Nokia’s software-as-a-service (SaaS) efforts continue to slowly gain momentum, outlining the vendor’s ongoing progress toward evolving the availability of its services and tapping into new market opportunities.

Nokia began its SaaS journey in early 2021. This was part of a broader re-alignment for the vendor, which has since been rehashed.

Mark Bunn, SVP for cloud and network services (CNS) at Nokia, recently noted in a press briefing that the vendor now has nine SaaS offerings and more than 40 customers, “most of which are commercial. They’re paying customers, some of which are in trials. … Our expectation is that we will convert at least a portion of those to commercial customers in time.”

Nokia’s most recent SaaS addition is its Network as Code platform that it released last September. That service – alongside an adjacent developer portal – includes an SDK, network API  documentation, a “sandbox” to create software code, code snippets that can be included in applications and developer analytics to track usage. It’s targeted at helping communication service providers (CSPs) monetize their 5G network investments, with Dish Network signed on as an initial platform partner.

Nokia views this SaaS opportunity growing at around 20% year over year, becoming a $2.6 billion total addressable market by 2026. Bunn said Nokia’s SaaS efforts are generating “multiple millions” of recurring revenues, “and that is on track with where we expected to be at this stage of our of our life cycle.”

“That number has grown substantially this last year and that's, to me, an indicator that the customers are now starting to become comfortable, or more comfortable at least, with software-as-a-service in the telecom domain with applications that are adjacent to or in the network. And they're signing longer-term contracts as a result,” Bunn said.

This growth opportunity could be crucial for Nokia’s CNS business, which continues to struggle.

The vendor reported a 5% drop in CNS sales for the fourth quarter of last year, which CEO Pekka Lundmark said was “driven by declines in all businesses with the exception of business applications, which grew.” Despite the drop in revenues, Nokia did note full-year CNS gross margins increased from 5.3% in 2022 to 7.9% last year.

Nokia’s SaaS deployment model is reliant on the underlying capabilities of the market’s cloud hyperscalers, which alters how the vendor is taking the different SaaS products to market. Nokia works with the major players but focuses specific services to specific cloud platforms.

“The customer really shouldn't know or have to care too much about the underlying hyperscaler,” Bunn said. “Now with that said, the hyperscalers are different. They each have their own unique capabilities and some are better at some things than others.”

Bunn noted that, for instance, Nokia’s security SaaS platform is designed to work on Microsoft Azure. “Security happens to be one of Microsoft Azure’s strengths,” Bunn said.

On the other hand, “if you look at Google, one of their strengths is analytics, and we use some of their managed services inside either our framework or the service itself in order to optimize the capability that we're giving to our customers,” Bunn added.

Nokia is likely to continue with this pattern.

“It doesn't make a lot of sense to me right now to do something like this: Take all the SaaS services and put them on every hyperscaler, on their marketplace. That doesn't make a lot of sense to me,” Bunn said. “But what makes more sense to me is to position them where the technology is most applicable to the service itself.”

Despite the opportunities, Nokia’s SaaS efforts remained paced.

The vendor announced a 5G standalone (SA) core SaaS product in late 2022, but that product did not reach full commercial availability until late last year.

Bunn explained that the initial unveiling was “announcing an intention. We had a plan to bring the product to market. What we have done is we actually have brought it to market. We created what we refer to as a trial version, something that would enable our customers to actually start using it, testing it for use cases, and some of the leading use cases are 5G use cases around the IoT space.”

That platform is set to gain 5G non-standalone capabilities that will allow it to support legacy 4G LTE systems running alongside 5G systems.

Bunn said the vendor is “being very deliberate” with this initiative.

“We do have a roadmap for it,” Bunn said. “We're not going to get ahead of our skis, but it's one of the reasons why I'm insistent we take on lead customers for this kind of technology because you want to do it right.”

Despite the long gestation period, Nokia’s SAAS efforts are making notable commercial progress with lead customers.

Finish operator Telia late last year announced that it has signed on to use Nokia’s 5G SA core SaaS platform as part of a European Union-funded innovation program to provide the operator with an automated and scalable software model to speed network monetization efforts. The carrier is also using Nokia’s new Network as Code platform to help create enterprise applications.

“I am really optimistic,” Bunn said of Nokia’s SaaS efforts. “I think that the growth is going to continue. I think the expansion will go into the network. I think there are some really cool use cases as well as just overall need for our customers to be able to monetize their investments in 5G. And I think those drivers are going to continue.”