SEOUL: Alcatel -along with Samsung, which is diversifying into networks from its stronghold in smartphones and TVs -is counting on beating the competition by persuading Chinese clients that single radio access network is not the way forward.
Both Alcatel and Samsung hope to show Chinese clients that 4G networks with new technologies can be built faster and with lower operating costs.
For Alcatel-Lucent, which has swung back to net losses in the past four quarters and just replaced its CEO, China will be particularly key to the second half of the year. “We have a strong foundation in what will be the largest 4G opportunity in the world in the coming years,” David Geary, head of Alcatel-Lucent’s wireless division said of China Mobile trials.
“Single RAN is one of the trends in the market, especially in Europe,” I.P. Hong, head of global marketing in Samsung’s Networks Business said in a statement. “However, if you look into large-scale LTE deployments in the US, Japan and Korea, most of them are overlay networks on top of existing technologies.”
One CEO of a northern European operator, who did not want to be named because of the sensitivity of disclosing business information, agreed that there were significant cost advantages in awarding contracts to new network vendors.
“Prices for equipment have come down so much it is often cheaper for the new vendor to change out all the old equipment than to upgrade the site with new equipment,” he said.
In trials for China Mobile, Huawei and ZTE have done the most pilots, followed by Alcatel-Lucent with 14.5 per cent, according to IHS iSuppli. Ericsson and Nokia Siemens got just 8 and 7 per cent of the trial business respectively.
Sweden’s Ericsson currently has the biggest slice of the global mobile equipment market with around 35 per cent, while Huawei has 17 per cent, NSN 15 per cent and Alcatel-Lucent 12 per cent. The first wave of 4G investments that began in 2010 in Japan and Korea favoured Ericsson and NSN, and saw the arrival of newcomer Samsung, while the second in the US went largely to Ericsson and Alcatel-Lucent.
But even vendors that have done well in 4G so far need a China boost given the weak outlook for network gear this year.
Research firm Gartner sees network equipment sales up 2.3 per cent to $79 billion in 2013 after a contraction last year.
China’s three mobile operators -China Mobile, China Unicom and China Telecom -plan to spend a combined 345 billion yuan ($56 billion) this year on network upgrades. That includes investment in 4G, which multiplies mobile broadband speeds by up to five times for users of Apple Inc’s iPhones or Samsung Electronics’ Galaxy phones.