Posts

There are no guarantees in the metaverse, but Tech Mahindra bets on it anyway

Tech Mahindra unveils a dedicated metaverse practice

On Feb. 28, 2022, Tech Mahindra announced the launch of its new practice, TechMVerse, a metaverse-oriented business unit that will focus on developing immersive and digital experiences for clients. According to the company’s press release, the practice will combine Tech Mahindra’s network and IT infrastructure expertise with AI, blockchain, 5G, augmented reality (AR)/VR and quantum computing capabilities to build metaverse use cases, such as DealerVerse (a metaverse-based car dealership), Middlemist (a non-fungible token [NFT] marketplace), Meta Bank (a virtual bank), and a gaming center. While currently at about 100 employees, according to The Economic Times, Tech Mahindra announced that it plans to train 1,000 engineers in the coming years to support the practice’s growth.

5G as the company’s backdrop 

Tech Mahindra’s historical strengths as a telecom-oriented IT services firm help guide its future path. Today’s Tech Mahindra was born from a 2013 merger with Mahindra Satyam, which helped the company diversify into new verticals outside of its core telecommunications market, such as banking, financial services, and insurance (BFSI). As such, telecom infrastructure, network and IT services are Tech Mahindra’s bread and butter, accounting for approximately 40% of total revenue. And the company has continued to invest in 5G, network and software-defined architecture services, giving Tech Mahindra strong capabilities in the next-gen wireless technology that will help power many of the data-intensive metaverse use cases.

A recent example includes a collaboration with Nokia (NYSE: NOK) that will enable Tech Mahindra to leverage Nokia’s private wireless Digital Automation Cloud solution for customers and support 5G private wireless network automation and management through an “as a Service” model. Verizon’s (NYSE: VZ) “H1DD3N” AR/VR treasure hunt in September 2021 to promote its 5G network across several large U.S. markets and Apple’s (Nasdaq: AAPL) new iPhone lineup reflects 5G’s role in supporting metaverse use cases, and Tech Mahindra’s 5G private wireless network capabilities can make similar events and 5G speeds possible for its enterprise clients.

Tech Mahindra eyes 2 key areas of the metaverse 

Two components of Tech Mahindra’s investments related to the metaverse stand out to TBR, particularly around NFTs and gaming. As blockchain data and analysis firm Chainalysis stated in its 2021 NFT market report, “In 2021, users have sent at least $44.2 billion worth of cryptocurrency to … two types of Ethereum smart contracts associated with NFT marketplaces and collections.” Tech Mahindra is aiming to capitalize on the commercialization of new products related to this NFT spending. Specifically, the company plans to offer digital and professional experience services around design and content through TechMVerse and will also offer low-code NFT and blockchain platforms for enterprise clients.

We see this as a key opportunity for Tech Mahindra, as organizations increasingly devote resources to exploring the connection between NFTs and the metaverse — such as JPMorgan’s Onyx Lounge in Decentraland, where one can buy virtual land with NFTs — yet may lack the required IT infrastructure, skills or impetus to build their own use cases from scratch. Tech Mahindra is also planning to collaborate with Mahindra & Mahindra Ltd. to offer digital collectibles that will be listed and offered for sale through Tech Mahindra’s NFT Marketplace platform.

At the same time, the gaming industry is arguably the pioneer of the metaverse. From The Sims to Fortnite, consumers continue to spend real dollars on virtual things in virtual worlds. Hence, the metaverse is not a new concept, rather one that has already been quietly and successfully adopted by gaming companies, as new data from the Entertainment Software Association found that spending on gaming content reached $51.7 billion in 2021. While noting that it plans to develop use cases, Tech Mahindra also announced it is launching a new Cloud Gaming as a Service solution for telecommunications, cable and OEM companies in partnership with Ludium Labs, a firm that offers cloud adoption and interactive streaming of applications.

According to the press release, the 5G-powered, low-latency gaming solution will have a library of 150-plus AAA games stored in the cloud and will help these firms improve their customers’ access to compute-intensive games on any device, thereby eliminating the need for consoles and high-speed internet. The service mirrors Microsoft’s efforts to transform the gaming industry by bringing in subscription-based business models with the 3Q20 launch of Project xCloud.

According to TBR’s 4Q21 Microsoft Cloud report: “While Project xCloud — now called Xbox Cloud Gaming — was not the first subscription-based gaming service to be offered in the industry, TBR felt at the time of the launch that Microsoft’s ability to differentiate would be supported by the company’s expertise in operating subscription-based businesses and guide its gaming go-to-market efforts.” Tech Mahindra’s Cloud Gaming as a Service solution can open up similar opportunities to its core communications client base and enable telecom companies, cable companies and OEMs to compete with gaming incumbents, further expanding Tech Mahindra’s addressable market in the metaverse.

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.

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.