“In 2012, Nokia Siemens witnessed emerging competition from Samsung, which has expanded its network infrastructure business out of its domestic Korean market with limited gains in Europe and the United States,” said Nokia in its annual report.
The other main highlight of the Nokia annual report 2012 is its admission about Huawei.
“In recent years, the technological capabilities of Huawei improved significantly, resulting in competition not only on price but also on quality,” said Nokia in its annual report.
In 2012, Huawei and ZTE have continued to grow their market share but at a slower pace than in previous years, challenging European vendors.
At present, Nokia Siemens Networks considers five companies – Ericsson, Alcatel Lucent, Huawei, ZTE and Samsung Electronics – to be its main competitors as major network infrastructure providers.
Nokia Siemens Networks also competes with Cisco Systems and NEC Corp.
In segment terms, the continued decline of legacy technologies in the mobile broadband business, such as 2G (GSM) and CDMA that was experienced in 2011 continued during 2012.
After reasonable growth in 2011, the 3G segment declined in 2012. This decline has been off-set by the growth in 4G (LTE) which has emerged as a fast-growing commercial technology in markets outside the early adopting United States, and especially in Asia.
Within the 4G segment, vendors are competing based on factors such as technology innovation, network topology and less complex network architectures as well as integration towards all-IP networks.
Competition in 3G remains intense as deployments of single Radio Access Network technology remains viewed as a critical entry point for networks, particularly by vendors looking to win share in new markets. This was particularly intense in 2011 in Europe and Asia Pacific, but showed some signs of easing during 2012.
In services, which remained a growth area in the industry, Nokia Siemens business is increasingly tied directly to the mobile broadband product business, in particular in areas such as care and network implementation.
As a result, pricing, efficiency and roll-out capabilities are competitive drivers. The development of its global service delivery capability, which allows Nokia Siemens to perform more tasks remotely using standardized tools and processes, is increasingly important as it enables efficiencies for mobile operators and for its own operations.
Competition in services is from both traditional network providers such as Alcatel-Lucent, Ericsson and Huawei, as well as non-traditional telecomm entities and system integrators, such as Accenture and IBM.
In addition to these companies, there are also local service companies competing, which have a narrower scope in terms of served regions and business areas. In 2012, some vendors, including Alcatel-Lucent and Nokia Siemens Networks, signaled their intention to scale back their activities in the lower profitability areas of services such as field maintenance and some managed networks operations.
Nokia also says that certain competitors may receive governmental support allowing them to offer products and services at substantially lower prices. In many regions, restricted access to capital has caused mobile operators to reduce capital expenditure and has produced a stronger demand for vendor financing.
Certain of the company’s competitors may have stronger customer financing options due to internal policies or government support. While the amount of financing Nokia Siemens provided directly to its customers in 2012 has declined from already relatively low levels in 2011, as a strategic market requirement the company plans to offer this financing option only to a limited number of customers and primarily to arrange and facilitate financing with the support of export credit or guarantee agencies.
Arvind Krishna
