Telco Market worth $65 Billion in 07
Telco Market worth $65 Billion in 07
Month Date, 2008: Analyst firm, Ovum has published their 2007 service business results for network infrastructure vendors which showed the Telecommunication Services market exceeded $US 65 Billion ($AU 70.9 Billion) in worldwide revenue.
Ovum’s report has detailed how the telco services market grew 17% from 2006 levels, which includes product, network and IT-related service spending. This total included network equipment providers who accounted for approximately 60%.
“The importance of services to telecom equipment vendors is hard to overstate,” said John Lively, Vice President, Network Infrastructure, at Ovum. “The telco services market is larger, and growing faster than optical networking, switching and routing, and broadband access equipment combined, and its generating profits. Simply put, services are key to infrastructure vendors’ financial success.”
According to Lindel, the growth has been brought about by the capacity glut of the past several years, combined with the rise of Chinese vendors with low labor costs and relationships with well-funded development banks which has made it difficult for large incumbent NEPs to make money on products.
Other findings to emerge from the study include service revenues accounting for more than 20% of total company revenues for top tier network infrastructure vendors. There was also a gap emerging between the operating margin on services which came in at 13% compared to that of hardware which was 5%.