The ongoing slowdown and the resulted financial crunch faced by operators appears to be turning them towards low-cost vendors and those assisting them in raising credits (read Chinese vendors). This believe is cemented by findings from telecom market research firm, Dell’Oro for the network gear market for Q2 09.

The findings reveal that both Huawei and ZTE are growing rapidly in terms of market share at the cost of their European counterparts.

On a YoY basis, Huawei’s market share increased from 10 % to 17 %. ZTE doubled its market share from 4 % to 8 %. For European operators this meant erosion of their market share. While earlier Huawei and ZTE were said to be unduly benefiting from their dominance in the domestic Chinese market, things have changed gradually with the two companies registering significant contribution from their respective overseas business divisions.

NSN which had hoped to gain from its proposed acquisition of Nortel but lost to Ericsson, the drop in market share was alarming from 26 % to 20 %. Alcatel-Lucent saw its market share drop to 12 % from 14 % a year ago. NSN is believed to be choosy about its deals with more focus on margins but analysts believe this is at the cost of market share of the company.

However Ericsson was an exception to this trend among European vendors and managed to retain its market share at 32 %. If the Nortel acquisition goes through, the company should be able to gain more market share.