Chinese internet service provider Tencent struck a deal with Nokia to test 5G platforms and services in China. The tests will tap into Tencent’s more than 1 billion WeChat and QQ social media application users.
The work will include establishing an end-to-end 5G test environment in Shenzhen. The location will use Nokia’s AirScale Radio Access Network, 5G Core, MEC framework, and third-party devices.
Initial efforts are targeted at using 5G to boost service performance. The companies will also use artificial intelligence (AI) and automation management to promote 5G standards and an open source ecosystem in support of new services. One of those is edge computing for vertical markets like transportation, finance, energy, intelligent manufacturing, and entertainment.
Tencent is a big player in China’s social media and gaming space. It’s often cited alongside search giant Baidu and e-commerce site Alibaba under the label “BAT” as China’s answer to Amazon, Facebook, and Google in the U.S. A recent Synergy Research report ranked Tencent as the fifth-largest public cloud provider in the Asia-Pacific region.
“This collaboration with Tencent is an important step in showing webscale companies around the globe how they can leverage the end-to-end capabilities of Nokia’s 5G Future X portfolio,” noted Marc Rouanne, president of Nokia’s Mobile Networks division, in a statement.
Nokia earlier this year launched that portfolio, which encompasses all of Nokia’s work around 5G platforms.
Nokia Upside
The Tencent deal is a significant push by Nokia into wrangling more business from webscale companies. The vendor has traditionally relied heavily on the telecom sector to drive revenues, but competition and consolidation has crimped growth.
Peter Jarich, head of GSMA Intelligence, wrote on Twitter that it was “good to see continuing progress on Nokia connecting with webscale players.”
Nokia CEO Rajeev Suri recently told investors that the vendor had seen around 20 percent growth per quarter over the past two quarters across its enterprise, webscale, and cable TV markets.
“I would say overall, if you look at enterprise and webscale, they are structurally more attractive on the whole, i.e., higher margin potential in the long-term as well as higher growth,” Suri said.
For its most recent quarter, Nokia reported $6 billion in total net sales, which was an 8 percent year-over-year drop and just short of analyst forecasts. The sales dip was spread across most of Nokia’s operating divisions, with the most impactful hit coming from its networks division that accounts for the vast majority of its business.
Network division sales were down 12 percent year-over-year to $5.2 billion. But operating profits plunged a more dramatic 87 percent to $52 million.
Suri blamed the network spending shortfall on typical Q1 softness and operators keeping their powder dry until an expected burst later this year in spending tied to 5G networks.
In the U.S., the vendor has struck a deal with T-Mobile US, and it has been working on various trials with AT&T.
Nokia has also signed 5G deals with a number of international operators, including China Mobile, NTT DoCoMo, Orange, Vodafone, Korea Telecom, SK Telecom, and Telefonica.
Wow, that’s awesome! I guess change is the only constant in this business. Congrats to Tencent and Nokia!