Chinese Telecom Power Market

World Telecom Power Market Overview

Market capacity analysis

The world telecom power market generated revenues of $2.92 billion in 2009, which showed a negative growth rate of 12.3% over 2008 due to downturn in the world economy. Figure 1 shows the revenue for the world telecom power market in 2007, 2008, and 2009.

Market regional analysis

In 2009, the Asian and U.S. markets generated revenues of $1,456.2 million and $864.3 million respectively. Europe, the Middle East and Africa (EMEA) markets generated revenues of $599.2 million. EMEA is the only market, which experienced a growth compared to 2008.

In 2009, the Asian market had the largest revenue share in the world telecom power market, with 49.9%, followed by the American and EMEA markets with 29.6% and 20.5%, respectively.

Market competitive analysis

In 2009, Emerson, and Eltek Valere constituted the first tier of the world telecom power market, with a share of 24.9% and 22.3%, respectively, followed by Delta and ZTE with13.9% and 8.0% respectively. Others contributed about 30.9% of the total market share in 2009.

Chinese Telecom Power Market Overview

Market capacity analysis

The direct investment in 3G network scaled up to above RMB100 billion in 2009, which was the first year of 3G in China, resulting in strong demand for telecom power. The Chinese telecom power market generated revenues of RMB3.7 billion in 2009, which showed an increase in growth rate to 27.6% over 2008. The market shipment accounted for 357,000, with an increase in growth rate to 8.5% over 2008. Figure 2 shows the shipment for the Chinese telecom power market in 2007, 2008, and 2009.

Market competitive analysis

In 2009, China Mobile and China Telecom purchased telecom power products through public bidding. Emerson was ranked the first in the share of China Mobile with 28.0%, while ZTE had the largest share in China Telecom with 31.0%. China Unicom did not open bid last year. Its share of centralized purchasing was similar to that of 2008. ZTE was also ranked the first in the share of China Unicom with 40.0%.

In the telecom power the top three vendors held centralized purchasing by carriers in 2009, about 80.0% of the total telecom power market shipment share. ZTE had 30.5% of the shipment, and was ranked the first in Chinese telecom power market. Emerson was ranked the second in the market with a share of 27.4%, followed by Delta with 23.2%. Figure 3 shows the company market share by shipment for Chinese telecom power market in 2009.

Competitive Analysis of Major Telecom Power Vendors

ZTE

■    Market position: ZTE provides stable, reliable, customized, and green telecom power products and solutions for global communication carriers. It is the market leader for telecom power in China.

■    Service development: ZTE power products have obtained the top three achievements in the top three carriers purchasing for many years. It accounted for the largest share of purchasing in 2009. There is a set of ZTE power in each three mobile base stations, which provides power protection. ZTE was ranked the second in the share of China Mobile, which is expanding to 27 provincial branches; ranked the first in China Unicom, accounting for over 40.0% of the share; also ranked the first in the new share of China Telecom. It accounted for over 30.0% of the market share in 2008 and 2009. ZTE has achieved full coverage of Greater China, including Hong Kong, Macao, and Taiwan.

■    Product strategy: ZTE provides a full range of telecom power products and solutions for a variety of telecom power application scenarios, such as the core engine room, and power products and solutions for indoor and outdoor base stations. It continues to launch new products, which increase the promotion level. It also focuses on program integration, market planning, and band and services. It takes full advantage of products of international different regions in promoting and integrating based on existing products in other regions. Moreover, it makes the most effective use of product resources to enhance the effectiveness of product promotion.

■    Service strategy: ZTE saves cost by fast responding and through flexible dealing of the demand from carriers.

Emerson

■    Market position: Emerson held the largest share in the telecom power market in China.

■    Service development: In 2009, after China Mobile telecom power tenders, Emerson was the leading participant with 28.0% of the market share. After China Telecom tenders, Emerson had 20.0% of the market share. After China Unicom tenders, Emerson was ranked the second with a 35.0% of the market share.

■    Product strategy: Emerson’s development of communication power module dormant energy-saving technology can effectively control the rectifier module’s operating mode. This reduces the no-load loss and increases the rate of remaining modules of the load by redundancy of the rectifier module. This increases the efficiency of operation of switching power system, reducing energy consumption.

■    Service strategy: Emerson regards service as company culture.

Frost & Sullivan’s GEM research method evaluates telecom power vendors in China in terms of both Growth Strategy Excellence and Implementation Excellence. Paired comparison method is applied to grade them. The growth capacity of each provider will be shown in the GEM matrix. Figure 4 shows the comprehensive competitive evaluation of major participants for Chinese telecom power market in 2009.

Market Drivers and Restraints

Market drivers

■    The all IP-based, broadband- and mobile-oriented direction of telecom network determines rapid development of telecom power

Due to changes in technology and customers’ requirements of telecom network, the technology trend of telecom network will develop toward the all IP-based, broadband- and mobile-oriented direction. To satisfy customers that experience services/enable customers to experience services anytime and anywhere, the mobile-oriented feature of network and the integration of mobile and fixed networks are necessary developments. Mobile devices, data communications equipment, and telecom power are expected to be the focal points of growth in communications equipment.

■    Full service development by Chinese carriers is expected to result in rapid growth of the telecom power market

Full service operations receive high-level attention and systematic upgrading. Chinese carriers have taken measures to enhance full service development. Full service operations need full service network supporting. Therefore, telecom power and other equipment are expected to have great opportunities in the future.

■    Network convergence is likely to further promote the development of telecom power

China’s State Council held an executive meeting on January 13, 2010, and decided to accelerate the network convergence including telecom network, radio and television networks, and Internet. It also clearly stated the milestones and priorities with regard to telecom power. Network convergence is expected to result in new network deployment during the long term.

■    3G wave is expected to increase telecom power requirements

3G wave has created new opportunities for telecom power. In 2009, which was the first year of 3G in China, 3G licenses were issued. Telecom power is the key to the entire communications network infrastructure. After the boom and reform of 3G, carriers are enhancing base station coverage of communication, which is likely to increase telecom power requirements. It not only greatly promotes investment in communications industries in China, but also increases the domestic demand, which leads to the development of Chinese telecom power that will be beneficial for manufacturers.

Market restraints

■    Energy conservation and emission reduction have set higher requirements for vendors

With increasingly extensive range of network applications such as the Internet and mobile phones and upgrading of network speed and network bandwidth, the scale of the communications industry has become larger. Energy consumption and carbon dioxide emissions of the whole industry are much larger and increased more rapidly than that of the traditional aviation industry. The vendors of the communications industry must actively adopt green planning and introduce products with energy conservation and emission reduction technology. Therefore, high demand is expected for the technological innovation of telecom power products in future.

■    Communications base stations, equipment, and the required power are getting smaller and smaller

3G construction has fast speed of building, small power and AC-DC power co-existed and so on. With 3G construction widely developing and the phenomenon of co-sited base stations increasing, carriers are focusing on miniaturization of the volume of power products. Power requirements are also decreasing, which is a restraint for the development of telecom power.