One vendor’s end-to-end strategy is another vendor’s poison.
Nokia Corp., Siemens AG and Motorola Inc. market their end-to-end strategies as one-stop shops for carriers. But Lucent Technologies Inc., Nortel Networks Ltd. and Alcatel Alsthom say end-to-end solutions actually limit choices for carriers. In between is L.M. Ericsson, which plays fair weather with both business models.
An end-to-end company sells radio, core equipment, gateways, application platforms and devices-especially devices.
Nokia, Siemens, Motorola, Samsung, LG Electronics and UTStarcom supply both infrastructure equipment and handsets. Across the aisle are Nortel, Alcatel and Lucent, which supply only equipment.
End-to-end players say they offer an integrated vision, so customers do not have to go elsewhere to procure what they want. Equipment-only companies say they are better focused on their core competencies and avoid the unwieldiness of adding handsets.
Ericsson says both sides have advantages and shortfalls, and it partners with its former subsidiary, Sony Ericsson Mobile Communications L.P., when the customer wants an integrated framework, and bowls alone when it does not matter.
Two recent developments tell the quandary of the end-to-end tale. Alcatel sold its handset unit to focus on its infrastructure strengths. UTStarcom bought the handset business of Audiovox Communications Corp. to affirm the power of devices as a complement to an infrastructure business humming on all cylinders.
“Adding the terminals gives us an added advantage,” commented Jeff Mar, president of the CDMA division for UTStarcom, explaining it fits into the company’s all-Internet Protocol vision.
“We are focused on the carrier model, not the consumer model,” explained Mark Morell, director of strategic marketing with Nortel, adding that end-to-end companies often have to handle the extra burden of tackling the quirks of consumers, whether they want high-end handsets or low-end devices.
Nokia enjoys an advantage from tackling the various parts of the wireless business, including consumer, enterprise and carrier markets, according to Bill Plummer, vice president of strategy and external affairs at Nokia. The carrier can deliver and dynamically monitor what services are being provisioned, to what extent they are being used and tailor the services and applications to the popularity from the end users’ standpoint, Plummer explained. “We help the carriers plan their products and applications and manage their networks for competitive advantage.”
Although Nortel does not offer handsets, Morell said his company has “an end-to-end story.”
Lucent echoes the same idea, according to Tom Zahn, manager of device strategy and partnerships for Lucent’s Mobility Solutions group. This means they configure their infrastructure systems to fit into a variety of handsets on the market.
Vendors that offer handsets as part of total solutions are limited to the genius or mediocrity of the handset, equipment-only manufacturers claim.
Ericsson spokeswoman Michelle French said sometimes customers want the infrastructure player to tack on their handsets. In that instance, Ericsson works with Sony Ericsson. She explained that Ericsson also is the world leader in mobile platforms, which loads all the various applications and systems onto a handset. “We bid with Sony Ericsson and the mobile platform,” she said.
Some carriers prefer to buy core equipment from Nortel, radio technology from Lucent and devices from Nokia. The beauty of open standards enable each company’s products to fit with each other, all vendors noted.
Despite not making handsets, Lucent can debug phones early because it has chip alliances, either through Novatel Wireless or Qualcomm Inc. As such, Lucent doesn’t have to wait for the phone to be ready to handle any glitches, Zahn said.
Zahn also noted that Lucent carries out development efforts with handset makers like Motorola and Nokia for interoperability. End-to-end players say they win this comparison since these efforts take place within their own companies.
Even so, handset makers are increasingly using the expertise of original design manufacturers to ease the burden of making their devices. Nokia announced recently at its Capital Markets Day that it is considering using ODMs for its handsets going forward. This buttresses the position of critics that the end-to-end players run an unwieldy system.
Both Nortel and Lucent have considered making handsets. Nortel considered it in the late 1990s and built some devices but did not go ahead because “it’s a different model to deal with the consumer market,” said Morell,
Zahn said Lucent has discussed the option, but has always decided not to make the move.
