Sheer size alone is no longer the asset it once was in the ICT sector. That said, some industry giants do retain a dominant position – even as they step into the third century of their existence.
One such organisation is NEC, the $42 billion market leader from Japan. While everyone knows its name – and has a broad idea of its size and scope – many Europeans may still not be aware all of its areas of expertise.
A solid global brand to be sure, with strong credentials in IT, communications, display technologies and identity management solutions, NEC has been an active player in Europe for over 30 years.
European Communications recently met the newly appointed Managing Director, NEC UK, David Payette, and Kevin Buckley, Director of Mobile Network Solutions Division, NEC UK, to ask them what future they saw for the European communications sector and, more specifically, what a changing NEC had to offer the region.
EC: David – to start off on a somewhat personal note, you took Asian studies and Japanese as a discipline at university, what attracted you to this subject and did this affect your decision to join NEC?
DP: I felt early on that the interplay between Asia and the rest of the world would be a stimulating environment to work in, so after university I went to Japan in the early '90s and joined a Tokyo-based systems integrator. In a series of increasingly senior roles, I moved to EDS in Asia Pacific, then Lucent in Australia and five years ago ended up here in Europe with Avaya, before being headhunted to this post only a few months ago. These international experiences have been both challenging and culturally enriching, and yes, the fact that NEC offers me the opportunity to put my Japan experience to use in this part of the world, makes this new role a particularly attractive fit for me.
EC: And what are the specific benefits you feel that NEC brings to the market?
DP: For a start, we have a long history of bringing innovation and service excellence to Europe, and with that comes an emphasis on continuity and trust with customers and partners that can sometimes be hard to find in today's industry. This focus on long-term credibility is well received in the market, right down through the value chain to the end user.
As an innovator, we're proud of the many market firsts we've achieved here in areas such as 3G networks and devices, and more recently with i-Mode, to name a few examples. We believe these experiences provide a platform that will help us go from strength to strength and deliver ever increasing value to our customers.
EC: It is widely recognised that much of Asia Pacific is well ahead of the West when it comes to innovation and deployment of advanced technologies. What cultural factors do you think influence this?
DP: When you talk about high standards of manufacturing and quality control, I suspect values and cultural factors are significant, particularly in countries such as Japan. But where innovation is concerned, I believe this is more a matter of basic economics. For example, it was only natural that the high population density you see in Asia's developed markets brought a high mobile subscriber base or 'teledensity' more rapidly there than in other parts of the world. Once this stage is reached, market forces relentlessly drive innovation through intensified competition and increasingly insatiable consumer appetites for more functionality. The game changes from simply laying the infrastructure and acquiring the subscriber base to building loyalty by delivering powerful data services to the handset and fortifying the network with higher technologies like HSPDA and IMS, which drive the necessary throughput and convergence.
We are seeing the same thing happening right now in the UK and throughout Western Europe. And, because NEC has always been a major player at the forefront of Asia's development we're well suited to bring that experience and technology to Europe, and in a time tested and proven manner. And i-Mode for instance is one of the more recent examples of this.
EC: For certain, the NEC portfolio is extremely broad. Is it possible that it's too broad, or that you are trying to cover too much?
DP: We don't think so at all. Highly specialised companies and individuals will always be essential – and we partner with many of them, but I'd argue that there's also a growing requirement for corporations to take wider scopes, given the perpetually increasing 'joined-up' nature of the systems that support our societies, businesses and lifestyles.
The future of telecommunications is about breaking down boundaries and making the customer experience seamless. NEC sees the big picture and our joined-up thinking makes us the first choice for service providers of all types around the world. The future for ourselves, our customers and our customers' customers will be about enabling communications, information and commerce anywhere, anytime. For me, being able to provide broad based individual expertise across areas as seemingly diverse as supercomputing, identity management, wireless and so on, which in fact increasingly complement the communications arena – combined with our ability to join disparate components together to achieve higher value – will play an important role in the industry and that's good news for us and our customers.
EC: Kevin, how do you see this 'joined-up' thinking coming to market, specifically in the European mobile sector?
KB: I think what David just intimated about continuity and breadth is very important. If you look at the forces that now characterise the European communications sector as a whole, then openness, interoperability and adaptability are key drivers. The network's no longer closed and, in the case, say, of a service provider offering a converged fixed-mobile portfolio of services, they not only need access to 2G, 2.5G, 3G, HSDPA, i-Mode, WiFi, WiMax, DECT and Bluetooth expertise, but also to particular applications such as mobile TV – an NEC speciality – as well as enabling technologies such as identity and security management.
EC: Investing in R&D in such a fast changing industry is like trying to hit a moving target while aiming through a fogged-up mirror. How does NEC plan its investment?
KB: NEC itself has an interesting balancing act to play as it tries to help the whole industry move forward. On one hand we do possess what might be recognised as traditional strengths. We invest around £4 million each and every day in R&D; we play a major part in all the relevant standards bodies around the world; and we also place a lot of emphasis on local partnering with both academia and business.
On the other hand we have the ability to move very quickly when conditions demand. That necessarily involves being as close to the customer as possible and eliminating the unnecessary formality that can slow down the all-important 'time-to-market' factor.
EC: What joint R&D programmes do you run in EMEA with commercial or academic partners?
