Overview:
With the continued exponential growth in mobile data traffic, one would expect a substantial increase in sales of mobile (2G/3G/4G) network infrastructure equipment. Not so, according to Infonetics Research, which released excerpts from its 3rd quarter 2012 (3Q12) 2G, 3G, 4G (LTE and WiMAX) Infrastructure and Subscribers market share and forecasts report, which tracks 2G, 3G, and 4G (LTE and WiMAX) network equipment and subscribers.
“LTE was indeed the lone bright spot this quarter, as the rest of the mobile infrastructure market dragged the overall market down, led by a sharp drop in CDMA gear.” said Stéphane Téral, report author and principal analyst for mobile infrastructure and carrier economics at Infonetics Research. Infonetics wrote that in 3Q12, the global 2G/3G/4G (including LTE and WiMAX) infrastructure market was down 4.7% from the previous quarter and down 4.0% from the year-ago quarter.
How could that be since operators were expected to continue to build out their 2G/3G/4G networks, especially 2G and 3G which are still the the most widely deployed mobile networks? Mr. Teral thinks it’s because most of the wireless build out has already occurred.
In an email exchange to discuss the widespread lack of interest in wireless infrastructure, Stéphane wrote,
“The fact is that the wireless infrastructure on this planet is essentially built out and to find other opportunities, you need to find another planet. That’s what I’ve been saying for some time! 75% of total 2G/3G subscribers are still on GSM, meaning a long migration process to 3G, despite all headlines and deceptive marketing hype about 4G (LTE. WiMAX, HSPDA+), which technically is not 4G!”
Mr. Teral added,
This migration will be less capital intensive as network construction of the past two decades was. That’s why the mobile network infrastructure market is stagnant at best and definitely not sexy. Even LTE won’t pick up the slack and at current pace of investment, it’s going to be extremely difficult for early adopters to recoup the cost if consumers are not willing to pay more for bandwidth.”
However, Stéphane is optimistic for the mobile infrastructure market in 2013. He wrote,
“Despite the current lethargy, we anticipate a strong pipeline moving forward, with 2013 fully charged with a good mix of 2G, 3G, and LTE equipment purchases. China Mobile alone has a nationwide TD-LTE rollout plan of 100,000 eNodeBs.”
Mobile Infrastructure Market Highlights:
- In 3Q12, the global 2G/3G/4G (including LTE and WiMAX) infrastructure market was down 4.7% from the previous quarter and down 4.0% from the year-ago quarter
- Nokia Siemens Networks jumped from #4 to #2 in the LTE equipment market after more than doubling its LTE revenue in 3Q12, significantly closing the gap with market leader Ericsson and passing Alcatel-Lucent and Huawei
- From the year-ago 3rd quarter, global LTE infrastructure sales are up 131%
- Infonetics forecasts LTE subscribers to grow nearly 5-fold to top 51 million worldwide in 2012
- The Global Mobile Suppliers Association expects 166 commercial LTE networks by year end
- CDMA2000 continued its freefall in 3Q12, down 16% sequentially and down 46% year-over-year, reflecting the beginning of the long declining tail curve
- The WiMAX ecosystem is shrinking, with fewer vendors continuing to support the technology as they stake their long-term futures on LTE (this is no surprise with almost all the WiMAX network providers, e.g. Sprint and Clearwire, moving to LTE rather than WiMAX 2.0 or IEEE 802.16m)
Report Synopsis:
Infonetics’ quarterly 2G, 3G, 4G (LTE and WiMAX) report provides worldwide and regional market size, vendor market share, analysis, deployment trackers, and forecasts for LTE, WiMAX, and 2G/3G mobile network equipment and subscribers. The report tracks more than 50 subsegments of the market, including radio access networks (RAN), base transceiver stations (BTSs), mobile softswitching, packet core equipment, and E-UTRAN macrocells. Vendors tracked include Airspan, Alcatel-Lucent, Alvarion, Cisco, Datang Mobile, Ericsson, Fujitsu, GENBAND, HP, Huawei, NEC, NewNet, Nokia Siemens Networks, Proxim, Redline Communications, Samsung, UTStarcom, ZTE, and many others.
