Overcoming challenges

    Norson's report indicated that Ericsson still faces some challenges in China's telecom market such as China's increasing regulatory support for TD-SCDMA, which could undermine WCDMA's dominance as well as Ericsson's competitiveness.

    Yet, "the vendor also has many opportunities to develop new revenue streams," it said.

    In September, Ericsson restructured its global operations into three units: networks, multimedia and global services.

    Olsson indicated that the convergence of networks would bring huge opportunities for Ericsson's newly formed Multimedia unit.

    "As we embrace the new era of the Digital World, we foresee the convergence of telecom, Internet and media as enabled by what we call the 'Full Service Broadband,' which will eventually support any multimedia services to any screen of your choice, anytime and anywhere," he said.

    "We already see a big demand for advanced services and applications from the advanced markets within China, which will definitely drive the development of new revenue generating multimedia services, beyond the currently available basic voice and rudimentary data services."

    Prime advantage

    Ericsson already established two multimedia application R&D centres in China, employing hundreds of engineers. And the firm is working with 10,000 local wireless content providers and service providers in China to develop multimedia applications that "interest enterprises and consumers, and boost operators' business," Olsson said.

    "We have built up strong competence in professional services and multimedia solutions in China."Professional services include network design, planning, optimization, software development and managed services where telecom equipment manufacturers take over and run networks for operators.

    Ericsson is now the world's largest provider of professional services in the telecoms industry.

    "Although competitors such as Nokia will also improve their offerings in this area as the market increases in size and becomes more standardized, Ericsson holds an early advantage, especially in network management services, and will be able to leverage this to keep an advantage in the future," the Norson report said.

    "The increasing proportion of revenue coming from services will help Ericsson to improve not only its revenue but also increase its profit margins."

    Nokia in October formed a joint venture in China to provide professional services to local operators. Compared with the network equipment business that has been struggling with price cuts and intense competition, professional services have become more lucrative for telecom companies.

    (Source: China Daily)