Telecom vendors aim to capitalize on investments in OSS/BSS, small cells and LTE

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TECHNOLOGY BUSINESS RESEARCH, INC.

TBR’s Telecom & Mobility Vendor BenchmarkResearch Highlights and Outlook

Technology Business Research (TBR) Quarterly Webinar Series

October 11, 2012

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2 TBR Quarterly Webinar Series | 10.11.12 | www.tbri.com | ©2012 Technology Business Research Inc.

Telecom & Mobility Vendor Benchmark Review: Webinar Presenters

Chris AntlitzNetworking & Mobility Analyst

Email: [email protected]: @chrisNMP

Michael SoperNetworking & Mobility Research Analyst

Email: [email protected]: @MichaelJSoper

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TBR’s Telecom & Mobility Vendor Benchmark reports deliver unique insight and value through in-depth analysis in a concise, consumable format • TBR reports are unique for their deep, holistic

analysis of leading vendors in the telecom and mobility industries.

• Financial modeling and TBR insights help customers gain a better understanding of vendor business models.

• TBR’s quarterly reports and webinars are responsive to client timelines, clear and concise, and provide insights across multiple layers of a vendor’s organization.

• TBR’s strategic assessment provides an impartial check on a vendor’s progress in its strategic objectives.

Telecom & Mobility Vendor Benchmark Review: Webinar Overview

TBR Telecom & Mobility Vendor Benchmark Portfolio

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Applications: Vendors are gearing up for an increase in OSS/BSS modernization and transformation projects

After a weak 2Q12, vendors are positioning themselves to capitalize on operator investments in OSS/BSS, small cells and LTE

Networking & Mobility 2Q12 Research Highlights and 2012 Outlook

Telecom & Mobility Vendor Trends for 2012

Infrastructure: Most vendors continued to experience falling infrastructure sales as operator spend on legacy technologies such as CDMA and GSM slowed dramatically

Services: Ericsson remained well ahead of the competition in 2Q12, while NSN and Alcatel-Lucent’s revenue slumped as they began to exit unprofitable contracts and noncore markets

CEM

BSS

OSS

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Telecom & Mobility Vendor Benchmark 2Q12 Review and 2012 Outlook

With revenues from legacy technologies eroding, infrastructure players are beefing up their small cell solutions

Applications: Vendors are gearing up for an increase in OSS/BSS modernization and transformation projects




CEM

BSS

OSS

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Alcatel-Lucent

Cisco

Ericsson

NSN

Samsung

ZTE

Huawei

Juniper

HP

IBM

-40%

-30%

-20%

-10%

0%

10%

20%

$0.0 $0.5 $1.0 $1.5 $2.0 $2.5 $3.0 $3.5 $4.0 $4.5 $5.0 $5.5

Year

-to-

Year

Rev

enue

Gro

wth

Revenue (in $ billions)

INFRASTRUCTURE SEGMENT 2Q12 REVENUE & YEAR-TO-YEAR REVENUE GROWTH

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SOURCE: TBR AND COMPANY DATA

Equipment deals in which Huawei offers a better value proposition than the competition are becoming commonplace

Telecom & Mobility Vendor Benchmark 2Q12 Research Highlights: Key Trends

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Decreased demand for CDMA products in North America is harming sales at Alcatel-Lucent and Ericsson, while Huawei expands further in EMEA

Ericsson• Ericsson will continue to squeeze revenue from

network modernizations in Europe in 2H12.• CDMA sales will fall further in 2H12, but higher LTE

capex outlays will partially offset the decline, as Ericsson is the top LTE vendor in the U.S. with contracts with all four Tier 1s.

Alcatel-Lucent• China’s massive investment in fiber access — called

Broadband China — will be a boon for Alcatel-Lucent starting in 1H13.

• Top-line growth at Alcatel-Lucent in 2012 is looking unattainable as revenues from legacy products such as CDMA and GSM equipment continue to fall.

Huawei• Legacy buildout deals in emerging markets are

leading to upgrades and expansions.• Huawei continues to take market share from rivals by

pursuing its aggressive pricing tactics.

Telecom & Mobility Vendor Benchmark 2Q12 Research Outlook:

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Vendors will seek revenue growth from customer experience management (CEM) and OSS/BSS transformations

Telecom & Mobility Vendor Benchmark Review and 2012 Outlook

CEM

BSS

OSSApplications: Vendors are gearing up for an increase in OSS/BSS modernization and transformation projects



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Alcatel-Lucent

Cisco

Ericsson

HP IBMNSNSamsung

ZTE

Huawei

Juniper

-40%

-20%

0%

20%

40%

60%

80%

0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70

Year

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Year

Rev

enue

Gro

wth


APPLICATIONS SEGMENT 2Q12 REVENUE & YEAR-TO-YEAR REVENUE GROWTH

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Most of Huawei and Ericsson’s applications revenue comes from OSS/BSS, while IBM derives the bulk of revenue from analytics and cloud


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Vendors are focusing their software efforts on billing and CEM, though both markets will not see rapid growth until 2013

NSN• NSN will differentiate from competitors with its CEM

focus, emphasizing operator accessibility and analytics. • NSN is searching for a buyer for its BSS assets after

placing the unit in “maintenance mode” as part of its 4Q11 restructuring announcement. NSN’s billing assets are an attractive acquisition target to companies like Ericsson or Amdocs.

