By Tommi Uitto
We have an ongoing improvement programme to significantly strengthen Nokia’s Mobile Networks business and Radio Access Networks (RAN) products. Supported by the positive and encouraging customer feedback we have received since late 2019 and especially during 2020, I am pleased to share some detail on the incredible progress we have made so far.
Regarding our 5G/NR chipsets, the share of “5G Powered by ReefShark” products shipped was already at 25 per cent in Q2 2020, and we believe we are on track to achieve at least 35 per cent by end of the year. This reflects the shift in our deliveries from Field Programmable Gate Arrays (FPGA) to more cost-efficient and power-efficient System-on-Chip (SoC) processors in both the baseband and radio units of our base stations (BTS). By the end of Q2 2020, the new ReefShark SoC-based Massive MIMO radio unit (active antenna) product family was shipping in 13 variants across the global market in different frequency ranges. This number continues to rise. We now also have ReefShark SoCs available for the next generation of Nokia AirScale Multi-RAT baseband and we are on track to start shipping the boards by the end of 2020. Next year, we expect that our ReefShark SoC-based baseband and radio units will take lion’s share of our deliveries, reaching at least 70 per cent by year-end.
Our “5G Win Rate” measures our success in converting our 4G/LTE customers to Nokia 5G/NR and winning share from the competition in the transition from 4G/LTE to 5G/NR, net of any market share losses to competitors during such transition. The 5G Win Rate tracks currently at over 100 per cent, excluding mainland China. In other words, we have won more 5G/NR share than our run-rate 4G/LTE share would have warranted. Further, we believe we are on track to achieve 27 per cent market share across 4G/LTE and 5G/NR globally, excluding mainland China, at the end of this year.
To date, we have won 83 commercial 5G deals, have 152 5G engagements (including paid trials and alike), and have launched 32 commercial 5G networks. The customers with whom we have won 5G/NR contracts represented approximately 70 per cent of our Radio Access Network (RAN) business in a typical year before 5G era. We have launched commercial networks in frequency ranges of 600MHz, 700MHz, 850MHz, 2.5GHz (TDD), 3.5GHz, 28GHz and 39GHz, basically all frequency ranges supported by end user devices. We are winning 5G deals with Communication Service Providers (CSP) and Enterprise customers. We have launched commercially 5G/NR vRAN1.0, i.e. Cloud RAN for 5G/NR with a Virtualized Centralized Unit (vCU) as the first supplier in the world. We have activated 4G/5G DSS (Dynamic Spectrum Sharing) and 5G SA (Stand-Alone) in commercial networks.
How did we achieve all this? What more is there still to come? What can you expect from Nokia in Radio Access Networks (RAN) products?
Mobile Networks Improvements
The improvement programme has five domains that includes approximately 100 major changes and improvements. The five domains are:
Leadership, operating model and organization, including efficiency benefits of rationalizing, defragmenting and consolidating development work across our R&D sites.
Interworking between Research/Standardization, Product Management and Product Development.
Product platforms, especially RF and baseband processor base and certain SW architectures.
Product development processes, methods and tools.
Culture
I will spare you from all the details of this programme and the approximately 100 major improvements and changes. However, below are some highlights on how we have focused on R&D performance, spanning the five domains listed above.
Boosting our performance
We have focused on critical 5G/NR development areas and re-balanced product development capacity. We have invested more in the bottleneck areas determining overall velocity. For instance, we have doubled the number of SoC developers. We have been transitioning from a sequential and siloed waterfall model to large-scale agile development with end-to-end feature teams in our 5G/NR development – an approach that we had once successfully implemented in 4G/LTE and are now taking further. We have rationalized and consolidated product development work across our R&D sites. In short, we have increased capacity, productivity and velocity. So, let’s look at the results:
System release delivery accuracy has improved significantly: the first two 5G/NR releases were late to the market, whereas the last two releases have been delivered on time or ahead of schedule.
SW quality has improved greatly: inflow and number of open SW defects has reduced by 30 per cent.
HW quality has improved strongly as well: return rate is down by 40 per cent.
All operational Key Performance Indicators (KPI), including both leading and lagging KPIs, have improved constantly. The above six KPIs are just a small collection of the 30 or so KPIs which we continuously track.
The most important indicator is, however, customer feedback. The feedback on our progress in improving the competitiveness of our products is both positive and encouraging across our customer base, from large operator groups to individual local operators. They have applauded our progress in making our products more competitive. Some operators have shared their supplier benchmark reports which show strong improvement in our competitive position. I am personally grateful for the advice and encouragement from many of my key customers.
Towards a learning organization with a high-performance culture
Working with change experts from an external leading consultancy, we have been tracking how our teams are thinking and feeling about the transformation that we have undertaken within the Mobile Networks unit. We use a tool set with benchmark data provided by the consultancy and have run surveys three times with our employees. We saw fantastic year-on-year improvements in the survey results in October 2019, compared to October 2018, and again amazing improvements in May 2020 compared to October 2019.
In the October 2019 results, eight out of ten so-called transformation drivers had improved, and the remaining two had stayed constant at the median level relative to benchmark companies. In the May 2020 results, all ten transformation drivers improved further, all of them were above the median of benchmark companies, and very importantly, most of them were at an excellent level. Further, all business outcome drivers and turbulence reduction drivers improved and were at an excellent level.
These results did not materialize just by measuring, but through hard and persistent work. In addition to the 2019-2020 transformation programme, all the associated transformational actions including training, process development, communication, etc., we have spent a lot of effort in striving towards becoming a learning organization with a high-performance culture. For instance, we have conducted dozens of high-profile “autopsies without blame”, to uncover failures and mistakes, to learn from them, to come up with systemic improvement across the board, celebrating improvements but never focusing on who is to blame for the mistakes or failures. This has unleashed not only the innovative power of our organization to improve everything but has also helped unmask some simmering legacy issues, which we have now resolved.
What does this cultural shift mean? Such fantastic results, combined with hard-core improvements in our operating model, product development processes, methods, tooling, etc., will inevitably lead to further improvements in product development and the competitiveness of our products. Our 5G/NR products have already become more and more competitive during this period, demonstrated by customer feedback and our 5G Win Rate, for instance. We can expect such improvement trajectory to continue, supported by the high-performance culture of the learning organization, for the benefit of our customers.
What’s next?
We are not done yet. There is still some work to be done in three of the five domains in the improvement programme described above.
Of course, the journey never ends. Our product competitiveness will continue to strengthen in all aspects, be it feature set, roadmap, size, weight, power consumption, capacity, connectivity, architecture, or ease of deployment and operation and so on. Moving forward, the journey in improving our product development operation and product platforms will be more about continuous improvement, fine-tuning and seeking for the next improvements we can make.
Stay tuned for more. Next time I will take the mystery out of Open RAN (ORAN), Cloud RAN and Virtualized RAN (vRAN) and explain why we are keen to create the future, rather than protect the past, like some other suppliers.
- Tommi is President of Nokia’s Mobile Networks division.
