Cellular Infrastructure Market Fell 12 Percent In '03, Says Gartner

The global cellular infrastructure market declined by 12 percent last year, mainly due to delays in deploying third-generation networks. But there was an upturn in the fourth quarter, according to a just published report from market researchers Gartner.

Jason Chapman, principal analyst with Gartner and author of the study, said recent, significant orders have improved the outlook. He anticipates single-digit growth in 2004.

"Mobile network operators spent even less in 2003 than in 2002, and investments in radio access, switching, applications and core infrastructure for mobile networks totalled $40 billion, down from $45 billion in 2002," said Chapman.According to the report, Ericsson retained its leading position, taking 26 percent of the world market. This was 3 percent down from its share in 2002. Chapman said Swedish group is positioned to profit from more 3G network deployments in 2004 thanks to its leading to its leading wideband CDMA technology.

Nokia and Siemens increased their market shares to 14 percent and 13 percent, respectively, helped by healthy spending on GSM and W-CDMA rollouts. Motorola was fourth on Gartners' list, with Nortel fifth and Lucent Technologies sixth.

GSM dominated contract announcements in 2003, accounting for 64 percent of the total and 59 percent based on total contract value. W-CDMA and CDMA both accounted for 14 percent of the number of announced contracts, although CDMA surpassed WCDMA in terms of contract value with 37 percent.Siemens said it was very encouraged by the report. "Since 2000, we've nearly doubled our market share in mobile communication networks," said Lothar Pauly, a member of the Siemens mobile group board. "Our objective is to continue to grow faster than the market and expand our position of leadership in 3G/UMTS."

The German group's strong performance stems from several GSM contracts in Eastern Europe and in "emerging markets," including Asia Pacific, Middle East and African countries. Of the 22 3G/UMTS networks in operation since last year, Siemens claimed 12 were powered by infrastructure designed and provided by the compnay and partner NEC.

The report notes that Ericsson has yet to see improvements in its CDMA business, attributing the slow uptake to technology changes in its radio access equipment. The company has bundled its CDMA and W-CDMA basestation in the radio equipment to position itself for the 3G market. It noted that when Verizon Wireless announced major contracts early this year, Ericsson lost to both Lucent Technologies Inc. and Nortel Networks Ltd.

Nokia is said to have improved its margins and made marginal gains despite "teething problems" with its radio equipment, which the company had to fine-tune for the W-CDMA market.