Leading CSPs pull forward 5G-related investments, driving CAGR increase in the North America TIS market

According to Technology Business Research, Inc.’s (TBR) Telecom Infrastructure Services North America Market Forecast 2018-2023, the CAGR of the TIS market in North America increased compared to last year’s forecast as leading communication service providers (CSPs) in the U.S. committed to accelerate and broaden the scope of their 5G-related initiatives.

In the past 12 months, the five largest mobile operators in the U.S. have made formal commitments to deploy 5G at scale across their U.S. footprints over the next few years. This acceleration in deployment timetables is primarily in response to competitive and government pressures. Spend pertaining to these overarching trends will be partly offset by cost savings from legacy infrastructure decommissioning, cloud, and NFV/SDN as well as synergies that are realized from M&A.

Though 5G will be the primary driver of the TIS market in North America over the next five years, digital transformation-related initiatives, which encompass network and business model transformation, will also support TIS market development. With the competitive landscape in the U.S. facing significant disruption from M&A events and new entrants, CSPs will be under pressure to respond by continuing their transformations. Digital transformation requires rearchitecting networks to become cloudified, virtualized and intelligent. AT&T (NYSE: AT&T), Verizon (NYSE: VZ), Comcast (Nasdaq: CMCSA) and T-Mobile (Nasdaq: TMUS) are expected to drive the bulk of digital transformation-related spend through the forecast period.

TBR’s Telecom Infrastructure Services North America Market Forecast provides annual analysis and forecasting of the deployment, maintenance, professional services and managed services markets for network and IT suppliers.

In IoT, Oracle means business

“Business first” is the resounding message from Oracle regarding IoT. The company leaps over the technical morass and ecosystem complexities, which often bog down any digital transformation discussion, and instead starts with the business discussion: What is your pain point? Oracle has deep relationships with a wide customer base due to its legacy solutions, including ERP and supply chain management. Oracle leverages this vendor standing to start discussions with VPs and line-of-business (LOB) managers on how Oracle can improve the client’s business outcomes. Once a set of KPIs are agreed on, Oracle and its partners work backward with operational technology (OT) and IT teams to reach the business outcome.

TBR believes Oracle has made great strides with its business outcomes focus. The first time we talked to company executives, in September 2017, they seemed to be following the traditional route of going through IT, as IT vendors tend to do. However, the company faced similar roadblocks to its peers. Tribalism inside the organization — OT versus IT versus C-Suite — made collaboration inside a customer organization difficult. Oracle found itself selling to customer IT, with customer IT having to sell to management, and Oracle admits this approach was not working. And the issue was not just with the audience; what Oracle was selling — IoT capabilities and solutions — was also an issue. Now, the company is upselling features attached to existing products.

Oracle retooled its IoT go-to-market strategy to focus heavily on selling business outcomes and making its platform accessible to the business user. Below, we outline a few important steps Oracle has taken.

Portfolio simplification

Figuring out IoT is difficult for customers. It is not always clear which direction to go in, which use case to chase or how technologies will benefit the business. Ultimately, the number of paths to follow can lead to choice paralysis. Oracle addressed this with a narrower (but not less impactful) portfolio with five primary applications, or packaged solutions, aimed at specific business goals:

  • Asset monitoring: Focuses on asset health, utilization, availability and predictive maintenance
  • Production monitoring: Manufacturing equipment and production line monitoring and prognostics
  • Fleet monitoring: Monitors shipments, fleet vehicles, driver behavior and costs
  • Connected worker: Focuses on worker safety by monitoring workers and their environments
  • Service monitoring for connected assets: Allows customers to engage in value-added services to their end customers through incorporating asset monitoring and manipulation capabilities into products

Booz Allen Hamilton keeps winning, even when the government shuts down

TBR’s initial response to Booz Allen Hamilton’s (BAH’s) 1Q19 earnings published on Tuesday, and we expect another strong quarter from BAH to close out its FY19. BAH boasts a soundly differentiated market position and multilayered alignment of its technology and advisory portfolio with the primary objectives of its federal customers. Consulting-led offerings are increasingly interwoven with an innovative technical capacity designed to enable federal clients to meet operational challenges and security threats ever-increasing in sophistication and volume. BAH even emerged from the recent 35-day temporary government shutdown with minimal fiscal damage, further illustrating the resiliency of its solutions model and fueling its confidence about 2020. We further expect the company will issue strong guidance for its upcoming fiscal 2020, with revenue growth in the high single digits and margin performance sustained at current levels.

