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Retail/Business Ethernet Services Market Update

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An analyst briefing presentation by Stratecast analyst Roopashree Honnachari on the retail/business ethernet services market.

An analyst briefing presentation by Stratecast analyst Roopashree Honnachari on the retail/business ethernet services market.

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  • 1. Retail/Business Ethernet Services Market Update Revenue Growth Continues even as Competition Heats Up! Roopashree Honnachari, Program Manager Business Communication Services Aug 11, 2011
  • 2. Today’s Presenter Roopashree (Roopa) Honnachari Program Manager, Business Communication Services Frost & Sullivan 2
  • 3. Agenda Why Carrier Ethernet? How large is the market? Market Revenue Evolution, 2010 & 2015 Market Ports Evolution, 2010 & 2015 Market Demand Drivers Competitive Landscape, 2010 Key Takeaways 3
  • 4. Why Carrier Ethernet?Changing Communication Needs Of Today’s Business Voice Internet Data Video SecurityDistributed Disaster Data Backup/ Cloud-basedEnterprise Recovery Services Replication CaaS SaaS IaaS 4
  • 5. Why Carrier Ethernet? Convergence! Pre-Convergence Post Convergence Managed IAD Private PRIVATE PRIVATE Frame FRAME FRAME ATM ATM ATM Line LINE RELAY LINE Relay RELAY Ethernet Service Providers Network/Cloud Multiple traffic-specific networks • A single converged network for all types of Multiple access lines per location traffic Quality of Service (QoS) managed separately in • Class of service (CoS) for traffic each network prioritization 5
  • 6. Why Carrier Ethernet? (continued)• Familiarity in the LAN• Scalable bandwidth (owing to switched network architecture)• Cost-effective (lower per MB cost)• Facilitates convergence of applications! 6
  • 7. How Large is the Market? Total Retail Carrier Ethernet Services Market: Revenue Forecast, U.S., 2008- 2015 8,000 45.0% 40.0% Revenue ($ Million) Growth Rate (%) 35.0% 30.0% 25.0% 4,000 20.0% 15.0% 10.0% 5.0% 0 0.0% CAGR 2008 2009 2010 2011 2012 2013 2014 2015 (10-15) Revenue 1,139.6 1,561.7 2,188.1 2,975.8 3,957.8 5,066.0 6,332.5 7,725.7 28.7% Growth Rate 37.0% 40.1% 36.0% 33.0% 28.0% 25.0% 22.0% The growth is largely attributed to the market migration from legacy services—Leased lines, Frame Relay and ATM to Ethernet services. Note: All figures are rounded. The base year is 2010. Source: Frost & Sullivan analysis. 7
  • 8. Market Revenue Evolution, 2010 & 2015 Market Evolution by Metro vs. Long Haul, Market Evolution by Service Type, 2010 & 2015 2010 & 2015 100% Revenue ($ Millions) 100% 80% 80% Revenue (%) 60% 60% 40% 40% 20% 20% 0% 0% 2010 2015 2010 2015 Long Haul 23% 35% E-LAN 32% 38% Metro 77% 65% E-Line 48% 44% Access 20% 18% Note: All figures are rounded. The base year is 2010. Source: Frost & Sullivan analysis. 8
  • 9. Market Ports Forecasts Total Retail Carrier Ethernet Services Market: Ports Forecasts, U.S., 2008-2015 650,000 40% 35% 30% Growth Rate Ports 25% 20% 15% 10% 5% 0 0% CAGR 2008 2009 2010 2011 2012 2013 2014 2015 (10-15) Ports 104,697 139,756 185,027 242,872 313,936 401,316 506,283 628,857 27.7% Growth Rate 33.5% 32.4% 31.3% 29.3% 27.8% 26.2% 24.2% Note: All figures are rounded. The base year is 2010. Source: Frost & Sullivan analysis. 9
  • 10. Market Ports Evolution (U.S.), 2010 & 2015 Market Ports Evolution by Service Market Ports Evolution by Speed, Type, 2010 & 2015 2010 & 2015 100% 100% 80% 80% Ports (%) 60%Ports (%) 60% 40% 40% 20% 20% 0% 0% 2010 2015 2010 2015 10 G 3% 9% E-LAN 26% 27% 1 GigE 18% 26% E-Line 48% 48% 100 M 36% 32% Access 26% 25% 10 M 43% 33% Note: All figures are rounded. The base year is 2010. Source: Frost & Sullivan analysis. 10
  • 11. Market Demand Drivers Market migration from traditional private lines to Ethernet EPL and EVPL services Growing market demand for Ethernet access to MPLS VPNs and Dedicated Internet Access is fuelling revenue growth Increasing adoption of E-LAN services among verticals such as healthcare, education and government Enterprise adoption of Ethernet to access cloud-based services represents a growing market opportunity for the service Layer 2 Ethernet services are complementing Layer 3 MPLS VPN networks for multipoint-to-multipoint connectivity 11
