Incumbent telecom vendors face disruption from pure play entrants amid relatively weak capex environment – at least until 5G rollout begins, says Technology Business Research.
TBR’s latest Telecom Vendor Benchmark report concludes that vendors will face challenging market conditions until commercial 5G rollouts commence, which will provide a slight operator capex uplift.
The impact from NFV [network functions virtualization] /SDN [software defined networking] adoption is accelerating as Tier 1 service providers ramp commercial deployments of software-mediated infrastructure, often with the help of pure play suppliers, disrupting sales of traditional ICT hardware from incumbents, TBR concludes.
“Pure play NFV/SDN suppliers are being leveraged by some of the largest Tier 1 operators to support software-mediated services,” said TBR Telecom Analyst Patrick Filkins.
“While many of these projects are in the early phases, numerous operators appear willing to accept risk by contracting less known suppliers for solutions, such as SD-WAN [software-defined wide-area network].”
Providers are adopting, however, especially Cisco.
“As the impact to hardware sales from software-mediated adoption becomes more pronounced over the next couple of years, telecom vendors are investing to align with operators’ consumption models and drive recurring sales of software and services,” TBR reports.
“Cisco’s transition is most aggressive, primarily fueled by a steady cadence of software-based acquisitions and internal changes. Nokia, Juniper and Huawei have also acquired software firms within the last year, with a focus on security, application management and service orchestration.
“Acquisitions such as these will enable equipment suppliers to increase exposure to software opportunities and partially offset the impact from weaker hardware sales.”