ACG Research

ACG Research
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Tuesday, February 21, 2012

Mixed Bag for Mobile IP Infrastructure in Q4

IP Edge and Packet Core. Mobile IP Backbone was down 6.6% sequentially and 8.7% year over year, while Packet Core (up 4.9% q/q, 1.6% y/y) and IP Backhaul Routing (up 13.3% q/q, .07% y/y) were the driving areas in the Mobile IP Infrastructure market. As reflected in the ACG Optical Market results for Q4, Metro WDM and Long Haul DWDM are absorbing the core network bandwidth demands while the operators focus on improving the access and backhaul networks as the advanced 3G and 4G networks continue their march to an All-IP infrastructure.

One cause for concern is that overall growth in Mobile IP Infrastructure was relatively flat compared to past years, going back to 2008. Strong gains in IP Backhaul Routing and Packet Core were nearly offset by dramatic drops in IP Backbone and IP Backhaul switching.

Cisco reported mixed q/q results, but strong gains y/y to retain its #1 position in IP Backbone, Mobile IP edge and Mobile IP Backhaul. Much of Cisco’s Q4 gains seemly came from Juniper, while Huawei was up q/q, but down y/y in IP Backbone.

Ericsson’s #1 position in Packet Core (31.5% share) is being threatened by Cisco’s 8.5% y/y gain; Ericsson’s decreased 6.9% y/y. Alcatel-Lucent posted consistent q/q gains reflecting the overall positive results announced by the company; ALU also posted a gain of 58.8% in its IP division revenues for Q4.

The global economic outlook remains mixed however we expect to see continued focus on the mobile environment for 2012. The US economy has experienced slow growth over the past two years; however Standard & Poor’s 500 companies are seeing earning increase by more than 15% each quarter, a positive sign for the economic recovery/growth. Spectrum positions around the world continue to impact operators’ 4G plans, with the US facing a spectrum shortage, and the UK, for example, seeing its 4G spectrum auctions held up by regulatory concerns.

ACG Research anticipates that 2012 will be challenging for providers and vendors as global economies continue to fluctuate. According to the Conference Board, global growth is projected at only 3.5% in 2012. In spite of this slow growth, mobile service providers will continue to upgrade their 3G networks and look to migrate to 4G. 2012 will be challenging for the telecom industry as a hole but the mobile operators will continue to invest in their Radio Access Networks, as well as Packet Core and Backhaul to meet continued demand for mobile broadband services. These solutions, which are putting pressure for differentiated solutions, must deliver innovation, support innovative business models, produce cost and operational management benefits and meet enterprises’ strategic requirements and consumers’ developing needs.

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Chris Nicoll

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