re: Ericsson CDMA
Percentage of value of cellular/PCS contracts announced over 18-month period ending 5/31/01:
Nortel 19%
Lucent 66%
Motorola 8%
Ericsson 5%
Other 2%
>> Ericsson Wants To Hit It Big With CDMA
Kelly Carroll
Telephony
August 13, 2001
industryclick.com
Vendor challenged to find ways around already established carrier relationships
Two-and-a-half years ago, Ericsson did not have a CDMA strategy and was one of the technology's biggest critics. Today the vendor is hell-bent on being one of the top two CDMA vendors in the next three years.
While Ericsson is winning CDMA deals in Latin America and China, the North American market will be tougher to penetrate because carriers have pre-existing vendor relationships.
Vendors have a lot of staying power, and it generally is not easy to break into a new market, said Ake Persson, head of Ericsson's CDMA systems business unit. However, we are making a lot of progress in our discussions with established CDMA operators. We didn't expect to receive big orders immediately in 1999 or last year.
In March 1999 Ericsson bought Qualcomm's infrastructure division, which would give the company exposure to current generation CDMA networks and third generation (3G) cdma2000 networks. At the time, analysts were pegging Ericsson as being better positioned than Qualcomm to make the business profitable.
But Ericsson's role in narrowband CDMA to date has been limited at best, said Paul Dittner, analyst for Gartner Dataquest. Their handset [business] has never gained any momentum, and the infrastructure side has been pretty quiet.
Ericsson's only CDMA system contracts in North America include Qwest Communications, Leap Wireless and Sprint PCS.
In the handset market, the vendor last week struck its first CDMA deal, a multiyear contract with Verizon Wireless. Ericsson, which currently has about a 5% market share in CDMA, is driving toward a 20% market share in the next several years, Persson said (see figure). We are coming from behind so we are a bit modest, but we don't see why we shouldn't be one of the top two CDMA vendors in the next three years, he said.
Despite its history as a CDMA opponent, the industry seems to have let bygones be bygones.
Ericsson repented and apologized, said Ira Brodsky, president of Datacomm Research. The only obstacle now has... to do with the fact that a lot of [vendors] landed their deals for infrastructure before Ericsson got into the CDMA game. There also have been signs that operators may build multivendor networks, Brodsky added.
With multiple technology solutions, Ericsson believes it stands apart from the competition because it can work with multiple standards.
The company also considers itself prepared for any further operator consolidation, which could result in some GSM operators owning CDMA properties, Persson said. That was sort of the driving force [for us] to go into CDMA, he said.
Adding the technology to its arsenal also meant an expansion into handsets. It is becoming more important that we can supply operators with end-to-end solutions, Persson said. We can have an advantage over the competition if we can supply both systems and phones.
However, Ericsson could have a harder time with CDMA handsets because of competition from a slew of Asian handset manufacturers, Brodsky said. But he maintains that the infrastructure game for CDMA is fairly wide open.
Because wideband CDMA is not expected to come to market for two or three years, the company could offer cdma2000 to GSM operators as a faster and surer way to get to 3G, which might improve their global position. Other players like Lucent do not have the same kind of connection with GSM-based carriers, Brodsky said.
Persson believes Ericsson's recent win with China Unicom will prove to be important for the company as well as the CDMA industry. That will also create an impact on the U.S. market. Operators like to see volume. <<
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