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Back to Basics With Huawei

Catherine Haslam
5/28/2009

2:10 PM -- Huawei Technologies Co. Ltd. has gone back to basics with a new 2G-only base station called EasyGSM BTS, in an attempt to target emerging markets in Africa, Asia/Pacific, and South America. (See Huawei Unveils EasyGSM BTS.)

Touting its small size, integrated switching, and vastly reduced power requirements, Huawei claims the total cost of ownership is a "fraction" of current solutions.

The BTS has been developed by Huawei in conjunction with Vodafone Group plc (NYSE: VOD) as part of the strategic relationship between the two companies. It's been tested by Vodacom Pty. Ltd. in South Africa, and Vodafone is now reviewing commercial launch options.

In developing a product specifically for a low ARPU market, Huawei is mirroring the development of ultra-low-cost handsets four years ago and laying down the gauntlet to Alcatel-Lucent (NYSE: ALU), Ericsson AB (Nasdaq: ERIC), and perhaps particularly Nokia Networks , which has experienced recent 2G successes in emerging markets on the back of its Flexi BTS. (See Malaysia's DiGi Upgrades 2G Network and NSN Wins in Pakistan, although it should be noted neither was targeting just rural communities.)

So, does Huawei's move threaten to put even greater price pressure on the existing products of other vendors, or could it prompt them to match Huawei and create an ultra-low-cost infrastructure segment, just as happened with handsets?

That will depend on many factors, including operator demand, R&D costs, and margin potential. It's clear, though, that Huawei has thrown down the gauntlet to its rivals yet again.

— Catherine Haslam, Asia Editor, Light Reading

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