Nokia Slams Ericsson 5G Claims as 'Misinformation'

Nokia has hit back at rival Ericsson after the Swedish vendor this week claimed it was the only equipment maker with a 5G-ready baseband product. (See Huawei, Nokia Not 5G Ready, Says Ericsson.)

Describing Ericsson's boast as "misinformation," a spokesperson for the Finnish company said its AirScale radio access platform has had 5G-ready baseband capabilities since last year.

Nokia Corp. (NYSE: NOK) says it already has about 100 AirScale customers and that its product is now being used in 5G-related trials.

The next-generation mobile technology is due to be standardized next year, with a number of telcos now planning to introduce commercial 5G services in 2019.

Huawei Technologies Co. Ltd. has also poured scorn on Ericsson's baseband claims. The Chinese vendor earlier this week told Light Reading that two of its radio platforms -- the 5000 Series Massive MIMO and 3000 Blade series RRU -- are 5G-upgradable.

"These platforms are already deployed economically and Huawei baseband platforms are capable of supporting 5G NR [new radio] according to 3GPP standards," said a spokesperson for the company.

All three vendors -- which today dominate the market for telecom network equipment -- hope that customer spending on 5G technology will boost future sales following a downturn in the mobile broadband radio access market this year.

That downturn has hit Ericsson AB (Nasdaq: ERIC) particularly hard. The Swedish vendor has reported mounting losses in recent quarters and is now focused on restoring profitability and rebuilding a reputation for technology leadership at its main networks business, which accounts for about three quarters of its total revenues. (See Ericsson Sees Networks Progress Despite Mounting Losses.)

During an interview with Light Reading earlier this week, Arun Bansal, the head of Ericsson's businesses in Europe and Latin America, claimed that a relatively new platform it calls the Ericsson Radio System (ERS) is currently the world's only baseband product that can be "software-upgraded" to support the 5G standard when that becomes available.

Ericsson is now trying to build 4G market share in China and Europe through ERS sales. Its rationale is that operators using the platform are likelier to buy 5G products from it in future.

The market share push is expected to weaken Ericsson's gross margins in China in the final three months of this year but could bolster profitability in future as customer spending shifts from hardware to software.

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However, Morgan Stanley analyst Francois Meunier was critical of the latest strategy during an earnings call with Ericsson earlier this month. Meunier accused Ericsson of "giving away" hardware to secure deals and said that a similar strategy in Europe several years ago had ultimately backfired, with Ericsson unable to sustain market share gains in the long run. (See Ericsson in China: Dangerous Liaisons?)

Unless Ericsson is slashing prices, telcos may see little reason to use Ericsson instead of Huawei or Nokia if all three companies can provide 5G-upgradeable baseband products.

Nevertheless, Ericsson claimed to have increased its market share in China during the July-to-September quarter, while Nokia issued disappointing guidance for 2018 because of "robust competition" in China. (See Nokia Share Price Tanks on Networks Gloom.)

Ericsson says the ERS platform accounted for 55% of all its radio shipments in the third quarter, beating its original target of hitting 50% this year. It expects to stop shipping older radio products entirely in 2018.

The Swedish company has also boasted that an ERS deal with Vodafone UK came at the expense of its competitors. "The one contract we announced was in London where we are swapping out one of the existing partners of Vodafone, and that is a sign of leveraging our ERS portfolio … to drive market share in Europe," Bansal told Light Reading. (See Ericsson Seals 4G, 5G Deal With Vodafone UK.)

— Iain Morris, News Editor, Light Reading

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