2007 Market Trends
In 2007, Ericsson, Alcatel-Lucent, Nokia Siemens Networks, Huawei, and others stepped up their focus on services businesses to help insulate against slowing demand for telecom equipment. Meanwhile, the increasing intersection of network and IT worlds is creating significant opportunities for IT vendors such as IBM, HP, Accenture and EDS to seize growth opportunities within telco operator accounts and for traditional infrastructure vendors to expand into more software-centric parts of the network, particularly OSS/BSS. Beyond the major players, a second tier of network and software vendors are stepping up their systems integration and consulting initiatives.
TBR believes that determining the magnitude of the market as a whole, its various segments and the market share of major players are critical steps toward understanding the strategies that a firm should apply to win additional services business.
1) After announcing a handful of managed services contracts in 2006, suppliers reported a surge in 2007, with more than 100 deals announced. While interest in outsourcing remains low in North America, other regions, especially Western Europe, are seeing increased activity.
2)Completion of mergers among suppliers has tightened the competition among the three largest telecom suppliers. TBR believes that Ericsson will face significant challenges to its market leadership as both Alcatel-Lucent and Nokia Siemens Networks become more aggressive in the network services space.
3)While IBM continues to lead large IT systems integrators in revenue from service providers, HP markedly increased its position in 2007 bringing it into a virtual tie for the lead among these players.
4)While network equipment spending slowed in 2007, service provider consolidation and migration to IP-based multimedia infrastructure drove opportunities for services.