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NFV and SDN are transformational technologies, and even leading CSPs are in the early stages of evolving

Despite market and complexity challenges, CSP spend on NFV/SDN will grow at a TBR-projected 32.4% CAGR from 2019 to 2024 to nearly $147B

NFV/SDN spend will increase at a CAGR of 32.4% to $146.9 billion between 2019 and 2024, compared to nearly flat overall communication service provider (CSP) spend (capex plus external opex) for the global market. NFV/SDN spend will scale through the forecast period as leading CSPs broaden their transformation initiatives and as additional CSPs begin their transformational journeys.

5G will be a key catalyst that will push more CSPs to adopt and broaden their NFV- and SDN-related initiatives. COVID-19 will serve as a catalyst for digital transformation, which implicates NFV and SDN, as operators will increase investment in the technologies to improve network cost efficiencies long term and support shifting data usage trends arising from the increased number of work-from-home employees and remote learners. Rakuten, along with China- and U.S.-based CSPs, will be key drivers of the spend increase in the early years of the forecast. TBR expects lower-tier CSPs in developed countries and key CSPs in emerging markets will ramp up NFV/SDN spend in the later years of the forecast period, driving continued spend growth in the overall market.

Most CSP spend on NFV/SDN to date has been on virtual machines, but this will increasingly transition to container-based and cloud-native, microservices-based spend through the forecast period as CSPs continue their evolutionary journeys.

TBR’s NFV/SDN Telecom Market Forecast details NFV and SDN trends among the most influential market players, including both suppliers and operators. This research includes current-year market sizing and a five-year forecast by multiple NFV and SDN market segments and by geography as well as examines growth drivers, top trends and leading market players. TBR’s NFV/SDN Telecom Market Landscape includes key findings, market size, customer and geographic adoption, operator and vendor positioning and strategies, and acquisition and alliance strategies.

Comcast Business targets strategic acquisitions and international expansion to fuel long-term growth

TBR perspective  

Comcast Business remains in an enviable position and is an outlier in the telecom industry. The cable operator’s business unit continues to post double-digit revenue growth and is taking market share from a range of competitors in the U.S. The company’s core value proposition is its powerful DOCSIS 3.1-based, hybrid-fiber-coax (HFC) fixed access platform, which provides significantly better value in terms of connectivity performance to price paid compared to legacy technologies such as MPLS and DSL. Comcast Business sees at least another $60 billion in market share that is available to take from less competitively positioned incumbent telecom operators in its domestic market. This sizable addressable opportunity will continue to feed the Comcast Business machine for at least the next few years.

TBR believes Comcast Business also has significant opportunity to sustain long-term revenue growth through international expansion and the company’s evolving sales and marketing strategies. The company is pivoting from a focus on selling its products horizontally across verticals to a solution-centric, verticalized approach, evident in the acquisition of Deep Blue Communications, which specializes in the hospitality, retail and entertainment industries, and also evident in the company’s new product offerings and design principles. Comcast Business is also expanding outside the U.S. and is building presence via acquisitions, in Canada via iTel, in the Caribbean and Mexico via Deep Blue Communications, and in Europe via Sky. Over time, TBR believes the shift to build its international footprint will help Comcast Business win more of the Fortune 1000 companies that have sites in multiple countries and that require global services. In addition, Comcast Business’ acquisition of BluVector, an AI-powered cybersecurity technology company, points to another trend at the company, which is to build out robust security capabilities.

The 2019 Comcast Business Analyst Conference highlighted the company’s business progress and financial performance and detailed initiatives that will spur long-term growth including new acquisitions and portfolio developments as well as Comcast Business’ evolving go-to-market strategies. The event included a State of the Business update by Comcast Business President Bill Stemper as well as presentations focused on areas including the company’s recent Deep Blue Communications acquisition, the ActiveCore SDN platform, network security and Comcast Business’ fast-growing enterprise division.

5G-related investment fuels vendor growth; greenfield 5G and Industry 4.0 opportunities emerge

U.S. cable operators and Dish Network are exploring building out their own 5G networks

Rakuten’s mobile broadband network deployment demonstrates that vendors must be aware of new opportunities to deploy 5G networks for customers that do not currently own mobile broadband networks. In November Dish Network selected Ericsson to supply a radio access and core network for Dish’s Narrowband IoT (NB-IoT) network, which is expected to be completed in March 2020. Dish, which has been closely watching Rakuten’s build-out, is also contemplating a nationwide 5G network, on which it could spend up to $10 billion. Cable operators Comcast, Charter and Altice, which are currently mobile virtual network operators (MVNOs) of Tier 1 mobile operators, are contemplating greenfield 5G network builds as well.

