IT infrastructure top priority for Financial Markets in 2014

Financial markets set to continue spending on regulatory compliance and servicing to improve client loyalty

Melbourne, 12 December 2013: New research* from Ovum, a leading global analyst firm, reveals that as profitability is more difficult to find than prior to the financial crisis, 2014 will be a year of foundational investment for the financial markets, with the primary focus on investment in IT infrastructure.

This investment is required for finding new opportunities to drive profit, by moving into new markets, trading venues, geographies and asset classes, while managing this additional complexity. Over two thirds of respondents queried on infrastructure spending forecasted an increase of between one and six percent in their outlay.

Meanwhile, the ongoing volatility in global markets is making profitability a challenge and, as a result, customer loyalty is declining. As neither the buy side nor the sell side can guarantee profit margins in current market conditions, both sides are set to invest in IT systems that improve service levels in the hope that it positively impacts customer satisfaction and ultimately customer loyalty.

Rik Turner, senior analyst, financial services technology, Ovum comments: “Financial markets will face two main challenges in 2014, with the difficulties of achieving profits in a post-financial crisis environment and complying with the ever-increasing raft of rules and regulations. This will drive an increase in IT infrastructure spending, as well as a focus on servicing systems to improve customer loyalty levels.

“Regulatory compliance will continue to be a particularly large area of spending,” comments Turner. “The ever-increasing range of rules and regulations is requiring large investments and is currently consuming as much as 40% of overall IT budgets across the financial markets.”

This is supported by Ovum’s ICT Enterprise Insights** – the largest survey of senior IT executives ever conducted – which reveals that navigating the tsunami of regulation around the globe, particularly in North America and Europe, the two largest trading regions, requires significant investment in IT systems.

Ovum foresees an exciting year for telecoms wholesale as 2014 brings increased competition, internal conflict between wholesale and enterprise and voice interconnection shows signs of structural change

Melbourne, 10December, 2013 – Next year , the wholesale telecoms industry will wake up to customers' shifting priorities, the risks posed by internal conflict between wholesale and enterprise channels, the threats posed by new entrants into the market, and signs that structural change is finally coming to voice interconnection. This is according to Ovum’s Wholesale Telecoms 2014 Trends-to-Watch report*, which urges wholesalers to exploit these trends by differentiating from or partnering with new entrants, minimizing internal channel conflicts, becoming more responsive to customers, and exploring emerging alternative models for voice interconnection.

Wholesale Telecoms Trends-to-Watchhighlights

• Competition will grow in national wholesale markets.Traditional wholesalers must not consider existing revenue streams to be safe.Instead they should actively compete with new entrants, differentiating their offering in terms of service reach, breadth and depth of portfolio, quality, responsiveness, reliability, or customer service. However, established players should also seriously consider partnering with new entrants that have lower costs, greater quality, or other advantage over their own capabilities.

• Conflicts between wholesale and enterprise channels will increase. We expect carriers to continue turning their standalone wholesale units into lines of business (LOBs) reporting into their enterprise counterparts. But to reduce enterprise-versus-wholesale channel conflicts, carriers should clearly define and strictly enforce customer segmentations, with accounts assigned to one channel or the other.

• Customers will require wholesalers to be more responsive.Providers of wholesale services must realize that intermediaries need to be able to give their customers reliable dates for service availability. Hence, wholesalers must take action to improve systems and processes to speed up the delivery of services and the prediction, diagnosis, and resolution of faults.

• Voice interconnection will show signs of structural change. For the first time, regulatory, retail, and wholesale trends are all pushing in the same direction. 2014 will see the beginning of changes in pricing regimes for voice interconnection as retail telcos look to reset their voice cost base. However, the time has come for wholesalers to dust off those alternative pricing models and start testing which are and are not fit for purpose. Likewise, retailers that operate in markets where the trends are moving fastest should be talking to their wholesale providers to understand their options and plan for a long-term transition to new and sustainable voice models.

David James, Principal Analyst, Wholesale Telecoms, Ovum, says: “Despite its reputation for being rather traditional, unexciting, and averse to change, the wholesale telecoms market continues to evolve to meet the rapidly changing demands of retail service providers and other intermediaries. Since the turn of the millennium wholesale has transformed from a sleepy backwater that few discussed into a valuable source of revenue for many telcos. To remain effective, wholesalers must continue to respond to new developments.”

Ovum Comment: Alcatel-Lucent launches Metro Cell Express Site Certification Program

Following the news that Alcatel-Lucent has launched the Metro Cell Express Site Certification Program, Daryl Schoolar, principal analyst at Ovum provides his view on this major initiative:

“Mobile network operators want to provide better coverage to their customers through an affordable network investment. Metro small cells are a critical part of the plan, but mobile operators face challenges in how to actually deploy them in a timely, efficient, and profitable manner. Alcatel-Lucent’s just announced Metro Cell Express Certification program aims to make small cell deployments easier for mobile operators. The certification program provides mobile operators with a database of ALU qualified small cell site locations, system installers, and backhaul solutions.

“Obviously Alcatel-Lucent wants to sell more small cells, so anything it can do to accelerate small deployments is to its benefit.  By making the process of deploying small cells easier and faster by identifying needed resources ALU should help accelerate the markets growth and give it a point of differentiation. This is the goal of the certification database. By ALU creating a resource where mobile operators can find resources needed for a small cell deployments mobile operators won’t have to go out and do this completely on their own. This should save time on when it comes to installing small cells. If the vendors in the database are able spread some of the cost of say backhaul or site rental among multiple operators, mobile operators might also see a cost savings as well. Ovum has yet to see any other small cell vendor, at least publicly, commit to easing small cell deployment challenges at the level of ALU and its certification program.

