Managed Services 2015 - MarketResearch7.4 Global Managed Services 7.4.1 North America Managed...
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Managed Services 2015
Executive Summary
CMR Market Research
March 2015
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The contents of this report represent CMR’s analysis of the information available
to the public or released by responsible individuals in the industry. It does not
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information in the study is based on a variety of sources that we deem to be
reliable, including subjective estimates and analyst opinion, CMR does not
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source materials.
Copyright © 2015 by CMR Market Research
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About CMR
CMR provides in-depth analysis of major telecommunications and IT industry
trends. CMR has been tracking the telecom and IT industry for over twenty years.
CMR analysts are in the marketplace every day evaluating information and
analyzing data, providing the most current, leading-edge market assessments.
CMR tracks actual financial reporting from all of the major telecom service
providers – throughout the world – and measures revenues and units by multiple
segments, including wireless/wireline, voice/data/video, and residential/business.
CMR analysts estimate upside and downside market ranges, and looks for factors
that could alter future market conditions.
Contact us at:
www.cmarketresearch.com, 609-289-8627, or [email protected].
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Table of Contents
1 EXECUTIVE SUMMARY
1.1 Managed Services Environment
1.2 Providers and Segments
1.3 Forecast Summary
1.4 Report Structure
2 BACKGROUND
2.1 Managed Services Definitions
2.2 Global and US Business Market
2.3 Managed Offerings
2.4 Managed Services Providers
3 MARKET SEGMENTS AND SERVICES
3.1 Managed Services Segments
3.2 Managed LAN Services
3.3 Managed WAN Services
3.3.1 Broadband Access
3.3.2 IP VPNs
3.3.3 Ethernet Services
3.3.4 VoIP Services
3.3.5 Dedicated IP
3.4 Mobility Management
3.4.1 Mobility Services
3.4.2 Managed Mobile Applications
3.5 Infrastructure Management
3.6 Data Center Management
4 DEMAND DRIVERS
4.1 Managed Services Demand Drivers
4.2 Employment Trends
4.3 Business Locations
4.4 Workforce Mobility
4.5 US Business Telecom Spending
4.6 Global Telecom Spending
4.7 Managed Services Industry Structure
5 TECHNOLOGY TRENDS
5.1 Market Segments
5.2 Segments Definitions
5.3 Vertical Markets
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5.4 Network Architecture
5.5 Internet Services and Protocol
5.6 Ethernet Services
5.7 Fiber Technology
5.8 Mobility
6 MANAGED SERVICE PROVIDERS
6.1 Provider Segments
6.2 Telecom Carriers
6.3 Cable Operators
6.4 Equipment Vendors
6.5 System Integrators
7 REVENUE FORECASTS
7.1 Methodology
7.2 Forecast Summary
7.2.1 US Managed Services Forecast Summary
7.2.2 Global Managed Services Forecast Summary
7.3 US Managed Services
7.3.1 US Managed Services by Segment
7.3.2 US Managed LAN Services
7.3.3 US Managed WAN Services
7.3.4 US Mobility Management
7.3.5 US Infrastructure Management
7.3.6 US Managed Data Center Services
7.4 Global Managed Services
7.4.1 North America Managed Services
7.4.2 Europe, Middle East, Africa Managed Services
7.4.3 Asia Pacific Managed Services
7.4.4 Latin America Managed Services
7.5 Conclusion
FIGURES
Figure I‑1 Managed Services Segments
Figure I-2 US Managed Services Revenues, 2014-2019 ($Billions)
Figure I-3 Report Segmentation
Figure II‑1 Segments and Managed Services Providers
Figure II-2 US Telecommunications Revenue by Market: Business (Voice,Data,
Wireless), Consumer, 2014 ($Billions)
Figure II‑3 Telecommunications Value Chain
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Figure III-1 Managed Broadband Access
Figure III-2 Managed WAN Optimization
Figure III-3 E-LAN Network
Figure III-4 Managed VoIP Diagram
Figure III-5 AT&T’s Wireless WAN Service
Figure III-6 Inventory Management Flow
Figure III-7 Alcatel Managed Services Model
Figure III-8 Managed Cloud Services
Figure IV‑1 US Employment, 2000-2014 (Percentage)
Figure IV‑2 Projected US Employment Growth by Major Occupational Groups,
2012 and 2022 (percentage change)
Figure IV‑3 Employment and Teleworkers, 2008-2015 (Millions)
Figure IV‑4 Managed Endpoints, 2014-2019 (Thousands)
Figure IV‑5 Distribution of US Establishments, 2011 (By Employees Size)
Figure IV‑6 Mobile Penetration by Region, 2014
