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Telecom equipment market gets off to weak start in Q1 2020 – Dell'Oro

Revenue for the overall telecom equipment market fell 4% year-on-year in the first quarter of 2020, according to the latest update from market research and analyst group Dell'Oro.

Notably, the report said Cisco, Huawei and Nokia all experienced reductions in revenue share (see table), although Ericsson's share was unchanged at 14% and ZTE improved its share to 11% from 10% in 2019. Ericsson is now proving to be a key beneficiary of the controversy around Huawei, while ZTE has shown a return to earlier form. (See Goodbye Huawei, hello Ericsson: Swap-out gathers pace and ZTE is on the up, but challenges remain.)

Table 1: Telecom equipment market shares

Vendor 2019 market share Q1 2020 market share
Huawei 29% 28%
Nokia 16% 15%
Ericsson 14% 14%
ZTE 10% 11%
Cisco 7% 6%
Source: Dell'Oro.

Dell'Oro includes broadband access, microwave and optical transport, mobile core and radio access network, SP router and CE switch equipment in its overall market definition. The group noted that the Q1 figure is "tracking slightly below the full-year 2020 growth projections of 1%" and said it expects market conditions and supply chain risks to be more favorable in the second half of 2020.

Dell'Oro said the market started 2020 on a weaker note following two consecutive years of growth, reflecting mixed conditions. In terms of the impact of COVID-19, the group said "healthy end-user fundamentals and positive 5G momentum" outweighed the downward risks associated with the pandemic for both RAN and core investments, although the crisis had a "more material impact" on some of the non-wireless related segments, driven partly by supply chain disruptions and weakened demand.

The group observed that although network capacity upgrades had been required to accommodate data traffic growth during lockdown, "traffic surges did not lead to significant demand for network capacity upgrades across all the telecom equipment segments." Mobile RAN and core equipment accounted for almost half of the market in Q1 2020, with combined revenue rising by a single-digit rate.

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— Anne Morris, contributing editor, special to Light Reading

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