August 07, 2005

High tech no refuge from the Chinese threat
Paul Durman


IT MAY be sad, but it should come as no surprise that Marconi has entered takeover talks with Huawei, the Chinese telecoms-equipment maker.
The game has been up for Marconi since April, when it missed out on a share of the work to build BT’s 21st-century network (21CN). This £10 billion project is the biggest honeypot in the telecoms-equipment industry. It is important not just because of its size but because it will be the proving ground for the next generation of technology.



Although BT is set to be the first big telecoms group to switch entirely to a so-called IP network, every other international telco is planning to follow in its wake. Marconi was counting on the support of its most important customer. It did not receive it, and its shares almost halved in a day.

The reason for Marconi’s failure was telling. Trials of Marconi’s equipment met BT’s requirements, but it could not meet BT’s demands on price. Nursed back to health after its financial crisis of four years ago, Marconi remains too weak and too small to be able to offer uneconomic prices to win “strategic” deals.

In contrast, Huawei is a preferred supplier to BT for two of the five “domains” of the 21CN contract. Only Cisco, the American networking giant, was similarly successful. More than anything, this is a testament to the quality of Huawei’s technology. It should also serve as a wake-up call.

If you’ve never heard of Huawei, you’re not alone. Until recently, much of the European telecoms industry was similarly unfamiliar with the company. But over the past two years Huawei, along with its Chinese rival ZTE, has scored a number of impressive contract wins in Europe, offering good kit as well as good prices.

Having entered a joint distribution agreement with Marconi earlier in the year, Huawei always looked the most likely buyer for the company, as we have written before. The two sides are some way from a deal, but it is not easy to see who else would have the appetite.

The telecoms-equipment industry still shows signs of overcapacity. This ought to be the last bastion of high-tech manufacturing, but even here the Chinese are beating us at our own game. Another round of consolidation beckons.


Exshellent

A PLEASANT surprise at last from Royal Dutch Shell. How about that? Jorma Ollila is an excellent choice as the group’s next chairman. Few businessmen command the same level of international respect as Nokia’s chief executive.

That’s also the view of Sir Chris Gent, one of Ollila’s best customers when he was at Vodafone. Gent, who has also moved up a corporate rung as chairman of Glaxo Smith Kline, said Ollila had “tremendous strategic insight which will propel Shell forwards”.

Forget the chatter about mobile-phone design having nothing in common with finding oil. Much of Nokia’s huge success, and generous margins, have been built on its tremendously efficient supply chain. Most importantly, it was due to Ollila making the right strategic calls.

（原帖子标题为英文，经过了管理员修改）