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Market Reevaluation Necessary for Wireless Infrastructure
Posted: 01-Aug-2002 [Source: Allied World press release]

[New report states the market cannot support as many vendors as we have today and estimates sales of wireless base stations will be down 15% this year, with 3G barely making a dent.]

Oyster Bay, NY -- The wireless industry has changed dramatically in such a short time, reaching a crescendo many thought was still years off. While subscriber growth has slowed worldwide, the market for infrastructure has come to a grinding halt. Allied Business Intelligence estimates that sales of wireless base stations will be down 15% this year, with 3G barely making a dent. Sales of wireless base stations reached nearly $20.3 billion in 2001 with 2002 sales expected to decline to $17.4 billion. With this sudden reversal of fortune, many companies are expected to reexamine their position within the industry, including operators, equipment vendors and startups.

A new report by ABI examines the key trends within the wireless infrastructure industry and reveals many of the challenges, and opportunities, that lie ahead.

Globally, the industry is at a transition point. Asian operators are testing the waters with commercial 3G networks. In the Americas, operators are migrating away from TDMA technology. Finally, European operators are struggling with high debt loads and a subscriber base nearing saturation. All of these have different ramifications for the base station market. Industry participants faced with this uncertainty must be nimble and shift focus as necessary.

With demand for 2G set to diminish rapidly over the next 5 years, a greater emphasis will be placed on the rising demand for 3G equipment.

"No one wants to be first to consolidate or narrow their 3G product portfolio. The market just cannot support as many vendors as we have today," said ABI Senior Analyst Edward Rerisi. The analyst makes a key point regarding the market for 3G equipment based upon CDMA technology: Less than a quarter of 3G spending over the next five years consists of CDMA2000 equipment. Geographically, it's almost all in the Americas and Asia Pacific. "With reduced growth prospects, it's incredibly clear that the CDMA equipment market is ready for a shakeup."

Mr. Rerisi is author of the new study, "Wireless Base Stations: Global Deployments & Revenue for 2G, 2.5G and 3G Systems," which examines these trends in greater detail. In light of recent industry weakness, the report includes updated analysis for each of six geographic regions.

Allied Business INtelligence Inc. is an Oyster Bay, NY-based technology research think tank that publishes research and technology intelligence on the wireless, broadband, electronics, networking and energy industries.

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