Market research firm Infonetics Research released excerpts from its annual Telecom and Datacom Network Equipment and Software report, which provides a big picture of the health of the overall market.
TELECOM AND DATACOM MARKET HIGHLIGHTS:
. Following a recession-induced drop in 2009, the global telecom/datacom equipment and software market grew 19% in 2010, 7% in 2011, and held steady (no gain) in 2012 at $172 billion
. Going forward, Infonetics projects the telecom and datacom equipment and software market to grow at a 4.9% CAGR from 2013 to 2017, when it is forecast to hit $218 billion worldwide
. During those 5 years, Infonetics expects service providers and enterprises to spend a cumulative $1 trillion on telecom and datacom equipment and software
. The top 4 telecom/datacom equipment vendors in order by overall worldwide revenue market share are Cisco, Ericsson, Huawei and Alcatel-Lucent
. Cisco maintains its commanding lead in the enterprise segment, while Ericsson is #1 in the larger service provider segment
"Even though there's tremendous uncertainty about the health of the global economy and prospects for economic growth in the short term, the telecom and datacom equipment and software market is on track to grow annually through 2017, driven by major network transformations," reports Jeff Wilson, principal analyst at Infonetics Research.
Michael Howard, co-founder of Infonetics and co-author of the report, adds, "Asia Pacific took the lead in telecom and datacom equipment spending in 2012, and we expect the region to continue leading at least for the next 5 years, contributing more than a third of global spending through 2017."
Infonetics' annual telecom and datacom equipment and software report compiles worldwide and regional market size, vendor market share, and forecasts through 2017 from its reports that track enterprise and service provider gear. It is a subset of all data networking and telecom equipment for service providers, cable companies, and small, medium, and large organizations, and therefore excludes consumer electronics.
The 11 major categories of equipment and software tracked include broadband aggregation; broadband CPE; pay TV; optical network hardware; carrier routing, switching, and Ethernet; service provider VoIP and IMS; service provider mobile/wireless infrastructure; service enablement and subscriber intelligence; security; enterprise and data center networks; and enterprise communications.
Companies tracked include Alcatel-Lucent, Avaya, Brocade, Ciena, Cisco, Ericsson, Fujitsu, HP, Huawei, Juniper, Motorola, NEC, Nokia Siemens Networks, Samsung, Siemens, ZTE and many others.
To buy the report, contact Infonetics: http://www.infonetics.com/contact.asp
We think the telecom/datacom market is bi-furcated: Asia is doing well, but Rest of World (RoW) is struggling and not growing much. In particular, the European market is "sagging," according to Bloomberg:
European Plan to Boost Sagging Telecom Market Set for September
Asian companies like Huawei, ZTE, and Samsung are gaining market share in the fiercely competitive telecom equipment market. Huawei and ZTE also dominate broadband CPE with Taiwanese companies like Netgear, D-Link, Ubee Interactive, ZyXEL, Actiontec, and many others doing quite well.
We think that RoW telecom/datacom vendors are struggling to make a profit. Moreover, VCs are not investing in such start-up companies, as they don't see a viable market in the next five years. In fact, "network infrastructure" has become a dirty word to most VCs and angel investors.
Canadian research and education network CANARIE has deployed the 6500 packet-optical platform from Ciena to support the 100G upgrade and network expansion of a route connecting Montreal and New York, according to the optical transport equipment vendor. The new fiber-optic network link will sustain the “big data” streams used in today’s advanced academic and scientific research.
Last year, CANARIE experienced 83% percent growth in data traffic, going from 46,149 terabytes to 84,630 terabytes. Much of this data comes from “big data” projects like the Large Hadron Collider (LHC) at CERN in Europe. Canada’s TRIUMF facility in Vancouver is a Tier 1 data site for the LHC computing grid and uses the CANARIE network to transfer data to and from other sites.
Spanning Canada from Victoria, BC, to St John’s, NL, CANARIE’s network also connects more than 89 universities, 101 colleges, 47 public colleges, 127 provincial and federal government labs and research parks, 62 hospitals and health networks, 24 cultural institutions, thousands of K-12 schools, 12 provincial and territorial optical network partners, and more than 100 international peer networks in 80 countries.
The upgraded Montreal to New York link will provide high-performance optical transport to enable the delivery of big data streams and foster greater scientific collaboration – both in-region and internationally – for key Canadian research and education centers that are working on projects including everything from particle physics to genomics and neuroscience.
“With Ciena’s 100G technology, we are able to expand and upgrade the Montreal to New York route of our vast R&E network, while at the same time significantly reducing our operating costs and increasing performance over this busy link,” says Jim Roche, president and CEO of CANARIE. “This is a first step in doing the same at other segments of our network.”
