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Vendors targeting telco opex budgets

According to new research from IDC, eight of the top global networking equipment vendors – collectively generating an estimated $124bn in 2012 revenue, or approximately 90 per cent of total worldwide network infrastructure revenue – are actively targeting access to telco opex budgets. To achieve this, they are placing significant emphasis on professional services and software product enhancements that are attractive solutions to reducing telco opex costs.

IDC says that global economic instability, competitive pressures, and decreased capex spending by service providers are all forcing networking equipment vendors to streamline and refocus their business strategies in order to maintain profits.

As telcos and service provider shift their focus to reducing their opex, improving time to service, and offering more innovative mobile broadband and cloud-based virtualisation services with higher margins, vendors must adapt accordingly. Nav Chander, research manager for Enterprise Communication Services at IDC, explains:

“As network equipment continues to commoditise, the vendors look to sell software-based product offerings and value-added services in addition to network equipment as a way to drive margin expansion. Those vendors that focus on virtualised product strategies, embrace open software-based architectures incorporating SDN concepts, and create value by driving [telco] opex lower will have the greatest impact in the telecom market.”

IDC profiled vendors that included Alcatel-Lucent, Ciena, Cisco, Ericsson, Huawei, Juniper, NSN, and ZTE. As part of its research, the firm found that Ericsson and Huawei continue to be the overall global telecom product revenue leaders from 2010 through the first half of 2012 with Huawei poised to be the 2013 market leader. However, smaller vendors such as Juniper and Ciena have invested a significantly higher percentage of overall revenue into R&D.

IDC is not the only firm to put out a new report on vendors accessing telco opex budgets – read our related story from Ovum here.

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