Ericsson• Support Solutions, formerly Multimedia, is better

positioned to capture opportunities in OSS/BSS following the integration of Telcordia.

• Ericsson, with its new Telcordia assets, is best positioned in the billing systems market to provide BSS transformation to operators.

Alcatel-Lucent• Motive Customer Experience Solutions, or Motive CXS, is

Alcatel-Lucent’s entry in the emerging CEM space• CloudBand became commercially available in May. The

company has secured a trial customer: Texas-based operator Transtelco will offer cloud services to its U.S. and Mexican customers via Alcatel-Lucent’s El Paso data center.


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Telecom & Mobility Vendor Benchmark Review and 2012 Outlook


Alcatel-Lucent and NSN’s restructuring programs unlock opportunities for rivals to take market share, particularly Huawei and ZTE

CEM

BSS

OSSApplications: Vendors are gearing up for an increase in OSS/BSS modernization and transformation projects



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Accenture

Alcatel-Lucent

Cisco

Ericsson

HP

IBM

NSNSamsung

ZTE

HuaweiJuniper

-20%

-10%

0%

10%

20%

30%

40%

$0.0 $0.5 $1.0 $1.5 $2.0 $2.5 $3.0 $3.5 $4.0

Year

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Year

Rev

enue

Gro

wth


SERVICES SEGMENT 2Q12 REVENUE & YEAR-TO-YEAR REVENUE GROWTH

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TIS leaders are challenged by an anemic equipment market and weak margins, necessitating vendors to move up the value chain


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NSN and Alcatel-Lucent are reducing their exposure to low-margin services

NSN• NSN will continue exiting unprofitable managed

services contracts to boost margins and hone its focus on higher-value services that are not commoditized.

• NSN is focused on leveraging its stable of GNOCs in all deals that include a service component, while reducing its reliance on local delivery resources.

Alcatel-Lucent• Alcatel-Lucent’s evaluation of managed services

contracts for termination or restructuring will negatively impact services revenue in the short term, but will lead to margin gains.

• Similar to NSN, Alcatel-Lucent will concentrate on high-value services, such as consulting.

Ericsson• Ericsson is working to protect its customer base

from Huawei and ZTE.• Ericsson added to its capabilities with the

acquisition of Telcordia. The company views Telcordia’s expertise as a key asset to drive OSS/BSS transformation projects.


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Vendors are looking to CEM, small cells, services and backhaul to drive growth in the industry

Telecom & Mobility Vendor Benchmark Research Outlook – 2Q12 Research Highlights

Quarterly Topics TBR Value Proposition Related Reports

Customer Experience Management (CEM)

• Determine which services and software (e.g., OSS/BSS, analytics) telecom infrastructure vendors are including in their CEM solutions.

• Evaluate how vendors are leveraging partnerships with analytics and software players to differentiate CEM offerings.

Alcatel-Lucent, Ericsson, Huawei, IBM, NSN

Wi-Fi/Small Cells

• Determine which vendors are technology leaders.

• Determine in which regions small cells are in highest demand.

• Evaluate how vendors are integrating Wi-Fi with small-cell products (e.g., acquiring the technology, high R&D investment).

Alcatel-Lucent, Cisco, Ericsson, Huawei, NSN

Services

• Anticipate the next services boom following heavy deployment activity in India, the U.S. and Europe.

• Determine to what extent low-cost telecom infrastructure players are gaining traction in services-only deals.

Alcatel-Lucent, Ericsson, Huawei, IBM, NSN

Backhaul

• Track developments in demand for microwave and optical backhaul.

• Analyze new backhaul technologies that are coming to market.

• Analyze which backhaul technologies are best suited for small cells.

Alcatel-Lucent, Cisco, Ericsson, Huawei, NSN

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Questions?

Telecom & Mobility Vendor Benchmark 2Q12 Review and 2012 Outlook

TBR


For further information, please contact:

Kate PriceDirector, Networking & Mobility Practice

[email protected]

Chris AntlitzNetworking & Mobility Analyst

Email: [email protected]: @chrisNMP

James McIlroyVice President, Sales

[email protected]

Michael SoperNetworking & Mobility Research Analyst

Email: [email protected]: @MichaelJSoper

mailto:[email protected]


TBR

TECHNOLOGY BUSINESS RESEARCH, INC.

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