Ericsson, the Swedish telecoms equipment company, ousted Lucent as the number one telecoms equipment manufacturer in 2000, according to Gartner Dataquest. Lucent slipped to fourth position behind Nortel and Nokia, following its decision to spin out Avaya, its networking equipment unit.
The study by Gartner Dataquest claimed Ericsson had become the leader of worldwide telecom equipment sales, following its success in building mobile networks and its investment in 3G systems.
However the study cautioned that Ericsson’s recent market share gains from winning about 40 per cent of all 3G contracts announced to date have come at a cost. The issue that surprised investors when Ericsson announced its results was that it said it needed to double its research and development spending to cope with that demand, the analyst is reported to have commented.
Analysts estimate the increased R&D spending would cut wireless infrastructure margins from about 16% to 12-13% over the next two years.
Ericsson’s increase in spending comes against a backdrop of growing concern about how fast operators will build out 3G networks. Some operators in Germany, for example, have indicated they may opt to share basic 3G infrastructure.
Doubts about the timing of 3G have led some banks such as Merrill Lynch, to conclude that 3G will not be rolled out in volume until 2004, against earlier forecasts of 2002-2003.
