We are hoping to see some improvement. So beyond that, it really comes down to achieving further scale and commercial discipline, especially in areas like Optical and Submarine Networks. In addition to that, I already — as part of the previous answer, I talked about the strategy to expand in IP networks. So NI, clearly going to the right direction despite the short-term challenges we are seeing with some large customers, especially in North America this year. CNS, we have been working through our portfolio rebalancing efforts. The latest one you now saw which was the partnership with Red Hat. And this is putting us on a path to improve our margins in the business. And of course, we have strong margin improvement targets going forward as we communicated as part of the Q4 result.
CNS obviously is a software business which is developing towards new business models such as Software as a Service. And then finally, Technologies. Obviously, we plan to get back to the €1.4 billion to €1.5 billion run rate. We have to remember that this is 100% gross margin business. So there is a direct contribution from any additional sales. And as Marco mentioned, what we need to get to that €1.4 billion to €1.5 billion, remembering that we are currently at €1.1 billion now after the latest deals that we have signed €1.1 billion from the beginning of ’24, what we really need to get there is to finalize the smartphone renewal cycle, including finalizing the — or solving the ongoing litigations with OPPO and Vivo and their expected continued progress in some of the growth segments where we have really promising stuff going on as well.
This would take us to the €1.4 billion to €1.5 billion. So, roughly — I mean, these are the elements in the bridge that would take us to that at least 14% group margin but I understand there is a lot more detail that we could discuss; but unfortunately, we have to do that another time.
David Mulholland: Did you have a quick follow-up?
Simon Leopold: Yes, quick follow-up, please. In terms of the IP routing segment relative shortfall this quarter and tough comp to last year, what do you attribute that to in terms of issues like customers absorbing inventory, customer concentration or changes in the competitive environment?
Pekka Lundmark: It is not — the last one, it is not a change in the competitive environment. If anything, our relative competitiveness has increased in that. We have an issue with customer concentration. I think it’s fair to say that we are still in this business. We are too dependent on a small number of large customers. And then when you see investment slowdowns in a particular region like North America and the largest operators there, the result is the one that you now see in the IP numbers. This is why it is crucially important for the future outlook for the IP business that we do exactly what I was explaining earlier that we need to diversify the customer base to enterprise verticals to webscalers. What we need in that business is a larger number of customers and with a smaller concentration of — or dependence on a small number of large customers.
David Mulholland: Our next question from Joseph Zhou from Redburn.
