We’re not talking the glory days of old, but bear in mind that the third quarter of last year saw the division shed an unholy €683 million ($895 million). Before today’s preliminary results for the fourth quarter, analysts were warning that people shouldn’t get too hopeful about the Finnish firm returning to profitability anytime soon.

But then:

“Nokia now estimates that Devices & Services has exceeded expectations and achieved underlying profitability in the fourth quarter 2012.

- Mobile Phones business unit and Lumia portfolio delivered better than expected results; and
- Operating expenses were lower than expected.
- Devices & Services non-IFRS operating margin for the fourth quarter 2012 now expected to be between break even and positive 2 percent.”

Net sales within Devices & Services totalled €3.9 billion for the quarter. The biggest sellers were, unsurprisingly, the really low-end Series 40 phones, which sold 70.3 million units. However, the company also sold 15.9 million smartphones: 9.3 million Asha full-touch handsets, 2.2 million Symbian smartphones and a cool 4.4 million Windows Phone-based Lumia smartphones.

Better-than-expected sales of Lumias and low-end devices were only part of the picture, though – lower-than-expected operating expenses also helped.

Nokia Siemens Networks also beat expectations in the fourth quarter, achieving underlying profitability for the third consecutive quarter. That said, “seasonality and competitive environment” will likely weaken profitability in both divisions this quarter, Nokia noted.

Stephen Elop is delighted, as would I be if I were him. After all, this was a man whose decision to bail on the ‘burning platform’ that is Symbian led some embittered ex-Nokians to brand him the “world’s worst CEO”.

“We are pleased that Q4 2012 was a solid quarter where we exceeded expectations and delivered underlying profitability in Devices & Services and record underlying profitability in Nokia Siemens Networks,” he said in a statement. “We focused on our priorities and as a result we sold a total of 14 million Asha smartphones and Lumia smartphones while managing our costs efficiently, and Nokia Siemens Networks delivered yet another very good quarter.”

Finalized results will come out later this month, but the preliminaries have already sent up Nokia’s share price a whopping 16 percent on the Frankfurt stock exchange.

Of course, it’s too early to call this a full turnaround, but it’s certainly a slap in the face for those predicting Nokia’s imminent demise.

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“By 2020 the average person will download one gigabyte of personalised data each day, and it will be delivered for less than $1 a day.”

That’s a striking comment from Hossein Moiin, CTO of Nokia Siemens Networks. Not only does it speak to the enormous growth in our data needs through this decade, but also to a more intelligent, personalized web. Obviously, the trend is that we’re downloading more data to our mobile devices, but we’ll also be uploading additional preferences, favored activities and other bits that will further shape our mobile web experience.

As for handling the growth in demand, Moiin is specifically talking about LTE, which is relatively new as a mobile broadband technology, but one with legs, as 200 new LTE networks are expected to launch by 2015. And LTE will gain additional efficiencies with new releases going forward. That’s important because so far, the promised savings from LTE hasn’t yet filtered down to consumers. Moiin suggests it will by 2020, but not only through cost reductions. Operators will need a little revenue help from value-add services for that dollar-a-day plan.

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Why is LTE so greedy? For starters, the radio in your LTE device is doing a lot more than it ever did in your old 3G handset. The radio is the single biggest source of power drain in any device apart from the LED screen, but unlike the display, the radio is always on. And LTE is particularly hungry. The next time your new Galaxy Nexus or HTC Vivid conks out right after lunch, here are five reasons why:

• Your phone has rabbit ears. All LTE devices sold today use a technology called MIMO, which doesn’t just send or receive a single signal, but rather multiple parallel transmissions. Today’s devices support two such paths – future devices will support more — which means each phone has two antennas, each of which requires its own power amplifier. It’s not quite as bad as the running two phones off of a single battery, but you get the idea.

• Look at all those networks! Verizon Wireless and MetroPCS 4G phones aren’t just maintaining two LTE links, they’re running an additional radio to boot. Devices from these carriers have to remain in constant contact with both the CDMA network – to receive phone calls and texts – and the LTE network.

• LTE devices are co-dependent. Your screen may be dark, but your phone is constantly pining for the network. That means its periodically scans the airwaves around it to determine which tower it should tether itself to. The more networks there are to choose from the more scans it must make. With the typical operator sporting some combination of GSM, HSPA, CDMA and EV-DO systems — often multiple version of each in different frequency bands — there are a lot of other networks for an LTE device to flip between.