Figure IV‑7 Percentage of World's Population Covered by a Mobile Cellular
Signal, 2003, 2010
Figure IV-8 US Business Wireline Voice and Data Revenue Share, 2012 and
2019
Figure IV‑9 Global Internet Access Penetration, 2005-2013
Figure IV-10 Managed Services Gross Margins
Figure IV‑11 Porter’s Five Forces
Figure V‑1 US Business Wireline Revenue by Vertical Market, 2012
Figure V‑2 US Business Wireless Revenue by Vertical Market, 2012
Figure V‑3 Converged Networks
Figure V‑4 Fixed Mobile Convergence
Figure V‑5 AT&T’s Ultra-available Managed Network Service
Figure V-6 Ethernet Network
Figure V-7 Managed Carrier Ethernet Network – Wireline and Wireless
Figure V‑8 Carrier Ethernet Evolution
Figure V‑9 FTTx Network
Figure V‑10 US FTTH Home Passed and Connections, 2005-2016 (Millions)
Figure V-11 US Wireline Access Lines and Wireless Subs, 1988 to 2014
(Millions)
Figure VI-1 AT&T Managed Internet Service
Figure VI-2 AT&T’s MPLS Private Network Transport Services
Figure VI-3 AT&T’s Ultravailable Managed Network Service
Figure VI-4 AT&T’s US Enterprise Hosting Services
Figure VI-5 AT&T’s US WiFi Hotspots Managed Internet Service
Figure VI-6 CenturyLink National Footprint
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Figure VI‑7 Integrated Managed Services
Figure VI‑8 Comcast Fiber Backbone
Figure VI-9 Cablevision Network Service Areas
Figure VI-10 Alcatel-Lucent Service Management Model
Figure VI-11 Cisco’s Machine-to-Machine IP NGN Infrastructure
Figure VI-12 Converged Application Server
Figure VII‑1 US Managed Services Revenues, 2014-2019 ($Billions)
Figure VII‑2 Global Managed Services Revenues, 2014-2019 ($Billions)
Figure VII‑3 US Managed Services Revenue, by Segment, 2014-2019 ($Billions)
Figure VII‑4 US Managed LAN Services Revenue, 2014-2019 ($Billions)
Figure VII‑5 US Managed WAN Services Revenue, 2014-2019 ($Billions)
Figure VII‑6 Managed WAN Services Distribution, 2014
Figure VII‑7 US Managed Endpoints, 2014-2019 (Thousands)
Figure VII‑8 Managed VPN Revenue, 2014-2019 ($Billions)
Figure VII‑9 Managed Ethernet Revenue, 2014-2019 ($Billions)
Figure VII‑10 Managed Dedicated IP Services Revenue, 2014-2019
($Billions)
Figure VII‑11 Managed Voice Revenue, 2014-2019 ($Billions)
Figure VII-12 US Managed Mobility Services, 2014-2019 ($Billions)
Figure VII‑13 US Infrastructure Management Revenue, 2014-2019
($Billions)
Figure VII‑14 US Managed Data Center Services Revenue, 2014-2019
($Billions)
TABLES
Table I‑1 Managed Services Segments
Table I-2 Service Providers SWOT
Table II‑1 Managed Services Segments
Table II-2 Managed Services Providers’ Strengths and Weaknesses
Table III-1 Managed Services Providers Strength by Market Segment
Table III‑2 IP VPN Access Drivers
Table III‑3 Elements and Features of IP/MPLS Networks
Table III-4 Characteristics of Ethernet Services
Table III‑5 Elements of Managed Mobility Services
Table IV‑1 Projected US Employment by Major Occupational Groups, 2008 and
2018 (Millions)
Table IV-2 Evolution of Enterprise Applications, 1993-2024
Table IV-3 US Business Revenues, 2014-2019 ($Billions)
Table IV‑4 Global Mobile Subscribers Forecast, 2014-2019 (Millions)
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Table V‑1 Managed Services Segments and Drivers
Table V-2 Business Size Characteristics
Table V-3 Ethernet Services Characteristics
Table V-4 US Wireless Statistics, 1995-2013
Table VI-1 Managed Services Providers by Market Segment
Table VI‑2 Comcast Ethernet Services
Table VII‑1 US Managed Services Revenue, 2014-2019 ($Billions)
Table VII‑2 Global l Managed Services Revenues, 2014-2019 ($Billions)
Table VII‑3 US Managed Services Revenue, by Segment, 2014-2019 ($Billions)
Table VII‑4 US Managed LAN Services Revenue by Sub-Segment, 2014-2019
($Billions)
Table VII‑5 Managed WAN Services Revenue by Sub-Segment, 2014-2019
($Billions)
Table VII‑6 Managed WAN Services Distribution, 2014, 2019
Table VII-7 US Managed Endpoints, 2014-2019 (Thousands)
Table VII‑8 Managed VPN Revenue, 2014-2019 ($Billions)
Table VII‑9 Managed Ethernet Revenue, 2014-2019 ($Billions)
Table VII‑10 Managed Dedicated IP Services Revenue, 2014-2019 ($Billions)
Table VII‑11 Managed Voice Revenue, 2014-2019 ($Billions)
Table VII-12 US Managed Mobility Services, 2014-2019 ($Billions)
Table VII‑13 US Infrastructure Management Revenue, 2014-2019 ($Billions)
Table VII‑14 US Managed Data Center Services Revenue, 2014-2019 ($Billions)
Table VII‑15 Regional Managed Services Revenues, 2014-2019 ($Billions)
Table VII‑16 North America Managed Services, 2014-2019 ($Billions)
