Heavy Spurt in Femtocell Contracts Not Translating to Volumes

Femtocell shipments are not hitting expected volumes, according to new research. ?The number of operator contracts is sharply rising, but the number of femtocell shipments is hardly keeping pace. Only 2.5 million femtocells shipped in 2011, a disappointment from the three to four million that were expected.

Fueling the higher expectations was the increase in femtocell commercial operator contracts, which totaled 88 in 2011. Included are individual operator contracts awarded to femtocell vendors, as well as multi-vendor contracts offered by some operators.

Out of the 88 contracts, 37 operators have launched services, with many more expected to launch during 2012.

Alcatel-Lucent, Huawei, and Ubiquisys are closely tied in terms of the top share of contracts. Huawei and Alcatel-Lucent have 27 operator contracts each, while Ubiquisys has 28 contracts through NSN and NEC collectively.

However, the market share of unit shipments looks very different compared to the contract market share. Cisco/ip.access and Airvana/Ericsson are closely tied for top share and collectively represent 55% of the market’s shipment volume. Cisco/ip.access supplies to AT&T and Airvana/Ericsson supplies to Sprint.

“With two of the 37 femtocell operators making up 55% of the shipments, the risk is that the market will lose its momentum if the status quo doesn’t change,” says Aditya Kaul, practice director, mobile networks. “Femtocells are still largely used as Band-Aid solutions by most operators to cover up coverage holes. While operators like SFR in France are attempting to move beyond the Band-Aid proposition and use it as a competitive acquisition tool, the market needs many more SFRs to carry the momentum forward and achieve true mass-market status.”

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