Nokia Suffers 3G Blow
Unstrung has learned that Hutchison is to replace them with equipment from a joint venture of NEC Corp. (Nasdaq: NIPNY) and Siemens AG (NYSE: SI; Frankfurt: SIE).
Market analysts believe the fallout may jeopardize the vendor's long-term desire to dominate the W-CDMA network market -- a position currently held by LM Ericsson (Nasdaq: ERICY) -- and could give rival offerings a golden opportunity to enter the frame.
"It is obviously not a good sign and is a blow to Nokia," says Peter Jarich, senior wireless infrastructure analyst at Current Analysis. "It validates the offerings of non-incumbent W-CDMA vendors such as Nortel Networks Corp. and Lucent Technologies Inc. and really boosts their claims."
This is not the first time the Finnish vendor's infrastructure quality has been called into question (see Hutch's Nokia Network Woes?). Nokia itself admits that there have been previous "software issues" with its kit that have required attention.
A statement from Lehman Brothers claims that at its midyear Strategy Update in Helsinki today, Nokia "sought to address the recent concerns regarding the capabilities of their W-CDMA infra solutions." Nokia also admitted that "final testing and optimization of their W-CDMA solution still needed to be completed." The vendor does not expect this to occur until the end of 2003.
Various sources reveal that Nokia’s W-CDMA base stations may have been taking longer to pass through interoperability testing at the Hong Kong carrier than a similar offering from NEC/Siemens.
Furthermore, Hutchison is also believed to have faced problems with the multimedia capabilites of Nokia's network kit. "As far as I am aware, they couldn't get the video messaging to work and generally the software was unstable," comments Nomura Holdings Inc.'s Richard Windsor.
Nokia refuses to comment. “We don’t unannounce contracts,” says the company’s communications director, Thomas Jönsson.
Hutchison's Hong Kong operation is also keeping schtum. “It is not our normal practice to discuss or disclose any information on our contracts with vendors,” says spokeswoman Frances Ng. “I can only confirm that we are working closely with various network vendors for our 3G network development.”
— Justin Springham, Senior Editor, Europe, Unstrung