Network Gear Sales Surge in Second Quarter
By Carlo Longino, Fri Aug 13 20:15:00 GMT 2004

Sales of mobile infrastructure equipment surged 37 percent in the second quarter, according to a research firm.

The Dell'Oro Group says $9.0 billion of mobile network equipment was sold in the second quarter of 2004, over a third more than in the same quarter last year. Surprisingly, sales of GSM/GPRS/EDGE gear accounted for 60 percent of the increase.

The firm says that investment in basic voice services in developing regions is driving GSM equipment sales, while many carriers are also spending a lot of money on EDGE gear. But WCDMA equipment revenues fell almost 20 percent in the quarter sequentially, representing a slowdown in 3G network buildouts in Europe and elsewhere. Dell'Oro says, however, WCDMA sales will grow more than 50 percent this year.

Even with the 3G dip, the report paints a far rosier picture than an earlier report from another analyst, which predicted a 15% drop in the market through 2008. It's a little easier to take the optimistic view today's report suggests -- there are still a lot of networks all over the world to be built.

There's lots of work left on European 3G networks, and WCDMA buildout in North America has barely begun. Developing nations' networks continue to grow, and new networks in Africa and other places are popping up. But the biggest question may be what happens in China -- how soon the government approves 3G licenses and how quickly carriers there start setting up the networks. There should be enough revenue from outfitting the country with 3G, as well as expanding the 2G and 2.5G networks to boost the industry for quite some time.