scale and good products, but it’s always an uphill battle when fighting an incumbent, she said. “It’s harder to do it if you don’t have those everyday conversations with the customer — if you’re not supporting their everyday product lines,” she added.

It’s probably important to note that the other major winner in the Verizon Wireless contract was one of the operator’s most entrenched incumbents, Alcatel-Lucent (NYSE:ALU). And Verizon’s other primary radio access dealer was Nortel, which at the time of the contract award had just gone into bankruptcy protection. Ericsson had a lot going for it when it won that deal, including monstrous scale and a highly developed product line, but Nortel was no slouch either. Word has it that Nortel’s LTE technology was the envy of the industry — something NSN seems to have confirmed by bidding on Nortel’s LTE assets as well its CDMA business. Remember, NSN already has an LTE product line.

It would be silly to assume that concerns about Nortel’s questionable future had no bearing in Verizon’s decision to bypass its long-time partner for a newcomer. Now if that incumbent relationship had been in the hands of a financially stable — and non-bankrupt — NSN, VZW’s decision still might have been the same. But it might have been different.

E-mail me at kfitchard@telephonyonline.com.