Ericsson Looks East as Western Rivals Merge
With customers merging and capital expenditure budgets shrinking in North America and Europe, Ericsson AB is shifting more marketing resources to Asia where the mobile and networking equipment OEM is hoping to benefit from a surgeA transient variation in the current and/or potential at a point in the circuit. in infrastructure spending by governments and private communication services enterprises.
The company aims to keep up a vibrant presence in its Western markets and plans to continue rolling out new products and services in North America, the world’s biggest market for telecommunication equipment. Service providers in the region are slowing down capex growth, however, and refocusing investment resources on gaining scale through consolidation and by adding spectrums to broaden offerings to customers. This development has resulted in slower capex growth in North America, accelerating OEM consolidation and intensifying competition amongst survivors, according to Ericsson executives.
Hans Vestberg, President & CEO, Ericsson LM
“Our sales trend shows there’s less spending on mobile broadband in North America from the customers for the reasons that we have talked about so many times before – mergers [and] spectrum auctions, which makes the market a little bit slower.” said Hans Vestberg, president and CEO of Ericsson during a conference call to discuss the company’s first quarter results. “We see even more competition and new, innovative models coming up in order to meet the growing demand of mobile broadband and new Internet services.”
The changes Vestberg referenced are deep and persistent, impacting not just the telecom services providers and their willingness to raise spending on infrastructure and other network services but also the equipment vendors. OEMs are jostling for market share and struggling to reduce costs, boost margins and improve their competitive positions, according to industry observers. This has resulted in a wave of mergers and acquisitions in the Western mobile and networking equipment market. The latest of such deals – the planned acquisition of Alcatel-Lucent SA by fellow European Nokia Corp. – announced recently could result in additional pressure on Ericsson, according to Vestberg. (See: Nokia Renews Makeover Efforts with Alcatel-Lucent Deal).