“Of course the obstacle here for ALU is scaling the program. As it was launched today, Cell Express Certification only gives access to 100,000 sites to operators in the US and Western Europe. This is a good start, but ALU will definitely need to add more geographic coverage and exponentially increase the number of sites. While being able to provide access to every site needed through the certification program is obviously unrealistic, ALU must be able to cover a significant portion of the needed sites via its certification program for it to be successful. As Ovum has pointed out in past research, small cells are key to ALU’s overall future success and Metro Cell Express Certification is obviously something the vendor sees as key to its small cell success.”

Ovum predicts revenue growth and resource allocation challenges for network equipment providers in 2014

Melbourne, 3 December, 2013 – Ovum’s research* into the US$160bn telecom network infrastructure market indicates five key trends to watch in 2014* as communications service providers (CSPs) seek a better balance between cost and revenue: small cell adoption; data and customer experience management; the move to software-centric networks; increased optical network capacity in the metro; and changes in the infrastructure value chain. Vendors that stay in front of these trends should beat average market growth projections.

Network Infrastructure 2014 Trends-to-Watch:

• Ovum forecasts low single-digit revenue growth for communications service providers through 2018. The growth of over-the-top players, changes in subscriber behaviours, and regulatory policies are all negatively impacting CSPs' service revenues. This will limit CapEx growth and restrain revenue growth for network infrastructure vendors. Investments in higher-growth revenue opportunities, for example Big Data-related infrastructure and services, LTE, 100G, and the like, will allow vendors to outpace the general market.

• The big boom in small cells deployments won’t happen in 2014, but indications are clear that interest in small cells is growing. For 2014, small cell solutions for indoor spaces will be hot.

• Video analytics and optimization in particular will prove crucial. Improved customer experience and network asset management will increasingly require sophisticated, realtime policy-controlled traffic management and data analytics, especially for mobile networks.

• Telcos will gain confidence to expand software-defined networking (SDN), network virtualization, and network functions virtualization (NFV) trials and early deployments. In 2014, new and revised standards and specifications related to software-defined networking (SDN), network virtualization, and network functions virtualization (NFV) will bring the industry closer to consensus.

• Lower-cost coherent optical metro solutions will hit the market in 2014. Network value will increasingly be driven by software-tunable capabilities, allowing new possibilities for transport network optimization and monetization.

• In 2014, the equipment value chain will continue shifting to benefit application software and chips. For NEPs, the response is vertical integration to include more chip design. For merchant chip suppliers and innovative NEPs, over-the-top (OTT) operators tantalize with a shortened technology adoption cycle.

Dana Cooperson, VP Network Infrastructure at Ovum, said: “The tight revenue climate facing most CSPs is not likely to reverse anytime soon. For NEPs following these trends, one of the challenges will be of resource allocation. While new trends in network infrastructure cannot be ignored, there must be a balance between putting corporate resources into staying on top of new trends that may take several years to turn a profit versus putting resources into existing, profitable network solutions that have a limited life expectancy.”

Ovum reveals the PC is still king for Cyber Monday shopping

Melbourne, 2 December 2013 – Despite the widespread proliferation of mobile devices, the majority of Cyber Monday shopping will still take place using a desktop PC, finds Ovum. According to the global analyst’s Consumer Insights survey, security and data privacy concerns continue to be the main stumbling blocks to consumers embracing m-commerce, including m-payments, m-banking and m-shopping.

In a survey*of more than 15,000 consumers across 15 major global markets, Ovum found that 68 percent of respondents globally prefer to use a PC or laptop when shopping online. Only 1 in 5 use their mobile phone and a smaller proportion (14%) use a tablet. According to the findings, the reluctance to use a mobile device stems from perceptions that services are not secure (49% of respondents) or that personal data might be misused (47%). These results will no doubt disappoint the telecoms industry, which is investing massively in developing mobile payment services in both mature and emerging markets.

“The implications of these findings are profound for the growing mobile commerce ecosystem, as when it comes to digital commerce, consumers clearly still feel more comfortable with their PC and laptop,” says Angel Dobardziev, principal analyst at Ovum. “This shows that operator strategies that factor in rapid adoption of mobile commerce services need a reality check. Furthermore, the industry must design services that build on users’ comfort with e-commerce over the PC and extend it to the m-commerce domain.”

Further reinforcing the infancy of mobile commerce, the survey reveals that 50 percent of respondents have no interest in trying mobile payments in the next 12 months, and fewer than 2 in 10 respondents make m-commerce transactions on a regular basis (excluding checking bank balances, which 35 percent use regularly). Regionally however attitudes to mobile financial services remain highly variable across regions. For instance consumers in Asia-Pacific are the leading adopters of mobile money services, followed by EMEA and then the Americas. In terms of age, younger consumers in the 16–34 age band are almost twice as likely to be users of mobile money services as their more mature peers in the 35+ band.

“There is no doubt that eventually we’ll see mobile devices used for the majority of our online services, but in the m-commerce sector there is still some way to go. To succeed, service providers will need to carefully understand and effectively address the subtle differences that concerned consumers have with using mobile money and mobile commerce services,” concludes Dobardziev.

Ovum says retail banks will focus on revenue, over regulation in 2014

Greater investment in IT, particularly online and mobile channels, will see retail banks embrace customer-centricity

Melbourne, 2 December 2013: Retail banks’ priorities are set to switch in the next year, with revenue growth taking precedence over cost-control and compliance management. New research* from Ovum, a leading global analyst firm, reveals that although cutting expenditure and complying with regulations will continue to be vital, retail banks must focus on revenue enhancement to provide a sustainable return for stockholders.

