The near-term outlook for networks is not looking good for two of the industry’s biggest infrastructure vendors, with Nokia expecting a decline in net sales for its networks business and Ericsson forecasting the mobile infrastructure market to fall 10 to 15 percent this year and 2 to 6 percent in 2017.
But Nokia CEO Rajeev Suri, speaking during the company’s first Capital Markets Day in two years, said he’s confident Nokia will outperform rival Ericsson and that there is light at the end of the tunnel, with Nokia seeing a primary market that is expected to return to growth in 2018, Mobile World Live reported.
Suri is confident Nokia is positioned to grow faster than the market. “Let me be clear. Nokia is not Ericsson,” Suri said, according to Mobile World Live. “They are in crisis. We outperform them in pretty much every area. Look no further than the third quarter to see the stark differences.”
Nokia reported a 6 percent decline in sales in the third quarter (PDF) and warned that waning demand for wireless-network equipment would continue to weigh on revenue. Third-quarter sales fell to $6.5 billion, led by a 12 percent drop in network revenue.
Ericsson has described its situation as being in the middle of a “significant company transformation.” In the third quarter, Ericsson reported a 19 percent decline in sales in the networks segment. It announced plans to slash 3,000 jobs in Sweden and expects to implement further short-term actions in order to adapt to weaker mobile broadband demand.
Former Ericsson CEO Hans Vestberg was ousted in July after the company posted a 26 percent year-over-year drop in net sales during the second quarter. CFO Jan Frykhammar was appointed to serve as interim CEO until the company’s new CEO, Börje Ekholm, takes over in January.
Speaking at Ericsson’s Capital Markets Day in New York last week, Frykhammar forecast that the total mobile infrastructure (RAN) market is set to fall between 10 and 15 percent this year and by between 2 and 6 percent in 2017, according to Mobile World Live.
It’s unclear when 5G will affect network sales in a big way. In Ericsson’s latest edition of its Mobility Report, forecasts call for 550 million 5G subscriptions in 2022. North America will lead the way in uptake of 5G subscriptions, where a quarter of all mobile subscriptions are forecast to be for 5G in 2022, representing the highest market penetration in the world.
Asia Pacific will be the second fastest growing region for 5G subscriptions, with 10 percent of all subscriptions being 5G in 2022, Ericsson said, noting that South Korea, Japan and China will host the Olympic Games in the coming six years and have stated intentions to launch 5G in conjunction with the Games.
Mobile video traffic is forecast to grow by around 50 percent annually through 2022 to account for nearly 75 percent of all mobile data traffic, while social networking is the second biggest data traffic type after video, forecast to grow by 39 percent annually over the coming six years, according to the report.
As for the Internet of Things (IoT), the report says that around 29 billion connected devices are forecast by 2022, of which around 18 billion will be related to IoT.