“The TRIUMF Tier 1 LHC site is a leader in the field by being consistently at the top in terms of availability, reliability, and efficiency when compared to other sites in the world. There are several factors that are reflected in our success and the network infrastructure provided by CANARIE through providers like Ciena is certainly one of them,” added Dr. Reda Tafirout, a research scientist at TRIUMF.
Ciena has been both a research and technology partner to CANARIE for more than two decades. The upgrade of the Montreal to New York route represents the initial step in a wider upgrade of the network to 100G.
Ciena and CANARIE have also been showcasing emerging technologies and advanced applications for science, research, and education over high-speed, high capacity research networks at several recent events, including at the TERENA Networking Conference (TNC2013), and at the Vectors customer event at Ciena’s research and development lab in Ottawa, Canada.
At the TNC2013 demonstration, participants were able to control a robot arm with haptic feedback while simultaneously controlling an identical remote robot arm located miles away at another global location. To provide participants with the needed three-dimensional visual depth feedback on their movements at the remote location, the demonstration delivered ultra high-definition video streams at extremely low latency to the event venues. Multiple 3G-SDI uncompressed video streams were transmitted and kept in sync with Ciena’s Native Video Transport technology.
In its Ottawa R&D lab, Ciena showcased its software defined networking capabilities in a demonstration that showed 4K video delivery at 5 Gbps over the CANARIE network using Ciena packet networking technology featuring SDN ONF OpenFlow 1.3 protocol. As part of the demonstration, a video was sent from the StarLight R&E hub in Chicago across a Ciena connected link over the CANARIE network to Ciena’s lab in Ottawa.
- “With Ciena’s 100G technology, we are able to expand and upgrade the Montreal to New York route of our vast R&E network, while at the same time significantly reducing our operating costs and increasing performance over this busy link. This is a first step in doing the same at other segments of our network. Ciena has been a critical research and technology partner to CANARIE for more than two decades. CANARIE’s fibre optic networks and Ciena’s optical technologies are invisible to end users, but this infrastructure is absolutely critical to enabling academics, scientists and researchers to leverage global big data resources to create new knowledge and new opportunities for innovation.”
- Jim Roche, president and CEO of CANARIE
- “The research and education community relies on cutting-edge communications technology for global collaboration to achieve scientific advancements, which our OPn architecture supports by enabling the economical and exponential scale required to support high-bandwidth and collaborative research projects. Ciena is proud to work with CANARIE on the evolution of its network, helping it to deliver innovative new services and advanced research projects that
support tomorrow’s discoveries.” Rod Wilson, senior director of external research at Ciena
- “The TRIUMF Tier-1 LHC site is a leader in the field by being consistently at the top in terms of availability, reliability, and efficiency when compared to other sites in the world. There are several factors that are reflected in our success and the network infrastructure provided by CANARIE through providers like Ciena is certainly one of them.”
- Dr. Reda Tafirout, research scientist at TRIUMF
Recent Joint Demonstrations:
- Ciena and CANARIE have been showcasing emerging technologies and advanced applications for science, research and education over high-speed, high capacity research networks at several recent events, including at the TERENA Networking Conference (TNC2013), and this week at an exclusive customer event at Ciena’s research and development lab in Ottawa, Canada.
- At the TNC2013 demonstration, participants were able to control a robot arm with haptic feedback while simultaneously controlling an identical remote robot arm located miles away at another global location. To provide participants with the needed three-dimensional visual depth feedback on their movements at the remote location, the demonstration delivered ultra high-definition video streams at extremely low latency to the event venues. Multiple 3G-SDI uncompressed video streams were transmitted and kept in sync with Ciena’s Native Video Transport technology.
- In its Ottawa R&D lab, Ciena showcased its software defined networking capabilities in a demonstration that showed 4K video delivery at 5 Gb/s over the CANARIE network using Ciena packet networking technology featuring OpenFlow 1.3. As part of the demonstration, a video was sent from a StarLight-Ciena connected network in Chicago over the CANARIE network to Ciena’s lab in Ottawa.
About 2 weeks ago we wrote a blog on this site titled:
Siemens Searching For NSN Buyer which might be Nokia!
We speculated that Nokia might buy NSN, rather than a private equity firm or network equipment company. Today, that happened as Nokia bought Siemens interest in NSN for just €1.7 billion (US$2.22 billion). That seems like a low price for a half share of a vendor that generated revenues of €13.78 billion ($18 billion) and an operating margin (after one-time costs) of 5.6 percent for the full year 2012. The deal is set to close before the end of September, after which NSN will drop 'Siemens' from its name: Nokia says it will unveil the infrastructure vendor's new name once the deal is completed.
Stephen Elop, President and CEO of Nokia, commented: "With its clear strategic focus and strong leadership team, Nokia Siemens Networks has structurally improved its operational and financial performance. Furthermore, Nokia Siemens Networks has established a clear leadership position in LTE, which provides an attractive growth opportunity. Nokia is pleased with these developments and looks forward to continue supporting these efforts to create more shareholder value for the Nokia group."
