5 minute read
Thank you, and hello to you all. It's a pleasure to welcome you to virtual Espoo. Since August, I have held almost 100 calls with CSP customers, and I have spoken at virtual round tables with hundreds more analysts, investors, reporters, and other interested people, and not to mention employees, of course.
“CSPs will remain at Nokia's heart.”
In those discussions, I have said two sentences more than any others. The first is my name is Pekka Lundmark, and the second is CSPs will remain at Nokia's heart. People have been really keen to hear that, and I can see why. I've spent the past 20 years working in enterprises from consumer goods to energy. And more recently, I mentioned the importance of those businesses to my review of Nokia strategy and operational model.
I get it. Enterprise is sexy. It is tangible. It has the margins and unbelievable growth prospects. In comparison, there is a risk that CSPs might seem a bit overshadowed, but not to me and my team at Nokia. Look at it this way. Not only do our CSP customers still provide the vast majority of our revenue, but they bring about 1 million people online every single day. And even when faced with CapEx constraints, they still deliver vast economic and social value.
If you want proof, look at the COVID pandemic. When lockdowns kicked in, our customers coped with a year's worth of additional bandwidth demand in the space of a couple of weeks, sending out public health messaging, providing free data to students, even channeling direct funding from governments to individuals. Boston Consulting Group did a fascinating thought exercise recently. They asked how the pandemic would have affected the global economy if it had struck two decades ago, rather than today. Their analysis suggests that in the year 2000, a maximum of 0.2% of the labor force would have been able to work remotely. That compares to the 10% of people who did so during this year's pandemic.
Today's connectivity levels have saved up to 300 million jobs. They have safeguarded $8 trillion in global GDP, and they have allowed at least 100 million school children and 200 million university students to carry on learning online. That's 75 times as many as 20 years ago. That is just as exciting as anything happening in the enterprise space. In fact, everyone who works in the telecoms ecosystem should feel really proud and really energized by what CSPs have achieved in recent months. I know I do. And that work has been noticed. Consumers and regulators alike have recognized your efforts.
But we have to ask what next? How do we, as an industry, keep on proving our value when there isn't a global pandemic to overcome? and particularly in the middle of an economic downturn, which many experts expect in the next few years?
“We need to think creatively about what the CSP can and should do, what our customers expect, what they want and how we can give it to them.”
I'm sure we all remember the financial crisis around 2008. It was brutal. From 2007 to 2009, the average revenue per user for many operators fell by over 15%. Customer churn rates rose by a similar amount. To avoid the same crunch this time, we need to think creatively about what a CSP can and should do, what our customers expect, what they want and how we can give it to them. In one way, this seems straightforward. In fact, our industry has already taken the first steps into a new era. Look at your massive investments in 5G, FTTP, fixed broadband, and new software and platforms. This groundwork creates significant opportunities for CSPs to expand beyond their traditional solutions.
Addressing new segments, one promising area is enterprise where we in Nokia are working closely with CSP partners. We are at an early stage in the process of digitalization, but even so, we have already seen a very healthy demand for cloud delivery, as-a-service business models, industrial digitalization, and value driving software, to name but a few developments. There is vast opportunity, but with opportunity comes competition. This aggregation and greater industry specialization will allow new entrants to join you in the 5G ecosystem. We are seeing that happen in many forms. Some big players have moved into mobile networks, and many smaller players see ORAN as an opportunity to micro target part of the market.
As if that wasn't enough, you still have to handle the constant battle for customer retention and continuous upselling. The fact that you need to take care of all those priorities at once is clear. New tech must be monetized. New revenue streams must be found. New competitors must be accepted, and existing customers must be kept happy, too, all while building trust and developing relationships. If it seems complex, well, it is. But that's what today's event is all about, openness, accepting the challenges and being open to new solutions, new ideas, new voices, new perspectives. Over the next few hours, you will hear from ground breakers, super forecasters, and thought leaders, some of the leading specialists in their field. They will talk about what they are seeing and how they predict the sector will evolve, what people expect our CSP customers to do, what they need them to do and crucially, what they might be willing to pay for.
And yes, they will be a few Nokia names too, specifically, Tommi Uitto, Josh Aroner, Sandy Motley, and Marcus Weldon. But the most important message I want to communicate is that this is not about sales or about market share or even about Nokia's strategic review. Even our own speakers will be putting all of that stuff to one side. Our priority is fresh, unbiased, creative insight, insight designed to get people thinking about our businesses and our sector holistically.
“I want Nokia to tell a more ambitious story of how our CSP partners can improve performance, unlock business potential and build a better world.”
COVID, the risk of a downturn, and general unpredictability around the world have shown us that we cannot just go on expecting business as usual. The health of this sector relies not only on providing good products and services, but on being ambitious. And under my leadership, I want Nokia to tell a more ambitious story of how our CSP partners can improve performance, unlock business potential and build a better world. This is the time to do it, and I know you share that same ambition. Today is a great starting point, so it gives me a great pleasure to declare Real Talk 2020 open. Thank you, and enjoy the day.
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