Industry 4.0 will drive demand for cellular connectivity within the enterprise, but not for a few years

TBR’s research suggests that Industry 4.0, which includes mass 5G adoption globally, will not ramp up until between 2022 and 2025, at which point business cases will be proven, justifying an increase in market spend on ICT infrastructure. Cellular technologies, namely LTE and 5G, have better uplink and security capabilities, and lower latency than Wi-Fi, all of which are necessary as enterprises begin to use network technology for mission-critical workloads rather than “best effort” communications. Certain vendors, namely Nokia, Huawei and Cisco, are better positioned than others to capitalize on this trend as they sell both directly and indirectly into enterprises, as well as through communication service providers (CSPs). Ericsson, in contrast, plans to go to market almost exclusively through CSPs, which will place it at a disadvantage as many large enterprises will want private networks.

TBR’s Telecom Vendor Benchmark details and compares the initiatives and tracks the revenue and performance of the largest telecom vendors in segments including infrastructure, services and applications as well as in geographies including the Americas, EMEA and APAC. The report includes information on market leaders, vendor positioning, vendor market share, key deals, acquisitions, alliances, go-to-market strategies and personnel developments.

Technology Business Research, Inc. announces 2Q19 webinar schedule

HAMPTON, N.H. (March 4, 2019) — Technology Business Research, Inc. (TBR) announces the schedule for its 2Q19 webinar series.

April 10        Progress report: State of the NFV/SDN telecom market

April 17        Channel partner ecosystems will evolve to support digital adoption

April 24        Evolutionary IoT: Starting small and controlling costs

May 1           Obstacles and triumphs on the journey to cloud

May 8           Health IT converges around consumerization, value and ROI

May 15        30 minutes, 3 months, 3 years: Evolution of digital transformation

May 22        Bringing the best: Talent and technology in management consulting

June 12        The makings of the telecom edge compute market

June 26        Where will hyperconverged infrastructure fit in the modern data center?

TBR webinars are held typically each Wednesday at 1 p.m. ET and include a 15-minute Q&A session following the main presentation. Previous webinars can be viewed anytime on TBR’s Webinar Portal.

For additional information or to arrange a briefing with our analysts, please contact TBR at [email protected].

Progress report: State of the NFV/SDN telecom market

Insight’s from TBR’s 1Q19 NFV/SDN Telecom Market Landscape

The NFV/SDN ecosystem continues to advance and leading communication service providers (CSPs) are making progress on their NFV/SDN-related initiatives, but full transformation is still years away as industry challenges remain. Join Telecom Senior Analysts Chris Antlitz and Michael Soper for an in-depth review of TBR’s latest report on the NFV/SDN telecom market landscape.

Don’t miss:

  • Examples of how leading CSPs are progressing on their NFV/SDN-related initiatives
  • How NFV and SDN adoption will impact global CSP capex and opex spend through 2022
  • Why 5G will push CSPs to accelerate and broaden their NFV/SDN-related initiatives
  • Which vendors are outperforming in the NFV/SDN space

 

 

TBR webinars are held typically on Wednesdays at 1 p.m. ET and include a 15-minute Q&A session following the main presentation. Previous webinars can be viewed anytime on TBR’s Webinar Portal.

For additional information or to arrange a briefing with our analysts, please contact TBR at [email protected].

5G-readiness spend and migration to new network architectures spur the TIS market to growth in 3Q18

According to Technology Business Research, Inc.’s (TBR) 3Q18 Telecom Infrastructure Services (TIS) Benchmark, the TIS market grew as communication service provider (CSP) investment in areas tied to 5G-readiness increased. CSPs are rearchitecting their networks leveraging NFV, SDN and the cloud as well as implementing new business models, which requires growing spend across a broad range of professional services. Deployment services spend grew slightly, but the market will strengthen as the 5G spend cycle ramps up over the next couple of years, although the spend intensity will be lower than during the LTE cycle. RAN suppliers Nokia (NYSE: NOK), Ericsson, Huawei, ZTE and Samsung will capture incremental TIS market share as they drive high volumes of services attached to their 5G RAN. This is already occurring to some extent as CSPs densify networks as part of their 5G-readiness strategies. Though 5G will require significant hardware spend, the aggregate amount will be lower compared to LTE, which will drive vendors to explore new market areas, such as Industry 4.0.

The managed services market was flat year-to-year in 3Q18 as a decline in outsourcing was offset by growth in the out-tasking market. Generally, vendors are exercising pricing discipline when determining which outsourcing contracts to take on in an effort to improve margins. Ericsson is currently leading the way in this regard as it evaluates 42 contracts for exit or rescoping. Huawei, ZTE and CCS have been less concerned with price and are focused on consolidating the outsourcing market. Other vendors, including those that are historically hardware-centric with little to no footprint in the managed services market, are increasingly playing in out-tasking as they will manage applications deployed in CSP networks. Ciena (NYSE: CIEN) is an example of this trend.

