the race to emerging markets is heating up – insights from tbr’s 4q12 network infrastructure...
DESCRIPTION
The TBR Networking and Mobility research team recorded a webinar on Tuesday, May 7, 2013 recapping vendor performance reported in TBR's 4Q12 Network Infrastructure Services Benchmark. This deck is from that presentation. Senior Analyst Scott Dennehy shared his perspective on the results in the benchmark and provided additional insight into vendor performance and the future of the network infrastructure services market. Questions for discussion included: •Which geographic regions are providing the best opportunities for NIS growth? •How is the revenue mix of major NIS suppliers shifting? •How are emerging trends such as cloud, mobility and software-defined networking (SDN) affecting supplier opportunities? For more information visit www.tbri.comTRANSCRIPT
TBR
TECHNOLOGY BUSINESS RESEARCH, INC.
TBR’s Network Infrastructure Services4Q12 Benchmark Highlights and OutlookTechnology Business Research Webinar Series
May 7, 2013
TBR
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NIS Benchmark Contacts
Your presenter:
Scott DennehySenior Analyst, Networking & Mobility PracticeEmail: [email protected]: @scottdTBR
TBR
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After experiencing decelerating revenue in 4Q12, NIS suppliers will expand aggressively into emerging markets to fuel growth in 2013
Market Trends and Drivers
Key Themes and Market Trends
NIS growth continues to decelerate due to the challenging economic environment in mature markets.
Regions such as APAC and CALA saw the strongest NIS growth in 4Q12 due to rapidly growing economies in key emerging countries such as China, India, Brazil and Mexico.
As clients contend with smaller IT budgets, demand grows for solutions that reduce costs, improve operational efficiency and replace legacy network infrastructure.
TBR
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Network Infrastructure Services (NIS) Benchmark Coverage
Network Technologies:Routers and switches, unified communications and collaboration, network security (e.g., firewalls), videoconferencing,IP telephony, WAN optimization/acceleration, storage area networking, optical networking, wireless LAN, network management software, OS software
Suppliers:• Accenture• Avaya• Cisco Systems• Dell• Fujitsu • HP• Huawei• IBM• Infosys• Juniper Networks• Siemens Enterprise
Communications
Service Segments:• Deployment• Maintenance• Managed Services• Professional Serviceso Consultingo Systems Integrationo Design and Planningo Network
Optimizationo Securityo Training and
Certification
Geographic Segments:• North America• CALA• EMEA• APAC
Webinar Overview
TBR obtains and analyzes revenue, margin and headcount for 11 suppliers across 4 main service categories and 4 geographies
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Supplier strategies are evolving to become more services-focusedSupplier Overview
Equipment Suppliers IT Services Firms
• Lead with product, and attach services
• Revenue mix weighted to maintenance services
• Lead with services, and attach product
• Revenue mix weighted to professional and managed services
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Despite falling short of its enterprise growth goals in 2012, Huawei will remain a formidable NIS competitor in 2013
Total NIS Revenue
• NIS will become an increasingly larger part of Cisco’s total revenue mix, as the company focuses less on hardware and more on software and services as part of its long-term growth strategy.
• While Accenture’s deployment and professional services segments experienced revenue declines, the company relied on the strength of its managed services business in 4Q12 as clients continued to outsource their IT needs to reduce costs.
Accenture
CiscoDell
HP
Avaya
Huawei
FujitsuIBM
Infosys
Juniper
Siemens
-10%
0%
10%
20%
30%
$0 $500 $1,000 $1,500 $2,000
Year
-to-Y
ear
Reve
nue
Grow
th
NIS Revenue for All Lines of Business
4Q12 Total NIS Revenue (Millions USD) TBR
SOURCE: TBR AND COMPANY DATA
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NIS operating margin leaders are focused on operational efficiency, restructuring low-margin deals and pursuing high-value engagements
NIS Operating Margin
• Cisco’s ongoing expense management strategies and investments in service automation and low-cost labor enable the company to keep its NIS operating margin in the mid-20% range.
• With growth prospects improving, Infosys will reduce hiring to restore its status as the leading India-centric IT vendor in margin performance.
Accenture
Avaya
Cisco
Dell
HPHuawei
IBM
Fujitsu
InfosysJuniper
Siemens
0%
5%
10%
15%
20%
25%
30%
35%
$0 $100 $200 $300 $400 $500
NIS
Ope
ratin
g M
argi
n
NIS Operating Income for All Lines of Business
4Q12 NIS Operating Margin (Millions USD) TBR
SOURCE: TBR AND COMPANY DATA
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Conservative spending by U.S. public sector customers drove down maintenance revenue growth for many equipment suppliers in 4Q12
Maintenance Services
• Weak spending from public sector customers in the U.S. significantly impacted the maintenance services businesses of Avaya and Juniper, which experienced revenue declines of 6.5% and 5.9%, respectively. • Huawei will drive maintenance revenue growth in 2013 via its recently launched Hi-Care Support
Services portfolio, which is designed specifically for enterprise customers and includes basic remote and on-site support as well as a new online support portal.
