04.15.10
HAMPTON, N.H. (April 15, 2010) — Though some vendors, principally Huawei and ZTE, reported strong year-to-year growth in TBR’s 4Q09 Network Business Quarterly (NBQ) Benchmark report, the overall equipment sales environment was weak, as network operators remained cautious about committing to major spending on new infrastructure. According to the report, Ericsson continued to dominate in total revenue in 4Q09, despite a 13% year-to-year decline, as operators’ wireless network upgrades and growing professional and managed services contracts drove sales. Samsung and Huawei came in at No. 2 and No. 3, posting revenue of $7.8 billion and $6.3 billion, respectively. Alcatel-Lucent and Nokia Siemens Networks retained their respective No. 4 and No. 5 positions in 4Q09 revenue; however, like market leader Ericsson, both suffered year-to-year revenue declines. According to Ken Hyers, Senior Analyst in TBR’s Telecoms/Networks practice, “Operators clearly are continuing to defer spending on next-gen deployments, and despite all the noise about LTE, 2010 is likely to start out the way 2009 ended, with a return to year-to-year revenue growth unlikely until the second half of the year.”
While most regions saw a drop in spending compared to the year-ago quarter, China was the major exception. Despite the fact that no new operator contracts were awarded in China during 4Q09, spending remained high as operators continued their 3G network buildouts. According to the TBR report, however, spending in the country is expected to slow in 2010. TBR expects India to emerge as the next major growth market as 3G and Broadband Wireless Access auctions lead operators to award new contracts, boosting equipment sales in 2010 and beyond.
From a technology perspective, major LTE announcements marked the beginning of significant next-generation equipment and services opportunities over the next few years. HSPA and LTE contract awards, particularly in the Nordic regions, indicate that operators there see an imminent need for next-generation technology. Aggressive price competition will be the order of the day, as vendors compete for limited new contracts in 2010 and incumbent vendors seek to protect existing market share from both Huawei and ZTE, who are seeking to accelerate international growth after focusing on domestic contracts for much of 2009. The net result will be continued year-to-year equipment revenue declines for most vendors in 2010. On the bright side, increased consumer demand for data services is forcing operators to invest in capacity to keep pace, promising new opportunities for vendors. TBR believes that after a slow beginning, the pace of operator spending will accelerate in the latter half of 2010, meaning that vendor revenue in 4Q10 will likely be significantly better than in 4Q09.
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.
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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.