• Is that a tower on the horizon? Operators haven’t built out their new LTE footprints densely yet. With cells spaced much further apart, devices have to reach further – and thus boost their transmission power — to latch onto a tower. And since there are still plenty of coverage holes in these networks, phones are dropping in and out of LTE coverage quite often, initiating new rounds of scans and taxing the battery further.

• This ain’t no FM radio. There is a reason each generation of wireless technology is faster and more efficient than its predecessors. RF engineers are finding more and better ways to wrestle more bits into a radio wave. But, the more complex the waveform, the more computing power phone processors use up modulating and demodulating that radio wave. The 64-state quadrature amplitude modulation (QAM) and orthogonal frequency division multiplexing (OFDM) techniques used in LTE are as complicated as they sound. Consequently, the faster and more spectrally efficient networks become, the more power phones will consume trying to make sense of their signals.

So are we doomed forever to a life of constantly reaching for our battery chargers? On Monday, we’ll explore what handset makers and network suppliers are doing to improve LTE battery life, but also how they may be fighting a losing battle.

Tesla coil image courtesy of Flickr user caseyyee

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From an interview with Krish Prabhu, of AT&T Labs, in Fierce Wireless:

Over the next five years, our traffic volumes tell us that when we launch LTE each one of our 11 regional cores will have a throughput of two to three terabits, and the national core will have a throughput at least 10 times that. … We are very involved in the solution to that problem. We’ve identified a layered approach to get us there even as we support the launch of our LTE network and get LTE to 90 to 95 percent of our end-users. That to me is the biggest challenge.

However, instead of fear mongering, both stories actually try to discuss some of the technical challenges the industry needs to meet to support the demand for data. The NSN report discussed the need for more spectrum, but also the need to figure out ways to cram more bits into a single megahertz of spectrum, so every airwave can work a little harder. We’ve covered some of the ways this can happen, from carrier aggregation technology to better use of available spectrum to more base stations to help with capacity. NSN goes further and discusses the need for cognitive radios and self-optimizing networks, a concept that major vendors are pushing as networks become more complicated.

Over at AT&T, Prabhu told Fierce Wireless that when the network was carrying mostly voice traffic, managing the network itself was simpler. However, with the switch to data, and soon to all-IP networks in the form of LTE, the way traffic is handled changes. Data traffic becomes harder to anticipate and predict, and can overflow the network or the handset. He said AT&T Labs is working with developers to understand how apps behave on the network (products such as those from Mu Dynamics can help with this) as well as researching things such as algorithmic flow control on the network and better signaling and control of how data flows through the networks. Companies such as ByteMobile, Starrent (acquired by Cisco), Camiant (acquired by Tekelec) and others are providing some of these products. I expect we’ll hear more about this from Cole Brodman, the CMO of T-Mobile USA or Stephen Bye, the CTO of Sprint, when they hit the stage at our Mobilize 2011 conference on Sept. 26 and 27.

However, both of these articles ignore a critical element to help meet mobile broadband demand: Wi-Fi. AT&T is already using Wi-Fi as a means to offload traffic from its cellular network, and Metro PCS may be offloading some 20 percent of its traffic via the technology. But there is still a lot that needs to happen to help integrate Wi-Fi into the cellular experience in a way that’s seamless and encourages the customer to use it and trust it. It’s not surprising that NSN wouldn’t want to focus on the topic, since it’s not an area where it’s selling gear, but I hope that AT&T is keeping its commitment to better Wi-Fi even as it expands capacity and the capability on its core network.

Here’s the brief NSN presentation from SlideShare:

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Consumers. The biggest losers of this deal are going to be the consumers. While AT&T and T-Mobile are going to try to spin it as a good deal to combine wireless spectrum assets, the fact is, T-Mobile USA is now out of the market.

T-Mobile USA has been fairly aggressive in offering cheaper voice and data plans as it has tried to compete with its larger brethren. The competition has kept the prices in the market low enough. This has worked well for U.S. consumers. With the merger of AT&T and T-Mobile, the market is now reduced to three national players: AT&T, Verizon and Sprint.  Net-net, U.S. consumers are going to lose.

