The telecom market has undergone through some rough economic challenges during the past 10 years. With the need to support legacy platforms while still launching new applications, the ability to have a cost sensitive time-to-market strategy has become evermore crucial for survival in the telecom equipment manufacturers market.
Consolidating, reassigning and re-focusing on a TEM’s key differentiators in the market have become the make or break point for its long-term strategy. Some of the impact can be seen in the outcome of the consolidation of Nokia-Siemens and Alcatel-Lucent, as well as the just recent announcements of Nortel.
The TEMs of the past with more than 100K employees have shrunk and have needed to focus their engineering efforts on the application. Telecom carriers are also in a very competitive environment and need new and better ARPU revenue streams. This forces them to shorten their new service introduction if they wish to increase their subscriber base.
A research study by Insight Research indicates that the worldwide telecommunications industry is expected to expand during the next five years. Overall telecommunications services revenue will grow at a compounded rate of nearly 10.3 percent during the next few years, reaching $2.7 trillion by 2013.However, the prediction of worldwide wireline telecom carrier spending in 2009 is 10 percent less than in 2008, while carrier spending for wireless infrastructure is predicted to be seven percent less than in 2008.
This will put tremendous pressure on the engineering teams of TEMs and NEPs to launch new platforms and applications in a much shorter time period. The typical design cycles of 12 months and beyond are a luxury of the past, and reusability of components has become a much more integral aspect in telecom system design.
As an example, the clear indication of this new direction is the recent statement by the new Alcatel-Lucent CEO Ben Verwaayen, regarding Alcatel-Lucent’s system strategy:
"Our systems need to be open, our standards need to be open, and our minds need to be open. Our industry has been about proprietary, closed technology and mindsets. That needs to change."
ATCA is dedicated to telecom requirements and is an open standard which enables re-usability. While ATCA has been adopted by the major NEPs in the market, the real winners currently using COTS components and systems are the Tier 2 and Tier 3 NEPs. The reason for this is that the structure of a Tier 2 has less of an organizational burden than a Tier 1 and, therefore, can move more quickly with their product development. The same can be said for lower-scaled Carrier Grade Rackmount Servers, as it is a COTS platform that can be “Application Ready”. With this approach, Tier 2 NEPs gain an advantage to compete head-to-head with Tier 1 NEPs at the platform level, and can gain a significant market share for specific applications.
In the product definition process of new telecom platforms, COTS – whether it is Carrier Grade ATCA or Carrier Grade Rackmount Platforms – will play a more significant role in 2009 as an economical solution to provide new applications and platforms to the market during these trying times. Moreover, this trend extends to HA middleware and higher level protocol stacks, and the reusability of these software components in other platforms is an ideal frame work for each unique application.
The market for COTS vendors in 2009 is the perfect opportunity to grow as these aforementioned points are a clear indication of the need for a “Freedom of Choice” for the best of breed, best in price components and integrated platforms.
At Kontron, we are optimistic looking into 2009 and have realized the opportunity to provide the full scale of Carrier Grade Open Platforms, including – xTCA components and integrated platforms, Rackmount Systems, Embedded Server Motherboards, telecom specific components, and a portfolio of engineering services from integration to telecom specific certifications.