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Optical/IP

Huawei Deepens DSLAM Penetration

Chinese equipment vendor Huawei Technologies Co. Ltd. is on a roll these days and the threat it poses to incumbent equipment vendors is clear from the latest analyst figures. In the battle for market share, Huawei is rapidly closing in on vendors like Alcatel (NYSE: ALA; Paris: CGEP:PA), the long-time DSLAM equipment leader.

In its "Broadband Quarterly Shipments Analysis," Dittberner Associates Inc. reports Huawei’s DSLAM port shipments increased during the first quarter by 21.77 percent compared with the fourth quarter of last year, despite the overall market remaining flat.

That growth came at Alcatel's expense, as its shipments fell by 19.37 percent during the same period, and boosted Huawei to the number 2 position in the market (see Dittberner Reports on Alcatel's DSL ).

As it stands now, Alcatel has a 31.11 percent share of the market and Huawei has 21.89 percent, above companies like Lucent Technologies Inc. (NYSE: LU) and Siemens AG (NYSE: SI; Frankfurt: SIE).

Table 1: Q1 2005 Worldwide DSL Market
Vendor Q1 2005 DSLAM Port Shipments q-o-q growth Q1 2005 Market Share %
Alcatel 3,912,032 -19.37% 30.00%
Huawei 2,752,000 21.77% 21.11%
Siemens 1,424,728 65.73% 10.93%
Lucent 1,162,564 35.44% 8.92%
ECI Telecom 933,616 8.67% 7.16%
Others 2,853,796 0.12% 21.89%
Total 13,038,736 3.99% 100.00%
Source: Dittberner Associates Inc.




Light Reading's report Who Makes What: IP DSLAMs takes a closer look at this market, which is set to take off with the widespread deployment of TV and video over DSL, identifying vendors and categorizing their equipment.

Huawei is also making huge strides in the hot voice-over-packet equipment market. Dittberner’s "NGN Shipments Analysis" finds Huawei holding a 13.76 percent share of the market, with 1.98 million ports shipped in the first quarter, behind Nortel’s 22.9 percent share, or 3.29 million shipments (see VOIP Port Shipments up 6.3% in Q1). The overall market increased 6.33 percent quarter-on-quarter, and the growth of VOIP services signals demand is set to continue rising.

Table 2: Q1 2005 Worldwide VOP Ports Market Share
Vendor Total VoP Ports Shipped (MG, SF) Total Worldwide VoP Market Share (%)
Nortel 3,290,616 22.90%
Huawei Technologies 1,978,000 13.76%
Siemens 1,905,000 13.26%
Tekelec 1,586,000 11.04%
Italtel 1,086,666 7.56%
Others 4,523,645 31.48%
Total 14,369,927 100.00%
Source: Dittberner Associates, Inc.
MG = Media Gateway
SF = Softswitches






The reason for the turnaround in part comes down to image. The latest Light Reading Insider, "China's Big Three Vendors Take On the World," reports that carrier perceptions of product quality and support from Huawei, UTStarcom Inc. (Nasdaq: UTSIE), and ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763) have steadily improved, and potential customers who were attracted by lower prices but concerned about quality are now looking eastward.

The Insider notes Huawei's recent surprise contract wins with BT Group plc (NYSE: BT; London: BTA) demonstrate that the Chinese vendors are now a major force in the worldwide telecom equipment industry, and sees Huawei as the best positioned of the three (see Insider Analyzes China's Big Three). "With a strong domestic position in next-generation networking (NGN) and a healthy global position in DSL, Huawei appears well positioned to take share internationally," writes author James Crawshaw.

All three clearly have master plans for boosting international sales, and Huawei has had the most success so far, with around 40 percent of its orders coming from outside China last year, versus around 20 percent apiece for UTStarcom and ZTE.

They are particularly benefiting from the deregulation of emerging markets such as Eastern Europe, where there's no installed base to compete against. "In emerging markets, the Chinese brought to bear the experience of their domestic market, which shares many of the same characteristics, such as low penetration, generally low urban density, and low per-capita GDP," writes Crawshaw.

At the same time, telecom capital expenditure is on the rise in the Asia/Pacific region, so there’s no shortage of potential sales back home. Infonetics Research Inc. reports capex in Asia increased by 11 percent to $52.4 billion between 2003 and 2004, and expects spending to climb another 3 percent this year to $54.2 billion.

While investments are slowing down, from an 11 percent rise to a 3 percent rise, carriers are still spending 20 percent of their revenues on capex, a higher proportion than their North American and European counterparts. Revenues also increased by 11 percent between 2003 and 2004, reaching $257.2 billion, and are predicted to increase 6 percent in 2005 to $273.2 billion.

