Ericsson powers ahead of infrastructure competition, but outlook remains harsh

As Nortel slowly sinks into oblivion, Ericsson has powered ahead in Q2 by doubling its lead over competing infrastructure vendors as its nearest rival, Nokia Siemens Networks (NSN), saw a collapse in its market share. This sector of the mobile industry has experienced cut-throat competition for new business during the past few years, primarily coming from Chinese suppliers, and the outlook remains harsh.

While Alcatel-Lucent and NSN have both forecast the market to shrink by between 8 and 12 per cent, Ericsson CEO, Carl-Henric Svanberg, is still upbeat claiming mobile operators are not cutting their Capex any further, but signs of a widespread upturn remained elusive. Ericsson's market leadership--at 32 per cent in Q2--could be boosted further following its acquisition last month of key CDMA and LTE assets from Nortel, beating out NSN and private equity firm MatlinPatterson. Speculation continues as to the future home for Nortel's remaining LTE patents.

Meanwhile, NSN continued to report bad news with its market share falling from 26 per cent in Q2/08 to 20 per cent in Q2/09 as the company, in an effort to improve profits, avoided deals where the competition cut equipment prices to the bone. This has been reflected by Huawei increasing its market share to 17 per cent, while ZTE doubled its share to 8 per cent. Alcatel-Lucent's share fell to 12 per cent from 14 per cent, said the market research firm Dell'Oro.

Industry observers believe that the aggressive pricing policy and heavyweight support from state-run banks have helped Huawei and ZTE claw their way into the market--a trend that many believe will continue.

For more on this story:
Reuters

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