The emerging markets are providing growth across mobile infrastructure as 3G networks upgrade to advanced technologies and LTE begins to make more inroads across the globe.
Cisco bucked the downturn trend for Q1/2012 posting gains in the Worldwide Mobile Infrastructure market in every area, specifically in EPC. Cisco continues to gain global traction with its ASR 5000 and reported 20% y/y growth, including huge growth in Japan. The company has 30 EPC customers, including Bell Mobility in Canada, Reliance in India, Meagafon in Russia and Telefonica. EPC contracts are accelerating from a year ago as Ericsson has reported it signed 14 new EPC contracts. Huawei, ALU, and NSN also all report gains.
We see increased penetration of EPC in 3G installations and in the growing market for LTE networks around the world (via new spectrum auctions or announced plans for build outs). The IP backbone segment continues to grow because of the increasing data traffic on 3G, 4G and Wi-Fi networks, which ultimately traverse the core router backbone. We continue to expect SP Wi-Fi to be a major driver of backhaul installations and upgrades for the next several years as vendors and operators are learning how to implement new coverage models using Wi-Fi ahead of carrier-grade service standards of 802.11u and ANDSF.
The IP mobile backhaul market for both routing and switching continues to grow as the new 1 Gig and 10 Gig systems upgrade the access layer of the network as well as add IP-MPLS for traffic management and control. MPLS wins the Phoenix award as the technology resurrects itself to deliver traffic management and control in an All-IP world. We are also seeing a shift in the reporting and deployment of edge systems. We are starting to see larger chassis installations, which allow for future expansion (possibly as a result of aggressive pricing to normalize the cost of the chassis). The expectation is that revenue will be recovered as the slots are populated. This is not a new strategy, but one we are starting to see again in the mobile access area.
QUARTERLY TREND and DRIVER HIGHLIGHTS
- The continued introduction of new smart phones, tablets and other devices with faster processors, more memory and higher definition screens continues to push the capacity limits of the network resulting in two significant changes to the industry: 1) Vendors are starting to quote EPC system performance figures based on a propose device profile for individual operators, and 2) Second generation Signaling platforms are coming to market, significantly up-scaling signaling support figures.
- Service providers with existing LTE networks continue to upgrade their signaling and data capacities as more smart devices drive up demands on the network. TeliaSonera, Tele2 and Telstra launch LTE smartphone and tablet offers.
- TD-LTE and radio backhaul will expand the market for wireless infrastructure over the next three years, completing the demise of WiMax for most applications and providing the WiMax operators with a clear technology path to LTE.
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