Huawei and Alcatel-Lucent take wireless battle to service level
Carriers coping with the explosion of data traffic and slowing consumer spending have turned to equipment vendors to reduce costs and improve network quality. That has boosted demand for services contracts, at a time when sluggish equipment spending has weighed on sales at infrastructure makers.
Huawei Technologies and Alcatel-Lucent, fighting for third place in wireless equipment behind Ericsson and Nokia Siemens Networks, are reshaping tactics around services to gain access to networks they have so far been shut out of.
Carriers coping with the explosion of data traffic and slowing consumer spending have turned to equipment vendors to reduce costs and improve network quality. That has boosted demand for services contracts, at a time when sluggish equipment spending has weighed on sales at infrastructure makers.
"We use the services business as a doorway to get into the hardware business," said Leroy Blimegger, the head of Huawei's assurance and managed services. "That's the trend in the industry."
Along with the change is a shift in focus to services. Managed services, a market whose components range from fixing transmission stations to making new services possible, were expected to outpace gear sales, research firm Ovum said.
Ericsson and Nokia each had 27 per cent of the managed-services market in 2011, with sales of about US$3.2 billion each, according to ABI Research. After a late start, Huawei is catching up, taking in US$2.2 billion that year, and it is looking to sign deals in Europe to take more.
"There's a new phenomenon in Europe and North America around managing the customer experience" and these deals were typically more lucrative, said Gary Nugent, head of corporate services at Paris-based Alcatel-Lucent. "Customer experience is becoming a big sales argument for carriers."