Infonetics Research said large RBOCs and ILECs are slowing down on VoIP given that many large projects have been completed, while carriers are moving their capital expenditures to other priorities. Meanwhile, cable MSOs are getting ready to deploy residential VoIP but may delay spending until 2010.

“The fourth quarter of 2008 confirmed what we started seeing in the previous two quarters in North America, with signs in Western Europe and some parts of Asia as well: the market for carrier VoIP equipment has stalled due to large deployments nearing completion and shifting strategic priorities,” said Diane Myers, directing analyst, service provider VOIP and IMS with Infonetics. “The global economic downturn will likely exacerbate the drop in VoIP equipment sales.”

While the VoIP market was down last year, Nortel did well in the fourth-quarter, boosting its softswitch and trunk media gateway sales, while gaining market share in both categories.

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Just so you know, it was announced in July 2007.

More: TMCNet’s blog has a rather indignant post on how the U.S. government “$300 million on Nortel VoIP”.

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But according to Nortel Asia-Pacific president Francois Lancon, the market is getting more challenging as wireless carriers reduce spending. “What we are seeing is they are scrutinising purchases. Purchasing cycles are taking longer,” he told Reuters.

While demand from India and Japan are holding up, Lancon said he’s concerned about sales in China, particularly the enterprise market. That said, he said Nortel is aiming to maintain Asian sales at 22% to 25% of total sales by year-end. He added that sales in India have grown 40% to 50% from last year.

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Naturally, Edholm doesn’t think so given he’s in the business of selling products and services. Personally, I think overall investment will decline as customers become more pragmatic and cautious/conservative with their IT budgets. This is going to be bad news for telecom suppliers – be it Nortel, Nokia, Alcatel-Lucent, et al – and, of course, investors seeking growth to fuel stock price performance.

That said, there could be pockets of growth as customers look for ways to become more productive and cost-efficient. The question is whether Nortel can leverage those pockets with its technology portfolio.

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Are there going to be winners and losers over the next few months as carriers and corporate customers deal with more pressure on IT budgets?

Will an economic slowdown allow Cisco to take advantage of rivals’ struggles to gain an even bigger competitive foothold?

Who’s going to win? Who’s going to lose?

What do you think?

Update: Ericcson is expected to post a 40% decline in third-quarter operating profits compared with a year earlier, according to the Times Online. Apparently, Ericsson is hurting because the “lucrative network replacement and upgrade work drying up in Europe as telecoms companies tighten their belts”.

Meanwhile, Cisco laid off 129 employees earlier this week as part of a move to close its broadband telephony services unit.

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First, the optical market has been showing signs of life after the bandwidth glut caused during the telecom boom saw a tremendous amount of dark fiber created. As online video, particularly high-definition, becomes more popular, the need for more bandwidth is growing. Many carriers and cablecos realize they need to invest in their optical infrastructure to meet consumer demand. Nortel has enthusiastically been talking about a bandwidth boom so perhaps this is a positive sign.

The fact Bell is investing in 40G optical should not be a surprise given it needs to upgrade its infrastructure to compete against Rogers and Videotron (two large cablecos in Ontario and Quebec). But Bell has more than $30-billion of debt after a leveraged buyout, and it recently conceded it isn’t going to be as aggressive as many people expected about upgrading its infrastructure.

Nortel’s solution will enable 40G transmission to co-exist within Bell’s current 10G network. Bell expects to have significant cost savings by using the existing infrastructure rather than deploying new fibre or alternate solutions for the metro and long haul parts of its network.
”

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Some of his enthusiasm for Nortel’s prospect lie in his belief that Nortel is well positioned to do well as China’s telecom market evolves, grows and consolidates. Among the activity is a merger between China Netcom Group and China Unicom, which combined have 279 million wireless and wireline subscribers.

Richards think Nortel could see huge dividends from the Unicom-Netcom merger as it supplies to both Unicom and Telecom. “This is a glorious opportunity for Nortel, already a supplier to both China Unicom and China Telecom,” he said in a research note. “Overall, China has the potential to pull Nortel’s business and its stock out of its long-term funk and we believe they are well positioned to exploit that market.”

The Chinese telecom market is fertile ground for telecom suppliers given carriers are spending billions of dollars to build new networks and upgrade exisitng ones. China Unicom, for example, said earlier this month it could invest as much as $14.6 billion (100 billion yuan) over the next two years to build a 3G wireless, while China Telecom plans to spend $11.7 billion.

Source: Ottawa Citizen

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The agreement is part of a multi-million dollar network being installed within the 42,000-seat stadium that will include as many as 250 Wi-Fi hotspots, wireless ticket scanning, the ability for fans to order food from their seats using a wireless system, and 70 call-centre agents using an IP-based phone system.

Nortel clearly has a thing for baseball as its equipment has been used in half of the Major League Baseball parks that are either new or under renovation.

Last month, Nortel became the seventh tier one supplier to the 2012 Olympic and Paralympic Games in London. It will provide British Telecom with equipment to deploy secure and robust wide WANs, wireless LANs, and call centre and fixed telephony infrastructure.

Nortel will have exclusive marketing rights and usage rights to the London 2012 brand within its the telecom equipment sector.

(Source: Nortel press release)

For more, check out Douglas Schweitzer’s blog post on ComputerWorld.

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For example, Synergy Research Group just released its Q2 survey for router/switch sales to service providers. Guess what? The leading vendor in terms of quarter-to-quarter growth is Nortel..by a country mile over Tellabs.

In explaining the strong router sales overall, Synergy said:

“While the increasing demands of multimedia network traffic such as video are contributing to Router sales, Synergy believes managed services are also becoming a strong growth driver. Worldwide, businesses are turning to service providers for managed services as a cost-effective alternative to maintaining and running their own networks. Synergy believes as organizations continue to operate under challenging economic conditions, the trend to outsource network services to Service Providers will continue to increase.

For service providers to address this opportunity they will need to offer competitively priced services that provide a flexible access aggregation architecture and an efficient operation to the Enterprise. This will require Service Providers to increase their Router investment, especially at the edge of their networks.”

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