Wireless Telecom in Transition – Moto and Nortel may combine Wireless Infrastructure Units while Alcatel forms partnership with NEC for LTE

February 13, 2008
By

[editor's note:  To engage Alan Weissberger for consulting services, contact him at alan at viodi dot com]

If implemented, the merger of Motorola’s and Nortel’s wireless infrastructure businesses would result in the creation of a $10 billion revenue company that would be better positioned to jostle for market share in a fast-consolidating industry.  Both companies have invested in WiMAX technology and have different product lines.

The wireless infrastructure industry is now dominated by a few large equipment makers including Ericsson, Alcatel-Lucent, and Nokia-Siemens Networks, a venture of Nokia Corp. and Siemens AG.  Motorola and Nortel are trying to play catch up with those vendors and fend off competition from Chinese equipment vendors Huaweii and ZTE.

Pressures have increased as carriers in the U.S. and Europe slow their spending on network equipment while they wait for the next generation of technology that can handle the high-speed data necessary for richer Internet and video features on cellphones. At the same time, new entrants from China are putting downward pressure on prices.   

In a sign of how equipment makers are suffering, Alcatel-Lucent on Friday reported a $3.7 billion loss after taking a big charge to write off the value of one of the main businesses acquired in the 2006 Lucent merger.

At the Barcelona Mobile Broadband conference, Moto and Intel announced they are investing in WiMAX start-up companies.

Meanwhile, Alcatel-Lucent announced it is setting up a joint venture with Japan-based NEC Corp. to pool research-and-development resources to develop a competing  mobile-broadband technology known as long-term evolution, or LTE. 

Major U.S. carriers including AT&T Inc. and Verizon Wireless, a joint venture of U.S.-based Verizon Communications Inc. and United Kingdom-based Vodafone Group PLC, are choosing LTE over other advanced broadband technologies such as WiMax. The LTE technology is being developed by leading equipment makers including Telefon AB L.M. Ericsson, Nortel Networks Corp. and Nokia Siemens Networks, a joint venture between Nokia Corp. and Siemens AG.

Is this something good or bad for the telecom industry?  What is the impact on the WiMAX food chain as Moto and Nortel consolidate their product lines?  Will Alcatel-Lucent now abandon WiMAX as LTE appears to be gaining momentum?

Here are a few links that provide opinions and analysis:

Financial Post Reports: Obstacles ahead for Nortel, Motorola
http://www.financialpost.com/story.html?id=302160
 
Reuters take on Moto Nortel combining units:
http://www.reuters.com/article/mergersNews/idUSN1152954420080211
 
WSJ:  Big Wireless Gear Deal May Loom
http://online.wsj.com/article/SB120269934296058155.html
 
Moto and Intel announce WiMAX investments at Barcelona conference:
http://www.redherring.com/Home/23730

Alcatel Sets Advanced Broadband Venture

http://online.wsj.com/article/SB120283999690762781.html?mod=technology_main_whats_news

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