Mobile Networks Vendor Matrix

ABI Research's Mobile Network Infrastructure vendor matrix provides an unbiased ranking of vendors based on implementation and innovation. In the implementation segment, each vendor is ranked on the following criteria: overall revenue, gross margins, product diversity, revenue distribution by geography, managed services, number of Tier 1 customers, mobile device development, and shipment and sales in each of the technology categories. In innovation they are ranked on the following criteria: overall research and development spend for 2007, number of employees assigned to R&D, number of submitted and approved patents, vendor’s participation and contribution to standards development, innovations in the development of energy-optimized solutions, low CO2 emission products, development of alternative energy solutions, and multi-technology solutions. Development and distribution of 4G solutions is also an important criterion since it helps determine the a company’s future success.

Ericsson and NSN (Nokia Siemens Networks) were ranked the top two mobile infrastructure vendors based on the criteria outlined above. Both vendors demonstrated strength in product diversity, geographic distribution of revenues, research and development, innovation in energy and cost reduction, and overall sales performance. Ericsson is a global leader in GSM and HSPA infrastructure sales and deployments. The company leads in managed services, commercial IMS deployments, and other key areas. Ericsson has a managed services staff of almost 30,000 plus 16,000 support staff and manages more than 210 million subscribers. Ericsson developed innovative base station technologies such as the boomer cell, which enables operators to support four times the number of subscribers as well as increased data rates and expanded coverage radius. The company invests about $5 billion annually in research and development. Ericsson developed a multi-standard base station that requires 25% less space compared to the standard base station and reduces power consumption by 20% to 65%. The company also developed a solution to enable base stations to automatically switch off transmission during low utilization.

Similar to Ericsson, Nokia Siemens has a distributed product portfolio and geographically distributed revenue stream. It has innovations in its I-HSPA platform and Flexi-base station portfolio. The Flexi-base station platform supports GSM, EDGE, W-CDMA, HSPA, WiMAX, and LTE. Nokia Siemens provides both WiMAX and LTE products and was one of three vendors selected for the Sprint-Clearwire WiMAX network. The company's professional services team has more than 20,000 dedicated employees managing over 130 million subscribers.

ALU (Alcatel-Lucent) is ranked third overall. The company is third in overall revenue, second in IMS, and has a strong managed services segment with over 23,000 employees dedicated to managed services. Alcatel-Lucent also invested more than $4 billion in research and development in 2007 and has more than 26,000 patents. In addition, the company stands to benefit from the restructured Chinese market, as indicated by its $1 billion framework agreement with China Mobile and roughly $2.9 billion contract with China Telecom for CDMA equipment. China Telecom selected Huawei, ZTE, and Alcatel-Lucent for its CDMA expansion and upgrade. ALU garnered approximately 20% of the $14.5 billion in contracts awarded.

Huawei is ranked fourth overall due to its product and revenue distribution. The company's products range from devices to core infrastructure. Sales are distributed through most regions except the Unites States. Over 72% of 2007 sales were from customers outside of China. The company also stands to gain the most from the restructured Chinese telecommunications market and the strong growth in Africa. This is exemplified by the Huawei's recent replacement of Ericsson in China Mobile's network. Huawei was awarded a contract to replace 63,000 base stations. The company also ranked high as a result of its research and development. More than 43% of Huawei's staff is dedicated to research and development. In 2007, the company submitted more than 26,880 patents. Huawei is rapidly gaining market share and will most likely become one of the top two wireless infrastructure vendors within the next three to five years.

Rankings



After individual scores are established for Innovation and Implementation using the above criteria, an overall company score is established using the Root Mean Square (RMS) method:




The resulting overall scores are then ranked and used for percentile comparisons.

The RMS method, in comparison with a straight summation or average of individual innovation and implementation values, rewards companies for standout performance.

For example, using this method a company with an innovation score of 9 and an implementation score of 1 would score considerably higher than a company with a score of 5 in both areas, despite the mean score being the same. ABI Research believes this is appropriate as the goal of these matrices is to highlight those companies that stand out from the others.