Is Nokia's 5G overrated?

As the dominant player in the cell phone industry back then, it has been seen as a mobile provider compared to Ericsson and Huawei after transforming into the 5...

Dec 24,2020 | SHELLEY

Is Nokia's 5G overrated?

As the dominant player in the cell phone industry back then, it has been seen as a mobile provider compared to Ericsson and Huawei after transforming into the 5G field. However, after several years without much growth, the demand for 5G, although strong, always seems to lack a core support competitiveness.

After the third quarter earnings announcement, Nokia announced a new strategy to change its operating model. At first glance, Nokia seems to understand that investing in growth areas in the current state of restructuring is not an easy task.

This is because Nokia is focusing on investing in 5G networks and systems, but customers are not paying higher prices for equipment and services in the process. Nokia and 5G service providers need to convince mobile users to actually pay more for faster speeds and higher data consumption, but nothing is happening within the constraints of the current business model.

So, as Nokia fights for the 5G business, which seems to be seeing the light of day, it has encountered a problem in this area of user fees. After all, relying on customers will only transfer greater risks under their own door, which is not the kind of "responsibility" a giant company should have.

5g寬頻服務覆蓋

After the third quarter results were announced, the new CEO said: "The financial performance in 2021 is expected to be more challenging and Nokia needs to make more changes. Nokia will further increase investment in R&D to ensure its leadership in 5G."

According to the author's inquiry, the second quarter earnings report had discussed significant cost cuts. After the third quarter earnings report, Nokia plans to increase its investment layout in 5G, a decision made only after losing a major contract with Verizon worth $6.6 billion. So, from 2021 onwards, we could again see a situation where Nokia spends a lot but may gain almost nothing.

In this case, Nokia has reduced its operating margin target for 2021 from 1 point up or down from 9% in 2020 to about 7% now. So, in essence, operating margins could drop from about 8% this year to 7% next year. Although it is only a one-point fluctuation, it will have a profound impact on the market and on the company.

So the long-term goal of achieving a profit margin of 12% to 14% within a few years, which had been set earlier, will be postponed for at least two more years. Of course, this is still the case when the company's performance, such as more than expected performance.

According to another market survey, U.S. consumers do not want higher Internet speeds, and cable companies and ISPs are already investing in laying out 1G+ Internet speeds, but the average consumer is still using even 200M speeds. Is Nokia's 5G overrated?


Related Hot Topic

Is 5G contaminated?

Although 5G is non-ionizing because to its low wavelength and range, there is still a chance that it could harm the environment and people's health. The most significant effect of 5G will be an increase in atmospheric electromagnetic radiation, which will raise the risk of sickness and cancer.

Exists 6G today?

It's crucial to remember that 6G is not yet an operational technology. The industry requirements for 6G-capable network solutions are still years away, despite some vendors investing in the next-generation wireless standard.

Is 5G operational yet?

A statewide rollout of 5G networks is being actively pursued by all of the major US carriers. While some prefer lower-band spectrums for better coverage, others depend on millimeter-wave (mmWave) technology for faster speeds.

Exactly what is 5G?

While the standard "5G" is only available in low-band variants, it is actually real 5G. For its millimeter-wave, midband, and C-band 5G networks, AT&T utilizes "5G Plus."

Does 5G get warm?

In comparison to 4G networks, the 5G network offers faster network speeds and higher communication quality. But doing so produces extra heat. Additionally, due to network signal or environmental variables, phones may overheat.

5G Nokia

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