Phone Handset Makers. Before the merger was announced, the handset makers such as HTC and Motorola had two major carriers who could buy their GSM-based phones. They just lost any ability to control price and profits on handsets because now there is a single buyer that can dictate what GSM phones come to market. Even with LTE becoming the standard for the 4G world, it would essentially be a market dominated by three buyers (should Sprint go with LTE), which would place handset makers at the mercy of the giants.

Sprint. The nation’s third-largest carrier was in talks to buy T-Mobile according to Bloomberg, but AT&T’s offer has now pushed Sprint to the bottom of the pile in terms of size and potentially spectrum assets if it goes through. If it doesn’t go through, then Sprint now has a price it has to match in order to get its hands on T-Mobile. Plus, Sprint and T-Mobile often stood against AT&T and Verizon on a variety of regulatory issues, so if AT&T succeeds, Sprint will stand alone on special access and other issues.

Network Equipment Suppliers. The carrier consolidation has proved to be a living hell for companies that make infrastructure network equipment. Alcatel-Lucent, along with Ericsson and Nokia Siemens, are suppliers of gears to both AT&T and T-Mobile USA. With a single customer, they will lost ability to control their own fate and are going to see their profits suffer as a result.

Google. I think the biggest loser in this could be Google. In T-Mobile, it has a great partner for its Android OS-based devices. Now the company will be beholden to two massive phone companies — Verizon and AT&T — who are going to try to hijack Android to serve their own ends.

Don’t be surprised if you see AT&T impose its own will on what apps and service are put on its Android smartphones. I wouldn’t be surprised to see the worst phone company in the U.S. (according to Consumer Reports) tries to create its own app store and force everyone to buy apps through it.

It doesn’t matter how you look at it; this is just bad for wireless innovation, which means bad news for consumers. T-Mobile has been pretty experimental and innovative: It has experimented with newer technologies such as UMA, built its own handsets and has generally been a more consumer-centric company. AT&T, on the other hand, has the innovation of a lead pencil and has the mentality more suited to a monopoly: a position it wants to regain.

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The Chinese firm won a preliminary injunction preventing Motorola Solutions from transferring Huawei’s intellectual property as part of the transaction, pending arbitration. Nokia Siemens Networks said in an earlier statement that it “has no interest in Huawei trade secrets,” so perhaps the separation of all such trade secrets during arbitration will only add a delay to the deal as opposed to scuttling it.

Meanwhile, Huawei wasn’t so lucky with the U.S. legal system last week with the The Committee on Foreign Investment in the United States (CFIUS), recommending it halt its deal to acquire assets and technology from 3Leaf Systems, which made a networking chip that enabled enterprises to pool their servers. Huawei gave up on its $2 million deal to buy those assets rather than go to the White House and hope for the president to override the CIFUS ruling.

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Called e-clearing.net, the service will essentially authenticate your data across charging infrastructure, using information like your EV charging contract ID, an RFID card number, a PIN number or a telephone number. The group notes that the service is built to be secure, and says in the future, electric charging service providers can use e-clearing.net to make customer billing easier. Smartlab consists of German utilities Stadtwerke Aachen AG, Duisburger Versorgungs- und Verkehrsgesellschaft mbH and Stadtwerke Osnabrück AG.

The group’s new e-roaming project highlights just how nascent the electric vehicle industry is. While there are some early standards in place for charging, the IT layer for the data involved with charging isn’t yet standardized, though some groups are pushing for open standards. Like the smart grid industry is learning right now, open standards for electric car charging will be necessary to spur innovation and will be best when it comes to offering choice for the consumer EV driver. That’s one of the fundamental lessons the growth of the Internet taught us.

Nokia Siemens’ involvement also shows how the telecom sector is increasingly looking to work on using their networks for the “Internet of things,” including EVs and smart meters. As I noted in an article on Monday, a mobile ecosystem is slowly growing around home energy, too, as mobile operators get more involved in selling network access to utilities and device makers create special energy monitoring devices. Nokia and Siemens sell networking gear to phone companies, among other businesses.

Phone companies have been looking into creative ways to use their networks for “machine-to-machine” services like the smart grid and EVs, which don’t include consumer customers and cell phone accounts (for our report on machine-to-machine networks see here, subscription required). Consumers can be fickle, with churn and continuous upkeep — in contrast, machine to machine deals can be relatively low maintenance in comparison. Machine-to-machine services can also diversify phone companies networks and offer an area of growth in an otherwise saturated cell phone market.

