Introduction
Have you recently been paying attention to the industry trends in smartphones and internet infrastructure?
While global telecommunications equipment manufacturers continue to dominate the market, major Japanese telecommunications companies...NECやFujitsuThese domestic companies are said to be in a difficult situation in terms of performance and market share.
「MWC (Mobile World Congress)At the global trade show, both companies changed their existing business strategies and presented a "new path." This article delves into the background and strategy behind why such a decision was necessary to protect domestic telecommunications technology in the coming era.
We will explain the information you want to know, including perspectives on economic security and specific approaches to new products.
The real reasons NEC and Fujitsu are reviewing their businesses: "Economic security" and "market share"
The most important theme of this article is, "Why do domestic telecommunications equipment manufacturers need to withdraw from or restructure their existing business of 'base stations (communication towers)'?"
This answer seems likely to emerge from the perspectives of "the overwhelming competitiveness of overseas companies" and "maintaining security as a nation (economic security)."
First, let's look at the current market situation.
According to data from research firm Omdia, in 2024, the combined market share of base station shipments in the global market will be nearly 80% held by three companies: China's Huawei Technologies, Sweden's Ericsson, and Finland's Nokia.
Meanwhile, NEC's market share is approximately 0.91 TP3T, and Fujitsu's is approximately 0.51 TP3T.
This is a very harsh reality.
It can be said that domestic companies' self-reliant approach to market competition has reached its limits. As a result, both companies were forced to make decisions such as "ending existing businesses" or "organizational restructuring."
Specific new strategies and key points for future product development
I will explain three reasons why NEC and Fujitsu are not simply withdrawing from the market, but rather have new directions in mind.
- Point 1: Integration with the defense and space sectors (in the context of economic security)
NEC has shifted its focus from maintaining its base station business independently to integrating it with its aerospace and defense-related businesses. Mr. Sato (Head of NEC's Network Solutions Business) explained, "This will allow us to freely allocate research and development funds under a larger umbrella." - Point 2: Shift to software-defined networks (adoption of vRAN)
Instead of traditional hardware-centric base stations, they have developed products designed for use with "vRAN," which utilizes software. NEC's Horikoshi emphasized, "Because it's software-based, it's easier to create flexible configurations compared to dedicated hardware." - Point 3: Speeding things up through Fujitsu's spin-off (development into FINITY)
Fujitsu established a new legal entity (described below) in July 2013 by spinning off its network business. Fujitsu President Hayashi stated, "The spin-off has fostered a sense of independence among employees and has also led to faster decision-making."
Redefining the value of communication technology
The new strategy described above has several points to note and additional information to provide.
- Details of the technical benefits
Some of the products on display were networks for connecting data centers. NEC also emphasized this as a rapidly growing area. They mentioned that they are being chosen by AT&T and major European companies, indicating that they are solidifying their foothold not only in Japan but also overseas. - The biggest challenge is retaining talent.
The decline in communication technology directly leads to a brain drain of technology and talent from Japan. The Ministry of Internal Affairs and Communications is also discussing support measures to ensure the survival of domestically produced technology, and there is a growing sense among both the public and private sectors that "this technology must be kept within Japan." - Cost advantages
Software-based implementation offers advantages to telecommunications carriers in terms of total cost. The trend is shifting from focusing solely on hardware to optimizing the entire system.
Summary
Thus, the evolution of NEC and Fujitsu's base station businesses is not merely a matter of corporate management decisions, but is deeply intertwined with the critical issue of "technological independence" that the entire country faces.
Even if they withdraw from the market, it's not simply a defeat. It might be an attempt to redefine the value of communication technology under a new definition: "economic security."
However, the greatest concern here is the very loss of the technology itself. The Ministry of Internal Affairs and Communications is rapidly discussing support measures, and the public and private sectors continue to explore ways to ensure the survival of domestically produced telecommunications technology.
What we should not be misled by figures such as corporate performance and market share is the difficulty of ensuring the stable provision of the information infrastructure that we enjoy. Decisions made by companies like NEC and Fujiton to deviate from existing business models and shift to software definition and integrated development are not merely business strategies, but also one answer to the need to maintain national technology.
Mr. Horikoshi's words, "We haven't given up on the base station business. We want to blow everyone away with this new product," convey a never-give-up attitude, but at the same time, they also reflect a realistic acknowledgment of the "toughness of the market." Speeding things up through the spin-off can be seen as one way to address this.
Thus, the transformation in the telecommunications industry has a significant underlying meaning: not only is it an "evolution of communication services" that we ordinary users perceive, but it also represents the "domestic development of technology."
