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The Race to Emerging Markets is Heating Up – Insights from TBR’s 4Q12 Network Infrastructure Services Benchmark

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The TBR Networking and Mobility research team recorded a webinar on Tuesday, May 7, 2013 recapping vendor performance reported in TBR's 4Q12 Network Infrastructure Services Benchmark. This deck is …

The TBR Networking and Mobility research team recorded a webinar on Tuesday, May 7, 2013 recapping vendor performance reported in TBR's 4Q12 Network Infrastructure Services Benchmark. This deck is from that presentation.

Senior Analyst Scott Dennehy shared his perspective on the results in the benchmark and provided additional insight into vendor performance and the future of the network infrastructure services market.

Questions for discussion included:

•Which geographic regions are providing the best opportunities for NIS growth?
•How is the revenue mix of major NIS suppliers shifting?
•How are emerging trends such as cloud, mobility and software-defined networking (SDN) affecting supplier opportunities?

For more information visit www.tbri.com

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  • Provide detail on HuaweiHigh percentage of maintenance = > 50%
  • Transcript

    • 1. TBRT ECH N O LO G Y B U SIN ESS RESEARCH , IN C.TBR’s Network Infrastructure Services4Q12 Benchmark Highlights and OutlookTechnology Business Research Webinar SeriesMay 7, 2013
    • 2. TBR2 TBR Webinar Series | 5.7.13 | www.tbri.com ©2013 Technology Business Research Inc.NIS Benchmark ContactsYour presenter:Scott DennehySenior Analyst, Networking & Mobility PracticeEmail: scott.dennehy@tbri.comTwitter: @scottdTBR
    • 3. TBR3 TBR Webinar Series | 5.7.13 | www.tbri.com ©2013 Technology Business Research Inc.After experiencing decelerating revenue in 4Q12, NIS supplierswill expand aggressively into emerging markets to fuel growth in 2013Market Trends and DriversKey Themes and Market TrendsNIS growth continues to decelerate due to the challengingeconomic environment in mature markets.Regions such as APAC and CALA saw the strongest NIS growth in4Q12 due to rapidly growing economies in key emergingcountries such as China, India, Brazil and Mexico.As clients contend with smaller IT budgets, demand grows forsolutions that reduce costs, improve operational efficiency andreplace legacy network infrastructure.
    • 4. TBR4 TBR Webinar Series | 5.7.13 | www.tbri.com ©2013 Technology Business Research Inc.Network Infrastructure Services (NIS) Benchmark CoverageNetwork Technologies:Routers and switches,unified communicationsand collaboration,network security (e.g.,firewalls),videoconferencing,IP telephony, WANoptimization/acceleration,storage area networking,optical networking,wireless LAN, networkmanagement software, OSsoftwareSuppliers:• Accenture• Avaya• Cisco Systems• Dell• Fujitsu• HP• Huawei• IBM• Infosys• Juniper Networks• Siemens EnterpriseCommunicationsService Segments:• Deployment• Maintenance• Managed Services• Professional Serviceso Consultingo Systems Integrationo Design and Planningo NetworkOptimizationo Securityo Training andCertificationGeographic Segments:• North America• CALA• EMEA• APACWebinar OverviewTBR obtains and analyzes revenue, margin and headcount for 11 suppliersacross 4 main service categories and 4 geographies
    • 5. TBR5 TBR Webinar Series | 5.7.13 | www.tbri.com ©2013 Technology Business Research Inc.Supplier strategies are evolving to become more services-focusedSupplier OverviewEquipment Suppliers IT Services Firms• Lead with product, and attach services• Revenue mix weighted tomaintenance services• Lead with services, and attach product• Revenue mix weighted to professionaland managed services
    • 6. TBR6 TBR Webinar Series | 5.7.13 | www.tbri.com ©2013 Technology Business Research Inc.Despite falling short of its enterprise growth goals in 2012, Huaweiwill remain a formidable NIS competitor in 2013Total NIS Revenue• NIS will become an increasingly larger part of Cisco’s total revenue mix, as the company focuses lesson hardware and more on software and services as part of its long-term growth strategy.• While Accenture’s deployment and professional services segments experienced revenue declines,the company relied on the strength of its managed services business in 4Q12 as clients continued tooutsource their IT needs to reduce costs.AccentureCiscoDellHPAvayaHuaweiFujitsuIBMInfosysJuniperSiemens-10%0%10%20%30%$0 $500 $1,000 $1,500 $2,000Year-to-YearRevenueGrowthNIS Revenue for All Lines of Business4Q12 Total NIS Revenue (Millions USD)TBRSOURCE: TBR AND COMPANY DATA
    • 7. TBR7 TBR Webinar Series | 5.7.13 | www.tbri.com ©2013 Technology Business Research Inc.NIS operating margin leaders are focused on operational efficiency,restructuring low-margin deals and pursuing high-value engagementsNIS Operating Margin• Cisco’s ongoing expense management strategies and investments in service automation and low-cost labor enable the company to keep its NIS operating margin in the mid-20% range.• With growth prospects improving, Infosys will reduce hiring to restore its status as the leadingIndia-centric IT vendor in margin performance.AccentureAvayaCiscoDellHPHuaweiIBMFujitsuInfosysJuniperSiemens0%5%10%15%20%25%30%35%$0 $100 $200 $300 $400 $500NISOperatingMarginNISOperatingIncomefor AllLinesofBusiness4Q12 NIS Operating Margin (Millions USD)TBRSOURCE: TBR AND COMPANYDATA
