Thursday, July 25, 2002
Motorola, Ericsson and Nokia hold back of progress?
Posted by Andy Sjostrom in "THOUGHT" @ 08:03 AM
http://redherring.com/insider/2002/0723/men072302.html
Dan Briody of Red Herring has written an interesting article about Motorola, Ericsson and Nokia (MEN), and how they use their dominance to keep competitors out, lock carriers into buying their products and even holding back the technological progress of wireless networks.
"Stories about MEN's alleged abuse of their dominance abound in the wireless industry. There are even accusations of possible collusion: the claim is that MEN are purposely holding back the technological progress of wireless networks so they can cash in on their existing product lines. One startup claims Ericsson admitted that wireless carriers would benefit from its technology, but instead of offering it to the carriers, insisted that the carriers could "muddle through the next two or three years" without it. "I couldn't believe they were admitting that to us. We were amazed," says the CEO of the company, who requested anonymity."
The following quote is quite interesting. It describes the relationship between carriers and the largest manufacturers of telecom equipment:
"Vendor financing became popular in Europe, as struggling wireless carriers there borrowed their way into corporate bondage. In June 2001, for instance, Nokia had more than $3.5 billion in credit commitments to carriers. In a one-week lending binge, it lent nearly $2 billion to Hutchison 3G and Orange. All told, the nine largest manufacturers of telecom equipment had more than $25 billion at risk in vendor finance by summer 2001, according to McKinsey & Company, an IT consultancy. This quickly inverted the usual vendor-customer relationship. Many carriers found themselves shackled to their vendors and their products, unable to buy equipment from competitors. In addition to borrowing money from Nokia in summer 2001, Orange also borrowed from Ericsson, bringing its total debt to $1.3 billion. Carriers became beholden to their vendors, unable to green-light a new technology without vendor approval. ... "The vendors were saying, 'Look, I'm financing your network, so why would I lend you money so that you can buy equipment from someone else?' " explains a vice president at Cisco Systems, another company eager to break the hold of the incumbent equipment makers. "It became a source of tension." "
Bad boys, bad boys, watcha gonna do when they come for you!
Dan Briody of Red Herring has written an interesting article about Motorola, Ericsson and Nokia (MEN), and how they use their dominance to keep competitors out, lock carriers into buying their products and even holding back the technological progress of wireless networks.
"Stories about MEN's alleged abuse of their dominance abound in the wireless industry. There are even accusations of possible collusion: the claim is that MEN are purposely holding back the technological progress of wireless networks so they can cash in on their existing product lines. One startup claims Ericsson admitted that wireless carriers would benefit from its technology, but instead of offering it to the carriers, insisted that the carriers could "muddle through the next two or three years" without it. "I couldn't believe they were admitting that to us. We were amazed," says the CEO of the company, who requested anonymity."
The following quote is quite interesting. It describes the relationship between carriers and the largest manufacturers of telecom equipment:
"Vendor financing became popular in Europe, as struggling wireless carriers there borrowed their way into corporate bondage. In June 2001, for instance, Nokia had more than $3.5 billion in credit commitments to carriers. In a one-week lending binge, it lent nearly $2 billion to Hutchison 3G and Orange. All told, the nine largest manufacturers of telecom equipment had more than $25 billion at risk in vendor finance by summer 2001, according to McKinsey & Company, an IT consultancy. This quickly inverted the usual vendor-customer relationship. Many carriers found themselves shackled to their vendors and their products, unable to buy equipment from competitors. In addition to borrowing money from Nokia in summer 2001, Orange also borrowed from Ericsson, bringing its total debt to $1.3 billion. Carriers became beholden to their vendors, unable to green-light a new technology without vendor approval. ... "The vendors were saying, 'Look, I'm financing your network, so why would I lend you money so that you can buy equipment from someone else?' " explains a vice president at Cisco Systems, another company eager to break the hold of the incumbent equipment makers. "It became a source of tension." "
Bad boys, bad boys, watcha gonna do when they come for you!
