Motorola, Ericsson and Nokia hold back of progress?

[Andy Sjostrom]

<a href="http://redherring.com/insider/2002/0723/men072302.html">http://redherring.com/insider/2002/0723/men072302.html</a><br /><br />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. <br /><br />"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."<br /><br />The following quote is quite interesting. It describes the relationship between carriers and the largest manufacturers of telecom equipment:<br /><br />"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." "<br /><br />Bad boys, bad boys, watcha gonna do when they come for you!

[JMountford]

Um Let's see.....
Big Surprise!!!
Not even!

I am incredibly sick of all three of these companies. The carrier I use "Sprint PCS" had a falling out with Nokia about two years ago and has not sold any Nokia Phones since then. The funny thing is that Nokia does make CDMA phones and other CDMA carriers use their phones. Apparently Nokia were making demands of Sprint PCS and Sprint wanted Nokia phones to meet certain standards that Nokia did not want to meet.

Any way I do not feel sorry for these big Companies. I do wonder if some of the tactics that Nokia, Ericson, and Motorola employ are legal or not.

Maybe the Federal Trade Commision should get off of MS's back for a bit and go fry some other fish, before those fish are skinny.

[mikeschmidt]

I think this is pretty far fetched.

NETWORKS:
The operators are way in debt for their 3G licenses and these vendors have huge loans to the operators to build these networks. The vendors need to get 3G to the operators so the operators can start charging customers for new services and pay everyone back.

It is my understanding that these loans are not monetary (I could be wrong). I think the vendors are providing the equipment with delayed payements because the operators will not have the money until they start selling the services. Therefore, there is no money for operators to go buy another vendor's equipment.

Also, very few operators have contracts with only a single vendor. Normally, there are at least 2 vendors supplying network equipment to an operator. This keeps competition high.

PHONES:
There is way too much competition for anyone to hold back on technical advances. Of course these companies are trying to make money, so they focus on what sells and I think the majority of people still use there phones for simple voice calls.

/ mike

[dave]

i just wish they would quit showing me phones that they have no intention of selling me anytime soon. i suppose that this is as much or more the carrier's problem as it is the OEM, but i'm pretty tired of it. the extreme amount of time it took Voicestream to start selling the T68 is a pretty good case in point, and even then it is only the 'm' model and not the 'i'.

i understand that there is a considerable amount of testing that carriers want to do b4 taking on the hassle of supporting another phone, but i would have to think that if the carriers are at the mercy of the OEM's then the OEM's would want the carriers to sell the phones that customers actually want.

[Arne Hess]

I think this is pretty far fetched.

It is my understanding that these loans are not monetary (I could be wrong). I think the vendors are providing the equipment with delayed payements because the operators will not have the money until they start selling the services. Therefore, there is no money for operators to go buy another vendor's equipment.

Also, very few operators have contracts with only a single vendor. Normally, there are at least 2 vendors supplying network equipment to an operator. This keeps competition high.
You are right! Most operators/network vendors works on a 5 - 10 year revenue share. HHowever, this is already in place today with GPRS where a lot of vendors built up the networks "free of charge" but with revenue sharing!
Other operators like O2 - NL outsureced the whole network installation and management to the vendor - in this case it's even a better deal for the vendor.

Regarding the competition: As we are talking about multi-national operators there is a competition, yes. Take the mmO2 group, there every country will use the same vendor(s) and to get into this deals, the vendors do "everything" for the operator. What do you think which impact it has for the cash flow, if you are the first source of Vodafone International... ;-)
PHONES:
There is way too much competition for anyone to hold back on technical advances. Of course these companies are trying to make money, so they focus on what sells and I think the majority of people still use there phones for simple voice calls./ mike
Yes, you are completely right! Voice is the ARPU mashine, not all the tokki mekki and hancy fancy other features (beside SMS which generates ARPUs up to 30 - 40% on some operator revenues...)
However, if some features would be requested by customers, the vendors woul offer it but most features aren't - today...

[molna]

Nokia = only for the money... (using buyers as testers)
Ericsson = big economical problems...

So, go get a Siemens instead 8)

[Maverick]

Nokia = only for the money... (using buyers as testers)
Ericsson = big economical problems...

So, go get a Siemens instead 8)

1) What other reason would Nokia be in business for, The fun? :roll:
2) What economic problems are you talking about? Ericsson does'nt even independently make phones anymore.
3) And if you are looking for a giant paper weight, Buy a Siemens
4) If anyone is currently looking for a good phone, I recommend a Vertu

The most basic reason that the US is far behind most other countries mobile technology is that most American consumers are retarded, and the carriers mostly cater to them.

American consumers are extremely cheap and expect to pay under $400 for a phone, so there is no incentive for the carriers or the phone manufactures to bring them the latest technology.

[topps]

The most basic reason that the US is far behind most other countries mobile technology is that most American consumers are retarded, and the carriers mostly cater to them.

