Equipment vendors: service revenue offset any fall in product revenues, up 17% to $62 billion in 2008

[Marketwire] Market research firm Infonetics Research recently released its Equipment Vendor Services to Service Providers report, which tracks the revenue vendors derive from the services they offer to their service provider clients, including network maintenance, build, planning and design, operations, application service delivery, service provisioning and activation, and billing. Highlights from the market research report follow.

"Our analysis of vendor financial reports clearly shows major double-digit increases year over year for equipment vendor service revenue, which more than offsets product revenue declines for some vendors in the Tier 1 category (vendors with $7 billion or more in annual revenue). As a result, worldwide service revenue from equipment vendor services to service providers hit $62 billion in 2008, up 17% from 2007, and will continue to increase as service providers outsource more tasks so they can continue to cut opex and beef up their margins. In the equipment vendor services market, no one sees a slowdown during this global recession; instead, they all see more opportunities," said Stéphane Téral, Principal Analyst, Mobile and FMC Infrastructure, Infonetics Research.

REPORT HIGHLIGHTS

-- Facing pressure to quickly innovate with new services and to cut
operational expenditures, service providers are increasingly outsourcing
their day-to-day network operations to professional service houses

-- The top revenue-generating tasks outsourced by service providers in
2008 include network maintenance, application service delivery, network
build, and network planning and design

-- The vendor services to service providers market is driven by
traditional IT integrators and the telecom vendor integrator arms of Tier 1
vendors, including Alcatel-Lucent, Cisco, Ericsson, Fujitsu, HP, Huawei,
IBM, Microsoft, Motorola, NEC, Nokia Siemens, and Nortel

-- In 2008, IBM continued to lead the equipment vendor services market

-- Nokia Siemens Networks gained market share in 2008, while the other
top 5 vendors maintained or dropped a point or two of worldwide market
share

-- The bulk of the growth for the vendor services to service providers
market comes from Asia Pacific, with major outsourcing deals such as Bharti
Airtel in India

-- Worldwide Tier 1 vendor service revenue from equipment vendor services
to service providers jumped significantly in 2008, due mainly to strong
activity in India as well as the combination of smaller deals in Europe

-- Between 2008 and 2013, the Central and Latin America region is
expected to gain share at the expense of North America and EMEA

Infonetics Research: Telecom carriers spent $62 billion on outsourced services in 2008, with plans to increase