Over the next year, retail banks’ business methodologies will also be impacted. The prioritisation of revenue growth means there will be a focus on customer experience management and further investment in customer-facing business processes. For the former, digital channels in particular will be in the spotlight, but in an omnichannel context. This is expected to result in an improvement both in the efficiency of client interaction and in customer satisfaction.

“Retail banking has been undergoing a structural shift since the financial crisis, the repercussions of which continue five years later,” says Daniel Mayo, practice leader, financial services technology, Ovum.  “However, the sector now appears to be moving into the next phase, driving a new set of priorities or strategies, with a focus on revenue growth, and making customer-centricity key.”

This is supported by Ovum’s ICT Enterprise Insights** – the largest survey of senior IT executives ever conducted – which reveals that as the economic environment improves globally, banks are realising that investments must drive the enhancement of the customer experience. It is crucial that retail banks drive sales channels as a competitive differentiator and provide higher standards of customer service.

To achieve this, retail banks will spend more on IT infrastructure. The digitisation of retail services will continue, creating ongoing security challenges and requiring investment to balance user experience with robust security. However, the key technology shift will be the incorporation of analytics into business processes at an operational level, particularly in the areas of risk, marketing and operations.

Mayo concludes: “Despite economic headwinds, IT spending in retail banking will see strong growth, with online and mobile channels being the top investment areas. This spending will be driven by security enhancements, marketing and self-service capabilities, all of which are geared towards placing the customer at the centre of the retail banking industry.”

Ovum reveals 2014 will witness social messaging players challenge the status quo of mobile social networking

Melbourne, 27 November 2013 – The social messaging market is rapidly evolving and expanding as messaging players begin to amass hundreds of millions of users. In 2014 we will see further acceleration in user growth, together with a widening in the scope of social messaging services. More interestingly, in 2014 Ovum expects to see social messaging players challenging the status quo of mobile social networking and media and creating a paradigm shift in social media that will impact several OTT giants.

According to Ovum’s latest Social Messaging 2014 Trends to Watch report*, services such as Line and WhatsApp are mobile first services and are changing the way the consumer interacts with social media - be it messaging, voice, games or utilities and widening the possibilities of the type of social services that can be accessed on mobile.

Social Messaging 2014 Trends-to-Watch:

    A new wave of OTT players will hit the market in 2014.

    Expect a fundamental shift in social networking services.

    Social messaging will start to generate revenues.

    Messaging will evolve beyond text.

Neha Dharia, Analyst, Consumer Telecoms and author of the report says, social media as an industry is undergoing a major transition, one the key drivers of which is the rapid proliferation of social messaging services.  Social messaging apps are mobile centric services are intuitive and viral in growth have the ability to reach a wider audience. As new services get added on to messaging apps, we can expect these services to evolve into mobile media platforms which large user bases.

“In addition, we expect social messaging to slowly but surely start to generate revenues, which will assist in the evolution of social messaging players' offerings from messaging apps to holistic mobile media platforms,” Dharia says.

This shift has been driven mainly by mobile-first services due to more consumer accessing social services through mobile devices. The mobile internet used on variety of mobile devices is rapidly taking off in developed and emerging markets alike and will form the basis of the internet in the future.

Dharia states, “There is an increasing shift to mobile devices on either side of the development process and there is no doubt that mobile-first services make fuller use of the advantages of mobile than services that are ported from the PC to mobile.”

Social messaging players will trial services that move well beyond communications, including games, payments, information services and utilities. Social messaging apps will continue to evolve into mobile media platforms in their own right, using mobile technology to create contextual services for consumers.

“The rise of this new breed of mobile-focused, messaging-centric OTT players will be the driving force behind the changes in social networking and media services. By 2014 users will no longer need to access

services only through a social network  rather they will be able to access a service on its own. This service will then be connected by several channels to social networks, social media and other consumer services. What was once a horizontal service platform will have evolved into the glue holding several consumer services together,” concludes Dharia.

Ovum predicts global optical networks market will exceed US$17.5bn in 2018 as 100G surges

Melbourne, 13 November 2013 – The optical networks (ON) market will exceed US$17.5bn by 2018, for a 3.1 percent CAGR from 2012, predicts global analyst firm Ovum. An exceptionally strong 2Q13 has signaled the beginning of a spending bounce-back.  2Q13 was the strongest quarter in the last six and was the 7th highest quarter in the last 10 years.

In a new forecast analysis*, Global ON is projected to be up 1.1 percent in 2013 compared to 2012 based on positive growth forecasts for North America, SLTE, Asia-Pacific and South & Central America.

“Ovum’s 9.1 percent growth projection for North American ON sales in 2013 signals a solid bounce-back year after two years of non-growth” says Ian Redpath, Analyst, Network Infrastructure and author of the report.  “Network core investments are resuming and 100G is being deployed in volumes. The North American tier-1 communications service providers (CSPs) and cable operators are investing in their core network to support all traffic types. ”

Meanwhile, submarine line terminating equipment (SLTE) sales are projected to achieve modest growth of 3.3 percent after four long down years. In the Asia-Pacific region, strong growth in China, with help from the ASEAN-5 countries (Indonesia, Malaysia, Philippines, Thailand, and Vietnam) and Australia and New Zealand (ANZ), will mitigate projected market declines in Japan and India. Ovum’s growth projection for Asia-Pacific ON in 2013 is 3.1 percent.

