Cloud & Infrastructure

Telecom & IT Convergence What converging markets will change for telcos and IT industries M15127MRA – November 2015

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This document is a part of our "Cloud & Infrastructure" category which includes in 2015: - 2 datasets in Excel, updated yearly - 2 state-of-the-art reports in PowerPoint, updated yearly - 2 market reports in Word, each with its synopsis in PowerPoint - Privileged access to our lead Internet technologies analysts

Author: Julien GAUDEMER, Consultant Julien Gaudemer joined lDATE in September 2011, working as an Internet services consultant. His assignments primarily involve the technical examination of Internet services and infrastructure. He has notably worked on studies dealing with cloud computing (for the European Commission) and big data (for the French Caisse des Dépots). He has also worked on a multi-client study entitled ‘Cloud and Big Data – The rise of data centres’. Before coming to IDATE, Julien worked in the Network division of the French operator Bouygues Telecom in Paris as a project manager intern,. Julien Gaudemer holds an Engineer Master’s degree in telecommunications from the Institut Supérieur d’Electronique de Paris (2011), and he studied Management of Innovation at the Chalmers University of Technology in Gothenburg, Sweden. [email protected]

About IDATE and DigiWorld Institute Founded in 1977, IDATE has gained a reputation as a leader in tracking telecom, Internet and media markets, thanks to the skills of its teams of specialized analysts. Now, with the support of more than 40 member companies – which include many of the digital economy’s most influential players – the newly rebranded DigiWorld Institute has entered into a new stage of its development, structured around three main areas of activity:  IDATE Research, an offer of market intelligence publications  IDATE Consulting, time-tested analysis  DigiWorld Institute, a think tank on the digital economy.

Contact us for further information on our publications Isabel Jimenez P: +33 (0)467 144 404 - F: +33 (0)467 144 400 - [email protected] Copyright IDATE 2015, CS 94167, 34092 Montpellier Cedex 5, France All rights reserved. None of the contents of this publication may be reproduced, stored in a retrieval system or transmitted in any form, including electronically, without the prior written permission of IDATE. IDATE, DigiWorld, DigiWorld Institute and DigiWorld Yearbook are the international registered trademarks of IDATE.

Telecom & IT Convergence: What converging markets will change for telcos and IT industries

Contents 1.

Executive Summary and Introduction ........................................................................... 7

1.1.

The emergence of converging markets .......................................................................................................... 8

1.1.1. Why are the telecom and IT markets converging? ............................................................................................. 8 1.1.2. Main converging markets ................................................................................................................................... 8 1.2.

The dominance of IT players on converging markets ................................................................................... 9

1.2.1. IT players mainly target large accounts .............................................................................................................. 9 1.2.2. Pure players remain ‘small’ but are worth waiting for ....................................................................................... 10 1.3.

Telecom players still have a role to play on converging markets.............................................................. 10

1.3.1. Telcos’ strategy is to complete their product portfolio ....................................................................................... 10 1.3.2. In terms of revenues, ROI remains limited but not negative ............................................................................. 10

2.

Methodology & definitions ........................................................................................... 11

2.1.

General methodology of IDATE's reports .................................................................................................... 11

2.2.

Definitions ....................................................................................................................................................... 12

3.

Convergence enablers & business needs ................................................................... 13

3.1.

End-user business needs .............................................................................................................................. 13

3.2.

Telecom players prospective ........................................................................................................................ 15

3.3.

IT players prospective ................................................................................................................................... 16

4.

Main converging telecom and IT segments................................................................. 18

4.1.

Cloud computing services ............................................................................................................................ 19

4.1.1. Market description ............................................................................................................................................ 19 4.1.2. Market structure ............................................................................................................................................... 20 4.1.3. Market size ....................................................................................................................................................... 22 4.2.

Big data ........................................................................................................................................................... 25

4.2.1. Market description ............................................................................................................................................ 25 4.2.2. Market structure ............................................................................................................................................... 27 4.2.3. Market size ....................................................................................................................................................... 29 4.3.

Security ........................................................................................................................................................... 31

4.3.1. Market description ............................................................................................................................................ 31 4.3.2. Market structure ............................................................................................................................................... 33 4.3.3. Market size ....................................................................................................................................................... 34 4.4.

IT consulting ................................................................................................................................................... 35

4.5.

Unified communications, voice and data ..................................................................................................... 37

4.5.1. Market description ............................................................................................................................................ 37 4.5.2. Market structure ............................................................................................................................................... 37 4.5.3. Market size ....................................................................................................................................................... 39 4.6.