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Image courtesy of Coulomb.

We never thought we’d see the day when a Chinese telecom company, which has in the past been accused of industrial espionage by U.S. companies, would sue a U.S. equipment maker. Well, that’s exactly what has happened.

Huawei filed suit Monday to stop Motorola Solutions from selling its wireless network business to Nokia Siemens Networks, because the sale would transfer trade secrets and competitive intelligence from the Chinese equipment firm to its competitor. (By the way, Motorola had accused Huawei of industrial espionage in July 2010.) The lawsuit, filed in U.S. District Court in Illinois, seeks to stop Motorola employees and information associated with Motorola’s UMTS and GSM equipment businesses from being transferred to Nokia Siemens Networks under the $1.2-billion deal. From the lawsuit:

Such a transfer, if consummated in its originally contemplated form, will result in the massive disclosure of Huawei’s confidential information to NSN, with irreparable harm to Huawei. A large number of Motorola employees, many carrying direct knowledge of Huawei’s confidential information, would become employees of NSN. Huawei hereby sues to obtain preliminary injunctive relief to prevent such harm pending an arbitration under the agreements, including an order that Motorola and NSN modify their transaction to prevent the transfer to NSN of the portion of Motorola’s wireless business related to GSM and UMTS networks until an arbitral tribunal is able to adjudicate the matter.

Huawei and Motorola had worked together for the last decade with Huawei providing gear for GSM-based 3G networks and Motorola providing services and acting as a reseller of the Huawei gear. Motorola Solutions and NSN have not responded to requests for comment yet.

The irony here is that Huawei, which has been considered a cut-rate Chinese telecommunications provider, is using an intellectual property offensive to stop this deal. As such, this lawsuit could be a wake up call to the rest of the world. Huawei owns more than 49,000 patents worldwide, and while it’s unclear if there are patents involved in this lawsuit (it looks primarily like a trade secret issue), Huawei is sending out a strong signal that it plans to defend its IP. It’s also yet another example of Huawei moving up-market, becoming more than a provider of cheap Chinese gear.

Huawei is not merely a private telecommunications company; it has direct and cultural ties to China’s government, and this suit could be an initial test of the IP firepower China has been gathering in the last few years. According to data from the World Intellectual Property Organization Magazine:

Since its establishment in 1985, China’s patent system has matured considerably, breaking new records and significantly improving the country’s innovative capacity. In the first decade of the 21st century, patent applications in China grew by an average annual rate of 22.3 percent. From January to October 2010 alone, the number of applications for invention patents totaled 295,275, up 25 percent over the same period in 2009. Of these, almost three quarters of the total (72.5 percent – 214,079 applications) were filed by domestic applicants.

The magazine illustrated this in the following chart:

In the suit filed Monday, Huawei drove the point home, saying it spends 10 percent of its revenue on R&D and noting that half its 100,000 employees are engaged in some type of research and development. But will Huawei use its “rich IP and patent portfolio” as a means to stop consolidation in the equipment world as it’s trying to do here, or could it start asserting its patents and IP among competitors such as Alcatel-Lucent, Cisco, NSN and Ericsson? As the consolidation among gear makers hits a wall, will the next phase in Huawei’s domination of the industry rely on patent warfare?

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The standard is called Network Controlled Fast Dormancy or Cell_PCH and it combats the near-constant signaling that smartphone radios use to communicate with mobile broadband networks. Since smartphones aren’t yet smart enough to predict when you’ll need a wireless connection, they switch into an idle state when not in use, then reconnect as needed. This takes time, creates small bits of unnecessary network congestion and causes variable drains on the handset’s battery. Fast Dormancy aids by acting as a more intermediate state: one with less signaling and faster reconnections.

For phones to benefit from Fast Dormancy, two things have to happen. First, the mobile broadband network provider needs to support it; obviously networks built with NSN equipment are likely to do so. Second, the handset’s operating system or firmware must also support Fast Dormancy. According to NSN’s testing, Apple has added the use of this standard in the latest iOS software update, released last week.

Not every Apple iPhone will see better battery life, since network operators use various equipment. But if your iPhone appears to be lasting longer on a single charge after a day of hitting the web, you might have Nokia Siemens Networks to thank for it.

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