South & Central America (SCA) ON revenues are projected to grow by 1.6 percent for 2013. ON spending in SCA has achieved a new level, passing the $1bn mark, and Ovum is projecting that level will be maintained as the SCA economies continue to grow and diversify.

The Europe, Middle East & Africa (EMEA) region unfortunately remains mired in an economic malaise. “We expect 2013 ON sales to come in at a dismal negative 9.6 percent versus the 2012 level,” says Redpath. “Spending has been down in four of the past five years, and under-investment in the region is becoming more acute. At some point, the CSPs will have to resume buying to make up for this prolonged period of under-spending.”

 The major technology trend for the forecast is the ascendancy of 100G, whose revenues exceeded 40G sales for the first time in 2Q13. 100G spending was up 233 percent for 1H13 compared to 1H12, achieving US$1bn in revenue for 1H13, while 40G was down 24 percent for 1H13 compared to 1H12, with revenue dropping below US$1bn level to US$942mn.

“Nearly all new large-scale, long-haul optical networks designed and deployed today will be 100G. 100G has assumed the lead position and will not yield within our forecast period. Two positive market trends are emerging at the same time. The first is a need for the CSPs to refresh network technology after a long period of running core networks hotter and delaying investment. The second major trend is the maturity of 100G technology to the point where CSPs have begun deployments at scale. 100G is in the right spot at the right time,” says Redpath.

“Ovum’s most likely forecast scenario to 2018 projects strong positive growth in North America. Modest growth is projected for Asia-Pacific as a whole, with strong growth for ASEAN-5 and ANZ, moderate growth for China, and low growth for Japan and India. The growth expectations for Europe are a mixed:  down in 2013, modestly positive in 2014, and then more vigorous gains for 2015 and beyond,” concludes Redpath.

Ovum Comment: Cisco acquires its spin-in Insieme

OVUM COMMENT

David Krozier, Principal Analyst, Network Infrastructure, Telecoms, Ovum

“Cisco acquires its spin-in Insieme”

“Today Cisco announced it would acquire its spin-in Insieme, and provided new detail on the Application-Centric Infrastructure (ACI) for data centers that Insieme introduced in June 2013.  Cisco continues to promote the role of hardware in delivering future high performance networks and took great pains to distance itself from pure software based overlay virtualized networks (like the Nicira technology VMware acquired, Junipers Contrail, and Alcatel-Lucent’s Nuage) in the data center.

Insieme’s ACI solution consists of:

    The 100 Gbps ready Nexus 9000 Series switches that run under a new optimized version of NX-OS and can support up to 1.92 Tbps of bandwidth capacity per slot.  The 8-slot Nexus 9508 is available now, and other switches in the family will follow.

    The Application Policy Infrastructure Controller (APIC) supports a common policy framework that Cisco will extend to bring compute, storage, and network infrastructure under a common pane of glass for management and control. APIC uses a common application network profile similar to the service profile in Cisco’s UCS that will allow applications to be placed where they need to be instead of being tied to an IP address. APIC and the optimized NX-OS will be available in April 2014.

Ovum notes that while the 9000 Series switches can operate standalone, the features provided by the APIC controller require Cisco hardware.  While this may raise the hackles of those who believe future networks should be based on generic hardware platforms, this approach is unlikely to match the performance capabilities of ACI.”

“Twitter’s IPO is creating excitement”

OVUM COMMENT

Eden Zoller, Principal Analyst, Consumer, Telecoms, Ovum

“Twitter’s IPO is creating excitement”

“Investors see social media and mobile as sweet spots and it is therefore no surprise that Twitter’s IPO is creating so much excitement and is oversubscribed. Twitter’s valuation just ahead of its IPO stands at US$17.4 billion at the upper end, and this is high given that Twitter is still not profitable and has a much smaller user base than Facebook did at the time of its IPO. It is critical for Twitter to move quickly and effectively post IPO to address the challenges it faces in achieving growth and profitability. Twitter needs to step up and deliver on the expectations that are fuelling its valuation, and show that it has what it takes to provide a sustainable business model.

The two foremost challenges Twitter needs to address are linked: how to keep users engaged while driving advertising revenues.  To achieve these objectives Twitter will need to innovate in both services and advertising, but the format constraints that make Twitter such a dynamic and immediate service also limit its ability to innovate compared to a much broader platform like Facebook. Twitter has a difficult balancing act whereby it must introduce new ad formats into the Twitter stream without compromising the user experience. If it fails to get this right it will jeopardize user engagement and with it advertising spend. At the same time, investing in new service and advertising features will also push up costs, which if not carefully controlled will further impact Twitter’s ability to generate profits.

Twitter must also build advertising revenues as a matter of urgency outside of the US. 77 percent of Twitter’s user base is outside of the US but advertising is not keeping pace, with only 26 percent of advertising revenues generated from international markets. We expect to see continued strong growth in Twitter’s international user base and it literally cannot afford not to monetize this base.

 Mobile will be a key metric to watch once Twitter goes public and from a mobile advertising perspective this is one area where Twitter is further ahead of the curve than Facebook was at its IPO.

Twitter’s filing revealed that over 75 percent of Twitter’s 218 million users interact with the service via mobile and that over 65 percent of the company's advertising revenues are generated from mobile devices. This is promising and Twitter must ensure it builds momentum behind mobile. But this will not be easy as Twitter faces competition from an increasing number of home-grown social network and instant messaging services, particularly in Asia where the likes of WhatsApp, Kakao and Line are very popular.”

