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What's The Fallout From The Nokia-Siemens Merger?

LONDON — Analysts believe the carrier infrastructure joint venture announced by Nokia Corp. and Siemens AG will consolidate their power in some markets, especially wireless, raising many questions for competitors and business partners such as Nortel Networks Ltd., NEC Corp., Motorola Inc. and Juniper Networks Inc.

The consensus view is that the creation of Nokia Siemens Networks , the combination of Nokia's Networks Business Group and the carrier-related operations of Siemens Communications Group , is positive for both parent companies, and that it makes sense from both technological and cultural perspectives.

In a research note Inder Singh at Prudential Equity Group LLC wrote: "Strategically, we feel that the joint venture is a positive for Nokia as it creates a very strong WCDMA/GSM competitor, owning roughly a third of the market, behind only Ericsson."

So what does that mean for competitors? Bad news, basically. With Nokia and Siemens putting together their business to create a strong No. 2 in market share behind Ericsson AB, that leaves other competitors playing catchup. Nortel, NEC, Motorola, and Juniper all likely have work to do to respond to the move.

Patrick Donegan, senior analyst for wireless at Heavy Reading , reckons the news leaves Nortel and Motorola, two companies believed to have engaged in talks of their own with Siemens in the past few months, on the consolidation sidelines.

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