Optical/IP Networks

Network Market Faces Fall

The number crunchers at The Yankee Group have put a serious damper on the recent uptick in the cellular equipment industry, warning that the market is set for a revenue fall over the next four years.

The research firm claims the value of the cellular infrastructure market will fall from approximately $47 billion in 2004 to $40 billion by 2008.

Such downbeat forecasts contrast with statements from the likes of Nokia Corp. (NYSE: NOK) and LM Ericsson (Nasdaq: ERICD) suggesting the industry is to enjoy an upturn in fortunes following years of gloom (see Nokia Hits Higher Targets, Wireless Kit Back From the Dead, and Ericsson Soars on Q4 Results).

Between now and 2007, "equipment expenditures as a percentage of total wireless service provider revenues will decline from 11.3 to 6.8 percent,” warn Yankee analysts. “Pricing declines near 20 percent per annum will continue and create significant challenges for wireless equipment vendors.” (See Report Looks to Base Cuts and What Price a 3G Base Station?.)

Yankee claims the EMEA (Europe, Middle East, and Africa) market will be most affected by the slump, suffering a 20 percent decline in total expenditure between 2004 and 2008.

Oh, happy days.

— Justin Springham, Senior Editor, Europe, Unstrung

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