Who leads the global RAN market? Ericsson, says Mobile Experts

New analysis from Mobile Experts ranks Ericsson as the leading vendor for global RAN market share, with China’s Huawei at number two.

Mobile Experts principal analyst Joe Madden told Fierce that it’s not just a fluke during one quarter but something the firm is seeing more consistently. Its RAN revenue estimates place the Swedish vendor in the No. 1 spot for Q1-Q3 2021.

Huawei usually sits atop the global RAN leaderboard, and Mobile Experts reached a different conclusion than another industry research firm, Dell’Oro, which says Huawei is the top global RAN vendor by revenue year-to-date, followed by Ericsson.

RELATED: Huawei still dominates telecom equipment market

Madden said the main reason behind the shift of Ericsson overtaking Huawei is that the Swedish vendor is selling what he described as the Mercedes Benz version of base stations, while Huawei has been forced into the Volkswagen model.

U.S. sanctions restricted the Chinese vendor’s access to semiconductor parts, so Huawei shipments have been focused on low-bandwidth 4T4R base stations (using domestically sourced semiconductors) in China that have a low-dollar value, he explained. Ericsson, meanwhile, has moved ahead on premium massive MIMO units that have many more antennas with 64T64R arrays in regions like the U.S. for C-band rollouts.

“It makes a big difference in how much money you can charge for the base station,” Madden said.

How much of a difference? Mobile Experts estimates around a $8,500 price per radio unit for a high-performance 64T64R system (that includes radio, DU and CU software, management software all for a bundled price per unit) in terms of revenue.

“With Huawei doing non-Massive MIMO, they’re getting somewhere in the range of $3,000-$4,000 per radio unit, so less than half because it’s four antennas,” Madden said.

RELATED: Ericsson beefs up Massive MIMO lineup with smaller radio

To calculate RAN revenue shares, Mobile Experts uses a three-pronged methodology that incorporates a product-focused, bottom-up accounting approach for the global RAN market, including tracking specific parts needed to build a base station. By comparing multiple components, the analysis comes up with “a very accurate count” of how many base stations shipped and what kind, feeding into revenue estimates of what Huawei gets for a base station compared to what Ericsson does with high-performance models. Madden said looking back at the first nine months of 2021 Mobile Experts can say within 5%, “exactly what Huawei did in China compared with what other companies are doing in the U.S. and other places.”

RELATED: Huawei looks to software, automotive to beat U.S. sanctions

“If you use the normal worldwide average for revenue per base station it would be a lot of revenue, and Huawei would be number 1. But we’re noticing Huawei is not able to ship those more advanced base stations, so they’re sort of forced to ship the Volkswagen version because they can’t get access to more advanced semiconductors,” Madden continued.

Mobile Experts rankings are for the overall RAN market, including macro, small cells, in-building wireless, and RAN software.

Different conclusions

Research firms often rely on similar data sets and publicly available information, making it interesting to see two reach significantly different conclusions on RAN market share.

RELATED: China losses hurt Ericsson Q3 sales, supply chain issues surface

Dell’Oro analyst Stefan Pongratz said that while he hasn’t seen the Mobile Experts report, the firm’s own assessment agrees that there’s a price difference between non-massive MIMO and massive MMO units and that base stations in China are significantly lower cost. However, he pointed to the sheer size of China’s market and the number of base stations, which he said is approaching 1.4-1.5 million this year.

“Even with that [lower price], the volumes are so large right now in China,” he said. “So once you include the China component, Huawei is number one” by Dell’Oro estimates. Dell’Oro has Huawei leading the global RAN market in Q1-Q3 2021, with Ericsson as No. 2. 

If the vendors were selling the same priced base station “it would not even be a close comparison” in terms of China vendors leading, according to Pongratz. The country represents the largest market across regions Dell’Oro currently tracks.

Outside of China, it’s a completely different picture, he said. Excluding China, Dell’Oro has Ericsson gaining RAN share, as well as Samsung. Mobile Experts also has Ericsson leading outside of China.

RELATED: Dell’Oro expects RAN market to grow 10-15% in 2021

Research firms’ interpretations can vary based on methodology and different definitions, so it’s not always a straight apples-to-apples comparison.

Dell’Oro uses shipment data as well, and everything is reconciled with reported revenue. Mobile Experts also incorporates reported earnings into estimates, along with operator capex. Both Pongratz and Madden noted that for China’s Huawei, transparency isn’t the same as reports from publicly traded firms like Ericsson, but as Pongratz pointed out, Huawei does publish some financials in annual reports.

“While there is more wiggle room for interpretation when it comes to non-publicly traded companies, the revenue reconciliation process we use for all the telecom programs validates the message we have communicated for some time, namely that Huawei remains the largest RAN supplier on a global basis for the YTD period,” Pongratz said.