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November 27, 2003
LM Ericsson (Nasdaq: ERICY) has publicly announced plans to integrate its network infrastructure kit addressing two competing 3G technology markets, stealing a march on rival vendors attempting to serve both the Code Division Multiple Access (CDMA) and Wideband-CDMA (W-CDMA) sectors.
Earlier this month Unstrung reported on the company’s efforts to develop kit capable of working across both technologies (see Ericsson Keeps CDMA Faith). Today, the company issued an official statement outlining its strategy, and saying that dual-mode base stations were available, as of now (see Ericsson Aligns 3G Kit).
“More than 90 percent of our kit is now exactly the same across both technologies,” Peter Olofsson, director of public relations, tells Unstrung. “If you have an Ericsson radio base station, there are just two card slots in the cabinet that need to be replaced to convert a CDMA base station to W-CDMA, and vice versa. Carriers can use the same equipment regardless of the technology standard.”
Much of the vendor’s efforts are aimed at shmoozing its way into the potentially lucrative Chinese 3G market, where both W-CDMA and CDMA technologies are expected to play a major role (see Chinese 3G: Open to All? and Chinese 3G Faces Further Delay). “We want to underline our efforts, particularly in Asia,” says Olofsson. “CDMA is a more relevant issue in China, for example, where the government hasn’t yet decided which technology to use.”
The PR man also claims the new 3G kit will benefit both the vendor and its carrier customers. “Our objective is to have as much kit as possible that is exactly the same across both technologies. It reduces our development costs and protects the investment for the customer.”
Analysts believe the move will give Ericsson a head start over rival vendors. “Ericsson will probably be the first to get a fully integrated solution onto the market,” comments Dr Richard Windsor of Nomura Holdings Inc.. “Next up is likely to be Alcatel because they already have a unified solution for the UMTS market and they are making it CDMA 20001x ready. The other potential should be Nortel.”
Ericsson has experienced mixed success over the two rival markets. The vendor enjoys a market-leading position in the W-CDMA industry, claiming to have shipped 23,000 base stations with a 40 percent share of network contracts. Meanwhile industry opinion on its current level of CDMA success varies, with lowly market share estimates ranging from 5 percent (Lehman Brothers) up to a maximum 8 percent (see Ericsson's CDMA Cheer).
Despite its relative lack of success, the vendor is refusing to give up the CDMA battle, having recently confirmed its long term commitment to the market. “Even though we believe that W-CDMA is going to be the dominant 3G standard, we believe the CDMA market will still be substantial,” adds Olofsson.
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, meanwhile, 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).
— Justin Springham, Senior Editor, Europe, Unstrung
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