Read more of Senior Analyst John Caucis’ assessment of federal IT services vendors through the quarter and the upcoming quarterly benchmark.

Additional assessments publishing this week from our analyst teams

Tuesday

  • In our 1Q19 Hewlett Packard Enterprise Cloud Initial Response, we discuss how the company’s margin improvements resulted from a more software-defined portfolio and improved operating efficiency as the HPE Next initiative enters its final year. — Cassandra Mooshian, Senior Analyst

Wednesday

  • Cost-cutting initiatives including headcount reduction and deeper integration of digital sales and customer service channels enabled Sprint to reduce $1.2 billion in gross operating costs in FY18, but this was largely offset by reinvestments in network and other operational initiatives. Sprint’s financial position will remain challenged long term due to its high debt load and struggle to generate positive net income and free cash flow, highlighting why the T-Mobile merger is in the best interest of the company. — Steve Vachon, Analyst

Thursday

  • Now with its third CEO in two years, Rackspace rebrands Fanatical Support to Fanatical Experience as it commits to providing ‘unbiased expertise’ and a more total support system.      — Cassandra Mooshian, Senior Analyst

Friday

  • We expect VMware to report another quarter of strong, above-average growth in comparison to its software peers. Ongoing portfolio investments, partnerships and tuck-in acquisitions position the company for continued customer attraction and retention. — Cassandra Mooshian, Senior Analyst
  • Portfolio and talent developments equip HCL Technologies (HCLT) to sustain revenue growth through 2021. HCLT needs to quickly scale its investments and market presence to solidify growth. Kelly Lesiczka, Analyst
  • Despite enhanced efficiencies in traditional IT operations, T-Systems could not offset pressures on profitability from reorganization and adoption of IFRS 16. Expanding its portfolio in growth segments will enable T-Systems to benefit from a more flexible business model to adapt to and address client demands. Kelly Lesiczka, Analyst

And if you missed the May 22 webinar, Bringing the best: Talent and technology in management consulting, check out the replay here.

Red Hat builds the digital transformation autobahn, where developers are king of the road

Red Hat production systems curate community IP into a simplified horizontal platform, paving the way for scaled innovation

In a 2015 conference for financial analysts, Red Hat CEO Jim Whitehurst declared victory in commoditizing the enterprise OS market into RHEL and Windows Server, while outlining Red Hat’s intentions to do the same thing to the (then) emerging PaaS layer with OpenShift.

The closing guest speaker during the Red Hat keynote address at the 2019 summit was Microsoft (Nasdaq: MSFT) CEO Satya Nadella, who announced Azure Red Hat OpenShift. While it might still be premature to declare victory in fulfilling that aspirational objective from 2015, it certainly can be said that Red Hat has made significant progress in a short period of time.

RHEL and OpenShift represent the curation pillars for open upstream community innovations, coupled with Red Hat’s decades of open-source and service experience to deliver a capabilities-based advantage to its users. Red Hat represents the virtuous cycle of trusted platform delivery, user-contributed innovations, and Red Hat production-grade delivery of those innovations back to the community via a platform layer that is increasingly easier to deploy.

RHEL 8 delivers additional simplicity and automation capabilities to allow operators to better facilitate developer innovation

Red Hat heralds RHEL 8 as a significant improvement over RHEL 7, best illustrated by the fact that the upgrade process to RHEL 8 constitutes a simple point-and-click operation, after which automation can take over the rest of the process in seamless fashion.The latest release is said to be designed for applications to run across open hybrid cloud environments, addressing the enterprise hybrid reality. Before its official release to market at the summit, there were over 40,000 downloads of RHEL 8 in beta, which underscores pent-up demand for the release and also helped Red Hat to enhance the operating system based on invaluable feedback from those beta users.

TBR attended the Red Hat (NYSE: RHT) Summit, which featured the usual slew of product announcements. This year, the company focused intently on enhancements to Red Hat Enterprise Linux (RHEL) 8 and Red Hat OpenShift 4, which are the foundational products for the enterprise. However, more interesting were the general discussions throughout the summit about Red Hat’s business model and cultural uniqueness, which contribute to the company’s success in curating openly sourced IP into enterprise-grade technology products underpinning an ever-increasing share of business software. The value of its people and processes were regularly emphasized by reminding attendees that IBM (NYSE: IBM) is paying $34 billion for a $3.2 billion company that owns no IP.

