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Digital transformation, which encompasses new business models and network architectures, drives demand for TIS

According to Technology Business Research, Inc.’s (TBR) 2Q18 Telecom Infrastructure Services (TIS) Benchmark, the TIS market grew as digital transformation continued to fuel demand for services that accompany business model evolutions and the implementation of new network technologies, including 5G and NFV/SDN.

The complexity of new network architectures and the interoperability challenges they create have been a boon for professional services revenues, particularly those of IT services firms. A broad range of professional services are required to help operators transform into digital service providers, including consulting, network planning, design, optimization, systems integration, training services, security services and interoperability testing, among other services, all of which are in high demand. TBR estimates the TIS professional services market grew 6% in 2Q18.

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.

TIS margins declined in 2017 as vendors invested in service delivery evolution, including automation, tools and training

HAMPTON, N.H. — According to Technology Business Research Inc.’s (TBR) 2017 Telecom Infrastructure Services (TIS) Margin Benchmark, Tier 1 telecom vendor average TIS margins declined year-to-year in 2017 due mainly to restructuring at Ericsson, though growing investment in R&D, particularly for professional services, also had an impact.

“Vendors invested in service delivery evolution to stay ahead of adverse TIS market trends, such as legacy decommissioning and growing SI complexity,” said TBR Telecom Senior Analyst Michael Soper. “Professional services in particular is a focus area for vendors as they invest in tools and training to cope with increasing network complexity.”

Ericsson’s restructuring impacted all facets of its services business, driving margins down across the board. The company’s contract exit and rescoping activity hurt margins in 2017, but will enable Ericsson to emerge on better footing by the end of restructuring in 2019.

Except for Ericsson, vendors grew their maintenance margins, offsetting the impact of legacy infrastructure decommissioning with an influx of support revenue for recently deployed gear in China. Vendors are investing in automation in this space to sustain high margins where the full impact of legacy decommissioning and software-mediated networking are felt.

TBR’s 2017 Telecom Infrastructure Services Margin Benchmark provides annual analysis of deployment services, maintenance services, professional services and managed services margins for Tier 1 telecom suppliers. Suppliers covered include Ericsson, Huawei, Nokia 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.

 

 

Telecom vendors anticipate revenue from 5G in select countries as early as 2H18, but lower China capex drove market decline in 1Q18

HAMPTON, N.H. (June 29, 2018) According to Technology Business Research, Inc.’s (TBR) 1Q18 Telecom Vendor Benchmark, the conclusion of LTE coverage projects in China hampered revenue for the largest vendors. A reduction in demand from telecom operators for routing and switching products also caused revenue to decline for Cisco, Juniper and Nokia. In this market downturn, vendors are employing various strategies to maintain margins and mitigate revenue declines while eyeing initial commercial 5G rollouts, which are set to begin in the U.S. in 2H18.

“Suppliers are trying to sell into the IT environments of operators, engaging with the webscale customer segment, and expanding software portfolios to partially offset falling telecom operator capex,” said TBR Telecom Senior Analyst Michael Soper. “The shift in the revenue mix toward software is also helping vendors maintain operating margins in spite of lower hardware volume. Vendors are also growing their use of automation and artificial intelligence in service delivery to improve profitability by reducing their reliance on human resources.”

Western-based vendors are preparing their portfolios to build out 5G for U.S.-based operators in 2H18. Several operators have aggressive 5G rollout timetables and intend to leverage the technology for fixed wireless broadband and/or to support their mobile broadband densification initiatives. Vendors that have high exposure to the U.S. and are well aligned with market trends such as 5G, media convergence and digital transformation will likely increase market share over the next two years as operators in the region are expected to aggressively invest in these areas starting in 2H18.

The 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.

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.

Equipment vendors continue to struggle with lower sales volume, while IT services and software-centric companies enjoy growth, thanks to digital

HAMPTON, N.H. (Jan. 5, 2018) — According to Technology Business Research, Inc.’s (TBR) 3Q17 Telecom Infrastructure Services Benchmark, leading vendors are making significant strategy changes and retrenching around their core competencies to weather subdued communication service provider (CSP) spend.

“Leading vendors are realizing they must transform themselves before they can effectively help their customers transform,” said TBR Telecom Senior Analyst Chris Antlitz. “New technologies and processes, particularly in the areas of cloud, artificial intelligence, cognitive analytics, automation and DevOps, promise significant agility, better outcomes and cost savings, and vendors must not only offer solutions that leverage these technologies to their customers but also adopt and employ these technologies internally to be credible, differentiate and remain competitive.”

Tier 1 network solution providers (NSPs) are going back to their product-led roots and doubling down on partnerships. Huawei, Ericsson and Nokia are all transitioning back to being product-led, which is an about-face from their prior strategy of being services-led. This strategy shift indicates that product-centric vendors have realized that the optimal go-to-market model is to stick to their core businesses and core competencies as much as possible and augment capabilities with partnerships.

TBR believes this strategy shift means NSPs will increase emphasis on product-attached services, which is their main telecom infrastructure services (TIS) profit pool, particularly maintenance services. This retrenchment by NSPs will also enable IT services companies to have a clearer path to capitalize on digital opportunities.

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.