Joe Kaeser, Siemens CFO, commented: "With this transaction, we continue our efforts to strengthen our focus on Siemens' Core areas of Energy management, Industry and Infrastructure as well as Healthcare. The full acquisition of Nokia Siemens Networks by Nokia offers an attractive opportunity to actively shape the telecom equipment market for the future and create sustainable value."
Nokia Siemens Networks was established on April 1, 2007, as a joint venture combining Nokia's Networks Business Group and Siemens' carrier-related operations for fixed and mobile networks. Nokia Siemens Networks has since become a leading global provider of telecommunications infrastructure, deploying networks that help people stay connected in more than 150 countries around the world. The company's focus is in offering innovative mobile broadband technology and services.
Nokia will continue to consolidate Nokia Siemens Networks for financial reporting purposes as well as continue to strengthen the company as a more independent entity. Nokia plans to retain the existing management and governance structure at Nokia Siemens Networks, with Rajeev Suri continuing as CEO and Jesper Ovesen continuing as Executive Chairman of the Nokia Siemens Networks Board of Directors, which will adjust to the changing ownership structure.
Note that NSN had previously sold its optical networking business unit to private investment firm Marlin Equity Partners, a Los Angeles-based private investment firm. So NSN was reduced to a pure wireless infrastructure play.
Light Reading: Six years of struggle
NSN was formed on April 1, 2007, when the joint venture partners combined their telecoms infrastructure subsidiaries (Nokia Networks and Siemens Communications) to form a European powerhouse. (See Nokia Siemens Opens on a Downer.)
But little has gone right for the venture since its inception as it battled merger pains and intense competition from Ericsson AB and Huawei Technologies Co. Ltd.: Its parents were forced to inject fresh funds into the company in 2011 and implement a massive restructuring program to keep it afloat. (See NSN Gets $1.36B & New Leader and NSN Could Lose More Than 17,000 Staff.)
But that painful restructuring process, which has involved significant job cuts and the sale of non-core parts of the company, has helped NSN improve its margins, while the focus on mobile networks, professional services and customer experience management (CEM) offerings has given the vendor a decent foothold in the global 4G networks market. Now Nokia will need to show it hasn't made a big mistake in using up precious cash reserves on a networks operation, while the NSN team will need to prove it has market momentum and continue to improve its financial health.
What this move doesn't do, though, is answer all the questions about NSN's future. Nokia notes that it will "continue to strengthen the company as a more independent entity," a statement that leaves the door open for a separate listing of NSN in the future.
- Will the 100% Nokia owned company be able to compete with Ericsson, Huawei and Alcatel-Lucent in the global wireless network equipment market that continues to shrink?
- What synergies can Nokia gain from combining wireless devices/smart phones with network equipment?
- Will the company have an opportunity to enter new markets such as M2M communications, wireless eHealth, connected cars, etc?
- Jury is out on all of those (and other) questions about the company's future.
A NY Times op-ed by Verizon Chairman Lowell C. McAdam titled “How the U.S. Got Broadband Right” is yet another specious argument in favor of the existing loosely regulated monopoly system of Internet service.
The editorial states: "More than 80 percent of American households live in areas that offer access to broadband networks capable of delivering data with speeds in excess of 100 megabits per second. Almost everyone in the country has several competitive choices for high-speed broadband service (with wireline, satellite and wireless options). Verizon offers 14.7 million consumers, in parts of 12 states and the District of Columbia, speeds up to 300 megabits per second via our FiOS network, which is poised to provide even greater speeds in the future. Companies like AT&T, Comcast and Time Warner Cable are also investing in their infrastructure."
That's an outright lie! In Santa Clara, CA- the heart of Silicon Valley- I have only 2 choices for broadband- AT&T and Comcast Xfinity. I chose AT&T U-Verse which gets me 12M b/sec downstream. Comcast Xfinity offers ~50M b/sec here. In rural CA areas there is often no wireless broadband at all and only one provider- Comcast Xfinity!
Where does the U.S. rank on the list of the top 10 countries or regions with the fastest internet? Nowhere!
Here are the top 10 countries with fastest broadband access:
- Hong Kong
- South Korea
Also see: http://www.broadbandmap.gov/blog/
From a letter to the editor in Sat June 29th NY TImes:
"In fact, according to the Organization for Economic Cooperation and Development and the International Telecommunication Union (ITU), America trails most developed nations in providing broadband, despite Lowell C. McAdam’s assertion that Europe’s regulatory regime “limits investment and innovation.”
When will we wake up and recognize that a new economy dependent on broadband infrastructure is key to our success, indeed survival, in the world? Broadband is a public service that every individual and organization should have, and the United States needs to regulate this service as a public utility, not leave it to the so-called free marketplace."