TBR shares market predictions ahead of Quantum Computing Market Landscape launch

TBR's quantum computing market predictions

The quantum computing market will evolve from research-centric to commercial use cases as the technology reaches economic advantage — algorithm by algorithm — in the next three to five years. Once this occurs, developments will be rapid and organizations with the foundation built to take advantage of quantum computing will quickly reap the rewards of their early investments. Quantum computing will impact multiple aspects of the IT environment, including power consumption, data generation, security and classical computing tie-ins. The swift impact of quantum computing will be a key factor in determining who wins and who loses in this technological transformation.

Contact your account executive or Analyst Stephanie Long ([email protected]) to learn more about TBR’s upcoming Quantum Computing Market Landscape.

TBR Weekly Preview: May 20-24

Before the long weekend here in the U.S., our teams will be publishing deeper analysis on some of the vendors that released earnings earlier this quarter. As always, our approach starts with the individual companies, then builds to an understanding of the larger market.

Additionally, don’t miss this Wednesday’s webinar Bringing the best: Talent and technology in management consulting. Register today!

Tuesday

  • The combination of Atos’ integration and technology capabilities with Google Cloud technologies, made possible by the pair’s global partnership, which marked its first year on April 24, is expanding Atos’ cloud client reach and driving revenue opportunities in secure hybrid cloud orchestration, data and AI, machine learning, and digital workplace solutions for enterprises. The acquisition of Syntel expanded Atos’ cloud advise-build-run portfolio and client reach, notably in North America, and provided critical scale for Atos’ Business and Platform Solutions division, which will accelerate Atos’ cloud advisory and implementation activities. Integration of security services and products into cloud solutions, enables Atos to transform clients’ IT and business models and securely support and manage both cloud and legacy IT environments. — Elitsa Bakalova, Senior Analyst
  • The most recent edition of TBR’s Colocation Benchmark highlights how hybrid IT adoption is a driving force behind colocation adoption as colocation providers offer both data center space and connections to leading cloud providers. The availability of hybrid PaaS and IaaS offerings such as Microsoft Azure Stack and, soon, AWS Outposts provides additional opportunities to extend enterprise colocation environments. — Cassandra Mooshian, Senior Analyst
  • TBR’s Cloud Professional Services Market Forecast details how healthy growth will persist across cloud professional services markets despite automation’s downward pressures as hybrid IT sprawl proliferates. Accenture and IBM remained the top two vendors overall in cloud professional services in 2018, while Accenture is expected to take on significant additional market share through 2023 as it benefits from its C-Suite exposure and position as a technology-agnostic third-party expert. — Cassandra Mooshian, Senior Analyst

Friday

  • TBR’s initial look into Hewlett Packard Enterprise’s (HPE) 1Q19 performance deep dives into HPE’s infrastructure strategy amid recent ongoing changes as HPE enters the final year of its Next initiatives. Commoditization continues to take its toll on infrastructure vendors’ bottom lines, increasing competition and encouraging more nuanced strategies to get ahead. — Stephanie Long, Analyst
  • The 1Q19 Fujitsu Cloud report deep dives into Fujitsu’s cloud strategy amid recent changes. As the company no longer competes for new IaaS opportunities outside of Japan, Fujitsu is leaning on partners and their expansive customer bases more significantly and strategically amid the company’s own strategic shift. — Cassandra Mooshian, Senior Analyst

Finally, publishing this week from John Caucis are 1Q19 assessments of federal IT majors CACI and Leidos, including key developments from the quarter and detailed analysis of each company’s fiscal performance. Nearly a year after losing out to General Dynamics in the competition to acquire CSRA, CACI aggressively jumped back into the M&A fray, spending nearly $1 billion on acquisitions during the quarter to deepen its capabilities in C4ISR, cybersecurity, signals intelligence and electronic warfare for the U.S. Department of Defense and intelligence community. In the past, CACI’s MO regarding acquisitions was often paying a premium to scoop up differentiating solutions capabilities, and after paying $225 million to acquire N.Y.-based Mastodon Design and its 50 employees, it appears CACI retains an aggressive, but judicious, M&A posture. CACI delivered 12%-plus year-to-year growth during 1Q19 — more than half inorganic in nature. Federal IT peer Leidos delivered strong organic growth in its first quarter following its “year of transition” in 2018, suggesting its revamped growth strategy, which hinges on effective leverage of the information systems and strategic solutions assets acquired from Lockheed Martin nearly three years ago, is working. With its operational and organizational revamp around its core markets complete, Leidos is beginning to turn its attention to adjacent market opportunities, including in the U.K., where it plans a significant ramp up of recruiting activities in 2019.

