Five years ago, network operators were still hesitant to outsource operations and entrust their business to someone else, so the amount that they spent on network managed services totaled just US$5 billion in 2007. Today, almost every network operator depends on managed services for at least part of their operations and network managed services totaled US$12 billion in 2011.
“Outsourcing is a win-win situation,” says Jim Eller, principal analyst, wireless infrastructure. “Network operators can reduce OPEX, improve service quality, and increase revenues. And network equipment vendors earn higher margins on services than on hardware and software, which is increasingly commoditized.”
The leading vendors in network managed services are the major network equipment vendors: Ericsson, Nokia Siemens Networks (NSN), Huawei, and Alcatel-Lucent. Ericsson has been number one in network managed services since the first offerings in the 1990s. However, NSN has won more managed services contracts than anyone else over the past couple of years and was a close second in terms of 2011 managed services revenues. Alcatel-Lucent, third in network managed services last year, has introduced a lot of innovations in managed services offerings, such as energy managed services for sustainability. Meanwhile, Huawei is fourth but gaining quickly, with successes in emerging markets due to low-cost service offerings.
Aditya Kaul, practice director, mobile networks, sees a fundamental change in network managed services. “It’s not just about reducing operational costs anymore,” says Kaul. “Most operators have already achieved cost savings through outsourcing, so they are now looking for managed services partners who can help them to transform their businesses and increase revenues. We call this new paradigm ‘Managed Services 2.0 (MS 2.0).’”
ABI Research’s latest report, “Managed Services for Mobile Operators” discusses the latest trends in outsourcing, such as MS 2.0.
This report is part of the Mobile Core Networks Research Service.
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