JOHN M. EGER
San Diego, June 21, 2013
The writer, a professor of communications and public policy at San Diego State University, is a former legal assistant to the Federal Communications Commission chairman (1970-73) and director of the White House Office of Telecommunications Policy (1974-76).
Addendum: Broadband penetration higher in countries with national rollout strategy
Partnerships between government and industry are driving progress, says ITU:
Countries with a coordinated national strategy for rolling out broadband are making significantly faster progress than those taking a more laissez-faire approach to broadband development, according to a new report.
The research, conducted by the International Telecommunication Union (ITU), together with the Broadband Commission for Digital Development and Cisco, indicates that countries with a national broadband plan have fixed broadband penetration some 8.7 percent higher on average than countries without plans.
Once the potential impact of factors like higher average income per capita, market concentration and urbanisation are discounted, countries with plans benefit from fixed broadband penetration on average 2.5 percent higher than countries without plans, according to the report.
In mobile, the impact is almost as significant. Countries with national broadband plans have mobile broadband penetration some 7.4 percent higher on average than countries without plans. The report also acknowledges the role of market competition in boosting uptake. Broadband penetration in competitive markets is 1.4 percent higher on average for fixed broadband and up to 26.5 percent higher on average for mobile broadband.
“The Broadband Commission’s message about the power of broadband to transform each and every economic sector is now gaining global traction,” said ITU Secretary-General, Dr Hamadoun I. Toure.
Infonetics Research: Data Center equipment takes hit in 1Q13! Cisco Insieme: "application-centric infrastructure"Fri, 06/28/2013 - 11:06 — Alan Weissberger
“Following 2 strong years of investment, growth in the data center equipment market is starting to slow,” notes Matthias Machowinski, directing analyst for enterprise networks and video at Infonetics Research. “While the near term outlook remains positive, ultimately we think the market is headed for a peak, as data center operators improve infrastructure utilization, and adoption of cloud services moves hardware consumption from enterprises to large-scale data center operators.”
Infonetics Research reported that Worldwide revenue for data center network equipment (data center Ethernet switches, ADCs and WAN optimization appliances) declined 11% sequentially in 1Q13, to $2.3B. http://www.infonetics.com/pr/2013/1Q13-Data-Center-Network-Equipment-Market-Highlights.asp
So all this hype about SDN, Network Virtualization, Disaggregated Network OS, bare metal/commodity switches, etc for the “new Data Center” will likely be a smaller total market than the new stakeholders thought! That means many start-ups will go belly-up, similar to what happened after the Dot Com/fiber optic boom went bust!
Insieme is Cisco's response to the SDN competitive threat to it's switch/router business. It's reported to be a network-based system that will orchestrate security and network services out of the gate, as well as storage and compute down the road. Insieme Senior Vice President of Marketing Soni Jiandani said the company is building an "application-centric infrastructure" that will make the network reactive to applications. The technology will "orchestrate and integrate networks, security and network services that need to be delivered to applications," she said.
Light Reading on Cisco's Insieme:
Cisco's Insieme Doesn't Like Your SDN Model Neither fish nor fowl, Cisco's Application-Centric Infrastructure seems built to address so-called shortcomings of two main software-defined networking (SDN) camps.
- The overlay model involves virtual networks being created and destroyed at will on top of the physical network. That's what Nicira Networks Inc. (owned by VMware Inc.) and startup Plumgrid Inc. are doing.
- The controller model uses a centralized element or elements to make packet-forwarding decisions; this is how OpenFlow works, and it's what Big Switch Networks and many of the incumbent equipment vendors have been pursuing.
Here is what FBR's Scott Thompson wrote about Cisco's new Data Center Strategy:
Cisco Live! provided a view into the next wave of network innovation, particularly in the datacenter. The overwhelming takeaway is that the company appears to be transitioning to new architectures that place applications and their performance as the primary driver of networking while simultaneously lowering TCO and ease of use. The company released another round of new products that continue to consolidate multiple product families into one platform, but the most significant announcements focused on the datacenter.
Two products that seemed to dominate the spotlight were Cisco’s new datacenter switch, the Nexus 7700, accompanied by the new F3 switching blade, as well as an introduction to application-centric infrastructure, which Insieme appears poised to deliver. Both products are expected to be available by 4Q13 and should help to provide a bridge as management works to transition to a more software-based business model.
■Dynamic Fabric Automation delivers virtual-less automated provisioning to the datacenter edge. Cisco announced a new datacenter fabric that delivers automated provisioning across a leaf and spine (two-tier) architecture. The
fabric also delivers Layer 2/3 hybrid functionality to the network’s edge. The technology stops short of the automation achieved from ALU’s Nuage and Juniper’s Contrail solution but also helps to automate network provisioning. These features are likely to further blur the lines between routing and switching but provide enough near-term differentiation to offset a portion of the pricing pressure in the datacenter and service provider sectors.