Table VII‑17 EMEA Managed Services, 2014-2019 ($Billions)
Table VII‑18 AP Managed Services, 2014-2019 ($Billions)
Table VII‑19 LA Managed Services, 2014-2019 ($Billions)
Table VII‑20 Global Managed Data Center Services Revenue, 2014-2019
($Billions)
Table VII‑21 Global Managed LAN Services Revenue, 2014-2019 ($Billions)
Table VII‑22 Global Managed WAN Services Revenue, 2014-2019 ($Billions)
Table VII‑23 Global Managed Mobility Services Revenue, 2014-2019 ($Billions)
Table VII‑24 Global Managed Infrastructure Services Revenue, 2014-2019
($Billions)
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CHAPTER I
EXECUTIVE SUMMARY
1.1 Managed Services Environment
Telecommunications has fundamentally changed business and consumer markets.
From sales to manufacturing to customer support, telecommunications services
allow businesses to connect with their customers and deliver their products – some
digitally – to the customer’s door. Consumers have become attached to their
telecommunications devices twenty four hours a day and industries such as
broadcast TV are in the midst of a transformation to on-demand delivery of
content. Global telecommunications networks are critical to international trade
and finance, providing a conduit for business transactions and market trades.
Telecommunications has become a facilitator of economic advancement for every
developed country and perhaps even more critical to developing economies which
lack the resources to build costly manufacturing and service industries to compete
with western economies.
A large percentage of business activity now depends on the Internet from
everything from electronic commerce to intranet applications to customer service.
Consumer demand for the latest wireless devices and on-demand video content
have driven consumer telecommunications spending higher, contribution to the
higher share of disposable income spent on telecommunications services. The
shift to cloud-based solutions, where applications no longer run on premises
equipment, is also transforming the telecommunications and IT equipment
business.
As business and consumer demands change, service providers’ offering must also
change. Business voice calling has shifted to wireless and to lower-cost VoIP
services, where many businesses users can share a single IP connection for all of
their voice needs, eliminating the costly practice of having multiple voice trunks
or access lines for each employee. Wireline data services are growing modestly
due to more connections and higher bandwidth per connection, at the same time
wireless data services are showing substantial growth due to the penetration of
smartphones and tablets into business communications. Adding to the challenge,
unit prices continue to drop and providers are constantly searching for lower unit
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costs to preserve margins. Cable companies have made substantial in-roads into
the business services market, exhibiting annual growth over 20 percent of the past
five years, while grabbing some of the more profitable small and business
locations where their networks pass.
Businesses of all sizes – small, medium, enterprise – continue to push substantial
portions of their business transactions to the wide area network, and customers are
still willing to pay a premium for higher value services or managed solutions. The
complexity faced in managing these applications and networks, coupled with
limited resources, declining budgets, disparate networks and support systems,
continues to drive IT managers to managed services for both existing and new
applications. Businesses look to service providers to deliver the next generation of
business applications.
Managed Services providers are ideally situated to handle the complexities of
these evolving networks and application platforms. Service Providers can leverage
the latest technology, tools, and skills to deploy an end-to-end solution, while
providing around the clock and around the world coverage—essential to
maintaining today’s business networks. Managed Services let enterprises
outsource the most complicated elements of their information systems. With
limited IT staffing, enterprises can focus on their internal business applications,
while outsourcing the network design, installation, and management to a provider
who has the “state of the art” tools and skills to do it right. New cloud-based
applications can be deployed in weeks, allowing the enterprise to rapidly respond
to their internal needs.
