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Wireless Infrastructure Vendors Hunkering Down for a Tough 2009
Posted: 18-Mar-2009 [Source: ABI Research]

[ABI Research reports radio access network equipment expenditures to contract by 6% in 2009.]

Singapore -- Radio Access Network equipment expenditure is expected to contract by 6% as wireless infrastructure vendors brace for a stormy year. The latest market data from ABI Research pegs infrastructure spending at about $49 billion in 2009.

“2009 will be a tough year for wireless infrastructure vendors,” says vice president of forecasting Jake Saunders. He identifies two underlying trends determining the course of this market.

First, deployment cycles for 2G and 3G coverage are rapidly approaching maturity in the industrialized world. There is the lure of 3.5G and 4G infrastructure spending, but 3.5G infrastructure upgrades (HSUPA, HSPA+) are more incremental in value. 4G deployments such as LTE and WiMAX 802.16m represent more than just software upgrades to the network, but will only contribute meaningfully to equipment spending in the 2011-2015 timeframe.

Second, there is intense rivalry between the incumbents (Nokia-Siemens Networks, Ericsson, Alcatel-Lucent, Motorola) and the price-competitive and increasingly innovative Chinese vendors Huawei and ZTE. “Huawei in particular has been moving up the ranks,” notes senior analyst Nadine Manjaro. “In 2005, Huawei held just 5% of the market. In 2008, it chalked up nearly $18 billion in telecom sales. As a result, the firm moved into third place with 12.5% of the wireless infrastructure market. This is an extraordinary achievement.”

While the market will contract in 2009, there are hotspots to brighten up the infrastructure vendors’ day. In China, 3G licenses have been handed down. So far the Chinese vendors have been majority winners. Indian operators have provided veteran infrastructure vendors with substantial contracts. Ericsson assisted BSNL to roll out 3G infrastructure in 400 towns and cities in India. Not only is 3G penetration comparatively low in Asia but there are still opportunities in South America, the Middle East, and Africa. In these regions carriers are still very much expanding their footprints and improving in-fill and in-building coverage. Voice and messaging traffic are the main drivers.

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