Machine-to-machine (M2M) ........................................................................................................................... 40

4.6.1. Market description ............................................................................................................................................ 40 4.6.2. Market structure ............................................................................................................................................... 41 4.6.3. Market size ....................................................................................................................................................... 42

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Telecom & IT Convergence: What converging markets will change for telcos and IT industries

4.7.

SDN & NFV ...................................................................................................................................................... 44

4.7.1. Market description ............................................................................................................................................ 44 4.7.2. Market structure ............................................................................................................................................... 45 4.7.3. Market size ....................................................................................................................................................... 45

5.

Player positions on telecom and IT markets ............................................................... 46

5.1.

Telcos .............................................................................................................................................................. 47

5.1.1. 5.1.2. 5.1.3. 5.1.4.

BT..................................................................................................................................................................... 47 Deutsche Telekom – T-Systems ...................................................................................................................... 49 NTT .................................................................................................................................................................. 50 AT&T ................................................................................................................................................................ 52

5.2.

IT players ........................................................................................................................................................ 54

5.2.1. 5.2.2. 5.2.3. 5.2.4.

Oracle............................................................................................................................................................... 55 Cisco ................................................................................................................................................................ 57 HP .................................................................................................................................................................... 59 Citrix ................................................................................................................................................................. 61

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Telecom & IT Convergence: What converging markets will change for telcos and IT industries

Tables & Figures Table 1: Table 2: Table 3: Table 4: Table 5: Table 6: Table 7: Table 8:

Size of converging telecom and IT markets, and share of telecom and IT players .................................... 9 How telecom and IT services meet current business needs .................................................................... 15 IT and telecom converging markets size, and share of IT players and telecom players .......................... 18 Types of cloud services sold by different players in the marketplace ...................................................... 21 Type of data used by vertical ................................................................................................................... 26 Carrier positioning in the M2M space....................................................................................................... 42 Overview of telcos telecom and IT main products ................................................................................... 47 Oracle revenues breakdown – Full Year 2014 (Fiscal Year 2015) ........................................................... 56

*** Figure 1: Figure 2: Figure 3: Figure 4: Figure 5: Figure 6: Figure 7: Figure 8: Figure 9: Figure 10: Figure 11: Figure 12: Figure 13: Figure 14: Figure 15: Figure 16: Figure 17: Figure 18: Figure 19: Figure 20: Figure 21: Figure 22: Figure 23: Figure 24: Figure 25: Figure 26: Figure 27: Figure 28: Figure 29: Figure 30: Figure 31: Figure 32: Figure 33: Figure 34: Figure 35: Figure 36: Figure 37: Figure 38:

Strategic business priorities for next 12 months ...................................................................................... 14 Investment intentions ............................................................................................................................... 14 Evolution of IT spending .......................................................................................................................... 15 Selected ICT segments: global market size and growth .......................................................................... 16 Driving factors in entering the telecom services market ........................................................................... 16 Challenges in entering telecom services market ...................................................................................... 17 The three types of cloud (IaaS, PaaS, SaaS) .......................................................................................... 19 Cloud computing industry structure ......................................................................................................... 20 Growth potential for telcos in the SaaS and IaaS markets ....................................................................... 22 Growth of the global enterprise cloud computing market, by segment, 2015-2020 ................................. 23 Business, financial and environmental factors influencing cloud decisions.............................................. 24 Changing challenges as cloud evolves .................................................................................................... 24 Variety of data sources ............................................................................................................................ 25 Technologies used to derive value from big data..................................................................................... 27 Big data value chain ................................................................................................................................ 28 Big data landscape .................................................................................................................................. 28 Worldwide big data revenue forecasts, 2011-2020 .................................................................................. 29 State of big data investments ................................................................................................................... 29 Big data and analytics software market, in 2016 ...................................................................................... 30 Online advertising revenues, worldwide and regional, 2010-2018 ........................................................... 30 Mobility management/MDM industry structure ......................................................................................... 32 Security solutions industry structure ........................................................................................................ 33 Security market size 2014-2019 (billion USD) ......................................................................................... 34 IT consulting industry structure ................................................................................................................ 36 Worldwide IT services market 2014-2018 ................................................................................................ 36 Overview of players on the professional unified communications market ................................................ 38 Breakdown of players in the three main areas of unified communications............................................... 39 Unified communications market size 2014-2018 ..................................................................................... 39 M2M architecture ..................................................................................................................................... 40 M2M value chain ...................................................................................................................................... 41 World cellular M2M markets .................................................................................................................... 42 M2M development by vertical industry ..................................................................................................... 43 Implication of SDN in architecture ............................................................................................................ 44 OpenDaylight participants: network and IT vendors ................................................................................ 45 Products and services offered by BT within BT Global Services ............................................................. 48 Examples of unified communications solutions provided by BT Global Services ..................................... 48 Overview of T-Systems main products portfolios ..................................................................................... 50 NTT Group’s full global cloud coverage ................................................................................................... 51

