Huawei success could create opportunities for Ericsson and Nokia

Huawei’s success has largely come at the expense of more traditional players such as Ericsson and Nokia, but could Chinese success be the catalyst for growth at the former market incumbents.

At WeDo Technology’s Worldwide User Group meeting the topic of Huawei’s dominance reared its familiar head once more, but with some unexpected conclusions. It’s a story we have heard often enough: Huawei is leading on innovation and cutting costs for customers leading to a surge in market share and billions in new revenues. Ericsson and Nokia have suffered as a result of this success, but could an over reliance on Huawei force customers to reconsider the fallen giants?

Head-to-head, it would appear Huawei is the easy choice. At Mobile World Congress this year, we spoke to several CTO’s who highlighted the technology and customer support was superior, not only cheaper, but is this advantage leading operators towards critical mass? How much technology can you incorporate from one vendor before operations become over-dependent on that one supplier?

It’s a tough question to ask. As a buyer, you want to ensure the best technology and customer support is being selected, but at the same time you would like to ensure a degree of competition. Huawei has charged to the top, possibly creating a need to ask how much is too much Huawei? When does reliance become dependence? When do you lose your negotiating power? Is vendor lock-in becoming a realistic possibility?

Essentially, there could be a situation where operators are being forced to take on lesser technologies and suppliers who would not be considered best in breed, to ensure a healthy supply chain, a diverse ecosystem and a considered negotiating position.

But try telling that to a buyer. It’s a tough pill to swallow which could lead to some less than ideal conditions in the engineering department, but as a wider business decision, it might be the best way forward. How do you balance short-term hindrances with long-term gain? With investors snapping at the heels of executives, it complicates the matter further.

Many CEOs around the world will encourage competition as a means of chest puffing and bravado. Bring them on they’ll say, we’ll knock them back, after all, we’re number one for a reason. You can imagine this was possibly a memo sent around by the Ericsson management team upon the emergence of the Huawei beast, but the headache is continuing to grow. Huawei is still capturing market share, which could mean it is creating its own glass ceiling.

Ericsson and Nokia might be having a tough time at the moment, however if the concept of critical mass is a discussion in the operator board rooms, growth could be around the corner by default. They might sometimes acquire business simply because Huawei is getting too successful for its own good.

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