Incoming Nokia Siemens Networks (NSN) CEO Rajeev Suri believes the industry’s remaining half a dozen infrastructure vendors will consolidate down to three.

 

But he says the company will continue with its existing strategy and will be one of the last three left standing.

 

Suri says he sees good business opportunities in the service segment, as evidenced over the past few months with NSN winning large service deals from carriers such as France Telecom Orange in Spain and the UK.

 

This emphasis on service is timely given that NSN has forecast that equipment sales will fall by 10% this year (which is lower than some other vendors), with the company reporting a Q2 gross margin of 28%, down from 31.5% a year earlier, as sales fell 21% year on year.

 

The suggestion that industry consolidation is expected comes after the share price of Alcatel-Lucent jumped by around 20% last week following rumors that a Chinese manufacturer was on the prowl.

 

While this speculation has been dismissed by both Chinese firms, the prospect of NSN merging with Alcatel-Lucent has now been floated.

 

This idea has been rubbished by some industry watchers, given that both firms have already undergone huge and complex mergers, but Richard Windsor, global technology specialist at Nomura, painted a bleak picture for NSN. “The company is between the devil and the deep blue sea - it's neither a technology leader nor a cost leader,” he claimed.

 

For NSN, while merging with Alcatel-Lucent would give it the scale it needs to improve profits while strengthening its position in LTE technology, it could struggle to finance such a big purchase.