In its third annual blockchain summit, EY calls this ‘Year 0’ for blockchain

EY lays out its digital blueprint as ‘now, next and beyond’ with blockchain use cases easily fitting into the construct

This fundamental playbook repeated in many of the use cases discussed in breakout sessions at EY Global Blockchain Summit:

  • Early efforts focus on cross-collaborative business entities establishing business rules.
  • The rules become the digital contracts.
  • The first use case is either low-dollar-value or intracompany; the sponsoring enterprise working with EY becomes “customer zero.”
  • Once fully operationalized, EY and the client partner look for ways to enroll additional participants to:
    • Broaden the use case into an industry utility
    • Extend the underpinning business logic into adjacent industries for the repeatable capability to build out industry utilities

Gaming: The editors for the EY-Microsoft playbook

Much of the content shared at the 2018 event revolved around EY’s ongoing collaboration with Microsoft to deliver a blockchain royalty payment system to track developer community activities in the gaming space. This year, EY and Microsoft touted the collaboration on many different levels that easily fit into the “now, next and beyond” construct.

EY Tesseract: A clear view not to be confused with a short distance

The Tesseract-like aspirational objective is autonomous vehicles; period. To achieve the objective requires prototyping the IoT sensoring and business rules ahead of when specific technologies and revised public policy regulations have been hardened. Interim steps revolve around building out the ecosystem participants required to allow autonomous vehicles to be serviced absent human accompaniment as the vehicles course through the physical world based on their digital instructions.

The third annual EY Global Blockchain Summit gave an indication of the rapid acceleration in adoption that had EY describing this as “Year 0.” With hockey stick charts for the number of proof of concepts (POCs) and live applications, blockchain appears poised to deliver on its anticipated promises to transform business interactions and greatly reduce operating expenses while creating new business services networks. The event was held at 32 Old Slip in the heart of New York’s financial district with several hundred attendees and 28 breakout sessions organized in four tracks consisting of blockchain business applications (where TBR spent most of its time); blockchain assurance, tax & compliance implications; financial services and the token economy (where TBR attended a session on decentralized finance); and blockchain technology.

HPE buys Cray: Is this the definition of insanity?

We know Moore’s law drives consolidation in the industry. What we do not know, however, is if any two hardware-centric vendors can come together and build a business accretive to the top line. Michael Blumenthal tried this strategy by combining Burroughs and Sperry to create Unisys, and that certainly did not work. More recently Dell acquired EMC, and while jury remains out on that consolidation play, early indications have been positive.

HPE hardware acquisition history

Hewlett Packard Enterprise (HPE) has deployed this strategy multiple times over the years. Today HPE announced it will acquire Cray for $1.3 billion, which equates to $35 a share, or a $5.19 premium over yesterday’s closing price of $29.81. Similar hardware-centric deals HPE has conducted over the years include:

  • Acquiring Apollo after its first-mover advantage in engineering workstations was eclipsed by Sun Microsystems
  • Acquiring Compaq after it had acquired Tandem and Digital Equipment Corporation (DEC), which had likewise struggled as much in business model integration as with technology integration
  • Acquiring SGI, which was hemorrhaging cash but was a strategic HPE OEM partner that HPE could not afford to let fail or be acquired by a rival
  • And now Cray, the last of the venerable high-end niche vendors to double down on higher-margin high-performance computing (HPC)

HPC becomes mainstream as accelerators keep pace with big data compute demands

HPC certainly has growing appeal. That appeal stems from several economic drivers

  • As always, Moore’s law theory gets borne out in reality as cost and form factors decrease to the point where distributed computing (a fundamental tenet of Ken Olsen’s original business plan for DEC in the early 1960s) can be done at the board level if not the chip level. Graphics processing units (GPUs), tensor processing units (TPUs) and field-programmable gate arrays (FPGAs) can keep pace with increasing demands coming from big data analytics.
  • Supply chain excellence and software tuning of these commodity components can allow for custom-designed systems, purpose-built to the compute demands of the HPC customers.
  • IBM certainly keeps innovating in HPC, especially with its RISC-based Power chips suited for analytics.
  • Lenovo has taken a huge bite out of HPE’s share of the HPC space through its design engineering and supply chain flexibility, manufacturing commodity Intel boards at scale through Lenovo’s global manufacturing space. Per Lenovo it went from having none of the top 500 HPC installations in the world in 2014 to having 140 of them in 17 countries in 2018. Much of this success came at HPE’s expense.

Will the acquisition go against type and be viewed as a sane move?

