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Special Report: Technology and Innovation: Ericsson Finds a Chinese Rival Hot on Its Heels

February 25, 2013 by Leave a Comment

BARCELONA — As long as there have been mobile phones, Ericsson has dominated the global market for equipment for wireless telecom networks, selling the biggest share of gear to mobile phone operators around the world. But last year something happened that even the longtime market leader, based in Stockholm, had never faced.

A competitor, Huawei of China, pulled even in overall sales.

The rivals have different business mixes — Ericsson makes 43 percent of its sales by managing wireless networks, while Huawei also sells smartphones and corporate communication grids. And excluding those side businesses, Huawei’s sold $25 billion of equipment to operators last year, 29 percent less than Ericsson, which remains the biggest seller of key components like data and voice lines and routers, according to Dell’Oro, a research firm in Redwood City, California.

But Huawei, an upstart founded in 1987 initially to resell telephone switches in rural China, has become a global peer of equal scale, matching Ericsson with $35.7 billion in total sales.

Momentum for the time being appears to be with Huawei, whose profit rose 33 percent last year, to 15.4 billion renminbi, or $2.5 billion, as sales rose 8 percent to 220.2 billion renminbi, according to preliminary, unaudited figures from the company, based in Shenzhen. In the same period, Ericsson’s profit fell 53 percent, to 5.9 billion Swedish kronor, or $919 million, as network equipment sales dropped 11 percent, to 117.3 billion kronor.

Hans Vestberg, an Ericsson employee for 25 years who has been chief executive since January 2010, led the company’s diversification into network management, an outsourcing business that has helped Ericsson offset its equipment rivalry with Huawei. During an interview, Mr. Vestberg declined to discuss Huawei directly but noted that Ericsson had hundreds of competitors, depending on the type of equipment, the type of customer and geography.

Even so, remaining the overall market leader is important, he said.

“Ericsson has been the market leader throughout its 136-year history, and my job I guess is to make sure we hold on to that for another 130,” Mr. Vestberg said.

Product innovations, like antenna-integrated radio, or AIR, an antenna for a cellphone base station that has the radio transmitter built directly into the aerial to save space, electricity and cost for network operators, will keep Ericsson on top, he said.

But the rivalry, because of the increasingly strategic value of global communication networks, also has a significant geopolitical dimension. Amid national security concerns, the U.S. market for operator equipment has been essentially closed to Huawei, which was founded by Ren Zhengfei, a former engineer with the People’s Liberation Army.

The largest U.S. operators have not bought from Huawei, and, last October, the U.S. House of Representatives Select Committee on Intelligence recommended that they continue to avoid purchases from Huawei and another Chinese vendor, ZTE.

The House report, which followed hearings with Chinese company executives, concluded that Huawei had not supplied the requested information on its relationship with the Chinese government and a group of 10 state-owned Chinese banks that were among Huawei’s commercial lenders. The bipartisan panel, in its public report, concluded that Huawei was an extension of the Chinese government, using public subsidies to underbid and win business.

“Based on available information, the committee finds that Huawei receives substantial support from the Chinese government and Chinese state-owned banks, which is at least partially responsible for its position in the global marketplace,” according to the report.

A senior executive at an American maker of network equipment said he believed Huawei to be a de facto arm of the Chinese government, receiving preferential subsidies and support that had allowed it to undercut Ericsson and the other suppliers of equipment, Alcatel-Lucent and Nokia Siemens Networks, to build its market share.

Article source: http://www.nytimes.com/2013/02/25/technology/ericsson-finds-a-chinese-rival-hot-on-its-heels.html?partner=rss&emc=rss

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U.S. Underwrites Internet Detour Around Censors

June 12, 2011 by Leave a Comment

The effort includes secretive projects to create independent cellphone networks inside foreign countries, as well as one operation out of a spy novel in a fifth-floor shop on L Street in Washington, where a group of young entrepreneurs who look as if they could be in a garage band are fitting deceptively innocent-looking hardware into a prototype “Internet in a suitcase.”

Financed with a $2 million State Department grant, the suitcase could be secreted across a border and quickly set up to allow wireless communication over a wide area with a link to the global Internet.

The American effort, revealed in dozens of interviews, planning documents and classified diplomatic cables obtained by The New York Times, ranges in scale, cost and sophistication.

Some projects involve technology that the United States is developing; others pull together tools that have already been created by hackers in a so-called liberation-technology movement sweeping the globe.

The State Department, for example, is financing the creation of stealth wireless networks that would enable activists to communicate outside the reach of governments in countries like Iran, Syria and Libya, according to participants in the projects.

In one of the most ambitious efforts, United States officials say, the State Department and Pentagon have spent at least $50 million to create an independent cellphone network in Afghanistan using towers on protected military bases inside the country. It is intended to offset the Taliban’s ability to shut down the official Afghan services, seemingly at will.

The effort has picked up momentum since the government of President Hosni Mubarak shut down the Egyptian Internet in the last days of his rule. In recent days, the Syrian government also temporarily disabled much of that country’s Internet, which had helped protesters mobilize.