KB: One good example of the NEC character working together lies in some of our 3G work in Europe. In the background, we have Mobisphere, a long-term R&D partnership with Siemens aimed at driving 3G development work onwards. Out in the 'real world', we worked closely in the field with Siemens deploying 3's UK and Irish networks in record time. At one point, that involved installing 140 cell sites each week.
DP: Particularly with a complex technology like 3G, the kind of end-to-end thinking from NEC that Kevin's just highlighted becomes highly relevant. NEC has been involved in nearly every first-stage roll out of 3G systems worldwide – we developed the world's very first 3G handsets and we were the first to bring both of these to Europe. But we also know that great technology in the network is only part of the answer. To maximise ROI, you also have to understand the wider behaviours of the customer and the whole service and applications environment as well.
EC: David, you mentioned i-Mode, which you are currently involved in bringing to Europe. What are the particular benefits it brings?
DP: i-Mode is a mobile experience that gives subscribers incredibly fast Internet access, among other things, starting in the 2.5G environment, with a rich and friendly user interface, and content designed specifically with mobility in mind. This winning combination has delivered proven results in user take rates, which is key for service providers, who also appreciate the time tested success and technological depth of the solution.
Our long history with i-Mode in Japan has enabled us to help service providers across Europe differentiate themselves and grow data services revenues by enriching the mobile experience for their subscribers. And, for the content and applications provider – irrespective of whether they're Disney or a developer creating ring tones – the i-Mode handset is a compelling route to market, and anything that improves the user experience is good for both them and the actual network owner. We've already installed i-Mode systems in Russia, Greece, France, Italy and Spain and have just completed supplying the core infrastructure and terminals for O2's i-Mode launches in the UK and Ireland.
EC: Kevin, you mentioned Mobile TV as one specific application that NEC is involved in – along with the higher speed broadband radio technologies like HSDPA. What's your take on how the industry can deploy these new technologies to best advantage?
KB: There's a lot of talk out there about how the content owners or retail-oriented third parties like Google, Amazon and E-Bay might reduce the traditional telecommunications operators to a utility status as lowest possible cost, bit-pipe carriers.
Yes, the industry is transforming itself and yes, competition is now coming from a variety of new entrants who have radically different business models from the traditional telecommunications mindset. That said, the content and applications are still only part of the total offering.
If you don't have the appropriate handsets and devices for each emerging market niche, or network technologies that guarantee seamless delivery across multiple network platforms, then all the creativity of the content developers will count for nothing.
Consumers are becoming increasingly sophisticated buyers and, while parts of the communications industry will always reflect fast-changing lifestyle and gadget choices, fashion can also be a very fickle master to follow. Customers have long memories, with many buying decisions increasingly being made on word of mouth disseminated around on-line communities.At the risk of repeating ourselves, this is where NEC's corporate characteristics of continuity and extremely high reliability plays out very well, amongst both consumers and our network owner customers.
EC: What are your strategic priorities?
DP: Our strategy is three-fold and involves combining innovation and service excellence in unique and creative ways, exposing our major customers to more of NEC's diverse portfolio, and providing service providers with not just the right technology based solutions, but evolving value-add offers, such as professional services and end-to-end mobility offerings, that enhance their competitiveness and help them promote attractive data services and devices to their customers.
With that strategy, comes an appreciation from NEC of the consumer experience and the cultural characteristics of local markets. You referred to Mobile TV, which is another good example of this. We are a leading vendor of digital TV transmission networks in Europe, and with the mobile standard now being ready (DVB-H), we can offer both terrestrial and mobile distribution via the same network.
The same is true for our experience as a leader in microwave radio, ensuring that all the new high bandwidth variants of existing technologies – such as HSDPA, HSUPA and WiMax – perform out in the field in Europe with the same consistency and quality of services that they've shown in the lab and in the market in Japan.
EC: Do you think that traditional telecommunications business cultures are up to promoting content and applications as well as basic connectivity – especially where it comes to CRM?
DP: Yes, generally speaking, I do. I think we are really starting to see a sea change in this respect. But what I find interesting, is that while content, networks, and applications all help drive customer loyalty, it's 3G and Wi-Fi which have truly kicked the door open when it comes to opening up the world's markets to the next generation of data-based services, and it will be enhancers like HSPDA and IMS, which are major elements of our strategy, that help bring these services to fruition and create new opportunities for all.
EC: David, you've obviously got your own ideas about which directions NEC should be heading in over the coming months and years. Would you like to talk us through some of the changes that you intend making to the ways that NEC does business with its customers and partners?
DP: Sure. NEC intends to be more than just a high technology provider. We are well positioned to bundle our technologies, put more value-add services on top, and provide quantifiable business advantages to our customers in the B to B world from the CXO level on down and out into the consumer arena where the most important decisions are ultimately made.
This will involve promoting our brand identity more proactively, building further operational synergies across our business units, and driving a greater level of cross-product training internally. Our people are already highly motivated and skilled professionals in their respective areas and they will increasingly promote more of the overall technology continuum in support of our customers.
I'll also be looking to build on the good feedback routes that we already have in place with our R&D operations in Japan and across the globe.
NEC can actively help the wider industry achieve its now inevitable transformation by continuing to lead in many of the vital background areas that underpin it. Super computing, client server and display technologies, as well identity management solutions, all complement the communications environment and form part of a broader continuum. We believe companies that are adept at joining up this disparity and translating it into tangible business value will have the edge in the future. That, fortunately, has always been part of NEC's broader strategic vision.