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Virtualisation and the vendor landscape

18 May 2017 | Research

Dana Cooperson

Video and podcast | Automated Assurance| Service Design and Orchestration| Video and Identity Platforms| Network Automation and Orchestration| Digital Infrastructure Strategies| Next-Generation Wireless Networks

Communication networks have traditionally been built around hardware rather than around software, but with the change in customer requirements, both consumer customers and business customers, communication service providers (CSPs) must reconsider the way they build networks and those networks are going to based around software.

Video interview

Dana Cooperson, Research Director at Analysys Mason, looks at how virtualisation is changing the telecoms vendor landscape and how the competitioon is heating up to access the estimated USD200 billion product and service revenue on offer.


Listen to or download the podcast


Video and podcast transcript

Communication networks have traditionally been built more around hardware than around software, but with the change in customer requirements, both consumer customers, as well as business customers, communications service providers (CSPs) really have to reconsider the way they build networks and those networks are going to much more be based around software.

Analysys Mason has been looking at software and networks for a decade or more, and we are in a very good position to help our customers make that transition from networks that are a little bit software-based to networks that are very, very software-based. 

Software-controlled networks require a whole new management approach

Now, once you change the network, you're going to need a whole different way of managing it.

That's going to be a really big deal for our vendor customers, and we have a lot of experience with helping our customers figure out what these changes mean.  

We've got decades of experience with software and networks, and with the change in networks to virtualisation, it means networks are going to be even more software-controlled, and that is a huge change.

Opportunities created by virtualisation is changes the telecoms landscape

When that change happens – and that is going to be based around network function virtualisation (NFV), software-defined networking (SDN) and cloud computing – that's going to change the whole framework for vendor competition, so the whole landscape is set to change.  

We've got some vendors that are embedded today in networks. They know the network very, very well, but maybe they don't know how to build software-based networks. 

We also have new entrants that are coming into the market from different markets – for example, the IT market – and they can bring a lot to the telecoms market that wasn't there before. 

We also have some start-ups that have new ways of doing things, new ways of looking at things and then, of course, we also have the communications service providers themselves, and some of them are looking at "let's build our own software". 

Finally, we have new techniques like open-source software, and we're not really sure what that's going to mean to the vendors, which are used to building their own networks and the service providers that are used to buying that.

More than USD200 billion in product and service revenue is at stake

So, what's at stake here is ultimately about USD100 billion worth of spending on network equipment, about USD40 billion worth of professional services, and about USD26 billion of spending on telecoms software and related services. 

So, that is between USD150 billion and USD200 billion worth of spending that is going to be shifting into this new virtualised way of doing things.

Today, that market is only about USD6 billion, and is going to USD19 billion in 2019, so that's why the competitive framework is set to shift so dramatically. All that spending going from one place to another, and it is going to be very interesting, free for all in the market, and that's where we're going to be focusing our efforts in helping our clients to figure out,  [for example], if they are an incumbent in the market, how they take advantage of this and minimise the threats. And if they are a new vendor coming into the market, how are they going to take advantage of this. 

They have to figure out how to handle what is already in the market – they just can't come in there with something new and forget what's already there, they really have to deal with what's there, as well as help their customers’ transition.

Very exciting times.