The Obama administration’s initiative is in one sense a new front in a longstanding diplomatic push to defend free speech and nurture democracy. For decades, the United States has sent radio broadcasts into autocratic countries through Voice of America and other means. More recently, Washington has supported the development of software that preserves the anonymity of users in places like China, and training for citizens who want to pass information along the government-owned Internet without getting caught.

But the latest initiative depends on creating entirely separate pathways for communication. It has brought together an improbable alliance of diplomats and military engineers, young programmers and dissidents from at least a dozen countries, many of whom variously describe the new approach as more audacious and clever and, yes, cooler.

Sometimes the State Department is simply taking advantage of enterprising dissidents who have found ways to get around government censorship. American diplomats are meeting with operatives who have been burying Chinese cellphones in the hills near the border with North Korea, where they can be dug up and used to make furtive calls, according to interviews and the diplomatic cables.

The new initiatives have found a champion in Secretary of State Hillary Rodham Clinton, whose department is spearheading the American effort. “We see more and more people around the globe using the Internet, mobile phones and other technologies to make their voices heard as they protest against injustice and seek to realize their aspirations,” Mrs. Clinton said in an e-mail response to a query on the topic. “There is a historic opportunity to effect positive change, change America supports,” she said. “So we’re focused on helping them do that, on helping them talk to each other, to their communities, to their governments and to the world.”

Reporting was contributed by Richard A. Oppel Jr. and Andrew W. Lehren from New York, and Alissa J. Rubin and Sangar Rahimi from Kabul, Afghanistan.

Article source: http://feeds.nytimes.com/click.phdo?i=d82d79761c23385690421dfda238c8b9

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Europe Leads in Pushing for Privacy of User Data

May 4, 2011 by Leave a Comment

BRUSSELS — As pressure grows for technology companies like Apple and Google to adjust how their phones and devices gather data, Europe seems to be where the new rules are being determined.

Last year, Google generated a storm of controversy in Germany when it had to acknowledge it had been recording information from unsecured wireless networks while compiling its Street View mapping service.

Then, last week, regulators in France, Germany and Italy said they would examine whether Apple’s iPhone and iPad violated privacy rules by tracking the location of users.

Also, reports emerged last month that the Dutch police had obtained information from TomTom, a maker of popular satellite navigation devices, while setting up speed traps, prompting concerns by users and an apology from TomTom.

The companies all said there was nothing sinister about their activities, though Apple said it would issue a software update limiting the time that location data was kept to seven days. None of the information, the companies said, is particularly sensitive from the point of view of personal privacy, and they claim it will help them to deliver better services in many cases.

To address concerns about data protection, Viviane Reding, the European justice commissioner, said in a speech Tuesday that she would propose extending unionwide rules about breaches of privacy to online banking, video games, shopping and social media.

The rules require phone companies and Internet service providers to inform customers of any data breach “without undue delay.”

“European citizens care deeply about protecting their privacy and data protection rights,” Ms. Reding said in a separate statement.

“Any company operating in the E.U. market or any online product that is targeted at E.U. consumers should comply with E.U. rules.”

Ms. Reding made her remarks shortly after Sony apologized for a data theft involving 77 million account holders of the PlayStation Network, and a week after Apple said it would change the software that logs the location of users of its iPhone and iPad tablet computer.

“Seven days is too late,” Ms. Reding said Tuesday, referring to how long it took Sony to inform account holders.

Regarding Apple, she said she understood how the discovery that the iPhone collected location data had eroded “the trust of our citizens.”

Abraham L. Newman, an assistant professor at Georgetown University and a specialist in European privacy issues, said Europe’s spotlight on privacy could offer companies like Apple and Google the chance to reorganize the way they handled policies worldwide, using European standards in their corporate strategy.

Alternatively, he said, the companies could develop policies to ensure that data gathered in Europe was sufficiently “quarantined” to comply with rules, but limit changes in the rest of the world.

“Apple is entering a political dynamic in Europe which is similar to Google’s experience,” Mr. Newman said. “Authorities in Europe have decided that consumers better not be duped in a world of unlimited location data where companies know literally every step you take.”

What particularly distinguishes Europe is the strong role played by so-called national data protection authorities in keeping tabs on privacy issues, he said.

In the United States, there is no single agency dedicated to privacy, and while the Federal Trade Commission and the Federal Communications Commission can deal with violations of privacy, those agencies are mainly focused on enforcing fair business practices.

But Ms. Reding said the differences between Europe and the United States should not overshadow signs of convergence, like the work by the Obama administration and Congress to pass a privacy bill of rights that would stop companies from collecting or sharing personal information without an Internet user’s consent.

“Until recently, there was a common belief that the E.U. and U.S. have different approaches on privacy and that it would be difficult to work together,” Ms. Reding said.

“This can no longer be argued in such simple terms.”

Article source: http://feeds.nytimes.com/click.phdo?i=64b50a380e34e8b3249d866c831b3a82

Filed Under: Business News Tagged With: , ,