Services more critical than hardware to equipment vendor profits, says Ovum
ConvergenceAsia staff
27/03/2008

According to research firm Ovum's 2007 service business results for network infrastructure vendors, the telco services market hit US$65 billion in 2007, including product, network, and IT-related service spending. Network equipment providers accounted for approximately 60 per cent of that total.

"The importance of services to telecom equipment vendors is hard to overstate," said John Lively, Vice President, Network Infrastructure, at Ovum. "The telco services market is larger, and growing faster than optical networking, switching and routing, and broadband access equipment combined, and it's generating profits. Simply put, services are key to infrastructure vendors' financial success."

Key findings of the study include:
- Worldwide telco services revenues were $65 billion in 2007, up 17 per cent versus 2006
- Services revenues were more than 20 per cent of total company revenues for top tier network infrastructure vendors as a group
- Average operating margin on services was 13 per cent, versus 5 per cent for hardware

The research has been published in a report titled, 'Services business is key to infrastructure vendor profits' in Ovum's Network Infrastructure practice, which provides analysis and forecasts of service provider spending, network infrastructure and software, and vendor strategy.

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