Despite concerns about the overall strength of the world economy, projections for software and equipment spending by international telecoms remain strong, with industry analysts predicting robust growth for 2014 and beyond. For instance, in its “Telecom and Datacom Network Equipment and Software” report, Infonetics indicates that the global telecom/datacom equipment market will reach $218 billion by 2017. The research firm also expects providers to spend a cumulative $1 trillion on telecom and datacom equipment and software from 2013-2017.

 

“Even though there’s tremendous uncertainty about the health of the global economy and prospects for economic growth in the short term, the global telecom and datacom equipment and software market is on track to grow annually through 2017,” said Jeff Wilson, principal analyst at Infonetics Research.

 

A deeper look at recent research into the telecom/datacom equipment market makes clear that growth in the sector will be generated largely outside of the United States, at least in the short term. Gartner predicts that global sales of network equipment to carriers will increase by six percent to $85.4 billion in 2014, driven largely by growth in China and Europe.

 

Additionally, Forrester predicts the “burgeoning mobile market” will spur an increase in spending in 2014 and 2015, and Infonetics co-founder Michael Howard predicts that Asia Pacific will continue to lead global telecom and datacom equipment over the next five years.

 

“We expect the region to continue leading at least for the next five years, contributing more than a third of global telecom spending through 2017,” Howard said of his firm’s report.

 

Projections for operators in the United States are less optimistic, largely because Verizon and AT&T have nearly completed their 4G networks. But other providers like Sprint — which plans to spend $8 billion this year and next on a major network upgrade– will be attempting to make up ground, meaning some surprise growth could be possible.

 

“That could be a game changer, if you are all of a sudden spending billions on network roll-outs,” remarked Gartner analyst Akshay Sharma.

 

On the software side, big data appears to be the driving force behind spending for telecoms as well as other verticals like healthcare, utilities, and financial services. According to a recent report by the telecommunications and Internet-related consulting firm Mind Commerce, global spending on big data will increase by a 48 percent compounded annual growth rate (CAGR) from 2014-2019, with spending reaching $135 billion by the end of 2019.

 

A survey by Informa Telecoms & Media reveals that in the near future, operators plan to use big data to solve internal issues like reducing customer churn and improving the customer experience. 58  percent of those surveyed, however, believe the long-term value of big data will be generating new revenue streams. At present, big data represents about 10 percent of operators’ IT budgets, but that number is expected to rise to 23 percent over the next five years.

 

“It makes sense for operators to use big data to understand the key challenges and improve the customer experience,” said Julio Puschel, who co-authored the Informa research. “By using big data to optimize processes and improve quality of services, operators will already be building a platform to explore new business opportunities.”

 

While growth opportunities clearly exist, telecom equipment and software sellers do face some challenges, at least in the short term. Chinese vendors looking to conquer foreign markets continue to apply price pressure and many experts are predicting a significant drop in equipment prices over the next year, making profitability more challenging.  Still, the global market for telecom equipment and software offers significant opportunities for those who know where to look.

 

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