Ericsson Aims for Broader Base

Swedish vendor LM Ericsson (Nasdaq: ERICY) today revealed plans to improve integration of its network infrastructure kit addressing two competing 3G technology markets and aiming to make its equipment almost 100 percent interoperable.

Last month the company stole a march on rival vendors attempting to serve both the Code Division Multiple Access (CDMA) and Wideband-CDMA (W-CDMA) sectors by offering carriers network equipment that is “90 percent” similar across both technologies (see Ericsson Ships Dualmode 3G).

Ericsson now wants to increase this figure to near full dualmode status. “By the end of next year we will have 98 percent similarity between W-CDMA and CDMA equipment,” deputy CEO Per-Anne Sandström told an analyst and media briefing in London. “It will happen next year.”

Sandström claims the move will give the vendor “price advantages in manufacturing and major savings in R&D and production,” reducing development costs associated with two separate technologies. Carriers, meanwhile, can use any Ericsson equipment regardless of the technology standard deployed -- a benefit Sandström says will “protect their long-term investment.”

Analysts remain unconvinced of Ericsson’s disinterested motives. “In reality the benefits certainly favor Ericsson more than the carriers,” comments Gartner Inc.’s principal analyst for mobile infrastructure, Jason Chapman.

The W-CDMA air interface is part of the Universal Mobile Telecommunications Standard (UMTS), adopted as the European 3G standard and also deployed in a number of Asian countries. Used with existing GSM core networks, W-CDMA-compliant handsets and base stations can potentially increase wireless data transfer rates to a maximum of 2 Mbit/s.

CDMA networks offer a “spread spectrum” digital/cellular/air interface technology mainly used in the U.S. and South Korea. CDMA operates in the 800MHz band and 1.9GHz PCS band and supports data transfer speeds between 14.4 kbit/s and about 2 Mbit/s (in its latest third-generation variants).

Gartner’s Chapman states that both Lucent Technologies Inc. (NYSE: LU) and Nortel Networks Corp. (NYSE/Toronto: NT) are also touting dualmode 3G kit, but with less success than their Swedish rival. “It does seem that Ericsson has managed to get a lot more commonality in their platforms.”

Typical analyst forecasts expect W-CDMA networks to become the dominant 3G standard, controlling 80 percent of the market in contrast to CDMA’s minor share (see W-CDMA: When, Not If).

Ericsson currently enjoys a market-leading position in the W-CDMA industry, claiming to have shipped over 23,000 base stations with a 40 percent share of network contracts. Industry opinion differs on its level of CDMA success, with lowly market share estimates ranging from 5 percent (Lehman Brothers) up to a maximum 8 percent (see Ericsson's CDMA Cheer).

— Justin Springham, Senior Editor, Europe, Unstrung

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