■ Insieme has potential; more details in coming months. Cisco dedicated a significant amount of time on June 26th to the introduction of Insieme. The new platform was positioned as a game-changing technology that will usher in the age of the Internet of Everything with very little help from SDN or traditional virtualization technologies. While short on details, Insemie (=Italian for together) laid out a plan to combine several different functions of today’s IT datacenter and networking platforms into one application-centric architecture.
In a nutshell, the product is moving the company toward service-oriented rackscale architectures. Cisco indicated it would release additional Insieme details in coming months and have product available end-of-year 2013.
■ Focus begins to shift from product to sales. For nearly two years, Cisco appears to have been focused on striking a balance between driving margin out of legacy platforms and launching new, more efficient products without affecting
margins. The focus now shifts to Cisco’s formidable sales and marketing machine to convert the product into additional revenue growth. We expect the product portfolio it has announced is nearly certain to ignite a significant
near-term upgrade cycle within the enterprise customer base, which accounts for approximately 45% of Cisco’s revenue. To us, it remains unclear as to what extent the hyperscale and service provider businesses, which represent the
largest source of revenue growth and more than 45% total revenue, may adopt Cisco’s new platforms.
Q: When will Asia based competition affect Cisco's performance?
A: While Huawei Technologies Co., Ltd. has been unable to gain a foothold in North America (due to the impact of the attached stigma from the stance of the U.S. House Subcommittee on Cyber Security), without the EU taking a firm stand with the U.S., we expect Cisco has more revenue at risk in China than Huawei has in the US.
Q: Will new and unexpected entrants into the data networking space take share from Cisco?
A: There are significant technical and strategic shifts affecting the IT landscape. We expect Cisco to be threatened, and we expect these to become threats to an increasingly large number of IT players as technology shifts drive the industry toward consolidation. It will likely take 2 Years+ to have a significant impact on Cisco.
Infonetics Research released excerpts from its 1st quarter 2013 (1Q13) 3G and 4G Mobile Broadband Devices and Subscribers market share, size and forecasts report. The comprehensive report tracks over 50 mobile broadband market segments and sub-segments, including smartphones, operating systems (OS), routers, cards, USBs, embedded devices (such as tablets) and subscribers, all by the type of network they connect to, including Long Term Evolution (LTE), W-CDMA/HSPA and other networks.
1Q13 MOBILE BROADBAND MARKET HIGHLIGHTS:
. The global 3G/4G mobile broadband device market, including smartphones, embedded devices and routers, totaled $93 billion in 1Q13, dropping off 6% from 4Q12
. Tablets comprised 89% of embedded device units in 1Q13
. By 2017, Infonetics expects FDD-LTE mobile broadband tablets to edge out WiFi-only tablets in revenue share, with the higher selling price of connected tablets playing a key role
. Windows 8 is struggling to make a dent in the smartphone operating system (OS) segment, but did pass Blackberry in 1Q13 to take 3rd place behind big gorillas Andriod and iOS
. Tablets have dealt a death blow to the netbook: leading netbook manufacturers Acer and Asus announced
plans to cease production of netbooks
"The growing popularity of low-cost, WiFi-only tablets like Google's Nexus 7 and Amazon's Kindle Fire is having a direct and negative impact on embedded mobile broadband cards, as the vast majority of embedded device units come from connected tablets," notes Richard Webb, Infonetics Research's directing analyst for microwave and carrier WiFi.
Webb adds: "Both unit shipments and revenue for the embedded card segment sank by double digits in 1Q13 from the previous quarter and the year-ago quarter."
Infonetics' quarterly mobile broadband report provides worldwide and regional market size, vendor market share, forecasts through 2017, analysis and trends for smartphones, smartphone OS (Android, Blackberry, iPhone, Linux, Palm, Symbian, Windows Mobile, other), netbook OS (Linux, Mac, Windows, other), tablet OS (Android, iOS, Windows, other), USBs, cards, routers, embedded devices (PCs, netbooks, tablets, mobile internet devices) and subscribers. Companies tracked: Apple, Dell, HTC, Huawei, LG, Motorola, Nokia, Novatel Wireless, Qualcomm, RIM, Samsung, Sierra Wireless, Sony, ZTE and others.
To buy report, contact Infonetics: http://www.infonetics.com/contact.asp
2G, 3G, 4G Mobile Services and Subscribers: Voice, SMS/MMS, and Broadband (2013 Edition)
This report tracks mobile services revenue, mobile voice and data average revenue per user (ARPU), and mobile voice and broadband subscribers.