CMR’s analysts have been tracking Managed Services market for over ten years
ago and as we look back we find that many of the services, providers, and
customer requirements have changed substantially. The rise of mobile solutions,
cloud applications, and multi- Gigabit/s services are just a few of the service
changes that have transformed the business services portfolio. New players, such
as cable companies and cloud operators, have gained significant revenue share
from incumbent telco providers, while customer performance requirements for
better Quality-of-Service and improved security have pushed the limits of what
service providers can deliver.
There are over 450 Managed Services providers in the US and over 1,000
globally. Providers include telecom carriers, cable operators, equipment vendors,
system integrators, and managed services specialists. The current Managed
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Services industry is fragmented across a number of different provider types.
Telecom carriers have the broadest set of Managed Services, and they have been
successful in coupling management services with their transport capabilities.
Cable operators continue to penetrate this market, leveraging their extensive HFC
(hybrid fiber coax) access infrastructure and customer relationships to provide
basic Managed Services. Equipment vendors have leveraged their product role
into managing the network infrastructure for service providers. Systems
integrators have taken their ability to craft solutions for complex IT problems and
extended their expertise to provide Managed Services.
Amidst all of these changes and challenges, the industry remains strong. The
Managed Services market continues to grow 2-3 times faster than the basic
transport market and CMR projects this trend will continue through the end of the
decade.
The scope of Managed Services examined in this study is defined in Figure I-1 and
Table I-1.
Figure I-1 Managed Services Segments
MANAGED SERVICES
WIRELINE/WIRELESS
LAN WAN
DATA CENTER
INFRASTRUCTURE
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Table I-1 Managed Services Segments
Segment Scope Example
Managed LAN Management across LAN to the Network Interface
Managed IP PBX
Managed WAN Management across the WAN, from Network Interface to Network Interface
Managed VPNs
Managed Mobility Management and Coordination of Mobile devices and associated applications
Managed Sales Force Automation
Infrastructure Management Turnkey Network deployment and management
3G/4G Network Management
Managed Data Center Management of all elements within Network Data Center
Managed Cloud Computing
Managed Services can be a cost-effective alternative to handling the growth in
business applications -- and the higher bandwidth needs, more demanding
performance requirements, and new network equipment (sensors, smartphones,
tablets, cameras) that often accompany these applications. Outages of any length
can have a major impact on business profitability, as an increasing amount of
business activity is conducted online. Growth in the service economy and
increased electronic bonding with customers and suppliers will drive ever greater
demand for wireless and IP networked applications.
1.2 Providers and Segments
Managed Services Providers include telco carriers, cable operators, equipment
vendors, and system integrators. These companies provide one or more services in
the segments identified in Table I-1. For example, carriers such as Sprint,
Verizon, and AT&T have offered managed WAN services as the centerpiece to
their managed portfolio. Equipment vendors such as Ericsson, Alcatel-Lucent and
Huawei, offer managed infrastructure services in connection with their equipment
sales. Systems integrators such as IBM and HP offer customized managed
solutions covering multiple segments.
Managed Services provide an opportunity for carriers and equipment providers to
achieve higher financial margins than they operate at today. Basic telecom service
prices no longer track with prices of other business services, and telecom price
erosion will continue to put pressure on carrier margins. System integrators, such
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as IBM and HP, have already proven that with the right scale economies and
technological innovation they can deliver service elements at a lower cost than
would be incurred internally by the enterprise. These systems integrators have
historically achieved higher margins by commanding a price premium for
delivering end-to-end solutions. Table I-2 shows the Strengths and Weaknesses
of each service provider type.
Table I-2 Service Providers SWOT
Strengths Weaknesses
Telecom Carriers
Customer relationship Application management
Network and OSS integration Flexibility
Scale economies Customization
Cable/MSO Broadband access Enterprise expertise
Customer relationship Nationwide footprint
Equipment Vendors
Hardware/software platforms New to Managed Services business
Customer relationship Facility ownership
Scale economies Network and OSS integration
System Integrators
End-to-end solutions Small-medium business penetration
Application integration expertise Facility ownership
Custom solutions Network and OSS integration
Managed solutions can expand market and channel opportunities by allowing the
providers to reach customers and IT decision makers who they do not reach witih
basic transport services. In addition to expanding market reach, service providers
can improve financial margins by charging more for integrated solutions. While
improving margins is likely with managed service offers, it also requires
additional investment in systems along with skill training to solve the complexity
at the service provider level.
1.3 Forecast Summary
CMR estimates the size of the total US managed services market at $36 billion in
2014. Furthermore, we project that the US market will grow to $53 billion in
2019, at a CAGR of 8 percent, as shown in Figure I-2.