A definition of insanity is to engage in the same activity over and over again while expecting a different outcome. HPE’s history has been to acquire struggling firms in niche hardware areas in hopes of growing share. With fewer and fewer silicon-centric vendors left standing, the odds of success can certainly increase in time.

The Cray acquisition may well aid HPE in stalling Lenovo’s recent successes in the HPC space, but Lenovo’s operating best practices are well suited to commoditizing markets. Supply chain excellence honed to attack the hyperscale market brings decided cost advantage to the HPC space. Talent recruited from Intel and other firms likewise gives Lenovo the software tuning competencies necessary to extract fit-for-purpose performance from commodity chipsets.

Quantum also looms large on the horizon as the next chapter for the high-end compute requirements to help solve the world’s intractable problems. Seven nanometer wafers may not be the end of the line for silicon innovation, but it is certainly getting close. This acquisition seems poised to satisfy the immediate here and now, while once again being eclipsed by niche innovation elsewhere, with that elsewhere coming in the quantum domain in three to five years.

Recent articles have come out suggesting HPE is cutting back on quantum research, intending instead to extract more life out of the traditional computing space with processors for deep learning and analytics. HPE has certainly acquired a company that has been admired for decades as being the “tip of the spear” in silicon innovation. HPC innovations certainly can work for today, but that tip of the spear will be blunted by the inexorable laws of physics, making further silicon innovation increasingly more challenging. Future offerings in what has been Cray’s core market will come from quantum innovators. Once quantum reaches economic advantage over high-end classical computing, the industry will see yet another round of business exits for those vendors lacking transformation fearlessness. Like many of HPE’s other hardware-centric acquisitions, this move appears to have reasonable short-term impact and limited long-term upside.

Kick-starting innovation takes smart thinking, not just action

An innovation leader at a fast-growing Europe-centric consultancy shared with me tactics his firm uses to make its innovation engagements creative and pragmatic, with principles centered on adding real business value while capturing as much opportunity as possible for meaningful change.

First, pick one area to innovate, based largely on where you can expect value to come from. This echoes the age-old advice to search for what’s missing where it likely is, not where the lighting is best. And it echoes a recent theme we’re hearing from consulting and IT services vendors that clients need help making choices, not just understanding what choices they have.

Second, assemble the micro-learnings — the initial ideas and concepts — just to get people thinking, which I think reflects a trend of consultancies intentionally leaning away from “design thinking” as a term of art, while keeping the principles in place. Get creative, with purpose, but don’t get locked into an over-hyped and little-understood approach.

The third ingredient is multiple points of views, far wider than the perspectives of clients and their clients. If you’re considering supply chain, seek views from the HR managers at your client’s supplier. If you’re in the pharma space, talk to nurses actually distributing the meds. We’ve heard multiple stories of consultancies taking extra steps toward understanding a client’s ecosystem, but typically, this takes place when a minimum viable product is being tested, rather than early in the thinking-and-design phase.

Finally, when it comes to building something to test, focus on testing, whether you’re innovating around the right problem with the right idea, rather than the specific product or solution. Again, we’ve seen plenty of innovation engagements that move to testing and become too focused on the technology and making it work, not evaluating, continually, whether the innovation is being applied to the real problem.

Thinking on this discussion and reflecting on the last year of discussing innovation — as an offering, as an element of what consultancies and IT services vendors bring to their clients — we’re considering how to more fully capture innovation within the larger context of digital transformation. Look for specific assessments of innovation in the upcoming Digital Transformation Insights reports and the supporting vendor-specific quarterly reports, including Accenture, IBM Services and Management Consulting Benchmark Profiles for PwC, EY and McKinsey & Co.

TBR Weekly Preview: May 13-17

As we move further into May, we will shift from initial earnings reports to larger, detailed reports on the vendors we cover, plus the benchmarks and market forecasts for the broader areas, such as cloud and telecom. And definitely do not miss Wednesday’s webinar on digital transformation.