MOBILE SERVICES MARKET HIGHLIGHTS:
- For the full year 2012, global mobile service revenue – including voice, SMS/MMS and broadband – totaled $739 billion, up 2.5% from 2011
- Mobile data (text messaging, mobile broadband) service revenue rose in all major world regions in 2012, boosted by an increase in smartphone usage
- Though more subscribers are migrating from voice-only plans to data-centric packages, voice services are still expected to account for almost half of total mobile service revenue in 2017
- LTE broadband is growing the fastest of any mobile services category, with an Infonetics-projected compound annual growth rate of 55% for 2012–2017
- Infonetics forecasts global mobile LTE broadband subscribers to near 570 million by 2017, with most concentrated in North America and Asia Pacific
“Overall, the wireless industry remains resilient and continues to perform above expectations during a period of global economic malaise and increasing mobile saturation,” notes Stéphane Téral, principal analyst for mobile infrastructure and carrier economics at Infonetics Research.
“In fact, we found that local regulatory conditions and high mobile penetration rates are the key factors affecting mobile service revenue rather than economic conditions,” Téral continues, “Except in Europe, where unabated economic turmoil continues to take a toll as consumers set less and less money aside for mobile products and services, weighing on Europe’s BIG 5 – Vodafone, Telefónica, Deutsche Telekom, France Télécom and Telecom Italia.”
Infonetics’ biannual mobile services report provides worldwide and regional market size, forecasts through 2017, analysis and trends for mobile broadband, SMS/MMS and voice mobile service revenue, ARPU and subscribers by technology (GSM, W-CDMA, TD-SCDMA, cdmaOne, CDMA2000, FDD-LTE, TDD-LTE). The report features a Mobile Broadband Service Tracker following service provider deployments by country, technology and number of subscribers.
To buy report, contact Infonetics: http://www.infonetics.com/contact.asp
Infonetics: Mobile Infrastructure Market Declines, while Mobile M2M Spending was Up 25% year-over-yearSat, 06/22/2013 - 18:21 — Alan Weissberger
Infonetics Research released excerpts from its 1st quarter 2013 (1Q13) 2G, 3G, 4G Mobile Infrastructure and Subscribers report, which tracks 2G, 3G, LTE, and WiMAX network equipment and subscribers.
MOBILE INFRASTRUCTURE MARKET HIGHLIGHTS:
. In 1Q13, the worldwide 2G/3G/4G mobile infrastructure market totaled $9.8 billion, down 9% sequentially, and down 2% year-over-year, despite another LTE ramp-up driven by North America and Europe
. LTE revenue was $2.7 billion in 1Q13, an increase of 21% quarter-over-quarter and 108% year-over-year, though Infonetics believes an appreciation of the U.S. dollar against the Japanese Yen erased at least 5% of revenue
. WiMAX continued its decline, dropping 42% in 1Q13 from the previous quarter
. After dragging down 4Q12, the BRIC countries (Brazil, Russia, India, China) are shaping up as a major engine for 2013; case in point: Brazil added to the 1Q13 revenue mix when its 4 mobile operators kicked off LTE rollouts
. Ericsson remains king of the RAN, with double the revenue market share of #2 Nokia Siemens Networks
. Infonetics expects 3G RAN to continue to be greater than GSM moving forward solely driven by W-CDMA
. Global mobile subscribers are forecast by Infonetics to reach 7 billion by 2017, with LTE subscribers making up just 8% of total subscribers
"We are clearly seeing the broad shift to LTE and its direct effect on 2G, 3G, and WiMAX," notes Stéphane Téral, principal analyst for mobile infrastructure and carrier economics at Infonetics Research. "Typically strong 2G and 3G
markets, China in particular, did not come to the rescue this time around. In fact, China and Russia had a busy 1Q13 selecting LTE vendors. Life without LTE would be hell!"
Richard Webb, directing analyst for microwave and carrier WiFi at Infonetics, adds: "LTE is the highlight of our long-term 2G/3G/4G infrastructure forecast, growing at a 16% CAGR over the 5 years from 2012 to 2017."
AW Comment: Despite all the pundit predictions that wireless telco infrastructure spending would increase, due to more LTE and 3G+ deployments with small cells, it hasn't. Not even close! The contracting wireless network equipment market has led vendors such as NSN and Alcatel-Lucent to restructure and revamp their business focuses. That means asset sales and more downsizing (will it ever end?).
