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NFV and SDN begin to yield cost savings and prepare carriers to be competitive in the digital era

HAMPTON, N.H. (July 3, 2018) — Commercial deployments of NFV and SDN are aggressively moving forward, with nearly all leading Tier 1 operators having adopted or planning to adopt NFV and/or SDN by the end of this year, according to Technology Business Research Inc.’s (TBR) 1H18 Telecom Software Mediated Networks (NFV/SDN) Customer Adoption Study.

“The cost savings of network virtualization and automation is becoming more evident,” said TBR Telecom Senior Analyst Michael Soper. “Carriers are leveraging NFV and SDN capabilities, as well as integrating cognitive technologies such as artificial intelligence (AI) and machine learning (ML) to evolve to a zero-touch network that can automate performance management and maintenance functions to prevent network faults and reduce expenses. The industry is in the very early stages of this trend.”

WAN virtualization is a top priority for service providers as they implement solutions including SD-WAN and WAN optimization into their portfolios. Service provider revenue growth from software-mediated network services, particularly SD-WAN, is accelerating, but the lion’s share of WAN revenue continues to stem from traditional services such as MPLS.

The supplier landscape shows incumbent vendors, particularly hardware suppliers, remain entrenched with service providers, but face disruption within certain use cases and with respect to commoditization. The study indicates incumbent hardware providers are best-positioned for providing NFV and SDN solutions across domains, with startups, open source players and cloud-centric vendors infrequently mentioned by respondents. Still, incumbents will face disruption with respect to certain VNFs, such as vEPC and vRAN, and the most significant threat remains hardware pricing, the area in which the overwhelming majority of respondents expect to see cost savings due to commoditization and the shift in spend to the software layer.

As the software-mediated market matures, software-centric vendors will be better-positioned than hardware-focused competitors. Additionally, vendors with highly automated service delivery and remote delivery capabilities can help service providers reduce opex tied to NFV and SDN.

TBR’s Telecom Software Mediated Networks (NFV/SDN) Customer Adoption Study provides an in-depth examination of how operators are planning, preparing and executing to succeed in the NFV and SDN market. TBR surveyed 25 of the leading Tier 1 telecom service providers worldwide to gain insight into their NFV and SDN adoption plans. The study includes insight into service provider strategy, as well as service providers’ perceptions of supplier positioning and key benefits and obstacles.

For additional information about this research or to arrange a one-on-one analyst briefing, please contact Dan Demers at +1 603.929.1166 or [email protected].

 

ABOUT TBR

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, and telecom vendors and operators. Serving a global clientele, TBR provides timely and actionable market research and business intelligence in a format that is uniquely tailored to clients’ needs. Our analysts are available to address client-specific issues further or information needs on an inquiry or proprietary consulting basis.

TBR has been empowering corporate decision makers since 1996. For more information please visit www.tbri.com.

Converging trends enable software and IT services firms to continue to grow despite lower operator capex

HAMPTON, N.H. (June 27, 2018) — According to Technology Business Research, Inc.’s (TBR) 1Q18 Telecom Infrastructure Services Benchmark, post-peak RAN spend drove down telecom infrastructure services (TIS) revenue in local currency terms at some of the largest vendors including Ericsson, Huawei and Nokia. Meanwhile, software- and services-centric firms grew revenue as they capitalized on digitalization trends and/or provided outsourcing and C&SI to operators and webscales alike.

“Operators’ push toward ICT convergence and digitalization sets IT services firms up for continued growth,” said TBR Telecom Senior Analyst Michael Soper. “IT services firms are able to help telecom and webscale customers migrate to new technologies and implement new business models, both of which are in high demand as these companies pursue digital transformation.”

Webscale spend remains robust, but TIS work is confined to certain segments of vendors. Webscales seek out cutting-edge technology and typically contract with the OEM for product-attached services. Companies benefitting from this process include Ciena, which is providing optical equipment to webscales, and Nokia, which has many opportunities to sell into webscales with its end-to-end optical portfolio, premium IP routing and switching products. IT services firms, particularly Accenture, are providing back-office outsourcing and software SI.

Vendors with high exposure to the U.S. market and those that are well-aligned with market trends such as 5G, media convergence and digital transformation will likely increase their share of the TIS market over the next two years, as TBR expects operators in the region to aggressively invest in these areas starting in 2H18.

TBR’s Telecom Infrastructure Services Benchmark provides quarterly analysis of the deployment, maintenance, professional services and managed services markets for network and IT suppliers. Suppliers covered include Accenture, Amdocs, Atos, Capgemini, CGI, China Communications Services, Ciena, Cisco, CommScope, CSG International, Ericsson, Fujitsu, Hewlett Packard Enterprise, Huawei, IBM, Infosys, Juniper Networks, NEC, Nokia, Oracle, Samsung, SAP, Tata Consultancy Services, Tech Mahindra, Wipro and ZTE.

For additional information about this research or to arrange a one-on-one analyst briefing, please contact Dan Demers at +1 603.929.1166 or [email protected].

 

ABOUT TBR

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, and telecom vendors and operators. Serving a global clientele, TBR provides timely and actionable market research and business intelligence in a format that is uniquely tailored to clients’ needs. Our analysts are available to address client-specific issues further or information needs on an inquiry or proprietary consulting basis.

TBR has been empowering corporate decision makers since 1996. For more information please visit www.tbri.com.