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Aiko Wakao
TOKYO: The Japanese unit of Ericsson, the world's top maker of wireless network equipment, said it plans to focus on services and other applications businesses to offset slowing demand for hardware.
"We're being asked to help operate the networks and offer more consulting, rather than just selling the gear," said Masanobu Fujioka, the chief technology officer of Ericsson Japan, told Reuters in an interview. "We're moving in that direction."
"Although there will be upgrades, Japanese carriers are close to done with its W-CDMA networks, which means level of network investment will probably start coming down," Fujioka said.
Close to 60 percent of Japanese wireless customers already use third-generation (3G) phones and investment at the country's top carrier NTT DoCoMo Inc. is expected to peak this year.
As capital spending on W-CDMA may slow in coming years, Japan remains a very important market for Ericsson.
Fujioka said Ericsson is seeking to supply technologies to Japanese carriers, such as Nippon Telegraph and Telephone Corp. and KDDI Corp, which are testing integrated IP-based networks.
The local operators are ahead of its global peers in developing so-called next-generation network, making Japan an attractive market for Stockholm, Sweden-based Ericsson's latest technologies.
Fujioka also said he hopes to offer more applications that help operators expand its contents-related services such as music and video downloads.
He said the company has already developed a technology that can transmit video clips to multiple mobile phones at the same time and is looking for buyers.
Similarly, Ericsson has tied up with Napster Inc. in the United States to develop a platform to distribute songs to mobile phones.
"For us network makers, we can no longer survive with just making infrastructure," Fujioka said. "As carriers shift their investments to contents such as IP-based television and music-distribution, we can offer products in those areas."
Earlier this month, Ericsson said it was reorganising itself to pave way for stronger customers support and accelerate research in IP networks. It also set up a new business group called Multimedia to focus on such contents-related businesses.
For Ericsson, the diversification may be key to retain its top position in the industry, which has undergone a major reorganization with Lucent joining Alcatel, and Nokia allying with Siemens AG.
(C) Reuters
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