Our previous post indicated that NSN was up for sale, as co-owner Siemens has reportedly approached private equity companies to discuss NSN's possible sale. Nokia has been reported to be interested in buying the wireless gear company. http://community.comsoc.org/blogs/alanweissberger/siemens-searching-nsn-buyer-which-might-be-nokia
Just this past week, Alcatel-Lucent announced it's cutting costs (yet again), is shifting its focus more toward LTE and small cells, and decreasing investments in legacy wireless technologies. The plan is aimed at producing cost savings of about $1.34 billion as well as another $1.34 billion gain from unspecified asset sale. The proposals are the biggest corporate overhaul of the group since the $13.4bn merger of France’s Alcatel and Lucent of the US in 2006, according to the Financial Times which wrote that it is likely to lead to more than 10,000 job cuts, from an employee base of more than 70,000, according to estimates by analysts. Alcatel-Lucent's market capitalization, at €3.3bn, has slid 80% since the merger between the two telecom equipment titans in 2006. What does that tell you about the health of the industry?
Infonetics' quarterly 2G, 3G, 4G (LTE) report provides worldwide and regional market size, vendor market share, analysis, deployment trackers, and forecasts through 2017 for 2G, 3G, 4G (LTE), and WiMAX mobile network equipment and subscribers. The report tracks more than 50 subsegments of the market, including radio access networks (RAN), base transceiver stations (BTSs), mobile softswitching, packet core equipment, and E-UTRAN macrocells. Vendors tracked:
Airspan, Alcatel-Lucent, Alvarion, Cisco, Datang Mobile, Ericsson, Fujitsu, Genband, HP, Huawei, NEC, NewNet, Nokia Siemens Networks, Proxim, Redline Communications, Samsung, UTStarcom, ZTE, and others.
MOBILE M2M MARKET HIGHLIGHTS:
- The global mobile M2M module market scaled to a new level in 2012, reaching $1.5 billion – an increase of 25% from the previous year
- While 2G technologies make up the majority of mobile M2M units now, 3G M2M is on the rise, forecast by Infonetics to grow to 56% of all M2M modules shipped in 2017
- LTE is the fastest growing mobile M2M technology segment, driven by connected car initiatives such as GM’s OnStar, China Mobile’s massive LTE-TDD network buildout, and the Chinese government’s smart cities efforts
- Infonetics projects a cumulative $2.6 billion will be spent over the next 5 years on mobile M2M modules for the auto/transport/logistics vertical, the key anchor for the M2M market
- North America and Europe are currently the main centers of mobile M2M module growth, but Asia Pacific has the fastest anticipated rate of growth due to a highly diversified economic base that creates a stratified market for M2M solutions
- Infonetics expects the next 18 to 36 months to bring further vendor consolidation and vetting of business models to the mobile M2M module industry
Commenting on the growth in Mobile M2M (which impacts mobile infrastructure), Godfrey Chua, Infonetics' directing analyst for M2M said: “To put things in perspective, the mobile M2M module is just one of many technology solutions available for M2M services, one that represents less than 15% of active M2M connections today. Mobile M2M modules compete against myriad other technology solutions that enable M2M services, including DSL and T1 lines as well as wireless technologies like WiFi, Zigbee and Bluetooth.”
Chua continues: “Mobile operators are deploying more M2M solutions and enterprises and consumers are increasingly adopting them across the globe, creating a robust outlook for the overall M2M services market, as well as the mobile M2M module market. Many mobile operators are putting a sharp focus on and real resources behind their M2M businesses, and it’s beginning to pay off. That one of the global leaders, AT&T, can speak of a billion-dollar business in this segment demonstrates the traction and growth that M2M services are experiencing.”
M2M REPORT SYNOPSIS:
Infonetics' mobile M2M modules report provides worldwide and regional market size, forecasts through 2017, analysis, and trends for mobile M2M modules (units, revenue, ARPU) by technology and vertical (utilities/smart grid, automotive/transport/logistics, security/surveillance, retail/vending, healthcare, other).
The report includes a Customer Wins tracker with updates on activity by equipment manufacturers including Brightsky, Cinterion, Encore Networks, Gemalto, Huawei, Mesh Systems, Multi-tech Systems, Novatel Wireless, nPhase, Quake Global, Sierra Wireless/Sagemcom, Simcon Wireless, Skywave and Telit. Service providers and enterprises noted include Aeria, Ambient, AT&T, Digital Communications, du, EDMI, Geacom, Ground Lab, M2M Data Corporation, Motorola, Numerex, Orbcomm, Pomdevices, PositiveID, Redtail Telematics, Rogers Wireless, SK Telecom, Softbank, Sprint, Telstra, Verizon Wireless and others.
To buy these report, contact Infonetics:
Siemens has reportedly contacted private equity firms to gauge their interest in buying Nokia Siemens Networks or, as a
less likely alternative, taking over the German telecom equipment-maker's stake in the NSN venture, according to The Wall Street Journal. For its part, Finnish cellphone-maker Nokia reportedly has been exploring buying out Siemens' 50%
stake in the company. Some analysts have valued the company as a whole at nearly $9.4 billion.
The catalyst for the recent exploration of alternatives for NSN is a change in April in the shareholder agreement that frees each partner to explore options for its stake without the risk of a veto from the other party. Still, it is unclear how Nokia would view a possible sale of all or part of NSN to private-equity investors.