Ovum comments: Apple announces a raft of new products and price changes

Following the raft of new products and price changes announced by Apple recently, Jan Dawson, chief telecoms analyst at Ovum has the following initial comments:

“As expected, Apple took some cues from the iPad Mini in launching the new iPad Air, which is thinner and lighter, while adopting many of the internal improvements first seen in the iPhone 5S. This represents a good enough boost to the previous version to trigger good upgrade sales and get iPad shipments growing again, which was a key objective for this launch. However, the company also took a step back from the strategy it adopted when it launched the first iPad Mini. When that device launched, it was with a sub-par display and specs that matched the older iPad 2. The new iPad Mini and iPad Air both have top-of-the-line specs, and start at US$399, meaning that the minimum price for a high-performance iPad has actually gone up. Meanwhile, the iPad 2 and iPad Mini will remain on sale at lower prices, but with significantly less appeal given the gap in specs between them and the new iPads. It seems as though Apple is trying to push average selling prices for iPads back up again after they’ve dropped steadily over the past year. Both devices should sell very well, especially over the holiday period, but Apple held off being as disruptive as they might have been by pricing them relatively high.

“This is the clearest statement Apple could have made that it is only interested in competing in the premium tablet space. The yawning gap between the specs of the cheaper iPad Mini and iPad 2 and the new iPads signifies that it is only willing to compete at the lower price points with older models. This leaves a huge chunk of the tablet market unserved by Apple while others such as Google, Amazon and a raft of others aggressively target the sub-US$400 market. This reinforces our view that Apple’s share in tablets will continue to fall as Android’s share rises over the coming years.

“Though the iPad news will generate the headlines, the changes to Apple’s software licensing for Mac OS X, iLife and iWork is also important, not least for Microsoft. Microsoft generates 96 percent of its operating margins from operating system and productivity software licensing, and Apple is now teaching people to expect both of those things to be free. While this won’t disrupt Microsoft’s business overnight, it will create further pressure on Microsoft to bring down prices for its productivity software and especially for Windows.

“This is yet another example of one of the keys to being a successful player in the consumer tech market: using your core business to subsidize low-cost or free products in other categories. Amazon uses its e-commerce and digital sales to fund devices, Google uses advertising revenue to fund its software and services, and Apple is now using hardware to subsidize software across the board. The big question is, what can Microsoft do to compete, when its cash cow is being eroded by these moves from its competitors?”

AuraPortal Creates AuraPortal Cloud to Offer IaaS and SaaS Services to any Organization

AuraPortal Cloud Computing enables any entity to enjoy the benefits of the best Business Process Management (BPM) software, with the fastest and safest hardware, without any investment or maintenance worries and at a very affordable price.

October 20, 2013 – AURA (www.auraportal.com), a global provider of Business Process Management (BPM) software, has announced the creation and launch of its sound Cloud Computing structure.

This will enable any type of organization, public or private, to undertake BPM implementation projects through the AuraPortal.(*) suite without the usual structure and investment concerns inherent in such projects, and with the software licenses included in the service.

The idea of the Cloud is simple: It consists of adopting for the computing services the same model used in utilities services.

In the same way that an electricity user simply plugs in a cable to obtain power supply without bothering whatsoever about the cost and knowledge required to build and manage power plants and distribution grids, a company will be able to manage its processes with the AuraPortal BPM suite by simply connecting to Internet from any browser; and what is more, this allows complete mobility as AuraPortal can be accessed from any tablet or smartphone, without having to think about hardware or software requirements.

After several years of development and fine tuning, Cloud Computing is rapidly becoming the latest and unstoppable trend for the use of software applications, now that it is clear that the questions about access, security and reliability have been overcome.

Whatever the level of service, the user does not have to invest in hardware or software, AuraPortal handles all the necessary investments.

(*).AuraPortal has been distinguished with great advantage over its competitors by Ovum in its Decision Matrix (2011) report and by other renowned analyst firms.

Ovum comments: Apple won't crumble just yet

Following Apple’s announcement today, Ovum analysts have put together their initial reaction. Tony Cripps, Principal Analyst, Devices and Platforms, Telecoms at Ovum provides his view on the new releases:

“Even post-Jobs Apple still does great theatre, even if most of what was announced was unusually well-heralded in the blogosphere.

“Clearly there’s little need for gimmicks in the flagship 5S, in a launch replete with significant spec upgrades over and beyond the usual screen improvements. Apple, is certainly offering meaningful innovation here. Moving to a 64-bit architecture means Apple can genuinely claim to have brought something new to the smartphone party. It should certainly help the company further cement its lead as a mobile gaming platform and will give the Android fraternity something to think about in a space whose significance is sometimes downplayed beyond the gaming world.

“Ingratiating itself to the burgeoning community of health and fitness application developers with new sensors is also a good move by Apple at a time when consumer and professional interest in those categories are booming.

“Meanwhile the integrated capacitive fingerprint sensor will build legitimacy for the technology in mainstream consumer electronics, although privacy concerns are bound to raise their heads in these newly paranoid times.

“Anyone expecting Apple to come truly down market with the iPhone 5C was fooling themselves. The day that happens is the day the company signals that it has run out of headroom for expansion. It’s far from ready to concede that yet as it’s greater interest in Japan and China show, although the mooted tie up with China Mobile wasn’t announced as this comment was written.

“It does though indicate an acceptance that the consumers in the upper reaches of the smartphone mid-market are increasingly looking to distinctive devices of their own, and are not happy to accept cast offs or dumbed-down versions of former flagships.

