Nokia (NYSE: NOK) recently announced its plans to acquire privately held real-time analytics firm Deepfield for an undisclosed amount. Deepfield handles analytics for IP network performance management and security, and its integration should help Nokia address network and service-automation problems with big data. The deal is expected to close in the first quarter of next year.

The key facts

Deepfield notes that cloud applications and services, especially OTT video streaming platforms like Netflix and Hulu, account for over 60% of an web traffic today, but ISPs generally have very little insight into the services running across their networks.

Nokia will integrate Deepfield's features into all that traffic with software-defined networking (SDN) to make real-time, automated network changes to adapt more quickly to workflows. The integration should also bolster its security measures against targeted DDoS (distributed denial of service) attacks.

Ever since Nokia sold its handset unit to Microsoft in 2014, the Nokia Networks division has become its core business unit. The division became much larger after Nokia acquired former rival Alcatel-Lucent earlier this year, which made it the second-largest mobile equipment vendor in the world after Ericsson.

The key takeaways

Scaling up with acquisitions like Deepfield widens Nokia's competitive moat against Ericsson, and also Chinese tech giant Huawei, which threatens both companies with its cheaper hardware and services.

Despite those moves, Nokia's Networks revenue fell 12% annually last quarter, dragging the newly merged company's comparable revenues down 6% year-over-year. That softness was mainly attributed to macroeconomic challenges and sluggish infrastructure upgrades. Looking ahead, investors should keep an eye on Nokia's inorganic growth strategies to see if they can get the company's growth back on track.

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Leo Sun has no position in any stocks mentioned.

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