Traditional telecom equipment companies such as Nortel and Lucent, which were slow to adopt new technologies, lost their foothold in the market. They lost out to Alcatel, which continues to dominate the DSL market with Fujitsu leading the Sonet market. Ericsson, Nokia, and Motorola continue to move ahead in the wireless space taking up major chunks of the market. The year also saw acceleration of shift from traditional TDM towards IP infrastructure. Cisco continues to enjoy market leadership in the networking space, pushing Ethernet and IP standards, and adding capabilities like voice over routers and switches. The year also saw global vendor's allying with Asian players to gain a foothold in the equipment market. Nortel and LG Electronics entered into a marketing and R&D deal. China Putian Corporation also entered into a JV with Nortel to do R&D, manufacture, and sale of third generation mobile telecommunications equipment. Broadband, IP, wireless (3G), and DSL were some of the drivers for growth of the equipment market. Worldwide, telecommunications and communications equipment market forecasts strong growth in the existing markets. Markets at $197.6 billion in 2005 are anticipated to reach $446.9 billion by 2010. The top ten telecommunications equipment provider markets, at $166 billion in 2004, are forecast to reach $381 billion by 2010.

The Chinese Invasion
It was the year of aggression by Chinese vendors as they went all out and actually grabbed market share from leading equipment vendors worldwide in numerous infrastructure product categories and had good prospects for further expanding their reach. 

Given the kind of deals struck by Chinese vendors, the myth that Chinese vendors manufacture low cost, low quality products was shattered. With the fall in tariffs, service providers realized the importance of decreasing capex, resulting in their experimentation with the Chinese vendors. The Huawei deal with BT was a coup of sorts in the telecom business and there were rumors of a possible takeover of Marconi by Huawei. A market report placed Huawei as the number two provider worldwide in the DSLAM market leadership after Alcatel. Even, UTStarcom, a company based in US but having Chinese lineage, emerged as the number two vendor worldwide of IP DSLAMs, according to a report by Light Reading. The report attributes low labor costs allowing Chinese vendors to price their equipment at 10–15 percent lower than established telecom vendors. Early this year, ZTE entered into vendor financing arrangements with the Indian subsidiary of Bermuda-based Atlas group of companies. The deal worth $1 billion is for supplying broadband equipment to BSNL.

Telecom Infrastructure Services Market
An emerging trend during last year was network outsourcing, which attracted several non-telecom players including Accenture, IBM Global Services, EDS, and HP. These players, along with the telecom vendors Ericsson, Alcatel, Lucent, Motorola, Nokia, and Siemens saw an opportunity in telecom infrastructure services which includes: consulting, deployment and management services, and professional and maintenance services. IBM's outsourcing deal with Bharti, which IBM terms as 'first-of-a-kind business transformation agreement' was the first major deal worth $700–750 million during FY 2004–05. IBM will consolidate, transform, and manage comprehensive information technology (IT) infrastructure and applications for Bharti Tele-Ventures. It may be recalled that Bharti also entered into a $400 million outsourcing contract with Ericsson to outsource the management of its cellular network in 2003.

According to TBR: Ericsson, IBM, and Alcatel were the top three telecom infrastructure service providers during FY 2004–05.

Sudesh Prasad