“Colour variations and a clear design of its own is a good way to do this and clearly Apple isn’t too proud to follow its smartphone rivals in using this tactic. This change hasn’t affected Apple too much to date but would have represented a threat if the company hadn’t addressed the problem now – its once a year refresh can sometimes work against it.”

Ovum reveals key recommendations for those addressing the next billion mobile Internet users in emerging markets

Operators in emerging markets must simplify data access and embrace pre-paid user base, says Ovum

Melbourne, 20 August 2013 – The next wave of mobile Internet users will be from urban areas of emerging markets, finds Ovum. The lack of fixed Internet infrastructure in the region and the significant purchasing power of urban residents are pushing both end users and service providers towards mobile. Operators and content providers should therefore step up to help the next billion progress to a smarter mobile Internet experience.

New research from Ovum* highlights the correlation between the growth of the mobile Internet and the adoption of “smart” devices in emerging markets. While the installed base of smartphones accounted for just over 20 percent in emerging markets at the end of 2012, Ovum estimates that it will reach nearly 50 percent by 2017, which translates to over 2 billion devices. As the fastest-growing segment within overall devices, smartphones will be a critical driver of increased mobile Internet use across emerging markets.

“The rising ownership of smart devices is not just giving some consumers access to the Internet for the first time; the wide availability of these devices will also increasingly divert traffic to the mobile web,” explains Shiv Putcha, principal analyst, consumer telecoms at Ovum. “Operators and content providers now have an important role to play in helping the next billion transition from basic voice and SMS functionality, to their initial steps with mobile browsers, and ultimately to smart experiences on the mobile Internet.”

Ovum’s research recommends that mobile network operators (MNOs) embrace the prepaid user base for mobile broadband and also highlight the importance of simplified data access pricing. “The next billion consumers are typically highly value conscious; tariff complexity combined with potential bill shock will deter prospective mobile Internet users. These consumers will expect variety and simplicity in access packages and look for unlimited, time-based, and content-based packages,” explains Putcha.

For content providers, localization of mobile content services is essential due to the strong cultural identities and preference for local languages in emerging markets. Ovum also recommends that content providers partner with operators for billing support to enable users to spend smaller amounts over a larger period of time, particularly considering the limitations of current payment methods.

Ovum predicts the global enterprise Ethernet services market to exceed US$62bn by 2018

Melbourne, 14 August 2013 – The global enterprise Ethernet services market will exceed US$62bn by 2018, with the market growing at a 13.6 percent compound annual growth rate (CAGR) from 2012, says global analyst firm Ovum.

In a new forecast*, the independent telecoms analyst firm found Ethernet services revenues in 2012 were up to US$29.1bn, from US$26.5bn in 2011. For 2013, the Ethernet market is projected to be up 16 percent, reaching US$33.8bn.

Regionally, Ovum is projecting steady growth for North America at 11 percent CAGR for revenue from 2012–18. Meanwhile, EMEA has a higher growth potential at 14.9 percent CAGR based on carrier activities in Eastern Europe and the Middle East. In the Asia-Pacific region, excluding Japan, the growth forecast is at 23.9 percent based on a growing Ethernet market in China and the ASEAN-5 (Indonesia, Malaysia, Philippines, Thailand, and Vietnam). Japan, the largest Ethernet market in Asia-Pacific at US$6.5bn in 2012, is projected to continue at a mature market CAGR of 5.3 percent.

“Ethernet and IP VPN are the two essential data-optimized WAN connectivity technologies that are supplanting many legacy data connectivity technologies,” explains Ian Redpath, principal analyst, Network Infrastructure, at Ovum. “The resilient nature of Ethernet service growth is underpinned by a number of factors. Enterprises continue to combine previously separated voice and data networks into one converged Ethernet network connection, are comfortable in doing so, and are happy to reap the connectivity savings.”

Emerging Ethernet markets in many countries will have a long run of port growth ahead as their fundamental telecom infrastructure is improved, enabling more businesses to connect to local and global networks. In the highly developed Ethernet markets, bandwidth-per-port growth will be the story as more bandwidth-intensive applications ride over the top of the Ethernet connection.

“A large-scale optical network refresh is under way worldwide. The latest wave of network upgrades is enabling the 100GE-as-a-service market to begin. The new multi-terabit optical systems can accommodate 100GE as a service and the communications service providers (CSPs) are starting to roll out 100GE as a service,” says Redpath. Ovum projects the 100GE market will start modestly. Deployments are likely in CSPs' wholesale and high-capacity data center interconnect types of applications, but will broaden in time in major network global hub and data center–dense markets.

“The most fundamental state-of-competition factor is the number of players in a market. Competition continues to heat up in key global cities and regions. CSPs will need to continue to sharpen their differentiators: access, interconnection, cost base, service wrap, and bundle propositions,” recommends Redpath.

Ovum warns telcos to make critical assessments of their assets and operations to determine future growth

Melbourne, 24 July 2013 – A review of the full-year KPIs of 23 of the world’s largest telcos makes for sombre reading as revenues continue to decline, finds Ovum. Telcos will have to make a critical assessment of their assets and operations if they are to remain profitable, warns the global independent analyst firm.

New research* from Ovum examining the 2012 performance of mature, emerging and global market telcos** reveals that all operators with significant exposure to Europe reported worse results in 2012 compared to 2011. The overall revenues of European telcos were substantially lower, and growth in their emerging market operations was not enough to offset the losses in their domestic markets.