American consumers are extremely cheap and expect to pay under $400 for a phone, so there is no incentive for the carriers or the phone manufactures to bring them the latest technology.

Does it not have more to do with the fact that North Am consumers are used to free local phone calls, which was not the case in Europe where all calls on landlines were charged by the minute. So for Euro teenagers, cell phones with greatly reduced or free evening rates, it was a godsend because they could chat for near-free, something that N Am's were already used to.

[innersky]

Bad boys, bad boys, watcha gonna do when they come for you!

Yeah, look at Microsoft ...

[PlayAgain?]

Are these companies really blocking innovation and keeping people out of the market?

That is so naughty! So very, very naughty!

Maybe I should be sure to get myself a Microsoft smartphone on my next upgrade? If you're right about MEN (I have to be careful how I type that, the E is so close to the S), moving to Microsoft would be like going out of the frying pan and into the fire.

However, I think that the opennes of these companies in an indictment on those who insist on closing and locking their technology and users. While manufacturers are running from Microsoft, they are running to Nokia and SonyEricsson are possibly the most innovative manufacturers of mobile handsets in the world.

If you're suggesting that we shouldn't buy MEN devices because of their practices and monopolistic position, what's your position on Microsoft products?


PS. When I read the first line of this 'Thought', I knew stright away who'd written it, without having to scroll to the end to find out.

[Kre]

...most American consumers are retarded...

:lol: :lol: :lol: Im American, but thats pretty funny!


Cell phones have to be the most boring technology these days. Talk about yawn.

Lets just hope that Microsoft will not only see this `MEN attitude` as an opportunity but take advantage of it, by not copying their attitude, but rather innovating and giving everybody what theyve been missing.

If MEN are not going to take the reigns, then I say more power to Microsoft. Let them drive. At least what MS is offering with the Smartphone will fill the cellular technology void and give us a phone that will actually keep our interest and really fire up the industry for once.

[PlayAgain?]

That's all fine, but if you look at the nine features of the MSWPS2K2 which will offer new features to users, not one of them are actually new.

I'd rather trust the MEN than the BOYS.

[Kre]

That's all fine, but if you look at the nine features of the MSWPS2K2 which will offer new features to users, not one of them are actually new.

I'd rather trust the MEN than the BOYS.

Youll have to pardon me... Most abbreviations I know or can figure out, but I dont know what WPS in your above abbr. stands for.

Based on what we`ve had here in the States, Ill take a Smartphone anyday. Ive seen the new phones or concept phones from MEN, some of which we may not even see here in the States, but they either have funky hardware designs that I dont like, if they have color screens, they leave a lot to be desired, or theyre just plain boring both in terms of hardware and interface.

The idea I like about the Smartphone is the intuitive and visually attractive interface that will allow programs to be written for it, opening up so many different and interesting ways for us to use our phones, and the planned feature set of the hardware. The Sendo is amazing. Granted, I wish it had BT integrated, but we have to give these phones a chance because they arent out yet, and this is Microsofts first attempt at all of this. MEN have had years to get their phones right, and to this day havent put anything out worth a crap. I know thats a strong attitude, but its how I feel about it.

[PlayAgain?]

:oops: Sorry: MSWPS2K2 is Microsoft Windows Powered Smartphone 2002.

Anyway, back to the subject: It's not as if it's a monopoly, particularly since the word 'mono' means 'one' and all the companies (for there are more than one) listed in the article (not limited to Motorola, Ericsson and Nokia) are in competition against each other and are from different contries. What is this then, a polylopoly?

[Kre]

:oops: Sorry: MSWPS2K2 is Microsoft Windows Powered Smartphone 2002.

Anyway, back to the subject: It's not as if it's a monopoly, particularly since the word 'mono' means 'one' and all the companies (for there are more than one) listed in the article (not limited to Motorola, Ericsson and Nokia) are in competition against each other and are from different contries. What is this then, a polylopoly?

Thanks, I hadnt seen it abbreviated like that before. :)

Yeah, I get your point. Not really a polylopoly :lol: , as much as a triad made up of the main leaders of the cell phone industry that all share a common lack of vision and good attitude, at least according to the primary post in this thread.

[molna]

1) What other reason would Nokia be in business for, The fun? :roll:
2) What economic problems are you talking about? Ericsson does'nt even independently make phones anymore.
3) And if you are looking for a giant paper weight, Buy a Siemens
4) If anyone is currently looking for a good phone, I recommend a Vertu


1: Nokia only think about the money, why else would they launch the same mobile again and again with the same design and just adding one more function ;) Just to make 'stupid' teenagers buy them...
2: Open your eyes ;) E.g, SonyE has stopped the production on Z700. It will never be launched. Also (from mobil.se) SonyE can't afford advertising for T68i :)
3: Silly joke... Remember, Siemens is the mobile with less problems and bugs 8)
4: Vertu... never heard of it...