Ericsson CEO: We're Cool With Consolidation
By Carlo Longino, Thu Apr 07 22:30:00 GMT 2005
The boss of the infrastructure giant says that operator consolidation might cause some short-term contraction in the network gear market, but it will spur greater long-term demand.
Ericsson CEO Carl-Henric Svanberg gave a positive report at the company's annual meeting this week, announcing record profits and other proof Ericsson's turnaround is complete. He said the telecom equipment industry has changed significantly, seeing very strong competition with fewer vendors chasing fewer deals, with operator consolidation playing a key role in the developments. But Svanberg says everything is okay since falling service prices will drive more usage.
Operator consolidation seems to lead to higher prices, though, so perhaps Svanberg is a believer in virtual operators and the price wars they can help along. It's the flip side of some earlier speculation that MVNOs might hurt network gear vendors, but the possibility exists that MVNOs can attract enough usage that physical operators will have to beef up their own networks to keep pace.
Ericsson is also well placed to directly profit from MVNOs -- the company says it's going after more managed-services deals, where is is responsible for the overall management of an operator's network, like the one it signed with 3 Italy earlier this year.
The company also said it expects China to finally give out four 3G licenses this year, opening up another big market for infrastructure. Ericsson holds 35 percent share of the Chinese infrastructure market, a number it will hope to maintain in the face of fierce domestic competition there.