procurement

Ericsson’s Nortel wireless win linked to carrier buying trend

Ericsson came from behind to win the Nortel wireless auction, beating out both NSN (the original straw-man bidder) and a private equity bidder for the deal. There’s still a step of court and regulatory approval, but we’re not hearing issues in either of the two areas so far.

The Nortel deal gives Ericsson another North American asset after its win of a management contract for Sprint. It also means a major disappointment for NSN, which really needed to boost its own position in the U.S. in particular.

Obviously everybody knows at this point that wireless capex will beat wireline for the foreseeable future, but we also think that the move is linked to an overall change in provider procurement policies worldwide, a shift to a partnership with a few key vendors that control significant opportunity ecosystems.

Other deals like this are likely to emerge, inside and outside the wireless space, as vendors mass up and position for the fall cycle. We cover this shift in depth in the July issue of Netwatcher.

Carrier “procurement zone” strategies may lead to vendor partnerships

AT&T is refining its list of “domains” for procurement, and its new number (reported by UBS and others to be around eight) is more in line with the average range we got from our survey of carriers last month. The new system isn’t supposed to put smaller vendors at risk, but it’s pretty clear from the most recent commentary we’ve heard from Tier Ones that the pressure will be on vendors to create partnerships or even M&As to build enough mass to be convincing in key areas, or to insure they have some representation in some of the zones.

UBS reports that NSN is likely to be a zone player, as well as Alcatel-Lucent, Cisco, and Ericsson. We think that Cisco, in particular, may be thinking about measures to expand its footprint among the zones because most of the big players have broad portfolios and thus have a hope of representation in several zones.