Monday

  • The IBM Cloud report highlights how cloud remains an increasingly key component to IBM’s hybrid business model and long-term strategy. IBM reported single-digit cloud year-to-year growth, at 7%, a remarkably smaller rate than its larger cloud peers, which underscores the continued messaging and go-to-market shortcomings it needs to overcome. Cloud is often relied on as IBM tries to bounce back, but the cloud business also needs some attention. IBM will continue to sell off noncore software assets to hone its hybrid IT focus and messaging — the success of which is largely contingent on the planned acquisition of Red Hat in late 2019 by IBM. — Cassandra Mooshian, Senior Analyst

Wednesday

  • Strengthening its focus on premium customers enabled AT&T to improve the EBITDA margins of its Mobility and Entertainment Group divisions in 1Q19, despite competitive pressures hindering subscriber growth. Though AT&T will continue to trail T-Mobile in postpaid phone net additions throughout 2019, AT&T will boost Mobility margins through its premium unlimited data plans and by being disciplined in its device promotions. Conversely, AT&T continues to lose video subscribers to over-the-top platforms, but the operator’s higher DIRECTV price points will help strengthen Entertainment Group margins. — Steve Vachon, Analyst

Thursday

  • TBR’s first public sector IT services report of the quarter, Raytheon Intelligence, Information & Services (IIS), will discuss how Raytheon’s IIS business group continues to deliver market-leading fiscal performance, despite the run-off of a major defense sector support contract. IIS delivered double-digit top-line growth in 1Q19, driven principally by continued robust expansion of its core cybersecurity and space programs. Growth in these key sectors, particularly in the classified arena, was critical in enabling IIS to deflect the impact of declining work volumes on the Warfighter Field Operations Customer Support program, though the wind down of this program will become increasingly taxing during 2019. Meanwhile, a newly centralized base of operations in the United Arab Emirates will generate mindshare and market share gains for Raytheon in the Middle East while the company positions itself at the forefront of the 5G revolution in federal IT as the premier contractor to escort defense agencies into the 5G era. Finally, Raytheon is targeting the lucrative European security market as an opportunity to leverage its cyber leadership and expand international sales. — John Caucis, Senior Analyst
  • Cisco strengthens its portfolio by attaching services to new product offerings to capture data center, IT infrastructure and workplace transformation engagements. However, declines within its deferred revenue signal the company could face challenges in maintaining services revenue expansion. — Kelly Lesiczka, Analyst
  • Capgemini continues to sustain its profitable growth through an operating model based on three pillars: a unified go-to-market strategy that presents one face to the client and sells the entire Capgemini portfolio, industry focus, and an agile and competitive portfolio. Changes Capgemini made during 2018 to its portfolio, organizational structure and sales model enable the company to address rising demand from clients’ business side and strengthen relationships with clients to expand wallet share. Offering industry expertise, such as through the new Unified Commerce Solution for Grocery, enables Capgemini to attract clients’ C-Suites by addressing their business-specific needs. Capgemini has a competitive portfolio and global services capabilities around fast-growing and emerging solutions and revitalized core outsourcing offerings that will continue to drive revenue growth for the company. — Elitsa Bakalova, Senior Analyst
  • Industry specialization is becoming a central focus of Atos’ strategy as the company articulates and delivers digital value and customer excellence leveraging its technology expertise and partnerships in areas such as security, cloud, IoT and quantum computing. One of Atos’ strengths is its ability to strictly execute on the plans it sets for its financial performance over three-year horizons and present consistent messaging to the industry analyst community. TBR expects Atos to execute on its plan to provide clients with innovative solutions that enable technology-powered strategies and business models. Deconsolidating Worldline as a stand-alone business as of Jan. 1 is a logical move that will have an immediate positive impact and enable Atos to focus on its core digital services activities. — Elitsa Bakalova, Senior Analyst
  • Despite the maturing smartphone market and competition from new mobile virtual network operators such as Xfinity Mobile and Spectrum Mobile, significant opportunity remains for T-Mobile to sustain subscriber growth, exemplified by the company gaining higher postpaid phone net additions in 1Q19 compared to 1Q18. Decreased postpaid phone churn, which has been lower than that of AT&T the past two consecutive quarters, is a main driver of T-Mobile’s higher net additions, as customers are becoming more satisfied with T-Mobile’s service options, network coverage and customer service. — Steve Vachon, Analyst
  • The strength of its broadband business will enable Comcast to sustain Cable Communications revenue growth through 2020 despite continued video subscriber losses as consumers shift to over-the-top offerings. Comcast will also sustain revenue growth long term through the company’s burgeoning businesses, including Xfinity Mobile, Xfinity Home and its machineQ IoT venture. — Steve Vachon, Analyst

Friday

  • Fujitsu Services benefits from portfolio investments but needs to reorient its focus on client retention to sustain growth. We expect Fujitsu will look to its services portfolio offerings and onshore centers, showcasing its technology expertise to create differentiation and extract additional wallet share as well as generate opportunities outside its traditional client base. — Kelly Lesiczka, Analyst