European networks giants have adjusted to life with Huawei at last

Ericsson expanding rapidly, Alcatel-Lucent and Nokia both upbeat

Top 5 reasons to deploy VMware with Tegile

Analysis The wireless infrastructure vendors were uncharacteristically upbeat in their second quarter results announcements.

The impact of Huawei and ZTE has overshadowed them for so long that it seemed like a permanent fixture, but to a great extent, the western suppliers, and their shareholders, have now adjusted to the reality of China. This comes after almost a decade spent revising their expectations of margins and market share; restructuring their operations around an entirely new cost base; merging with one another; and finding ways to compete in the Chinese market themselves.

The recession threatened to wreck their efforts all over again, but there are signs that the sector is stabilising – just as the smartphone companies enter their own cycle of adapting to Chinese competition.

The next big upheavals for Ericsson, Nokia and Alcatel-Lucent will be equally challenging for Huawei and ZTE, centring on architectural changes, especially software defined networking (SDN) and the cloud, and on the need to diversify into new businesses. But in the meantime, even with Huawei poised to steal Ericsson infrastructure crown, the Chinese companies have had their own big changes to make – particularly to cast off their old reputation for low cost, low quality, and invest in advanced technology and high levels of service.

So competition has normalised a little, and against that backdrop, the European giants are talking a bit less about cost-cutting, and a bit more about new revenue streams.

Ericsson expands business in all directions

This was particularly true at Ericsson. Its quarterly figures were solid, mainly lifted by an important improvement in margins as carriers start to invest in LTE capacity, rather than modernisation projects. Net income was up 76 per cent year-on-year to SEK2.7bn, but revenues fell 1 per cent to SEK54.8bn ($8bn), a contrast with Huawei’s preliminary revenue figure for its first six months, which stated a 19 per cent leap to CNY135.8bn ($22bn).

Some of its growth factors were similar to Ericsson’s - growing investment in LTE worldwide and rising carrier spend on software and services, for example – though the Swedish firm will be well aware that its rival has a broader portfolio, including enterprise and devices, and that to rival Huawei’s growth, it needs to keep diversifying. In particular, it needs to reduce its exposure to the mobile industry’s unpredictable operator investment cycles and growing price pressures.

Important areas of expansion for Ericsson have included more managed service and equipment offerings for wireline and TV carriers and for the internet of things, as well as expansion of its portfolio for its traditional mobile base, with moves towards virtualization, cloud services and enhanced back-end systems.

The past week saw three examples of how Ericsson is seeking to reinvent itself, so that if it finally loses its mobile crown to Huawei, it will have other tricks up its sleeve.

MetraTech buy takes OSS/BSS into IoT

First, Ericsson announced the acquisition of MetraTech, a US-based provider of billing, commerce and settlement systems based around metadata. Nothing new there, it seemed, since the larger company has been filling out its billing and OSS/BSS portfolio for years. But this was different, because the deal is not focused on carriers, mobile or even wireline, but on areas where there is greater growth in network platforms – vertical markets, especially utilities – and a broader set of providers targeting smart cities, cloud services and the internet of things (IoT).

MetraTech’s software manages various models of billing, including subscription and usage-based services, and will be important in enabling Ericsson to adjust its billing platforms and services for the very different charging patterns of the IoT. Its main products are MetraNet, which is available as on-premises software or a managed service, and the Metanga "as a service" platform.

No price was disclosed for the acquisition but it includes all MetraTech’s 140 staff and contractors. As well as expanding Ericsson’s US business, which has been its keystone since it ac-quired the remnants of Nortel, the purchase signals the firm’s intention to move aggressively towards providers of IoT and XaaS (everything as a service) offerings.

The company said it would have an enhanced ability to support “customers, partners and suppliers in multiple industries and accelerate the creation and delivery of new value added services. Customers can create fluid, personalised, multi-party agreements to meet unique business needs,” said the statement.

"For a range of industries, thriving in the Networked Society means having the ability to quickly support new revenue models and shift strategies as fast as customer and partner needs evolve," said Per Borgklint, SVP and head of business unit support solutions. “MetraTech's metadata-based billing solutions strengthen our extensive OSS and BSS portfolio and billing capabilities across a range of sectors, helping us extend our leadership as we support a world with increasingly more connections."

Huawei campus Shenzhen

Huawei's gleaming HQ in Shenzhen

Security for virtualized datacentres

More from The Register

next story
Brit telcos warn Scots that voting Yes could lead to HEFTY bills
BT and Co: Independence vote likely to mean 'increased costs'
Phones 4u slips into administration after EE cuts ties with Brit mobe retailer
More than 5,500 jobs could be axed if rescue mission fails
New 'Cosmos' browser surfs the net by TXT alone
No data plan? No WiFi? No worries ... except sluggish download speed
EE buys 58 Phones 4u stores for £2.5m after picking over carcass
Operator says it will safeguard 359 jobs, plans lick of paint
Radio hams can encrypt, in emergencies, says Ofcom
Consultation promises new spectrum and hints at relaxed licence conditions
Google+ GOING, GOING ... ? Newbie Gmailers no longer forced into mandatory ID slurp
Mountain View distances itself from lame 'network thingy'
Vodafone to buy 140 Phones 4u stores from stricken retailer
887 jobs 'preserved' in the process, says administrator PwC
Bonking with Apple has POUNDED mobe operators' wallets
... into submission. Weve squeals, ditches payment plans
Drag queens: Oh, don't be so bitchy, Facebook! Let us use our stage names
Handbags at dawn over free content ad network's ID policy
prev story


Secure remote control for conventional and virtual desktops
Balancing user privacy and privileged access, in accordance with compliance frameworks and legislation. Evaluating any potential remote control choice.
Intelligent flash storage arrays
Tegile Intelligent Storage Arrays with IntelliFlash helps IT boost storage utilization and effciency while delivering unmatched storage savings and performance.
WIN a very cool portable ZX Spectrum
Win a one-off portable Spectrum built by legendary hardware hacker Ben Heck
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Beginner's guide to SSL certificates
De-mystify the technology involved and give you the information you need to make the best decision when considering your online security options.