When a technology era begins, infrastructure is king. But once the nuts and bolts are in place, it takes second place to peripherals.
In wireless, it is no different. “Total wireless infrastructure contract values are down roughly 40 percent year-on-year from the first half of 2002, compared with that of the first half of 2003,” according to a study from Allied Business Intelligence,
The report noted that the transition from TDMA technology to the GSM/GPRS protocol in North America accounted for large contracts awarded last year.
The trend confirms remarks from major infrastructure vendors like Nokia Corp., L.M. Ericsson and Motorola Inc. that the era of big equipment spending is over for the current generation of technology. Now the vendors are concentrating on professional services, where a new battle for market share is heating up.
According to the ABI research, third-generation contracts represented 13 percent of all deals signed. Ericsson still leads the market with 44 percent of W-CDMA contract awards, the research firm said. Alcatel, Lucent Technologies Inc., Nokia, Nortel Networks Ltd. and Samsung Electronics have won W-CDMA contract awards this year.
“Despite the number of 2G and 2.5G contracts signed, future strength in this market lies in the 3G, W-CDMA segment,” declared Edward Rerisi, ABI’s director of research. “Though other technologies should not be ignored, considerable upside opportunity lies ahead in the W-CDMA segment.”
He noted that “current individual 3G contract awards are worth roughly twice that of those for 2G and 2.5G networks.”
The research firm said more than $1 billion in contracts have been signed for W-CDMA since the beginning of the year, adding that awards have been increasing steadily during the first six months of 2003.
A huge chunk of the awards have gone to GSM/GPRS networks entering emerging markets. Yet according to the report, equipment vendors are focused on gaining W-CDMA market share.
“Long-term success will only be brought by early contract wins,” adds Rerisi.
Research firm Dell’Oro Group released a similar study with more optimistic results. The group said mobility infrastructure revenues were $6.5 billion for the second quarter of 2003, up 1 percent compared with the first quarter of 2003.
Dell’Oro credits the increase with a 12-percent increase in GSM equipment revenues, which offset a 21-percent decline in W-CDMA equipment revenues and a 6-percent decline in CDMA-based infrastructure. “Revenues for W-CDMA infrastructure equipment remain volatile based on a relatively small number of accounts, strict revenue recognition rules and delays in service introductions,” the research group said.
Dell’Oro said overall, the mobility infrastructure market was down 14 percent compared with the same quarter last year.
