New 'Use Cases’ to Give 5G Longer Life vs. 4G: Nokia CEO
Nokia believes the 5G market “still may be two to three years away from the peak,” said CEO Pekka Lundmark on a Q3 earnings call Thursday. “The 4G market peaked and then it started to decline quite quickly after that,” but there are “good reasons to believe” that 5G’s peak “could actually last for a longer period of time,” he said, because “there will be so many new use cases compared to the previous generations.”
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Lundmark predicts 5G will “gradually start declining” toward 2030, when 6G will start “hitting the market.” The “consumer side” of 5G in Europe has been “lagging behind in investment” compared with the U.S., South Korea, Japan and China, he said. “Europe is now clearly picking up on this investment.”
Beyond consumer 5G is “this big thing about the industrial digitalization” of enterprises “that will be possible with the combination of 5G and cloud and artificial intelligence,” said Lundmark. “When we are talking to all customers and observing what serious, big, heavy industrial actors are planning at the moment, it's actually quite encouraging.” Nokia estimates “there are 15 million industrial campuses in this world,” all needing to upgrade their “network infrastructure,” he said. “That's an amazing number.” He thinks “that will create a significant opportunity for several years to come,” he said.
Nokia continues to innovate with a “new approach to make millimeter-wave radio viable in fixed wireless access,” said Lundmark. “We have a new clever antenna design and algorithms where we provide extremely high-gain, 360-degree field of view, and continued optimization of the various propagation paths for the signal.” That enables good connectivity, “even with weak or reflected signals, and still allow for consumer indoor self-install, which is, of course, critical to make the business case work,” he said.
The company achieved 2% revenue growth in Q3 to just under 5.4 billion euros ($6.3 billion), but “we could have grown faster without supply chain constraints,” said Lundmark. “We are currently not constrained by market demand or our own production capacity,” he said. “What is constraining our growth at the moment is availability of components.”
Nokia is “working relentlessly” with suppliers and customers to procure necessary chip supplies, said the CEO. “It's very hands-on, everyday work” to get customers the supplies they need, and also to minimize inflation before it further impacts gross margins, he said. Chip shortages are not a “Nokia-specific issue,” he said. “It is possible that the situation will get more challenging before it then starts getting better.”