Bangkok--22 Jan--IDC
IDC's Annual APEJ Top 10 Telecommunications Predictions Duds 2010 as the Year of "Triumvirate of Change" that Will Shape the Industry's Future
IDC believes that the Asia/Pacific excluding Japan (APEJ) telecommunication and networking industry is being shaped and driven by a “triumvirate of change” and the impact of these changes will be felt in 2010 and beyond.
This triumvirate of change culminates from three overarching themes: Firstly, the desire for de-capitalization and dematerialization of the Information and Communications Technology (ICT) sector will result in a fundamental shift in the way service providers (SPs) and enterprises provision as well as consume ICT services. Secondly, the competitive environment, in both the networking and SP markets, will be altered as Chinese networking vendors and Indian telecoms operators formally take their seats on the global stage. The recession and its resulting focus on ICT business process alignment has given each group an added advantage. Thirdly, the unrelenting desire to create an "intelligent X" environment will form the building blocks for an ubiquitous computing and mobility landscape.
"There is a triumvirate of change that will be the main drivers of innovation and change in the industry in 2010 and the years ahead," said Adrian Ho, Program Manager for Telecom & Managed Services, Outsourcing and Networking within IDC's Asia/Pacific Practice Group. "ICT investments will remain both cautious and prudent over the next 12 months. Limited incremental budgets will be diverted to specific transformational technologies that meets key business objectives as determined in part by the triumvirate of forces propelling change in the industry."
In terms of market performance for the year, IDC expects the telecom, managed services and networking market to show moderate growth in 2010 helped by the revival in the global economy and improvement in the overall business climate. The APEJ telecom services market is expected to reach US$252 billion in 2010, representing a growth rate of 6.0%. Mobile and fixed data services will lead the growth in the telecom services industry. Spending in enterprise networks is forecast to grow by over 14.8% in 2010 to reachUS$12.8 billion. Growth will be driven by continued spending in datacenter networks, continued migration to an all-IP platform and branch office network investments. Carrier equipment market is expected to decline moderately by —0.8%, with the total market reaching US$55.7 billion.
"The recession accelerated the changes that were already taking place in the industry including how enterprises view technologies and their SPs," states Adrian. "The new 'normal' in the recovery period include expectations of higher and quicker return of investments, lower total cost of ownership which may include almost no or little ownership of capital and the expectation that SPs can help drive change and transformation."
“At the same time, SPs that kept their eye on innovation throughout the recession will be in the best position to take advantage of the recovery. It was the one currency that never lost its value during the crisis.” adds Adrian
The following are the Top 10 Telecommunications Predictions in 2010. These represent major trends with either the most significant financial impact or long-term market influence across the APEJ region.
First Triumvirate of Change: De-capitalization and dematerialization of ICT
1. The Maturing Cloud Will Need "Five 9" Service-Level Agreements and Enterprise Grade Cloud Services
IDC believes that the combination of "five 9" guarantees (99.999), plus a robust business continiuty and disaster recovery (BCDR) capabilities delivered by virtual private clouds and multilevel service level agreements (SLAs), will be the new "killer application" in cloud services and the hallmark of progressive telecom carriers in the region. This will be one of the triggering factors for broader adoption of cloud services.
2. New Unified Communication as a Service Players Will Shake Incumbent Conferencing Players Out of Complacency
With the onset of the global economic crisis, enterprises were suddenly faced with the predicament of operating with fewer resources. Unified communication (UC) tools and its ability to improve productivity of a geographically distributed workforce came into the limelight within the CIO's scheme of things. However, cash-strapped enterprises found Opex-based models for adopting UC more plausible in an environment where every penny spent came under the CFO's scrutiny. Progressive UC vendors seeing the opportunity for UC as a service (UCaaS) have launched these services.
Many UC services, such as voice and Web conferencing, have been traditionally offered as a service by pure-play conferencing SPs and telecom operators. Today, these services are facing the prospects of obsolescence unless the SPs evolve these offerings into full-scale UC services. This is mainly because the incumbent SPs see imminent competition from the UC vendors that are taking a holistic approach of UCaaS, often as part of a larger SaaS platform. With the pure-play conferencing players' services looking increasingly like plain vanilla offerings, they are doing some soul-searching to work out their forward path.
3. Converged Fabric and Evolving Datacenter will be Centerpiece of Transformation
Any organization that is planning a major datacenter upgrade in 2010 will have a hard time escaping vendors pushing converged fabric products. Vendors have been refreshing and adding converged fabric to datacenter solution portfolio over the last 12 months. IDC believes that converged fabric solutions will significantly address some of the IT sprawl and its resulting large amount of expenditure on maintenance.
