where will network equipment provider (nep) revenue come from in five years?
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TBR
T EC H N O LO G Y B U S I N ES S R ES EAR C H , I N C .
Where will Network Equipment Provider (NEP) revenue come from in 5 years?
Technology Business Research (TBR) Webinar Series
Feb. 4, 2014
TBR
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Chris Antlitz Networking and Mobility Practice Analyst
Email: chris.antlitz@tbri.com
Twitter: @chrisNMP
Phone: 603.758.1850
Webinar Presenter
TBR
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TBR’s Networking and Mobility Practice covers telecom operators and network vendors on a global basis
NMP Overview
Networking and Mobility Practice Portfolio
Operator Research
Telecom Operator
Enterprise Operator
Vendor Research
Telecom Vendor
Services (TIS)
Benchmark Addressable Market Forecast (AMF)
Margin Benchmark
Equipment Software
Enterprise Networking
Services (NIS)
Equipment and Software
TBR
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TBR conducts extensive research on telecom vendors, which enables us to obtain unique insights to help clients make business decisions
NMP Overview — Telecom Vendors
Telecom Vendor
Services (TIS)
Benchmark
Addressable Market Forecast (AMF)
Margin Benchmark
Equipment Software
• Telecom Vendor Benchmark
• Telecom Infrastructure Services (TIS) Benchmark
• Expanded TIS Benchmark
• TIS Global AMF • TIS North America AMF
• TIS Margin Benchmark
Telecom Vendor Reports • Accenture • Alcatel-Lucent • Cisco • Ericsson • HP • Huawei • IBM • Juniper • Samsung • NSN • ZTE
TBR
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TBR Networking and Mobility Practice Syndicated Topics 4Q13: Telecom Vendors
Telecom vendors are investing in NFV and pushing into the converged enterprise and telecommunications space to foster long-term growth Quarterly Topics TBR Discussions Related Reports
Network Function Virtualization (NFV)
• Determine which vendors are the early leaders.
• Evaluate vendor road maps for this nascent technology.
• Determine the impact NFV will have on the network infrastructure and services market.
Alcatel-Lucent, Cisco, Ericsson, HP, Huawei, IBM, NSN, Juniper, ZTE
LTE
• Assess vendor LTE strategies and identify which companies are leading in LTE revenue and contract count.
• Monitor the status of LTE globally, including spectrum availability and small-cell deployments.
Alcatel-Lucent, Cisco, Ericsson, Huawei, NSN, Samsung, ZTE
Information and Communication Technology (ICT)
• Monitor and benchmark the progress vendors are making in pushing into the enterprise networking market.
• Identify leaders and laggards in the enterprise networking market across a broad list of financial, go-to-market and resource management metrics.
• Analyze and size market opportunity for network vendors in the enterprise.
Alcatel-Lucent, Cisco, Ericsson, Huawei, Juniper, Samsung, ZTE
Regional Shifts
• Track the shift in LTE spending from North America, South Korea and Japan to China, Europe and Latin America.
• Analyze trends in technology throughout different regions, including the deployment of TD-LTE in Asia and the increasing number of overlay projects in Europe.
Alcatel-Lucent, Cisco, Ericsson, Huawei, Juniper, NSN, Samsung, ZTE
TBR
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Market demand for telecom equipment is slowing, while IT, software and services take priority in telecom operator spend decisions
Key Takeaways
NEPs’ chief customers — telecom operators — beginning major spending shift
Operators’ focus is on consolidation, new business models, and opex reduction
Growth in NEPs’ core equipment business is slowing.
NEPs are accelerating into software, services and IT to jumpstart growth.
$34,725
$37,370
$43,302$46,451
$0
$10,000
$20,000
$30,000
$40,000
$50,000
2009 2010 2011 2012
Re
ven
ue (
In $
mil
lions
)
Tier 1 NEP Software and Services Revenue
ZTE NSN Huawei Ericsson Cisco Alcatel-Lucent
TBR
SOURCE: TBR AND COMPANY DATA
$66,858$70,905
$79,435
$73,447
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
$80,000
$90,000
2009 2010 2011 2012
Re
ven
ue
(In
$ m
illio
ns)
Tier 1 NEP Telecom Equipment Revenue
ZTE NSN Huawei Ericsson Cisco Alcatel-Lucent
SOURCE: TBR AND COMPANY DATA
TBR
Market Trends
TBR
7 TBR Webinar Series | 2.4.14 | www.tbri.com | ©2014 Technology Business Research Inc.
NEPs responding to market transition with three main strategies:
