ZTE and LG line up for early LTE alliances
Published: 29 April, 2009
As carriers start to plan their LTE roll-outs for 2010 and beyond, one of the critical issues is how quickly they will be able to move beyond notebooks or fixed access and source a wide range of handsets. General wisdom is that handset chips will not be proven, and phones available in volume, for another two years at least, but some cellcos are trying to accelerate the process and lining up their phone partners early.
With the CDMA carriers generally making the earliest moves towards next generation systems, especially in the US, the CDMA phonemakers should also be in pole position to get LTE devices into the market, which in turn benefits their main chip supplier Qualcomm. Nokia is already looking to leverage its new friendship with Qualcomm to muscle into the CDMA stronghold and is said to be working with Verizon Wireless, set to be the world's first LTE operator, on dual-mode handset prototypes.
The US deployments of LTE and WiMAX are creating new opportunities for several players to increase their presence in the major market. Another is ZTE, which already has a strong position in CDMA, but mainly in emerging economies, and which has set ambitious targets to boost its cellphone sales in north America. It has scored a useful point by forming an alliance with flat rate CDMA carrier MetroPCS, which also plans to be an early LTE mover. The two are working on LTE handset designs, even though they are unlikely to be able to bring these to market until 2011 or beyond.
MetroPCS' COO Tom Keys said the companies are building a large screen smartphone with HTML browser first. MetroPCS has already provided the Chinese vendor with a route into the US market, and has offered midrange candybar and clamshell CDMA models from ZTE since 2007. MetroPCS plans to start rolling out LTE in the second half of 2010.
However, though handsets always generate the most headlines, LTE operators will have to launch initially with datacards and modem products, as Verizon has said it will. The same goes for NTT DoCoMo of Japan, always an early mover with new technology (even prepared to go live with pre-standard kit). It is working closely with LG and will take delivery of LTE modem chips from the Korean vendor from March 2010, according to Unstrung. LG says its LTE modem prototype performs at 60Mbps download and 20Mbps upload.
Getting into DoCoMo first would put LG in a strong position to take a lead in LTE handsets too, especially as it is a major supplier to CDMA carriers like Verizon and Korea Telecom. This may see DoCoMo looking beyond its traditional Japanese cellphone ecosystem, over which it has massive design influence, and which is dominated by Sharp.
DoCoMo needs to make early moves to boost its competitive edge against KDDI, Softbank and new entrant eMobile, as it is facing saturated user bases and falling ARPU. It saw its fourth fiscal quarter net profit slump from ¥114.7bn to ¥34.2bn ($353.2m) and it has lowered its guidance for the fiscal year ahead, falling below analysts' expectations. Sales fell to ¥1.07 trillion from ¥1.19 trillion in the cellco's Q409, and for its full fiscal year it saw handset sales fall by 21.8%.
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