Second Triumvirate of Change: The New World Order — Competitive Landscape Changes
4. The Economic Crisis Gave Chinese Networking Vendors Opportunity to Prove Themselves
Chinese technology dragons - Huawei and ZTE continued to prosper despite the global downturn in 2009. The recession also meant that carriers were willing to try alternative brands, allowing the two vendors to gain the technology recognition by tier one incumbents. It is their success in the international markets that is giving the likes of Ericsson and Cisco a run for the money. Huawei claims to have worked with 31 of the world's top 50 operators and ZTE with 30 of the world's top 100 operators. In fact, the downturn played a role in helping these vendors grow in 2009. The progress charted in 2009 sets the precedence for growth in 2010 for Chinese vendors.
5. India Carriers Join Inner Circle of Global Service Providers (GSPs)
India telecom carriers led by Reliance Global, Tata Communications, Bharti, and BSNL embarked on a journey to extend their presence outside India and have set out on their global ambitions. Buoyed by the global success of their business process outsourcing (BPO) counterparts and the insatiable desire by India enterprises to go global, India SPs have built investments and partnerships across the globe, transforming themselves from a India provider to a global player. The country's BPO, services and software legacy will play a major role in today’s emphasis on greater ICT and business process alignment.
Third Triumvirate of Change: Ubiquitous Computing and Mobility Creating the Intelligent X Environment
6. Smartphones in Emerging Markets will Rise
The key driver of smartphones in the emerging markets is the increasing sophistication of mobile users. By the end of 2009, mobile penetration exceeded 50% in China and approached 40% in India. Replacement users are expected to form over 70% of handset demand in China in 2010, up from 50% in 2008. Shipments of converged devices are likewise expected to grow from 7.5% of all shipments in 2008 to 13% in 2010.
7. The March of 'Droids
Android arrived in the APEJ region in the first quarter of 2009, and IDC expects the operating system (OS) to make a big leap forward in 2010, when shipments are predicted to swell to over 2 million units. By 2013, Google's offering is projected to become the third largest mobile OS in the region, with shipments hitting over 8 million units especially as more leading telecom operators pick up Android smartphones.
8. Mobile Broadband Driving Data Traffic — The Perfect Storm
As fixed broadband subscribers come to a slower growth after nearly reaching saturation, telecom operators are looking at mobile broadband as the key in growing revenue. Fixed broadband is tied to per household — each household is likely to only have one fixed broadband subscription for sharing, while mobile broadband is tied to per person usage. As such, mobile broadband services have a much bigger market for growth, especially with the increasing popularity of smartphones and social media sites like Facebook and Twitter.
9. Long Term Evolution — Building the Intelligent "X" Society
Long Term Evolution (LTE) is being promoted by the industry as the all-IP migration path for UMTS and EV-DO operators, and as the next step in migration to a future IMT-2000 Advanced or 4G architecture. IDC believes that most early LTE deployments in Asia/Pacific will occur at 3G networks that are already suffering serious utilization problems and need bandwidth relief, which LTE should be able to deliver. Early trials are expected in Australia, Korea, New Zealand, Hong Kong, China, and Singapore in 2010—2011. LTE will play a large part in resolving some of the existing bandwidth and capacity constraints.
10. Machine-to-Machine Interaction — Tipping Point Reached
2010 will see the first wave of early business models for Machine-to-Machine (M2M) interaction as most major operators are assembling marketing and business development teams to address this potentially huge opportunity. IDC believes that with 1 billion fixed-line subscribers and over 4 billion mobile subscribers globally, the addressable opportunity for M2M will be roughly 10:1 ratio or over 50 billion M2M devices connected to the global public and operator networks by 2020.
IDC’s annual Asia/Pacific (Excluding Japan) Telecommunications Top 10 Predictions draws upon latest IDC research and a worldwide brainstorming exercise among IDC’s 1000+ analysts. This was followed by an extensive regional review to weigh in on key industry events, user trends, vendor strategies and economic measures, that promises to uniquely define the technology trends which would impact and drive the Telecommunications market in the APEJ region for 2010.
Across the globe, following the release of IDC’s global top ten, geographic and technology teams will be releasing their own specific predictions in the up coming months. Please visit www.idc.com.sg/prediction-2010 often for updates
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