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Figure I-2 US Managed Services Revenues, 2014-2019 ($Billions)
CMR projects that long-term growth across all managed segments will slow
towards the end of the forecast horizon, as lower telecommunication spending and
slower business growth compound to slow the growth rate. The US and global
Managed Services market will grow 2-3 times faster than basic transport revenues
as businesses shift to managed solutions. The US Managed Services market will
grow faster than basic transport revenues for two reasons: the migration from
internal IT department management to Managed Services, and the shift to new IP
and wireless services.
The forecast of Managed Services revenues is a product of the services,
technologies, and industry forces discussed in this report. They include:
Employment Growth — expansion of the services workforce;
Business Establishments — location growth and interconnected
endpoints;
Mobile Workforce—increasing use of field and remote workers;
Telecommunications Spending — double-digit unit volume increases,
pricing declines, service migrations, and technology substitution;
Networking Convergence — the convergence of wireline and wireless
networks, along with the TDM to IP transition ; and
IT Management Trends — IT spending and staffing limitations in an
environment of increasing networked applications.
0
10
20
30
40
50
60
2014 2015 2016 2017 2018 2019
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1.4 Report Structure
This study provides a comprehensive analysis of the Global Managed Services
market, covering every region -- North America, Europe, Mid-East, Africa, Asia-
Pacific, Latin-America, and the Caribbean -- along with more detailed analyses of
the US market. For each region the report provides details by marketplace
segment: WAN, LAN, mobility, data center, and infrastructure. Forecasts for
market subdivisions, including managed IP VPNs & IP endpoints, security
services, WLANs, VoIP services, and hosting & storage are also provided. In
addition to these quantitative elements, the report provides assessments of the
technologies, services, demand drivers, and service providers across the
marketplace. Figure I-3 shows where these services fit within CMR’s
segmentation framework.
Figure I-3 Report Segmentation
CMR's market research reports provide in-depth analysis of major
telecommunications industry issues. This report, Managed Services 2015,
provides a detailed assessment and forecasts of global and US Managed Services
market. CMR's forecasts are based upon primary and secondary research about
current and future services adoption rates.
CMR maintains a comprehensive forecast model of telecommunications spending,
including actual revenue and metric reporting from all of the major industry
players -- globally. These data are combined with various time series and
econometric models of industry performance to produce projections of future
revenues, units, and pricing. Telecommunications services are a product of
current transport services, technology trends, consumer and business activity.
Report Segmentation
BB PL FRS IPE
Carrier Enterprise
Consumer
==================================== ======= ======= ======= ======= ==================================
US CANNA, EMEA, AP, LA
VoiceData
Video
Business
Residence
NAEMEA AP LA
Services Equipment
Wireless WirelineCarrier Enterprise Consumer
Voice Data Msg
Managed Services
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CMR has developed a detailed model to support this validation. The model
includes input from a number of independent variables, including consumer
spending, business activity, broadband adoption, wireless penetration and usage,
and cloud computing. Assumptions about industry pricing, service and technology
substitution, and penetration rates were validated against input from primary and
secondary sources.
The report is structured as follows:
Chapter II, BACKGROUND, provides an overview of the Managed
Services market, the definitions used throughout the report, service revenue
trends, and an overview of the major industry players and their
opportunities in this market.
Chapter III, MARKET SEGMENTS AND SERVICES, looks at the
managed services segments technologies – WAN, LAN, mobility, data
center, and infrastructure – and provides an assessment of how these
segments will change over the next few years.
Chapter IV, DEMAND DRIVERS, provides an assessment of the
independent variables that historically have proven to be good predictors of
managed services spending, including employment growth, business
locations, work force mobility, and economic activity.
Chapter V, TECHNOLOGY TRENDS, looks at the key business services
technologies – such as IP, fiber deployment, Ethernet, and wireless
backhaul – and provides an assessment of how these technologies will
impact managed services across various business segments – Small,
Medium, Enterprise.
Chapter VI, MANAGED SERVICE PROVIDERS, provides details on the
Managed Services players – Telcos, Cable Operators, Equipment Vendors,
and System Integrators -- and some of their specific managed services
offerings.
Chapter VII, REVENUE FORECASTS, provides detailed forecasts for of ,
Managed Services by Region (NA, EMEA, AP, LA), along with forecasts
of Managed Services Revenues by Service Type (Data Center, LAN,
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WAN, Mobility, Infrastructure). The chapter also provides more extensive
details on the US Managed Service market
While this report covers the global managed services market, emphasis is provided
on the US market. In addition, we recognize that most of these providers have
extensive networks and operations throughout the world, and indeed, managed
services extend beyond regional boundaries, as enterprises require management of
their global networks and applications.