Other Opinions:
Market intelligence firm IHS iSuppli uses a different set of metrics to track the mobile communications market. IHS defines mobile communications equipment factory revenue as what manufacturers earn from the sale of devices into the channel – in this case, mobile communications equipment like smartphones and other handsets. The category also includes wireless infrastructure gear such as routers.
According to IHS iSuppli, the market for mobile communications equipment will grow by 13% this year, propelled by climbing shipments of mobile handsets and tablets, particularly devices supporting the 4G long term evolution (LTE) wireless standard.
Total factory revenue from original equipment manufacturers making mobile communications equipment is projected to reach $376 billion by year-end, up from $334 billion in 2011. LTE spending will be double that of 2011 at $8bn.
Next year, overall revenue for mobile communications equipment is forecast to rise to $444bn. Driven by mobile broadband, the five-year compound annual growth rate until 2016 is expected to amount to 11%. The market for ICs for mobile infrastructure will be $74bn this year up 5% on 2011.
Meanwhile, ABI Research said that wireless infrastructure equipment revenues decreased 10.3 percent in the third quarter of 2012 to $11.3 billion from the same quarter one year ago. Third quarter wireless infrastructure equipment revenues were down 1.0% from the second quarter of 2012, the firm said in a press release.
http://www.abiresearch.com/press/nokia-siemens-networks-and-samsung-stand-out-in-st
“There is no question that the RAN market has been squeezed in 2012, although we have seen improvements in the 3Q, being 8 percent down from the 14 percent decrease we saw in 1Q,” said Aditya Kaul, practice director for mobile networks at ABI Research. “Even with 4Q bringing in the traditional Christmas cheer, 2012 will end up 10 percent down at the very least, which is bound to cause market share shifts especially in the top 3,” Kaul added.
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What About the Small Cell?
What about the increased use of small cells and nano base stations to facilitate spectrum re-use and hence deal with the mobile data capacity crunch? Won’t that boost the mobile infrastructure market?
In an earlier report co-authored by Mr. Teral and Richard Webb, Infonetics debunked the hype around small cells by stating,
“Small cell market is not big enough for all who want to play in it.”
“In terms of units, yes, small cell numbers can be big, but don’t get too excited – there are a lot of serious issues that need to be resolved, and some that cannot be resolved,” Mr. Teral said. “Let’s say an operator has thousands of small cells; how do you manage them all? How do you backhaul them? When we talk to carriers, backhaul is always the biggest issue. And then of course they have to get interference under control. Don’t get me wrong; there is no question that a small cell market exists and it is growing fast. But the volumes will not be high enough to support the number of vendors trying to get into the small cell space. There is no ‘El Dorado‘ in small cells. A vendor battle is looming and not everyone is going to win.”
Co-author Richard Webb, directing analyst for microwave and mobile offload at Infonetics, added:
“Public access femtocells already make up more than 70% of all small cells shipped worldwide. Deploying femtocells in public metro spaces could help mobile operators address the data offload challenge. As operators utilize LTE femtocells to complement coverage and capacity for LTE macro deployment, the 4G femtocell segment will take off, becoming the main growth engine of the small cell market by 2014. In the meantime, carrier WiFi will be a faster-growing solution for offload, as it is often less complex to deploy compared to cellular-based small cells.”
Small Cell Market Highlights:
- The number of small cell units sold is forecast to grow nearly 40-fold from 2011 to 2016, including 3G microcells and picocells, 4G mini eNodeBs, and 3G and 4G public access femtocells
- Infonetics expects global small cell revenue to grow at a 73% compound annual growth rate (CAGR) during the 5 years from 2011 to 2016
- Asia Pacific dominates the small cell market and will continue to do so through at least 2016
- Issues affecting small cell deployment vary from region to region and include backhaul link quality and affordability, inter-cell interference, spectrum availability, and regulatory restrictions
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