Samsung makes European network play - updated with additional comment


Now updated with further comment

Samsung has announced plans to target LTE network contracts in Europe, basing its hopes on an expanded European presence and on kudos gained from LTE contract wins already made in the USA, Middle East and Asia Pacific.

To support its goals, the company is establishing a network equipment operations centre at its European HQ in the UK – and aims to have 100 people working out of the centre in two to three years if the company makes good progress contracts.

“We are hiring now,” IP Hong Vice President of Marketing at Samsung's Telecom Systems Business, told Mobile Europe. Hong added that the company is already in trials with one major European operator, Hong said.

Although the vendor has little current footprint in European wireless infrastructure, it has won LTE deals in the USA with MetroPCS and Cellular South, with Mobily in the Middle East and will support SK Telecom’s commercial launch of LTE in July 2011, according to Hong.

Samsung is tying in the launch of its European operations with the launch of its Smart LTE portfolio, a set that emphasises features such as intelligent radio resource allocation. Hong added that amongst Samsung’s capabilities was a “special technology” for interference cancellation, that goes beyond current standards specifications.

The company is also marketing its multi-standards base station, with both macro and small cells in its product line. It will include 2G and 3G capabilities within that converged approach, hoping to offer operators flexibility as they swap out ageing equipment for more power and spectrally-efficient designs.

Steven Hartley, Principal Analyst of Ovum's Telco Strategy practice, said that Samsung's main differentiator appeared to be its end to end portfolio ("everything from washing machines and laptops to smartphones and network equipment") - especially in the connected devices realm.

Despite that, the company might find the European operator market tough going, both in terms of timing and in finding a technical advantage over the existing vendors' solutions.

"The downside is that they are entering a market that is fiercely competitive, both for vendors and competitors. Huawei and Ericsson are really carving up the majority of the deals, so my immediate reaction is that their timing isn't giving them any advantages," Hartley said. "Huawei is also having success with its MultiRAN product and some very aggressive pricing, so Samsung would need to have something majorly different when it comes to differentiating on technology.

Jim Eller, a Singapore-based analyst with ABI Research, placed the announcement in global terms. A note from Eller written for Mobile Europe said that it was "unlikely that Samsung would ever be more than a bit player in the LTE infrastructure market outside Korea".

Eller wrote:
"In general, the Koreans and the Japanese have been conspicuously absent from the global infrastructure market. They are dominant in their home markets, but they have never figured out how to sell overseas, except for occasional successes in developing countries due to export financing. The traditional Korean business model has always been to get the bugs worked out in their protected home market, and then sally forth into the world with the working products at subsidised prices lower than they charge in their protected home market packaged with cheap government export financing. They still haven't learned any new tricks, even though the economic development of Korea over the past 20 or 30 years has resulted in rapid growth of domestic consumption which renders the old export-driven economic policies irrelevant. It looks like Samsung is following the same strategy with LTE.

"Unfortunately for the Koreans, economic progress at home has made them uncompetitive globally in many areas, and the rise of cheaper Chinese vendors like Huawei and ZTE means that the Koreans have missed the opportunity window to grab market share in the global infrastructure business. Samsung will remain dominant in the Korean infrastructure market, thanks to their willingness to develop whatever the customers want (and thanks to the customers' willingness to pay a lot more to get this support), and there is enough business in Korea to ensure the survival of Samsung's infrastructure business. However, it seems unlikely to me that Samsung will ever be more than a bit player in the LTE infrastructure market outside Korea."