Huawei

NSN’s very bad quarter: Good technology, bad messaging

Nokia Siemens Networks’ (NSN) quarterly results were just plain bad, with the company admitting a much larger market share loss than they’d forecast—so much so it swamped a market that turned out to be better than NSN had expected.

We think the problem here is a combination of conservatism and the lack of a single area of specialized focus on which NSN could underpin marketing efforts. NSN has excellent technology but extremely limited marketing skills, and the company is especially troubled by a lack of ability to engage high-level issues in a telco market that is increasingly focused on transformation of business model.

The NSN analyst event late this month may show how, and if, NSN plans to change all of that. The numbers make it very clear that it needs to. NSN can’t sustain sales and margins against Huawei without a strategy, and it can’t boost its U.S. market position without one either. The expectations of vendor M&A in the telco equipment space has driven prices on companies up, making it less likely NSN could bring off an acquisition that would position it here in the U.S.

Huawei’s T-Mobile LTE win shows revenue concerns

Huawei, which recently appeared to reaffirm its guidance on sales growth for the year, has won an important T-Mobile trial in Austria. The deal gives Huawei the largest LTE field trial in Europe to date and reaffirms that the Chinese equipment giant is making real strides in the important mobile market.

We think Huawei’s rise in mobile is also an indicator that operators are concerned mobile margins won’t last, perhaps due to the inevitable commoditization of services created by mobile web, smartphones and netbooks. The pricing pressure in mobile is ominous for equipment vendors overall, we think, because it shows that there is little chance that any basic infrastructure will hold margins anywhere over time. That means it’s service layer or nothing

CIMI Corp. analysis on critical telecom vendors

The February, March and April issues of our newsletter, Netwatcher, will include a special series on eight critical telecommunications vendors. We will present a SWOT analysis of each vendor based on our assessment of the critical market issues in 2009 and beyond.

     - February: We’ll cover Alcatel-Lucent, Cisco and Juniper.

     - March: We’ll cover Ericsson, Nokia-Siemens Networks and Huawei.

     - April: We will cover Ciena and Tellabs.

In April, when all the material has been published, we will prepare a special document that includes all three sets of material plus an introductory section that outlines our view of the market. This will be available at no charge to retainer clients and Netwatcher recipients. We will also provide it as part of our TMT Advisor Information Services series at no cost to any service provider planner who registers with us prior to its release.

Contact us now at tmtadvisor@cimicorp.com for registration. You must provide your name, job title, and the name and URL of the service provider that employs you, and submit your request on your company email. Copies of this document will be available to others at a cost of $150 U.S., prepaid. Contact us for details.

Network market leaders analysis to come

In the Market Area Focus section of our February 2009 issue of Netwatcher we’ll be starting a three-article series on the major service provider network equipment vendors with coverage of Alcatel-Lucent, Cisco, and Juniper The next segment will cover Ericsson, NSN, and Huawei, and the third will cover Ciena and Tellabs

Nortel’s Ethernet sale: Who will buy?

We may be coming to the point of a Nortel Ethernet sale soon after the first of the year, according to some of our sources. Four companies have been named possible buyers (Cisco, Ericsson, Huawei, and Nokia-Siemens), but we are hearing that the front runner is Huawei and that Cisco is not a serious contender. There are potential issues in a Huawei sale but company executives from both sides have been working to make them less likely to derail a deal. Whoever does the deal, it is likely that it will spur additional activity in the Ethernet space, and a Huawei buy could well set the stage for an eventual takeover of all of Nortel by Huawei

China to invest $40 billion in 3G network

China will likely invest at least $40 billion in a faster 3G network based on China’s own TD-SCDMA, which differs from the international standards. The investment is expected to benefit primarily Chinese manufacturers. This may be an indicator that some major economies will spend to support their own industry rather than simply erect trade barriers or take other overt steps.

The U.S. decision to aid the auto industry would be regarded by some as a subsidy, again showing that countries will tread carefully to avoid poisoning the free trade atmosphere but at the same time support their own manufacturing sector as a necessary part of economic recovery.

Questions on whether Huawei has ties to the Chinese government and the military (particularly the PLA) have swirled for some time and have now been raised again in financial circles, which suggest that the Chinese giant may plan an IPO.