Wednesday, 21 July 2010 10:39 | James Barton
Nokia Siemens Networks (NSN) has purchased Motorola’s networks business for the sum of US$1.2 billion. The acquisition is reportedly aimed at raising NSN’s profile outside of Europe, and particularly in the US and Japan. However, NSN’s winning bid should have an interesting impact on emerging markets, particularly China.
NSN’s acquisition allows the European vendor to inherit Motorola’s relationships with over 50 operators worldwide, and cementing connections with some big names – with perhaps the most significant in terms of emerging markets being China Mobile.
Motorola’s networks business has provided equipment to China Mobile several times, most recently providing end-to-end TD-LTE demonstrations to support China Mobile’s presence at the Shanghai Expo. NSN’s acquisition will therefore stand it in good stead to act as a supplier to China Mobile – which has significant ramifications when its competitors are considered.
NSN’s acquisition has effectively allowed them to leapfrog the industry’s previous number two, Huawei, in order to seize the second largest share of the mobile gear market. Huawei’s position as the largest network equipment provider in China would make them an obvious choice as a supplier for China Mobile – whereas in light of this acquisition, the operator’s strong relationship with Motorola could result in them taking their business to NSN.
Whether NSN will manage to muscle in on Huawei’s territory remains to be seen, but the Motorola purchase is in keeping with the European vendor’s recent strategy of aggressive expansion. Recently, NSN has struggled to stay within profit margins, but the new purchase establishes it as the third-largest vendor in the US (by revenue) as well as the largest foreign vendor in Japan.
Motorola meanwhile has a very small global market share (just 3%); however, the networks business terms itself “a market leader in WiMAX, with 41 contracts in 21 countries; [with] a strong global footprint in CDMA with 30 active networks in 22 countries; and a robust GSM installed base, with more than 80 active networks in 66 countries; and excellent traction with LTE early adopters.”
While NSN is looking to increase its revenue in the North American market, it must be hoping that Motorola’s installed global base will reap rewards from emerging markets. Indeed, considering that NSN reportedly outbid Huawei in order to purchase the networks business, there are definite signs of strong customer loyalty to the Motorola brand – particularly, it would seem, in China.
NSN and Motorola expect the deal to close by the end of the year. Roughly 7500 employees will transfer to NSN following the acquisition, among them several large R&D sites in China, India and the US.
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