ZTE stands at an inflection point – will it grow increasingly regional or global?
Massive Chinese LTE rollouts provide an opportunity for transformation
Coming back from the New Year holiday, a wave of déjà vu made me question what year I was in as I read ZTE’s announcement of “organizational changes.” Didn’t the vendor implement organizational changes awhile back? Some of the same vague concepts mentioned in that previous reorganization seemed to echo in this new one – its infrastructure business vowing to “intensify its focus on key areas of higher profitability” (whatever those might be). At least on the infrastructure side, are these changes more of the same? Continue reading “Will Chinese LTE Rollouts Help Transform ZTE?”→
The globalization of the telecommunications industry is a given. Original national network operators such as AT&T, BT, Deutsche Telekom, NTT, Orange, Tata, Telefonica and Verizon are now global network providers. Network systems vendors, in turn, also come from all regions, such as Alcatel-Lucent and Ericsson from Europe, Ciena and Cisco from North America, Huawei and ZTE from China, and NEC and Fujitsu from Japan.
This globalization permeates the individual segments of the telecommunications industry, including optical networking, where market share is assigned by global share. A recent report by a quantitative analyst firm found that Huawei had the highest share of the optical network hardware market, followed by Alcatel-Lucent, Ciena, ZTE and Fujitsu. These results absolutely indicate the scale at which these companies operate; leading firms can leverage larger sales to lower their unit costs via economies of scale. The results could also imply that, for most optical networking opportunities, Huawei would be the most potent competitor. However, this implication would be false; the optical networking market is highly segmented based on geographic regions. For instance:
Fujitsu’s sales are overwhelmingly in North America;
Ciena does not even attempt to sell in China;
The winners of the upcoming massive 100G DWDM build-out by China Mobile are Huawei, ZTE, FiberHome and Alcatel Shanghai Bell, all Chinese firms; and
Huawei and ZTE are effectively excluded from the North American Tier 1 operator market.