The Race to Emerging Markets is Heating Up – Insights from TBR’s 4Q12 Network Infrastructure...

TBR

TECHNOLOGY BUSINESS RESEARCH, INC.

TBR’s Network Infrastructure Services4Q12 Benchmark Highlights and OutlookTechnology Business Research Webinar Series

May 7, 2013

TBR

2 TBR Webinar Series | 5.7.13 | www.tbri.com ©2013 Technology Business Research Inc.

NIS Benchmark Contacts

Your presenter:

Scott DennehySenior Analyst, Networking & Mobility PracticeEmail: [email protected]: @scottdTBR

mailto:[email protected]

TBR


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


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

TBR


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

TBR


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%

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$0 $500 $1,000 $1,500 $2,000

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NIS Revenue for All Lines of Business

4Q12 Total NIS Revenue (Millions USD) TBR

SOURCE: TBR AND COMPANY DATA

TBR


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%

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$0 $100 $200 $300 $400 $500

NIS

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NIS Operating Income for All Lines of Business

4Q12 NIS Operating Margin (Millions USD) TBR


TBR


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

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Maintenance Services Revenue for All Lines of Business

4Q12 NIS Maintenance Services Revenue (Millions USD) TBR


TBR


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

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Deployment Services Revenue for All Lines of Business

4Q12 NIS Deployment Services (Millions USD) TBR


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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

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$0 $75 $150 $225 $300 $375

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Professional Services Revenue for All Lines of Business

4Q12 NIS Professional Services Revenue (Millions USD) TBR


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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

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$0 $50 $100 $150 $200 $250 $300

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Managed Services Revenue for All Lines of Business

4Q12 NIS Managed Services Revenue (Millions USD) TBR


TBR


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


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


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

Technology Business Research (TBR) is a leading independent technology market research and consulting firm specializing in the business and financial analyses of hardware, software, networking equipment, wireless, portal and professional services vendors.

Serving a global clientele, TBR provides timely and accurate market research and business intelligence in formats that are tailored to clients’ needs. Our analysts are available to further address client-specific issues or information needs on an inquiry or proprietary consulting basis.

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To learn how our analysts can address your unique business needs, please visit our website or contact us today.

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This report is based on information made available to the public by the vendor and other public sources. No representation is made that this information is accurate or complete. Technology Business Research will not be held liable or responsible for any decisions that are made based on this information. The information contained in this report and all other TBR products is not and should not be construed to be investment advice. TBR does not make any recommendations or provide any advice regarding the value, purchase, sale or retention of securities. This report is copyright-protected and supplied for the sole use of the recipient. Contact Technology Business Research, Inc. for permission to reproduce.


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The Race to Emerging Markets is Heating Up – Insights from TBR’s 4Q12 Network Infrastructure...

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