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Motorola, Lucent seen struggling in UMTS infrastructure market

Posted: 09 Mar 2004 ?? ?Print Version ?Bookmark and Share

Keywords:lucent technologies? motorola? umts? universal mobile telephone service? 3g?

America's two big mobile phone infrastructure players, Lucent Technologies and Motorola Inc., are paying dearly for their lack of UMTS (or wideband CDMA) development, according to market researchers.

In a report released Thursday (March 4, 2004), ABI Research suggest Lucent Technologies, a late arrival to the UMTS (Universal Mobile Telephone Service) marketplace, managed to maintain an 11percent market share in 2003, down from 17 percent in 2002. Motorola, on the other hand, saw a 'tumultuous' drop in worldwide market share, from 12 percent in 2002 to just 4 percent in 2003.

The researchers wonder how long this operation can remain viable for Motorola.

While UMTS commands only an 18 percent unit share in 2004, it will skyrocket to almost 87 percent by 2009. This may appear to be a disproportionate share, but the ABI researchers noted that the signal propagation at 2.1GHz is much shorter than the propagation at 850MHz, where the competing CDMA 1x EV-DO typically operates.

ABI says the first quarter of 2004 has shown a renewed acceleration of contract wins. "3G launches are also beginning a gradual increase," said Ray Jodoin, ABI's director of Wireless Infrastructure Research, "while GSM service providers explore Edge as a cost effective suburban and rural solution."

While contract wins for both 2G and 2.5G systems seem to be still declining slowly, 3G spending remains highly competitive. There have also been some recent and serious reversals in terms of contract wins for 3G business, notes the report, including the takeover from Nokia of Hutchison 3G's UK network by the NEC/Siemens collaboration.

The report highlights several growth areas with the changes in contracts and shifts in timetables. It maintains the 3G market still represents the largest sector in terms of revenue growth over the other air interface technologies, but it could face a serious challenge from Edge.

ABI is forecasting a compound average annual growth rate of 52 percent for UMTS infrastructure from 2004 to 2009. That growth rate is up from previous forecasts, driven by acceptance of high data rate services, specially in Japan, where FOMO now enjoys over 2 million subscribers.

- John Walko

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