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Telecom & IT Convergence: What converging markets will change for telcos and IT industries

Figure 39: Figure 40: Figure 41: Figure 42: Figure 43: Figure 44: Figure 45: Figure 46: Figure 47: Figure 48: Figure 49:

NTT Group track record of cross selling IT solutions ............................................................................... 51 Overview of AT&T unified communications solutions .............................................................................. 53 Overview of IT players involved on both telecom and IT services markets, by core business ................. 54 Communications products provided by Oracle, especially through Tekelec and Acme Packet acquisition56 Cisco versus the Internet giants, as seen by Cisco ................................................................................. 57 Unified communications ........................................................................................................................... 58 Overview of HP Helion cloud solution ...................................................................................................... 59 Network applications covered by the AllianceOne partnership ................................................................ 61 Citrix cloud portfolio ................................................................................................................................. 62 MDM portfolio .......................................................................................................................................... 63 ByteMobile within Citrix portfolio .............................................................................................................. 63

List of players reviewed The major players reviewed in detail in this report are: Telecom players

IT players

 AT&T

 Cisco

 BT

 Citrix

 Deutsche Telekom

 HP

 NTT

 Oracle

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Telecom & IT Convergence: What converging markets will change for telcos and IT industries

2. Methodology & definitions 2.1. General methodology of IDATE's reports The methods employed by IDATE’s teams of analysts and consultants are based on an approach that combines:  research and validation of data collected in the field;  the application of classic industry and market analysis tools: segmentation, competition analysis, strategic strengths, modelling, assessment and forecasts…;  the expertise of specialists who contribute their own analytical capabilities and those of their network of market analysts. More specifically, the tools employed by IDATE’s teams are as follows: 1/A multi-disciplinary team of full-time consultants, specialised by sector of activity IDATE’s analyses are performed primarily by our in-house consultants, and very occasionally by freelance market analysts. This approach allows us to capitalise on our pool of expertise through teamwork, sharing knowledge, ideas, contacts, viewpoints and key data. Each report is drafted by a team of specialists, overseen by senior consultants with a proven track record in their field. 2/Primary and secondary research IDATE reports and databases are compiled based on primary data obtained from one-on-one interviews with the sector’s decision-makers, and on secondary data which is established by cross-referencing public sources and external databases. 3/An integrated information centre sustained by a number of tools and proprietary databases Over the past 30 years, IDATE has established working and data organisation methods and proprietary databases that trace the central chapters in the history of our sectors of expertise.  Companies: IDATE’s in-house data service tracks the latest news and events to come out of the top telecom, Internet and media industry companies around the globe. Innovative firms and start-ups are monitored by the market experts in the different “Practices”.  Markets: IDATE’s databases are derived from rigorous processing of fundamental economic variables (GDP, investments, exchange rates, demographics, etc.) and their relation to decisive sector-specific and national elements (capex, national market dynamics, etc.).  Technologies: IDATE’s organisation by Practice provides us with an efficient means of tracking innovation. IDATE’s engineers ensure in-depth understanding of the changing shape of products and services and of the latest innovations in the marketplace. 4/Contents of the published reports Each IDATE market report details the structures and issues at play in the market being examined, the decisive forces (technologies, regulation, consumption) and the players involved. Particular emphasis is given to market assessments and forecasts, as part of the central premise. All market reports are laid out in a clear and concise manner, and illustrated with tables and graphs of key market data and trends. The process of drafting of a market report includes the following stages:  analysis of the information available in the in-house databases, and review of analyses performed in the recent past;  based on a preliminary segmentation and assessment of the market, and as part of an validated interview guide, analysts conduct interviews that enable them to validate working hypotheses;

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Telecom & IT Convergence: What converging markets will change for telcos and IT industries

 a market model is then established, making it possible to test the hypotheses that have an impact on the market’s development, and validated by a new round of interviews;  and, finally, the report’s conclusions are debated with the team responsible for the project and with expert consultants from the various fields involved;  a final proofreading and editing/revision process, prior to the production of the final version of the report which is delivered to the client.

2.2. Definitions This report reviews the convergence of services which have hitherto been provided separately by either players on IT markets or telecom operators. An evolution in technology, both hardware and software, has led to the previously-distinct players being able to offer their services on what were traditionally the other’s market. It will focus in particular, for IT markets, on cloud computing, big data, security (including management solutions known as Bring Your Own Device (BYOD) and IT consulting. For telecom markets, the focus will be on unified communications (including collaborative tools) and M2M (on the service stack only).

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