NEW YORK -- The latest round of mergers, acquisitions, and partnerships involving some of the world's biggest suppliers of wireless infrastructure equipment makers will have significant ramifications for the entire wireless infrastructure supply chain, according to a new report released by Unstrung Insider (www.unstrung.com/insider), a paid research service of Light Reading Inc. (www.lightreading.com).
"Vendor M&A Frenzy: What Happens Next" analyzes the impact of consolidation on the cellular network equipment market and assesses key growth segments in a market that is expected to generate more than $55 billion in revenue this year, but which faces modest overall growth prospects. The report includes detailed market share breakouts for worldwide wireless infrastructure revenues by vendor and by type of technology (CDMA, GSM, and UMTS).
"The economic logic for consolidation in the cellular network equipment market has long been compelling," notes Gabriel Brown, Chief Analyst for Unstrung Insider and author of the report. "In a chain of events sparked by service-provider consolidation in North America, the M&A deadlock has been broken and the sector is now undergoing a deep restructuring process."
Major deals involving industry giants Alcatel, Ericsson, Huawei, Lucent Technologies, Nokia, Nortel Networks, Siemens, and others are creating a de facto oligarchy of infrastructure suppliers that will account for more than 80 percent of worldwide cellular infrastructure revenues, says Brown. "Size directly influences a vendor's ability to invest in R&D, optimize the supply chain and manufacturing, provide financing, achieve geographic diversity, and, ultimately, make a profit."
Key findings of "Vendor M&A Frenzy: What Happens Next" include the following:
- The cellular infrastructure market in the first half of 2006 was flat relative to the first half of 2005, but with lower profitability; this decline in profit margins is a key factor driving vendor consolidation.
- Post-consolidation market shares show the top three vendors Ericsson, Alcatel-Lucent, and Nokia-Siemens will account for almost 70 percent of the $56 billion worldwide wireless infrastructure market in 2006.
- 3G systems will account for about 20 percent of wireless infrastructure revenues this year, growing to 50% of the market in 2010 another critical market dynamic driving vendor M&A and partnership activity.
- Smaller vendors will come under even greater pressure in the next few years, with some abandoning UMTS 3G in favor of pre-positioning in future markets using OFDMA technologies, such as WiMax.
Companies covered in this report include: Alcatel; Ericsson AB; Huawei Technologies Co. Ltd; Lucent Technologies Inc.; Motorola Inc.; NEC Corp.; Nokia Corp.; Nortel Networks Ltd.; Siemens AG; Samsung Electronics Co. Ltd.; and ZTE Corp.
"Vendor M&A Frenzy: What Happens Next" is available as part of an annual subscription (12 issues) to Unstrung Insider, priced at $1,595. Individual reports are available for $900.
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About Light Reading
Founded in 2000, Light Reading Inc. (www.lightreading.com) is the ultimate source for technology and financial analysis of the communications industry, leading the media sector in terms of traffic, content, and reputation. It reaches an extensive audience of executives and technologists within the telecom and enterprise networking communities, as well as the financial/industry analysts and investors who track these sectors. Light Reading was acquired by United Business Media in August 2005, and operates as a unit of CMP Technology.
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