Telcos in Asia-Pacific and emerging markets experienced some growth but at a slower rate than in 2011.  The exceptions were China Telecom and China Mobile, which both reported significant revenue uplifts in 2012. Although operators in Japan, North America, and South Korea fared better, the revenue growth of all operators is expected to slow down until at least 2018.

“This research highlights the need for telcos to realign their business strategies for 2013 and beyond,” explains Adaora Okeleke, Telco Operations analyst and author of the report. “But simply reducing costs is not the answer. Telcos need to focus on monetizing opportunities created by mobile broadband, use core assets to expand into other industries and change the telco operating model, including the disposal of non-core assets.”

According to Ovum, there are many assets in telcos’ current estates that can weigh heavily on their businesses, particularly when they involve high opex and make little or no contribution to revenues and profitability.

“Telcos could feasibly play a role as service enablers, but they first need to adopt the leaner structures of over-the-top (OTT) players such as Google.” comments Okeleke.  “By partnering with application developers and allowing them to use their secure platforms for service delivery, telcos will be able to drive innovation and reduce time-to-market.”

Ovum forecasts that telco revenue growth will slow at a CAGR of 2percentbetween 2012 and 2018. The growth that does occur will largely come from emerging markets, with China playing a major role. The growing number of smartphone users will lead to an increase in the use of data services, which will help to drive operators’ revenues. The number of mobile subscriptions is set to increase in 2013, which is largely due to growth in mobile broadband services.

* Telco KPIs: 2012 Analysis
** “global market telcos” are defined as telcos with significant operations in both mature and emerging markets.

Ovum comment: Nokia Lumia 1020 sets new smartphone benchmark but pricing will be key

Nokia’s latest Lumia 1020 finally marries Microsoft’s Windows Phone 8 software with the 41MP over-sampling camera technology the company previously marketed in the Symbian PureView 808.

Tony Cripps, Principal device analyst at Ovum believes “The combination sets a new benchmark for high-end smartphone engineering – and a timely reminder of Nokia’s R&D capabilities – but the company must still overcome incumbent rivals, slow adoption of Windows Phone and a modest marketing budget if it is to finally help the company turn a financial corner after its recent time in the doldrums.”

Cripps continues:

 “At a time when macro-level innovation has seemed to be lacking in smartphones – due to the homogeneity of smartphone operating systems and the drive to appeal to the mass market – Nokia’s Lumia 1020 demonstrates that there is still considerable scope to drive forward the user experience in core smartphone capabilities. This is evidenced not only in the Lumia 1020’s imaging prowess but also in its audio abilities, the company’s Rich Recording technology similarly transforms the Lumia 1020’s audio recording.

“Both imaging and audio are key areas of investment for Nokia and crucial to its long-term strategy of rebuilding market differentiation. This is true not only at the high end, where the Lumia 1020 will be something of a beacon, but also further down the range as the fruits of Nokia’s labours begin to trickle down through the midrange towards the value end of the smartphone spectrum.

The previous PureView 808 gave a tantalizing view of what was possible in terms of phone imaging but felt squandered in the context of its geriatric operating system and aesthetically compromised by a cumbersome – if impressive – camera module.

“The Lumia 1020 addresses both issues. While the new camera module contributes to a device that is noticeably thicker than the existing flagship, the Lumia 925, it is small enough to avoid the chunky and top-heavy design of its PureView 808 forebear. The PureView user experience is similarly upgraded through its integration with Microsoft’s elegant Windows Phone 8 platform, which itself benefits from a flagship device featuring category-leading imaging technology.

Supermodel must show its class not become a cheap date

“Nonetheless, while the Lumia 1020 looks to be the new belle at the smartphone ball, its debut will not necessarily attract a mass of suitors. Most obviously, the device will be expensive. Pricing has yet to be revealed but engineering of the kind on offer in the Lumia 1020 does not come cheap. Aggressive operator subsidies would no doubt help in that regard, but might detract from the device’s premium engineering and user experience.

“Furthermore, Nokia, and Windows Phone more generally, still suffers from a lack of consumer awareness and marketing dollars compared with their key rivals, Apple and Samsung-plus-Android. While this situation is undoubtedly improving, these factors continue to put off many prospective consumers due a greater chance of favorite applications being unavailable.

As such, when lined up against rival devices such as Apple’s iPhone 5 and Samsung’s Galaxy S4, which now effectively sell themselves, the case for selecting the Lumia 1020 is less clear cut.

Nokia may still have work to do to convince prospective buyers to sacrifice favourite apps for superior imaging. But for those who are less concerned about specific third-party apps or in need of something different, the Lumia 1020’s pictures provide a thousand reasons to look again to Espoo.”

Ovum warns telcos to compete less and collaborate more as innovation efforts get put under the spotlight

Melbourne, 9 July 2013 – Innovation is critical to telco survival, finds Ovum. Yet many operators miss the big picture, exaggerate the threat from over-the-top (OTT) players, and misunderstand the broader benefits of innovation.

New research* from the global analyst firm examined more than 3,500 new service launches since 2009, finding that telcos must compete less and collaborate more. When comparing telcos’ efforts with Apple and Google’s approach to the app ecosystem, it is obvious why they never managed to gain a foothold in the market. Ovum implies that telcos were too selective when choosing partners and overburdened their prospective allies with unrealistic revenue expectations. Instead, the report recommends that telcos use partnerships to scout for new ideas, assimilate them, and capture value. In addition, the research indicates the importance of prioritising innovations (whether products and services, business models, or tariff strategies) that exploit the centrality of operators’ networks.

