|Ericsson dropping the DSLAM line|
|Saturday, 14 April 2012 11:58|
Commsday reports pulling out by end of year. Ericsson has been a leading maker of DSLAMs at least since 1998, selling about $100M/year recently. Their market share has been modest as Alcatel and Huawei fight it out for the lead. Commsday reports Ericsson has told multiple ISPs they are phasing out the product and not seeking customers after the end of this year.
Ericsson bought Entrisphere because they were confident they would win much of the 30M line AT&T U-Verse contract from Alcatel. AT&T soon announced Ericsson-Entrisphere as a supplier but ultimately sourced most units from Alcatel. That was a surprise, because Alcatel (and Microsoft) were two years late according to a presentation I have from Alcatel to AT&T. They also went $B over budget, including $hundreds of millions that Alcatel claimed for "changes" and AT&T believed were covered by the initial contract. Ben's new management at Alcatel patched things up somehow.
They did sell nearly a million ports in one quarter last year but to do so had to meet extremely aggressive pricing. About a year ago, I congratulated CEO Hans Vestberg on winning a contract in China for VDSL. He replied "If you knew the price we had to offer, you wouldn't be so enthusiastic." At the time, he was confident that the new edge routers from the old Redback division would become a hot product and pull up sales for the wireline division. It hasn't worked out that way.
Two years ago, Ericsson and Huawei made opposite decisions. Ericsson is concentrating almost everything on wireless and LTE, where they remain at the very top tier. Huawei is branching out, investing $billions in enterprise routers, smartphones, and the cloud. Inevitably Huawei will far surpass Ericsson in sales but Ericsson expects to be more profitable being less diverse.
LTE sales are booming, with AT&T, Vodafone, and now France Telecom building quickly. But Verizon is winding down and AT&T has guided to flat capex. LTE Advanced is a huge advance - 5 and 10 times the speed - but is already designed into most LTE gear shipping. In competitive countries, LTE Advanced will inspire a wave of network upgrades but the network requirements are relatively modest.
Sad to see Nokia and Ericsson abandon the DSLAM business.
|Last Updated on Saturday, 14 April 2012 12:06|