Accenture
Avaya
Cisco
Dell
Huawei
IBMFujitsu
HP
Infosys
JuniperSiemens
-20%
-10%
0%
10%
20%
30%
$0 $200 $400 $600 $800 $1,000 $1,200 $1,400
Year
-to-Y
ear
Reve
nue
Grow
th
Maintenance Services Revenue for All Lines of Business
4Q12 NIS Maintenance Services Revenue (Millions USD) TBR
SOURCE: TBR AND COMPANY DATA
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Deployment revenue leaders will continue to focus on low-volume, high-margin opportunities, leveraging partners for low-end projects
Deployment Services
• Emerging segments such as cloud, mobility and SDN will provide ample deployment services opportunities for NIS suppliers in 2013.
• Huawei is building out its enterprise product portfolio, which will drive revenue growth in deployment services as the company focuses on providing end-to-end solutions.
Accenture
Avaya
CiscoDell
Fujitsu
HP
Huawei
IBM
InfosysSiemens
Juniper
-15%
-5%
5%
15%
25%
35%
$0 $15 $30 $45 $60
Year
-to-
Year
Rev
enue
Gro
wth
Deployment Services Revenue for All Lines of Business
4Q12 NIS Deployment Services (Millions USD) TBR
SOURCE: TBR AND COMPANY DATA
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Professional services growth will remain slow through 1H13 as customer demand for emerging technologies ramps up
Professional Services
• Over the long term, professional services growth will be fueled by demand for C&SI around emerging technologies (cloud, mobility, unified communications, SDN), as customers will need help incorporating these technologies into their networks.
• Cisco will leverage high-growth consulting services, including cloud, security and mobility, and emerging verticals such as healthcare, to drive professional services revenue in 2013.
AccentureAvaya
Cisco
Dell
HP
Huawei
FujitsuIBM
Infosys
Juniper
Siemens
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
35%
$0 $75 $150 $225 $300 $375
Year
-to-
Year
Rev
enue
Gro
wth
Professional Services Revenue for All Lines of Business
4Q12 NIS Professional Services Revenue (Millions USD) TBR
SOURCE: TBR AND COMPANY DATA
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Managed services revenue leaders continue to successfully capitalize on enterprise customers’ need to reduce IT expenditures
Managed Services
• After seeing strong overall growth in 3Q12 (10% year-to-year), managed services was not immune to the slow down in customer spending in 4Q12, generating growth of just 3%.
• IBM’s emphasis on improving profitability by restructuring low-margin outsourcing contracts negatively impacted managed services revenue growth in 4Q12 but boosted the company’s margins.
Accenture
Avaya
Dell
FujitsuHP
Huawei
IBM
Cisco
Infosys
Siemens
-10%
0%
10%
20%
30%
$0 $50 $100 $150 $200 $250 $300
Year
-to-
Year
Rev
enue
Gro
wth
Managed Services Revenue for All Lines of Business
4Q12 NIS Managed Services Revenue (Millions USD) TBR
SOURCE: TBR AND COMPANY DATA
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Network upgrades remained in high demand in APAC, resulting in another quarter of strong revenue growth for NIS suppliers in 4Q12
Geographic Views
• Elongated decision cycles stemming from the U.S. government were a key factor in the NIS revenue declines for those suppliers heavily dependent on the public sector, including HP, Juniper and Avaya.
• High-growth Latin American markets such as Brazil, Mexico and Peru are becoming increasingly more attractive to major market players such as Cisco, HP and Siemens that are investing in personnel and partnerships to localize their position within these emerging markets.
TBR
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TBR’s Network Infrastructure Services Benchmark delivers the data and insights required to capture more services revenue
Value• TBR’s comprehensive view of the NIS market offers current and
historical insight, enabling suppliers to make informed decisions, including adjusting services strategies and tactics to facilitate market share growth.
• The benchmark identifies leaders, strategies and growth opportunities in the NIS industry to enable vendors to capture share from competitors and hold off rivals.
OpportunityGlobal enterprises (excluding telecom operators) spend $50+ billion annually on maintenance, deployment, professional and managed services for network infrastructure.
Content• The NIS Benchmark covers 11 suppliers in four services
segments across four major geographies.
o Highlights quarterly revenue, growth, margin, headcount and geographic data
• Analysis of top suppliers in each service category and region
• Insight into vendor strategies and market trends
NIS
NIS Benchmark Overview
TBR
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For further information, please contact:
Kate Price James McIlroyPractice Manager, Networking & Mobility Vice President of [email protected] [email protected]
Scott DennehySenior Analyst, Networking & Mobility PracticeEmail: [email protected]: @scottdTBR
Q&A
Questions?
TBR
TECHNOLOGY BUSINESS RESEARCH, INC.
About TBR
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