  • 12. MPLS or VPLS ? It is not MPLS or VPLS, but MPLS and VPLS VPLS MPLSLayer 2 VPN with Routing Control Provider Managed Layer 3 VPNScalable On-demand Bandwidth Multiple Access Options Ethernet is the default access Scale from 1M-100M on a 100M T1/T3,SONET, Ethernet, Wireless, port Satellite Ideal for < 100 sites Ideal for >100 sites (Regional & National) (Regional, National & Global) Ideal for High-speed Applications Data Center Connectivity Ideal for Distributed Connectivity Storage Area Networking, geographically dispersed branch offices, remote users, teleworkers, and business partners 12
  • 13. Competitive Landscape, 2010 Regional carriers with their vertical specific Total Retail Carrier Ethernet Services Market: solution selling strategy and enhanced SLA U.S., 2010 offerings will continue to see success. Others Cable MSOs offering metro Ethernet over AT&T fiber networks have the potential of successfully tapping into the high-speed XO needs of local enterprises in their footprint. Cogent EoC service providers are proving to be Level 3 Verizon invaluable in expanding Ethernet reach to remote/non-fiber fed SMB customer CenturyLink locations. However, the bandwidth/distance tw telecom limitations of the service restrict its suitability to connect distributed customer locations at Source: Frost & Sullivan analysis. sub 10 Mbps. 13
  • 14. Key Takeaways Ethernet will continue to gain adoption as the de facto choice for replacement oftraditional transport technologies The ability of Ethernet to support convergence of applications (voice/video/data) isexpected to drive market adoption of higher port speeds, thus resulting in increasedrevenue growth throughout the forecast period Cloud networking – to enable cloud services and access to them – will continue tofuel service provider/enterprise adoption of Ethernet services While Carrier Ethernet will continue to see rapid adoption in the metro space, bothfor E-Line and E-LAN type of services, MPLS VPNs will continue to dominate thenational/global multisite connectivity space. However, Ethernet will continue to playa role in hybrid networks involving MPLS/EVPL/VPLS networks 14
  • 15. Questions? 15
  • 16. Next Steps Request a proposal for or Growth Partnership Services or Growth Consulting Services to support you and your team to accelerate the growth of your company. (myfrost@frost.com) 1-877-GoFrost (1-877-463-7678) Join us at our annual Growth, Innovation, and Leadership 2011: A Frost & Sullivan Global Congress on Corporate Growth (www.gil-global.com) Register for the next Chairman’s Series on Growth: Driving Innovation – The What, Why, and How. Visions and Benchmarks as the Innovation Key (October 5th) (http://www.frost.com/growth) Register for Frost & Sullivan’s Growth Opportunity Newsletter and keep abreast of innovative growth opportunities (www.frost.com/news) 16
  • 17. Your Feedback is Important to Us What would you like to see from Frost & Sullivan?Growth Forecasts?Competitive Structure?Emerging Trends?Strategic Recommendations?Other? Please inform us by rating this presentation. Frost & Sullivan’s Growth Consulting can assist with your growth strategies 17
  • 18. Follow Frost & Sullivan onFacebook, LinkedIn, SlideShare, and Twitter http://www.facebook.com/FrostandSullivan http://www.linkedin.com/companies/4506 http://www.slideshare.net/FrostandSullivan http://twitter.com/frost_sullivan 18
  • 19. For Additional InformationMireya Espinoza Craig HaysCorporate Communications VP of Sales, North AmericaInformation & Communication Information & CommunicationTechnologies Technologies(210) 247-3870 (210) 247-2460Mireya.espinoza@frost.com chays@frost.comRoopashree (Roopa) HonnachariProgram ManagerBusiness Communication Services(210)-247-3860rshree@frost.com 19

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