Siemens Chief Financial Officer Joe Kaeser earlier this year said NSN "is not a business that we have any aspirations to stay [in]…and I do believe that 2013 will be the time for Siemens to help NSN to move to a better place."
People familiar with the matter told the WSJ that Nokia is exploring a possible buyout of its 50-50 German partner in NSN. Evidently, Nokia wants to keep NSN mobile network equipment and managed services business, which has propped up revenues and helped maintain cash levels during Nokia's shift to Windows Phone. NSN had sold its optical network equipment business this past December to private investment firm Marlin Equity Partners.
Last quarter, NSN contributed €210m to Nokia's net cash position with revenues of €2.8bn, putting it on a par with Nokia's device and services sales of €2.88bn.
Infonetics Research released excerpts from its 1st quarter 2013 (1Q13) Broadband CPE and Subscribers: PON, FTTH, Cable, and DSL market share, size and forecasts report, which tracks digital subscriber line (DSL), cable and fiber to the home (FTTH) customer premises equipment (CPE), residential gateways and broadband subscribers.
1Q13 BROADBAND CPE MARKET HIGHLIGHTS:
- Owing to the continued strong growth of FTTH and cable CPE, the global broadband CPE market hit $2.2 billion in 1Q13, an increase of 6% sequentially and 17% from the year-ago quarter .
- Though the overall DSL CPE market is slowing on an annual basis, VDSL CPE continues to enjoy strong growth (+30% YoY), particularly in North America and EMEA (Europe, Middle East, Africa ).
- Broadband CPE share leader Huawei pulled farther away from the pack in 1Q13, thanks to a 26% spike in revenue coming mostly from China , Singapore and Malaysia, where it is the primary supplier of GPON ONTs and ADSL CPE.
- Former #2 ZTE slipped to 4th place, leapfrogged by Technicolor and Arris .
- Pace's share of the broadband CPE market continues to grow, and Infonetics expects it to challenge for a place in the top 3 this year.
- Headless video gateways are forecast by Infonetics to grow at a 117% compound annual growth rate (CAGR) from 2012 to 2017
"Better than expected sales of higher-end cable CPE, including headed and headless video gateways being sold in North America and Europe, helped the broadband CPE market put up another strong quarter," notes Jeff Heynen, principal analyst for broadband access and pay TV at Infonetics Research. Heynen adds: "Operators across multiple verticals are in the middle of a long-term transition to higher-speed broadband technologies like FTTH, DOCSIS 3.0 and VDSL2 to keep up with subscriber demand for multiscreen video."
Infonetics' quarterly broadband CPE report provides worldwide and regional market size, vendor market share, forecasts through 2017, analysis and trends for ADSL and VDSL modems, gateways and IADs; standard and DOCSIS 3.0 cable modems, gateways and EMTAs; FTTH ONTs and gateways; residential gateways; PON and Ethernet FTTH ports; and broadband subscribers. Companies tracked: Alcatel-Lucent, Arris, AVM, Cisco (Linksys, Scientific Atlanta), Comtrend, D-Link, Dasan Networks, Fiberhome, Hitron, Huawei, Mitsubishi, Motorola, Netgear, OF Networks, Pace, Sagemcom, SMC Networks, Sumitomo, Telsey, Technicolor, TP-Link, Ubee Interactive, Zhone, ZTE, Zyxel and others.
To buy report, contact Infonetics at: http://www.infonetics.com/contact.asp
Comments on VDSL:
After 10 years (1996-2006) of slow growth and unfilled potential, VDSL-based CPE grew 30 percent year-over-year in North America and EMEA. For network operators that have a large base of copper plant, VDSL2 has become a viable near-term option to deliver higher speed services and video.
Three major telcos, including AT&T, Deutsche Telekom and Telecom Italia, have outlined large-scale build out plans that will continue through the year 2016. AT&T's Project VIP will extend U-Verse and IP DSLAM FTTN coverage by 8.5 million homes by 2015, while Deutsche Telekom will increase VDSL coverage to 65 percent by 2016. Telecom Italia will deploy fiber to the cabinet to 6.1 million homes in 100 cities by the end of 2014.
Unlike ADSL which uses ATM and AAL5 as a L2 framing, almost all VDSL/VDSL2 uses Ethernet MAC frames and Unnumbered Information (UI) Frames for Layer 2 (Data Link layer. Hence, we see an increase of more Ethernet compatible gear in the home, small office and telco central office (e.g. IP/Ethernet DSLAMs).
More importantly, VDSL got a new lease on life through the concept of "vectoring," which was co-invented by IEEE ComSocSCV member George Ginis. Check out his excellent paper on that topic:
Vectored DSL to the Rescue