3GSM: Nokia, Siemens kick off joint venture ahead of closing

BARCELONA--Though the financial details of their merger won’t be finalized until later this quarter, Nokia and Siemens used the 3GSM World Congress to launch their joint venture, unveiling a logo for the new company while revealing details of their updated product portfolio.

Most companies are quiet during merger negotiations or the regulatory-approval process, but Nokia and Siemens threw caution to the wind to make a big splash at the world’s largest wireless-industry show. The two companies shared a huge booth and hospitality area bedecked with the new Nokia Siemens logo—a stylized wave in alternating color bands. But at the company’s unveiling, Nokia Siemens officials were careful to couch their announcements in language like “planned” and “proposed,” and even went so far as to introduce the venture’s new chief executive, Simon Beresford-Wylie, as “CEO-designate.”

In his introductory speech, Beresford-Wyle said the new company would be one distinct from its two parents: with a new corporate philosophy that would emphasize the company’s combined strengths in wireless and wireline networks and also liberate it from the more narrow technology focus of the separate vendors’ former network divisions. Beresford-Wylie, who is currently head of Nokia Networks, said Nokia and Siemens have been married to the GSM/enhanced-data-for-GSM-evolution (EDGE)/universal-mobile-telecommunications-system (UMTS) technology path in wireless for decades—but with Nokia’s recent mobile WiMAX win with Sprint and Siemens’ development of fixed WiMAX products, the joint venture will look to be more technology agnostic, reflecting changes in the wireless industry driven more by services than technology.

“We need to lose our religion,” Beresford-Wylie said. “We’re moving away from a world with a telecom’s rhythm to a world with an Internet rhythm.”

While Nokia Siemens spent much of the conference’s first day touting the strengths of the new venture—second only to Ericsson in global-networks sales volume—it also gave its customers first glimpse of new product plans, which cut duplicated product lines from both vendors’ portfolios and integrated other product lines into a unified platform.

On the key GSM/EDGE/UMTS side—the bulk of the combined companies’ sales—the central architecture will be Nokia’s Flexi base station line, a modular box that houses everything from Nokia’s Node B UMTS gear to its WiMAX kit. Ari Lehtoranta, Nokia general manager of radio networks, stressed that Nokia Siemens wasn’t merely tossing Siemens technology to the curb. While the Flexi will serve as the architectural platform all new products are built on, the technology going into them will come from both companies, he said. In fact, Nokia Siemens will extend the UMTS partnership Siemens struck with NEC, drawing the Japanese vendor’s expertise with Asian deployments into the mix. And while all new sales of UMTS base stations will be Nokia Node B systems after the merger, the joint venture will soon develop a next-generation base station incorporating all three vendors’ research and development, which will be the eventual platform for its future long-term-evolution kit, Lehtoranta said. Nokia Siemens will also fully support Siemens’ current deployments of UMTS gear, developing high-speed-downlink-packet-access and high-speed-uplink-packet-access software for future network upgrades.

On the GSM side, Nokia Siemens will continue to build GSM gear from both portfolios. Lehtoranta said that as an established technology, the majority of GSM’s R&D costs have already been expended. It would be more expensive for the venture to develop a unified line than continue to build both products, he said. The company, however, will develop a single radio-network controller that will support both base station types.

On WiMAX, Nokia Siemens will use Nokia’s mobile WiMAX solution and Siemens’ fixed WiMAX kit. The companies plan to develop a single IP multimedia-subsystem architecture—though on the switching side the vendors will stick to their strengths, using Nokia’s Release 4 next-generation switch and Siemens’ multi-access wireline switch. They did not say if they would develop a unified switch for both wireline and wireless networks.