01.05.10
HAMPTON, N.H. (January 5, 2010) Countering a challenging environment for network equipment sales, Ericsson continued to lead the market for telecom infrastructure services, according to TBR’s 3Q09 benchmark report, and was the only supplier to exceed $2 billion in quarterly services revenue. While its pace of growth in North America slowed during the quarter, Ericsson’s wide global reach and its early investments into India and China continue to pay off. In fact, the company’s strategy to leave no region or operator unserved led to year-to-year growth of 23% from the Caribbean and Latin America (CALA) region and growth of 12.6% from Asia Pacific. In total, Ericsson’s nearly $2.4 billion in TIS revenue in 3Q09 allowed it to retain its position as the clear market leader. Nokia Siemens Networks and Alcatel-Lucent were virtually tied for second, each reporting just slightly more than $1.6 billion in TIS revenue for the quarter, while IBM and HP-EDS were in a virtual dead heat for fourth place.
In terms of year-to-year TIS revenue growth, Cisco led the Tier 1 suppliers during 3Q09 with 7.4%. Cisco’s capital financing options were particularly appealing in cash-strapped markets such as the Middle East and Africa. China-based suppliers ZTE and Huawei came in second and third place, respectively, for TIS growth: While ZTE continues to have success expanding its presence largely in China and emerging markets, Huawei is having success penetrating Tier 1 suppliers in mature markets. Notably, Huawei scored a deal with Telefonica Spain during 3Q09 for the deployment of a Metro Ethernet solution and was designated as a WiMAX supplier for Clearwire in the United States.
Regionally, Ericsson retained its position as market leader in EMEA, Asia Pacific and CALA, but it appears that NSN may be taking a page from Ericsson’s book in extending its services into new regions: During 3Q09, NSN experienced a whopping 70% increase in revenue from the CALA region due in large part to managed services contracts with Brazilian operators. Even more tellingly, NSN announced a reorganization in November to foster its services momentum – this after promoting the former head of its Services unit, Rajeev Suri, to the CEO position in October. Looking ahead to 4Q09, TBR believes continued momentum in services, combined with declining revenue from infrastructure sales, will propel services to nearly half of NSN’s overall revenue stream.
From a growth perspective, TBR believes consulting and advisory services are becoming increasingly important as operators investigate new business models and seek new revenue streams. All suppliers are stepping up their focus on consulting services that leverage new services business models while increasing operational efficiency for operators. As a result, TBR expects systems integrators such as IBM, HP and Accenture, which have typically taken a stronger position in consulting engagements with network operators, to face increasing competition from traditional equipment vendors in 4Q09 and 2010.
In addition to analyst inquiry time, custom projects and industry benchmarking, TBR’s NBQ quarterly reports provide an in-depth view of the leading equipment vendors and service providers in the network, telecom and mobility value chains, including Accenture, Alcatel-Lucent, AT&T Wireless, Cisco, Ericsson, HP-EDS, Huawei, IBM, Motorola, Nokia, Nokia Siemens, Nortel, Sprint Nextel, T-Mobile USA, Verizon Wireless, and ZTE. TBR NBQ covers key segments such as telecom infrastructure services, network equipment, software and enabling platforms and wireless terminals. We analyze how companies’ strategies, actions and results change each quarter, and what might be expected in coming quarters. TBR puts the information in context by presenting how the company has performed historically, along with how it fares when benchmarked against competitors.
603-929-1166
john.byrne@tbri.com
Technology Business Research, Inc.
11 Merrill Drive
Hampton, NH 03842
NOTE TO EDITORS: TBR is a market research and industry advisory firm; we are industry analysts covering high-tech firms from a combined business, financial and technical perspective. Example source description: John Byrne(john.byrne@tbri.com), Analyst with industry advisory firm, Technology Business Research, Hampton, NH. You have permission to quote directly from comments included in this document.
Technology Business Research, Inc., headquartered in Hampton, N.H., is recognized as one of the leading high-tech market research and consulting firms specializing in the analyses of computer, software, networking equipment, wireless, portal and professional services companies, as well as customer satisfaction studies. Serving a domestic and international clientele of high tech manufacturers, IT professionals, end users and financial executives, TBR provides timely and accurate market research and business intelligence in a format that is uniquely responsive and tailored to clients’ needs. TBR analysts are available to further address client specific issues or information needs on an inquiry or proprietary consulting basis.