Nokia Siemens Networks (NSN), the 50-50 joint venture between Nokia Corp. (NOK) and Siemens AG (SI), recently launched an innovative product that may change the competitive landscape of the telecom infrastructure gear market. Liquid technology is a software solution for network infrastructure that drastically reduces the need for dedicated hardware. With the massive growth of smartphones and tablets, the demand for bandwidth increases significantly. Instead of traditional voice call, data and video traffic are now consuming majority of bandwidth.
The above scenario has resulted in network congestion for telecom operators. This bandwidth shortage generally occurs during rush hours and in specific locations, generally in offices and business centers. So far, the telecom carriers are trying to solve this problem by installing new base stations in those locations, but this requires huge expenses to be incurred by the carriers.
The Liquid technology of NSN is a software solution that shares all network resources across all wireless and broadband networks. Therefore, the carriers can now utilize their relatively underutilized base stations in the rush hours to ease the traffic congestion of busy locations. This will eliminate the need for capital expenditures for new base stations. The Liquid technology eliminates computing power unit from the base station and the software shares computing power throughout the network similar to that of cloud computing architecture.
We believe this innovative Liquid product is a desperate attempt by NSN to regain its lost glory in the global telecom network infrastructure equipment market. Despite being the second largest company in this field after LM Ericsson AB (ERIC), NSN always remain in sticky wicket once it was formed in 2007. Huawei and ZTE, the two Chinese telecom infrastructure manufacturers, are fighting neck and neck with NSN to capture the global market share. In the last couple of years, NSN became marginalized in the battle field due to the introduction of more efficient and price effective equipments from Ericsson, Huawei, and ZTE.
Globally, NSN currently holds the second position with a market share of approximately 21%. Ericsson is the undisputed market leader with a 37% global share. Huawei is breathing down its neck with a market share of 18%. NSN has already started the shipment of its Liquid products. Another struggling network gear maker, Alcatel-Lucent (ALU) is expected to launch similar kind of product in early 2012.
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