NSN to Enhance Liquid Technology

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Nokia Siemens Networks (:NSN), the 50-50 joint venture between Nokia Corp. (NOK) and Siemens AG (SI) has cut a deal with content delivery network operator CDNetworks Co.Ltd. to accelerate the delivery of mobile content.

Liquid technology is a software solution for network infrastructure that drastically reduces the need for dedicated hardware. NSN stated that its new Liquid Applications will change the competitive landscape of the telecom infrastructure gear market by revolutionizing the base stations.

With the massive growth of smartphones and tablets, the demand for bandwidth has increased significantly. Instead of traditional voice calls, data and video traffic are now consuming the majority of bandwidth. This has resulted in network congestion for telecom operators.

Bandwidth shortage generally occurs during rush hours and in specific locations like offices and business centers. To address this issue, the telecom carriers have been installing new base stations in the congested locations, involving huge investments.

The Liquid technology of NSN is a software solution that shares all network resources across all wireless and broadband networks. Therefore, the carriers can now utilize their relatively underutilized base stations in the rush hours to ease network traffic congestion.

This will eliminate the need for new base stations. The Liquid technology eliminates computing power units from the base stations and shares computing power throughout the network, which is similar to cloud computing.

We believe that this innovative Liquid product is an attempt by NSN to regain its dominance in the global telecom network infrastructure equipment market. Despite being the second largest company after LM Ericsson AB (ERIC), NSN always remain in sticky wicket since it was formed in 2007. Huawei and ZTE, the two Chinese telecom gear manufacturers, are competing fiercely with NSN. Alcatel-Lucent S.A. (ALU) is another major competitor.

Meanwhile, Nokia reached a deal to purchase Siemens’ 50% stake in NSN for $2.2 billion, out of which $1.5 billion will be paid in cash and the remaining amount will be paid in a secured loan from Siemens after a year from the closing of the transaction. The deal is expected to close in the third quarter of 2013, subject to customary regulatory approvals.

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