1. Move into IT
2. Invest in software and services
3. Focus on a primary domain at the convergence of these trends
Vendor Strategies
Operator spending shift requires a new NEP strategy
TBR
8 TBR Webinar Series | 2.4.14 | www.tbri.com | ©2014 Technology Business Research Inc.
NEPs are branching out of their core network market to capitalize on opportunities from the convergence of network and IT technologies
96%
4%
2012 NEP Network and IT Revenue Split
Network
IT
TBR
SOURCE: TBR
81%
19%
2017 NEP Network and IT Revenue Split
Network
IT
TBR
SOURCE: TBR
Strategy 1: Move into IT
Key Takeaways
All Tier 1 NEPs are moving into IT, but are following different paths
NFV and SDN implementations will drive rapid increase in IT contribution
TBR
9 TBR Webinar Series | 2.4.14 | www.tbri.com | ©2014 Technology Business Research Inc.
Operators to spend increasing amount on software and services that can leverage their existing networks and tap into new market opportunities
Strategy 2: Invest in software and services
Key Takeaways
Operators are using software and services to serve two purposes: to create new sources of revenue and to reduce opex.
$34,725
$37,370
$43,302$46,451
$0
$10,000
$20,000
$30,000
$40,000
$50,000
2009 2010 2011 2012
Re
ven
ue (
In $
mil
lions
)
Tier 1 NEP Software and Services Revenue
ZTE NSN Huawei Ericsson Cisco Alcatel-Lucent
TBR
SOURCE: TBR AND COMPANY DATA
TBR
10 TBR Webinar Series | 2.4.14 | www.tbri.com | ©2014 Technology Business Research Inc.
NEPs are following 2 paths but trying to achieve similar a goal, which is to capitalize on the convergence of network and IT technologies
Strategy 3: Domain focus at trend convergence
Key Takeaways
Alcatel-Lucent and NSN narrow portfolio and specialize in specific domains.
Other vendors pursue M&A or organic growth to expand.
All vendors are placing more emphasis on software and services and increasing exposure to IT.
Bifurcation
of Strategy Traditional NEP
Business Model
Focus
• Alcatel-Lucent
• NSN
Expand
• Ericsson
• Cisco
• Huawei
• ZTE
TBR
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Help operators increase revenue by implementing new business models
o Leverage CEM to better monetize subscribers
o Security
Help operators increase margins by providing cost-reduction solutions
o Cloud
o NFV
o SDN
The provision,
implementation and
operation of these
technologies will
spur software
revenue and lead to
the sale of a wide
range of services
spanning consulting,
systems integration
and additional
outsourcing
opportunities for
NEPs.
Conclusion
What are the opportunities?
TBR
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Vendors must make
transformational changes
to their organizations to
stay nimble and
competitive — this
includes portfolio and go-
to-market changes.
Software and Services
organizations must gain
greater influence over
corporate strategy despite
hardware being the largest
revenue contributor.
Conclusion
What is key to success?
TBR
13 TBR Webinar Series | 2.4.14 | www.tbri.com | ©2014 Technology Business Research Inc.
Chris Antlitz
Analyst, Networking and
Mobility Practice
chris.antlitz@tbri.com
@chrisNMP
TBR Webinar: Where will Network Equipment Provider (NEP) revenue come from in 5 years?
James McIlroy Vice President of Sales Email: mcilroy@tbri.com Telephone: 603.929.1166
Twitter: @TBRinc SlideShare: www.slideshare.net/TBR_Market_Insight YouTube: www.youtube.com/user/TBRIChannel
Questions?
TBR
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NMP Syndicated Research Coverage
Telecom Vendors Operators Benchmarks
• Accenture Telecom & Mobility • Alcatel-Lucent • Cisco Systems • Ericsson • HP Telecom & Mobility • Huawei • IBM Telecom & Mobility • Juniper Networks • Nokia Solutions and Networks • Samsung Telecommunication
Systems • ZTE
• AT&T • Sprint • T-Mobile USA • Verizon Enterprise Coverage: • AT&T Business Solutions • BT Global Services • Orange Business Services • Verizon Enterprise Solutions • Vodafone Enterprise Services
• Telecom Vendor Benchmark
o Telecom Infrastructure Services (TIS)
Telecom Infrastructure Services Benchmark
Telecom Infrastructure Services Margin Benchmark
Telecom Infrastructure Services Addressable Market Forecast
Telecom Infrastructure Services North America Addressable Market Forecast
• Enterprise Network Vendor Benchmark
o Enterprise Networking Addressable Market Forecast
o Network Infrastructure Services (NIS) Benchmark
• U.S. and Canada Mobile Operator Benchmark
Enterprise Networking Cable Providers
(Reports include content on Ent. Networking)
• Accenture Telecom & Mobility • Cisco Systems • HP Telecom & Mobility • Huawei • IBM Telecom & Mobility • Juniper Networks
• Comcast • Time Warner Cable
Internet Companies
• Google • Microsoft Telecom & Internet
TBR Networking and Mobility Practice Syndicated Coverage
About Us Technology Business Research, Inc. is a leading independent technology market research and consulting firm specializing in the business and financial analyses of hardware, software, professional services, telecom and enterprise network vendors, and operators.
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