“No matter how much telcos try to diversify, their primary role will always be as carriers of voice, messaging, and data traffic. However, an efficient network that has been updated with new innovations can be combined with innovative business models to continuously deliver value to telcos and their shareholders,” says Emeka Obiodu, principal analyst in Ovum’s Industry, Communications, & Broadband practice. “As Google (with advertising on search), Apple (with devices), and Microsoft (with software) have shown, a well-crafted strategy can use additional, preferably low-cost, new products and services to supplement and shield core products.”

Elsewhere, the research highlights the significance of a comprehensive approach to evaluating the benefits of innovation. Ovum believes that telcos should use the notion of “net innovation benefit” – which is made up of “net new revenues”, “net cost savings”, and “net non-monetary benefits” – to measure the success of their innovation activities. The advantage of this metric is that it unifies the traditional metrics used for new products, processes, and marketing initiatives.

“By using such a comprehensive approach to evaluating new ideas, telcos will be able to avoid the short-sightedness and misunderstandings that have underpinned some of their previous innovation activities,” concludes Obiodu.

Ovum warns that telcos who ignore Big Data do so at their peril

Melbourne, 2 July 2013 – Predicting and reducing churn, promoting loyalty, upselling and cross-selling offers, and personalizing services are all key areas where telcos can leverage Big Data analytics for business benefit, says Ovum. Yet, one of the major reasons why this hasn't occurred is because of a traditional stumbling block – telco organizational and data structures.

In new research* investigating how telcos can monetize customer data, Ovum reveals that a well-executed Big Data analytics project requires flexible business structures and logical processes, not siloed structures with artificial constraints (i.e. internal politics) that have been defined by the network domains.  In order to succeed, telcos also need to become more data-centric and take lessons from the leaner and more agile data analytics models that are currently being pursued by over-the-top operators. Only once this issue has been resolved will telcos be able to effectively monetize the increased volume, variety, velocity, and value of the network, subscriber, and business data that they collect as part of their businesses.

“The proliferation of smart devices and services has led to a considerable increase in the number of customer–telco interactions. This is happening through multiple channels, which is forcing telcos to sharpen their focus,” says Clare McCarthy, head of Ovum’s Telco Operations practice. “As a result, mining a greater volume and variety of data, and doing so in realtime, is becoming a powerful competitive advantage for telcos.”

However, according to the research, many telcos still lack the necessary data management and analytics skills in-house to make their data work for them. As data scientists are in high demand and short supply, this area is ripe for vendor support, either with pre-integrated solutions or hosted services. Telcos are generally turning to one of four sources for their Big Data analytics needs: their existing OSS/BSS providers, trusted IT vendors, telco analytics specialists, or incumbent network equipment providers. Each carries its own particular competencies and strengths in vying for a share of a Big Data analytics market that Ovum forecasts will be worth US$7.7bn in 2018.

“Transforming ingrained operating models and business processes is a difficult task for telcos, and many are not entirely sure what they are transforming towards. Therefore, choosing a business intelligence and analytics solution and partner will be one of the most important strategic decisions that they face in the next year,” concludes McCarthy.

ZTE slips by Alcatel-Lucent in global ON market; top two slots now held by Chinese vendors. 100G passes $1bn, but overall market remains sluggish

London, 29 May 2013 – Ovum’s analysis of 1Q13 results in the $14.5bn global optical networking (ON) market has highlighted several key shifts. First, ZTE overtook Alcatel-Lucent to grab the number two spot; for the first time, Chinese vendors hold the top two ranks in optical networking. Second, growth in 100G remains a bright spot as annualized revenues exceeded $1bn for the first time ever. Third, market growth overall remains difficult, challenging equipment vendors; only Fujitsu posted sequential and year-over-year gains.

“While it is not uncommon for the market to decline going into the first calendar quarter, the decline is worrisome as this is the fifth straight time the market has declined versus the prior year's quarter, and quarterly revenues are the lowest they’ve been in six years,” says Ron Kline, network infrastructure analyst at Ovum. “On the bright side, 100G continued to show strong growth both sequentially and year over year. 100G port shipments in 1Q13 grew 41% and revenues grew 24% versus 4Q12, with annualized revenues surpassing $1bn for the first time. Twenty vendors shipped 100G for revenue in 1Q13 and more are slated to enter the market throughout the year. Guidance from vendors is cautiously optimistic, with good short-term visibility into order growth; long-term visibility remains cloudy.”

In a new market share analysis*, the global industry analysts verify that besides 100G, sales of next-gen converged packet-optical gear, including OTN switching gear, is up compared to the year-ago quarter, although annualized sales of 40G gear declined for the first time, indicating perhaps that the 40G market is starting to slow as vendors price 100G aggressively. From a regional perspective, Ovum reveals that spending compared to the year-ago quarter dropped in Asia-Pacific and EMEA, remained flat in North America, and grew 15% in South & Central America.

The global industry analysts believe the current downturn is being driven by a quickening in the shift in spending to non-IP/Ethernet aggregation equipment, faltering economic growth in Europe, and lower pricing due to intense vendor competition.

“The 1Q13 global ON revenue results are consistent with our most recent annual forecast published in April 2013. Ovum is projecting the optical networks market will exceed US$17.1bn by 2018, for a 2.7% CAGR from 2012. We project that all ON market regions will resume growth in 2013 as carriers who exercised fiscal caution and deferred spending in 2012 restart their plans. Growth of IP, video, mobile data, and data center expansions occurring in urban and more remote areas will be an ongoing catalyst for network footprint extension and capacity growth. Submarine network footprint and capacity will also expand in 2013,” concludes Kline.