Samsung and NEC Both Eye Japan as a Springboard for a RAN Comeback

(Jun 29 2011) 4G , Backhaul , LTE

1. By Caroline Gabriel, Research Director, Rethink Technology Research

   Japan has always been an important market in which to be seen for mobile vendors, because of the advanced nature of its rollouts. However, its carriers have often pursued semi-proprietary routes that have not lent themselves to international scale--most famously with DoCoMo's early but off-center implementation of W-CDMA, FOMA. However, with LTE, the Japanese majors are moving early but in a fully standardized way, and the competition for their favors is hotter than ever. And it goes beyond the usual suspects, providing a launchpad for two suppliers hopeful of an infrastructure comeback:  Samsung and NEC. 

   Both these companies largely faded away in the W-CDMA sector, but both are claiming competitive advantages that will allow them to take on Ericsson and Huawei in LTE. In NEC's case, this is a prescient and strong focus on small cells to build extensive self-organizing 4G networks, a strategy the firm will show off at this week's Femtocell World Summit in London.  

   NEC has home advantage, and already works closely with DoCoMo, but Samsung is also confident of Japanese growth, citing its own selling point--its experience and market lead in the other 4G technology, WiMAX, which includes contracts with Japan's UQ Communications. Now the South Korean giant has announced a deal with UQ's largest stakeholder, and Japan's second cellco, KDDI, for LTE gear. 

   Samsung will supply KDDI with LTE equipment for a commercial launch next year. Like NEC, the South Korean is emphasizing Japan's dense urban communities and high demand for broadband. In its statement, it said it would offer its customer "the first and the most optimized LTE solution for hotspots in extremely dense user areas that require higher capacity mobile broadband, whilst simultaneously improving service quality in weak signal areas." 

   The Japanese deal is a valuable endorsement of Samsung's recently announced strategy to leverage its WiMAX expertise to leapfrog larger players in LTE. Its flagship contract to date has been to gain a place in Sprint's Network Vision modernization program, alongside Ericsson and Alcatel-Lucent. Like KDDI, Sprint is the largest shareholder in a WiMAX joint venture, Clearwire, which is an existing Samsung client. Samsung also recently set up a European base for an infrastructure push in EMEA, and it has announced a win in Saudi Arabia. 

   Outlining its track record with KDDI, Samsung said it had "cooperated with KDDI to provide commercial CDMA systems since 2002. Through offering Mobile WiMAX solutions to UQ Communications … Samsung and KDDI have strengthened their strategic partnership from 2008." 

   It will need to watch out for NEC though. The Japanese firm is also looking to use its experience as an end-to-end supplier in its native country--and its huge backhaul business everywhere--to establish its credentials for a new push into international infrastructure markets, notably Europe. However, it will focus specifically on smaller cells outside Japan. NEC was actually in the 3G vanguard, supplying DoCoMo's world-first FOMA system and also Hutchison 3's early European network. But its 3G joint venture with Siemens, Mobisphere, was sidelined by the Nokia Siemens merger and it became a Tier 2 provider. Now it is looking for a comeback based on miniaturized eNode Bs, which may be particularly valuable in budget-constrained economies like India. The vendor launched its 3G femto in India last month and believes it can sell more than one million of the devices over the next two years.

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