Pricing pressures are cited for reasons on Ericson's poor Gross Margins:

Third, this industry maturity and competitive market dynamic does not IMO bode well for margin structure. I don’t think Ericsson’s GM miss this morning was all about Services mix, I mean China was down sequentially and the US was flat. Management can talk all day about more coverage in the mix but I think Ericsson is pricing aggressively to try to win business as a) largedeals are hard to come by, b) smaller deals are more ferociously competed for and c) most important, the wireless business has always been about SCALE. Nokia+ALU nearly equates to Ericsson’s scale, so my view is that Ericsson is trying to push ahead and gain share/scale vs this “new world order”. In addition, I think Huawei and to a lesser extent ZTE will compete more aggressive in the next 12-18 months as Chinese spend rolls over. Huawei is talking about 10% revenue CAGR from now until 2020. 30% of its business is corporate networking and smartphones which are growing around 30-35% a year. That means that its key infra business should have a flat revenue CAGR. Now, if China is about 30% of revs and Chinese capex is going to get whacked, what’s Huawei going to do? It can’t “diversify” geography into the US, Japan and South Korea, so i think it ups the “pricing” ante. That ain’t good in a maturing market.

Full Barron's blog:

blogs.barrons.com/te...=yahoo