re: Shosteck: End of Telecomm Recession
During Q1 2002, new orders from mobile operators may be "abrupt and substantial"
Analysis of six major vendors ... Shosteck believes that these six vendors combined will generate sales of $145 billion in 2001, 23.6% less than in 2000, "the year of peak sales."
>> Telecoms Rebound Set For Q1 2002 - Shosteck
Total Telecom
13 December 2001
Telecoms vendors can expect to see increasing revenues from the first quarter of 2002, with industry sales for the full year being up to 11.2% higher than in 2001, according to The Shosteck Group.
"Armageddon is not here," according to Dr Herschel Shosteck, president and chairman of the Wheaton, Maryland-based telecoms consultancy. "Notwithstanding the over-investment of the past two years and the announced plans of network operators to reduce investment, the sale of telecommunications equipment has likely reached the depth of its recession," believes Shosteck. Vendors can expect increasing revenues from Q1 2002, and "This is especially the case for the wireless segments."
Indeed, the Group, in a report entitled Strategic Implications of the Telecoms Collapse: Unseen Profit Opportunities, has concluded that during Q1 2002, new orders from mobile operators may be "abrupt and substantial," as operators face a capacity crisis as a result of increasing voice traffic volumes. "Mobile equipment vendors that have secured a sufficient supply of components to support increased production will profit. Those whose inventories are too constrained will not."
The Group has based its predictions on its analysis of six major vendors, and believes "industry sales will recover by 4.5% to 11.2% above those of 2001. During 2003, they will expand to approximately 10% above those of 2002."
Shosteck believes that these six vendors combined will generate sales of $145 billion in 2001, 23.6% less than in 2000, "the year of peak sales."
But not all companies will "share equally" from the sales recovery. "This will be due to two interrelated factors. First, the product mix of the industry is changing, in particular, toward those that support packet transmission. This will benefit those vendors with the greatest packet skills. Second, new vendors will enter the market and take share from established ones."
The Group also believes that the long-term effects of the 11 September attacks will be additional traffic on landline and mobile networks.
But it also warns companies that are downsizing as a result of the industry downturn that they should be careful not to eat into "corporate memory." "In terms of engineering, losses of corporate memory include the painfully acquired experience regarding which processes and methods work in real world applications and which don't," said Jane Zweig, CEO at the Shosteck Group. "It will be challenging at the very least to see how the large vendors will be able to regroup," she told Total Telecom.
She also warned against companies starving their R&D departments of funds to develop marginal or new lines because they are refocusing on core activities "that have high and near term commercial relevance. "This leaves what Zweig describes as an "R&D void. This is opening more opportunities for independent companies - start-ups - able to fill that void."
These start-ups will be funded by venture capitalists that are prepared to work against longer time frames for return on investment, where the new companies will be required to meet commercial as well as technological milestones.
"Start-ups will be critical for innovation. The large vendors will not be able to serve this role any more," Zweig added. <<
- Eric - |
