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Ericsson maintains leadership among network equipment vendors

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Ericsson continued to strike a fine balance between growth and profitability in 2Q09, continuing its gradual migration to a services led approach to operator accounts. Both Alcatel Lucent and Nokia Siemens also relied more heavily on services in 2Q09, but Ericsson continued to lead the industry in both infrastructure and services revenue, reports Technology Business Research (TBR).

Meanwhile, Chinese vendors Huawei and ZTE dominated revenue growth in 2Q09 by providing high-quality products at very competitive prices. Moreover, Chinese vendors benefited disproportionately from major 3G contracts awarded by Chinese operators in 2Q09.

Regarding the 2Q09 results, Director John Byrne commented that "With clear momentum in EMEA and an increasing focus on North America, both Huawei and ZTE are well-positioned to continue to take market share away from Western vendors, especially Alcatel-Lucent and Nokia Siemens."

North America has become a key battleground for equipment vendors as they position for 4G growth, with Ericsson, Alcatel-Lucent and Nokia Siemens recently making management appointments and transformation initiatives designed to win more business in the region. Even ZTE, which has yet to penetrate into North America in terms of major infrastructure projects, opened an LTE development facility in Texas.

TBR believes the partnership between Alcatel-Lucent and HP announced in May provides a differentiator for both companies, as the two vendors will offer an array of integrated telco/IT solutions that is broader than what suppliers such as Ericsson, IBM or Accenture are able to provide. TBR anticipates that this alliance will lead to other IT/telecom alliances as competitors seek to counter ALU/HP.

In handsets, Samsung successfully took away share from the world's largest handset vendor, Nokia. Meanwhile, Motorola suffered from another down quarter but TBR believes the worst may now be behind the struggling vendor. The company has embraced Google's Android platform as its primary smartphone platform, and will work closely with Verizon Wireless on the launch of the Android-based "Droid" phone, likely to be a big seller in the 4Q09 holiday selling season. TBR believes that Motorola is well positioned to show significant momentum heading into 2010 as a result of the Droid and other Android devices scheduled for release.

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Tags: ericsson  nokia siemens networks  motorola  nokia  4g  droid