— Nicole Willing, Reporter, Light Reading

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ecipo 12/5/2012 | 3:14:27 AM
re: Huawei Deepens DSLAM Penetration according to Dell'Oro, Huawei lost market share in the 1q05.
http://www.delloro.com/news/20...
OptoScot 12/5/2012 | 3:14:26 AM
re: Huawei Deepens DSLAM Penetration Under all the usual rules of acceptability China is almost bottom of the list of countries one would choose to do business with. Their record on human rights, appalling social and working conditions, their threatening attitude to Japan and Taiwan all make it the less than ideal trading partner.

They must be laughing their socks off that Western greed is letting them get away with it.

It's perhaps time Western industry took a stand. I'm a believer in reasonably level playing fields. With China the slope is too large to overcome and will remain so until their economic, social and other policies at least start to match those of the West. There are other ways to achieve regime change. Access to our markets should be top of the list.
Metal 12/5/2012 | 3:14:24 AM
re: Huawei Deepens DSLAM Penetration I could not agree with you more. Huawei has exhibited typical Chinese business practices:

-theft of intellectual property
-undercutting competitors prices
-bribes and kickbacks

I believe there is ample evidence online to support this. And let's not even talk about the artificially undervalued Yuan.
iwatcher 12/5/2012 | 3:14:24 AM
re: Huawei Deepens DSLAM Penetration I know you are scared.
I can feel your pain.
You know they are smarter than you are,
you know they work harder than you do,
you know they are more dedicated than you are,
you know .......
you know you can not win the competition,
you know you may lose your job,
you know ......





netfay 12/5/2012 | 3:14:23 AM
re: Huawei Deepens DSLAM Penetration China on the bottom of the list of countries one want to do business with? It must be kidding or you have lost your mind.Almost all the major famous companies wolrdwide are fighting to do business here.I bet you hardly know what is going on in China.Open your eyes,face the reality.Do not try to find any excuse.And don't be scared.
donniall 12/5/2012 | 3:14:22 AM
re: Huawei Deepens DSLAM Penetration The discrepancy between the Dell'Oro report, and this latest report (regarding DSLAM's) is bizarre .... Maybe someone from Lightreading - who engage in similar industry research and analysis - can enlighten us as to how two seperate entities can give two widely differing reports ....?
The only thing I can think of is that the manner in which Dell'Oro resuls are categorized/segmented ommits - for whatever reason - a whole bunch of data ...?

Don-
russ4br 12/5/2012 | 3:14:20 AM
re: Huawei Deepens DSLAM Penetration The greatest threat to China is China itself. Chinese companies are coming out with innovations on their own, and are winning deals in a fair manner internationally (it just happens that one of their competitive advantages is price). However, Chinese companies operate in a framework dictated/created by the Chinese government. Many of them (if not all) receive(d) generous government loans that they never pay back ... and they are benefitted directly on their exports by the artifical parity between the yuan and the US dollar. The Chinese government is doing an exceptional job of developing world class research centers in the top 100 (it's one hundred!) Chinese universities. China will be unbeatable as long as the Chinese government keeps it economic and policy act together. The threat to China will come from the inside, when the very dynamics of economic growth gets the people to question the legitimacy of the government, and challenge it (some of them might have interests that will conflict with government policy).

-russ
go_ON 12/5/2012 | 3:14:19 AM
re: Huawei Deepens DSLAM Penetration Their record on human rights, appalling social and working conditions, their threatening attitude to Japan and Taiwan

Sounds like the US but replace Japan and Taiwan with about 25 impoverished nations with no voice or clout

They must be laughing their socks off that Western greed is letting them get away with it.

And All the US companies competing for business in China / Iraq / etc are doing this to improve democracy I suppose

With China the slope is too large to overcome and will remain so until their economic, social and other policies at least start to match those of the West. There are other ways to achieve regime change. Access to our markets should be top of the list.

Regime change.... Fine little phrase for unprovoked aggression. First it was (imagined or contrived) threats to US security, then (imagined or contrived) WMD. now its because they are winning business? WhatGÇÖs next? they donGÇÖt drink enough Coke - nuke 'em?

shadowpawn 12/5/2012 | 3:14:18 AM
re: Huawei Deepens DSLAM Penetration -theft of intellectual property
-undercutting competitors prices
-bribes and kickbacks

Uh, gets me a better price as the buyer of this equipment. I then can compete and provide a better and cheaper service to my customers (read you). I will continue to call them when I want to beat my other vendors (read scare them!) into better products and services. Plus a bit of "extra income" on the side doesnt hurt.
wwatts 12/5/2012 | 3:14:13 AM
re: Huawei Deepens DSLAM Penetration shadowpawn:
"Uh, gets me a better price as the buyer of this equipment. I then can compete and provide a better and cheaper service to my customers (read you). I will continue to call them when I want to beat my other vendors (read scare them!) into better products and services. Plus a bit of "extra income" on the side doesnt hurt."

You may be a traitor if... selling your country down the river to make a buck seems like a good idea. Amoral and completely devoid of ethics, not a pretty combination.
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