 

 

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 (NYSE: ACN), Amdocs, Atos, Capgemini, CGI, China Communications Services, Ciena, Cisco (Nasdaq: CSCO), CommScope, CSG International, Ericsson, Fujitsu, Hewlett Packard Enterprise (NYSE: HPE), Huawei, IBM (NYSE: IBM), Infosys (NYSE: INFY), Juniper Networks (NYSE: JNPR), NEC, Nokia (NYSE: NOK), Oracle (NYSE: ORCL), Samsung, SAP (NYSE: SAP), Tata Consultancy Services, Tech Mahindra, Wipro (NYSE: WIT) and ZTE.

Telecom vendor revenues trend upward as operators pull forward 5G investment

According to Technology Business Research, Inc.’s (TBR) 2Q18 Telecom Vendor Benchmark, revenue growth improved for the largest vendors as they capitalized on early 5G investment but saw reduced spend in China. Operators, particularly those in the United States, are pulling forward investment in 5G and deploying small cells to densify networks. However, the RAN market will decline in 2018 as operators in China reduce spend significantly following the conclusion of LTE coverage deployments.

TBR believes Ericsson has staked an early lead in 5G, but Nokia (NYSE: NOK) and Huawei can leverage their end-to-end portfolios to regain share. In 4Q17 and 1Q18 Ericsson (Nasdaq: ERIC) aggressively priced its Ericsson Radio System (ERS), which is software-upgradeable to 5G, undercutting competitors to gain market share ahead of commercial 5G build-outs. Nokia and Huawei remain well positioned in 5G due to their ability to leverage end-to-end portfolios as a one-stop shop for network transformation in the 5G era.

ZTE was banned from sourcing components from the U.S. for part of 2Q18, which drove the company to essentially cease operating, leading to drastically lower revenue and a deep operating loss. The company is once again operating, but its reputation was tarnished, particularly in Western markets.

Graph showing 2Q18 revenue, operating margin and year-to-year revenue growth

 

TBR’s Telecom Vendor Benchmark details and compares the initiatives and tracks the revenue and performance of the largest telecom vendors in segments including infrastructure, services and applications and in geographies including the Americas, EMEA and APAC. The report includes information on market leaders, vendor positioning, vendor market share, key deals, acquisitions, alliances, go-to-market strategies and personnel developments.

Mainstream adoption of NFV/SDN now set for early 2020s as operators face migration issues, says TBR

Despite challenges, operators will push forward with NFV/SDN and will scale their investments in these technologies. Operators must transform to stay relevant and competitive in the digital era, and NFV/SDN is a critical component of that transformation. — Senior Analyst Chris Antlitz

 

Full article

State of the NFV/SDN telecom market

5G will support growth in the deployment and professional services markets, while slowing the decline of maintenance spend due to decommissioning and NFV/SDN

HAMPTON, N.H. (May 31, 2018) — According to Technology Business Research, Inc.’s (TBR) Telecom Infrastructure Services North America Market Forecast 2017-2022, the North America telecom infrastructure services (TIS) market will grow through the forecast period for three key reasons: Tax reform will stimulate capex investment; digital transformation initiatives will drive spend; and 5G investment will be pulled forward and accelerated by the big four operators in the U.S. to obtain or retain a competitive advantage. 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. TBR estimates the market will grow at a CAGR of 0.6% from 2017 to 2022.

“The big four operators in the U.S. intend to commercially deploy 5G as soon as late 2018, with deployments set to ramp up in 2019 and through the remainder of the forecast period,” said TBR Telecom Senior Analyst Michael Soper. “5G requires significant investments in fiber and upgrades in the network backbone and access layer, all of which will drive spend on TIS. 5G will slow the pace of decline in the maintenance market in the later years of the forecast period, but will not return the maintenance market to growth due to the aforementioned decommissioning and NFV/SDN.”

Vendors largely showed growth in North America in 2017. Although vendors with hardware exposure had flat or declining TIS revenue, suppliers grew sales if they had services and software portfolios aligned to operator transformation needs. Ericsson’s revenue declined predominantly due to the rescoped Sprint managed services contract. Cloud service provider spend remains robust in the U.S., helping Accenture and Nokia post growth in the region despite ongoing weak spend by telecom operators. Other vendors, particularly Juniper, are also obtaining a greater portion of TIS revenue from cloud service providers. Looking toward 2018 and beyond, IT services firms and software-centric companies, particularly Accenture, Amdocs, Tech Mahindra and Tata Consultancy Services (TCS), are best positioned to help operators capitalize on the digital economy.

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.

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.