By Tarmo Virki

HELSINKI (Reuters) - Recently founded Nokia Siemens Networks (NSN) closed in on Ericsson's lead in the cutthroat global market for wireless network gear in the fourth quarter, research firm Dell'Oro said.


The 50-50 venture of Nokia and Siemens, which started operations in April 2007, increased its market share to 29 percent in the quarter from 25 percent a year earlier, helped by strong growth in emerging markets in the Asia-Pacific region.

"NSN has a slightly higher presence in these emerging regions than Ericsson," Dell'Oro analyst Scott Siegler said.

Over the same period, the market share of Sweden's Ericsson fell to 34 percent from 36 percent.

"Nokia Siemens is definitely a very strong number two, and is coming on strong. But currently, Ericsson is the dominant player," Siegler said.

With China's Huawei Technologies and ZTE moving into the market in the past few years, network equipment prices have dropped, hitting the results of the top vendors.

The third-largest player, Alcatel-Lucent, had 16 percent of the market in October-December, Dell'Oro said, while Huawei's share more than doubled to 5 percent -- on par with Motorola Inc and just behind the number four, Nortel Networks Corp.

Restructuring programs at NSN and Alcatel-Lucent allowed Ericsson in the middle of 2007 to grab market share by slashing prices, but its push ended with a profit warning in October that sent its shares as much as 30 percent down in one day.

Top vendors have started to walk away from deals where prices have been pushed too low. NSN last year withdrew from a major deal in India, saying the price and conditions were too weak, and even Huawei said last week at a trade show in Barcelona it has rebuffed deals over price.

Dell'Oro said Huawei, whose third-generation (3G) equipment sales more than doubled in the fourth quarter from the third quarter, will shortly become the third-largest vendor of 3G networks, surpassing Alcatel-Lucent.

Dell'Oro said GSM technology still dominates the telecom network market and that it grew in the fourth quarter from the third. But the research firm said 3G, also known as WCDMA, is finally gaining traction and is poised to have a strong 2008.

"All signs point to a breakout year for the WCDMA market in 2008," Siegler said, adding that nearly 90 percent of all 3G networks have been upgraded to enable faster download speeds.

Siegler said faster speeds, making it easier to download video or share pictures on cell phones, were the best incentive for subscribers to start using 3G phones and services.

(Editing by Braden Reddall)
© Copyright 2007 Reuters.

Photo:
An employee of Nokia Siemens Networks enters the office in Dubai June 6, 2007. Recently founded Nokia Siemens Networks (NSN) closed in on Ericsson's lead in the cutthroat global market for wireless network gear in the fourth quarter, research firm Dell'Oro said. REUTERS/Ahmed Jadallah