Genuity Technology Insight report
Here is a summary of Genuity Capital Markets top ranked Technology Hardware Research Analyst’s note on Telecom Equipment vendors:
“Over the past couple of weeks, we have attended the Nortel (NT:TSX) Technology Day and Ericsson Investor Day, and have spoken to carrier contacts and third-party researchers. This report builds on our existing thesis regarding the changing landscape for carriers and the impact on suppliers.
· From a vendor perspective, roadmap is important, but price is as well. These two elements will allow equipment vendors to win contracts over the coming years. Along with these equipment sales will also come valuable services contracts, as vendors are increasingly expected to provide network planning and optimization for next-generation IP networks. While the networks are becoming more uniform, heterogeneous traffic demands and service level agreements ironically make the network management aspect more difficult, to some degree.
· Within markets such as wireless infrastructure, the advantages of scale are evident, as the top two in each market have become ever more dominant. The top two vendors’ market share for each segment are: GSM – 61%, CDMA – 77%, and WCDMA – 71%. The dynamics are such that smaller vendors will only become more marginalized going forward.
· While competitors such as Ericsson, Alcatel-Lucent, and Nokia Siemens have been much more vocal about their IMS successes to date, we believe Nortel could play a role, given its strength in areas such as carrier voice. Moreover, we believe that Nortel’s partnership with Microsoft may also be extending into the carrier space, as their softswitches have been enabled for unified communications through their ICA initiative. Partnering with a leader in services and software offerings could help Nortel deliver compelling carrier services over IP.”
If you get a chance to see the entire report, you’ll find it most enlightening.