Suppliers reposition for growth

09 Oct 2006

A massive shake-out among the big mobile vendors has been predicted since the introduction of 3G, but few could have predicted the speed with which the changes would occur. With the ink on the Nokia-Siemens deal still wet, and within days of Alcatel and Lucent shareholders signing off their merger, the French vendor is buying Nortel's UMTS radio network controller and node B product portfolio. Arguably the two big mergers were reasonably predictable but the Nortel deal clearly shows the problems facing vendors trying to compete for big infrastructure contracts in a shrinking market. Keeping up with the Jones in 3G is tough enough, but looking forward and calculating the investment that will be needed to be a player in HSPA and LTE makes carrying on a tough call.

Obviously for Nortel the answer was a no-brainer. Despite having good technology, Nortel has struggled to win 3G business (as indeed has Lucent). Alcatel, on the other hand, looked for a while as if it did not have the capability or desire to play in the 3G space. By acquiring first Lucent's and now Nortel's 3G expertise the firm has immediately leapfrogged up the ladder.

Indeed Marc Rouanne, president of Alcatel's mobile communications business, speaking following the Nortel announcement claimed that Alcatel was 'clearly posed to become a strong No. 3 in UMTS and HSxPA.'

Buying market share never comes cheap; Alcatel is paying Nortel $320 million for its UMTS product portfolio and for its UMTS engineers. Mind you, the move makes good business sense. With the CDMA EV-DO expertise it will get from Lucent, Alcatel will certainly be in a strong position to win business right across the 3G market.

Where does this agreement leave Nortel‾ 'Nortel is sharpening its focus on the markets in which we intend to lead,' says Mike Zafirovski, Nortel's president and CEO. 'Our UMTS access business lacks the scale and momentum needed to become profitable.'

The company says it will continue working on the evolution of GSM access and core, GSM-R, GPRS and EDGE as well as on CDMA access and core, and on UMTS core technologies. There was also reference to being committed to mobility and planning to 'lead the 4G evolution.' As its expertise in OFDM-MIMO was also referenced in the statement, one wonders if Nortel sees technologies such as mobile WiMAX as offering more positive future opportunities.

Certainly there has been concern expressed in some quarters that the decision by 3GPP and ETSI to keep backward compatibility to GSM and W-CDMA as a central plank of 3G Long Term Evolution rather than going for the much more efficient, but not backwardly compatible OFDM, was a missed opportunity.

Related content

No Comments Yet! Be the first to share what you think!
This website uses cookies
This provides customers with a personalized experience and increases the efficiency of visiting the site, allowing us to provide the most efficient service. By using the website and accepting the terms of the policy, you consent to the use of cookies in accordance with the terms of this policy.