- Nokia officially acquired optical vendor Infinera, which will help the Finnish company better compete with the likes of Huawei, Ciena and others
- Having Infinera in its arsenal will be key for Nokia’s newfound data center foray
- We can expect to hear about further data center inroads once new CEO Justin Hotard takes over
Nokia’s grand plan to shift gears from telco to data centers may just about come to fruition, now that it’s closed its $2.3 billion acquisition of optical networking vendor Infinera.
The Finnish company first announced its intent to buy Infinera last June, noting the purchase will increase the scale of its optical networks business by 75%. Indeed, Nokia faces some tough competition in the global optical market, such as Ciena, Cisco and Fujitsu in the West and Huawei and ZTE in other geographies.
Factoring Infinera’s reach, Nokia would have had the second highest market share in 2024 across several geographic regions, said Dell’Oro analyst Jimmy Yu in a LinkedIn post today. Those include North America, EMEA, the Caribbean and Latin America along with Asia-Pacific (excluding China).
“Closing the acquisition was the easy part, the hard part is what comes next—integrating Infinera’s and Nokia’s optical businesses,” Yu told Fierce.
Assuming that goes according to plan and “customer overlap is minimal,” he said Nokia will have a “much stronger position” in the optical transport space.
Nokia’s data center foray
Why does Nokia want to get deeper into the optical market? Well, it’s laid out a strategy to grow its data center business amid a mobile networks slump (despite the company assuring investors the latter market is finally “stabilizing.") Data centers require not only GPUs but also optical networking to support AI workloads.
Further doubling down on AI, Nokia is replacing CEO Pekka Lundmark with Justin Hotard, who’s currently head of Intel’s Data Center and AI group. With Hotard taking the reins in April, we can expect to see Nokia making “further inroads in the data center market,” said AvidThink principal Roy Chua.
Aside from snagging Infinera, Nokia has made a few plays expanding its data center strategy in the past year, he told Fierce. The company in September struck a deal with hyperscaler CoreWeave, which tapped Nokia to deploy its IP routing and optical transport equipment as part of CoreWeave’s backbone buildout.
Nokia is doing something similar for Nscale, plus it extended a deal with Microsoft Azure to supply the hyperscaler with data center switches and routers.
“Infinera adds strength to their product portfolio for optical data center interconnect and gives Nokia a more complete scale-out to ‘scale-outside’ data center solution,” Chua said. “As AI pre-training, post-training, and inference time scaling demand greater collective compute and drive increased inter-data center traffic, having strong scale-outside offerings should put them in a stronger market position."
Yu also mentioned Infinera has been developing a components business that includes ZR optics, which are "highly popular with hyperscalers that need large amounts of metro" and campus DCIs.
Rest assured, we’ll be closely watching Nokia’s next moves on the data center front.