    • 8. TBR8 TBR Webinar Series | 5.7.13 | www.tbri.com ©2013 Technology Business Research Inc.Conservative spending by U.S. public sector customers drove downmaintenance revenue growth for many equipment suppliers in 4Q12Maintenance Services• Weak spending from public sector customers in the U.S. significantly impacted the maintenanceservices businesses of Avaya and Juniper, which experienced revenue declines of 6.5% and 5.9%,respectively.• Huawei will drive maintenance revenue growth in 2013 via its recently launched Hi-Care SupportServices portfolio, which is designed specifically for enterprise customers and includes basicremote and on-site support as well as a new online support portal.AccentureAvayaCiscoDellHuaweiIBMFujitsuHPInfosysJuniperSiemens-20%-10%0%10%20%30%$0 $200 $400 $600 $800 $1,000 $1,200 $1,400Year-to-YearRevenueGrowthMaintenance Services Revenue for All Lines of Business4Q12 NIS Maintenance Services Revenue (Millions USD)TBRSOURCE: TBR AND COMPANYDATA
    • 9. TBR9 TBR Webinar Series | 5.7.13 | www.tbri.com ©2013 Technology Business Research Inc.Deployment revenue leaders will continue to focus on low-volume, high-margin opportunities, leveraging partners for low-end projectsDeployment Services• Emerging segments such as cloud, mobility and SDN will provide ample deployment servicesopportunities for NIS suppliers in 2013.• Huawei is building out its enterprise product portfolio, which will drive revenue growth indeployment services as the company focuses on providing end-to-end solutions.AccentureAvayaCiscoDellFujitsuHPHuaweiIBMInfosysSiemensJuniper-15%-5%5%15%25%35%$0 $15 $30 $45 $60Year-to-YearRevenueGrowthDeployment Services Revenue for All Lines of Business4Q12 NIS Deployment Services (Millions USD)TBRSOURCE: TBR AND COMPANYDATA
    • 10. TBR10 TBR Webinar Series | 5.7.13 | www.tbri.com ©2013 Technology Business Research Inc.Professional services growth will remain slow through 1H13 as customerdemand for emerging technologies ramps upProfessional Services• Over the long term, professional services growth will be fueled by demand for C&SI aroundemerging technologies (cloud, mobility, unified communications, SDN), as customers will need helpincorporating these technologies into their networks.• Cisco will leverage high-growth consulting services, including cloud, security and mobility, andemerging verticals such as healthcare, to drive professional services revenue in 2013.AccentureAvayaCiscoDellHPHuaweiFujitsuIBMInfosysJuniperSiemens-10%-5%0%5%10%15%20%25%30%35%$0 $75 $150 $225 $300 $375Year-to-YearRevenueGrowthProfessional Services Revenue for All Lines of Business4Q12 NIS Professional Services Revenue (Millions USD)TBRSOURCE: TBR AND COMPANY DATA
    • 11. TBR11 TBR Webinar Series | 5.7.13 | www.tbri.com ©2013 Technology Business Research Inc.Managed services revenue leaders continue to successfully capitalize onenterprise customers’ need to reduce IT expendituresManaged Services• After seeing strong overall growth in 3Q12 (10% year-to-year), managed services was not immuneto the slow down in customer spending in 4Q12, generating growth of just 3%.• IBM’s emphasis on improving profitability by restructuring low-margin outsourcing contractsnegatively impacted managed services revenue growth in 4Q12 but boosted the company’s margins.AccentureAvayaDellFujitsuHPHuaweiIBMCiscoInfosysSiemens-10%0%10%20%30%$0 $50 $100 $150 $200 $250 $300Year-to-YearRevenueGrowthManaged Services Revenue for All Lines of Business4Q12 NIS Managed Services Revenue (Millions USD)TBRSOURCE: TBR AND COMPANYDATA
    • 12. TBR12 TBR Webinar Series | 5.7.13 | www.tbri.com ©2013 Technology Business Research Inc.Network upgrades remained in high demand in APAC, resulting inanother quarter of strong revenue growth for NIS suppliers in 4Q12Geographic Views• Elongated decision cycles stemming from the U.S. government were a key factor in the NIS revenuedeclines for those suppliers heavily dependent on the public sector, including HP, Juniper andAvaya.• High-growth Latin American markets such as Brazil, Mexico and Peru are becoming increasinglymore attractive to major market players such as Cisco, HP and Siemens that are investing inpersonnel and partnerships to localize their position within these emerging markets.
    • 13. TBR13 TBR Webinar Series | 5.7.13 | www.tbri.com ©2013 Technology Business Research Inc.TBR’s Network Infrastructure Services Benchmark delivers the dataand insights required to capture more services revenueValue• TBR’s comprehensive view of the NIS market offers current andhistorical insight, enabling suppliers to make informeddecisions, including adjusting services strategies and tactics tofacilitate market share growth.• The benchmark identifies leaders, strategies and growthopportunities in the NIS industry to enable vendors to captureshare from competitors and hold off rivals.OpportunityGlobal enterprises (excluding telecom operators) spend $50+billion annually on maintenance, deployment, professional andmanaged services for network infrastructure.Content• The NIS Benchmark covers 11 suppliers in four servicessegments across four major geographies.o Highlights quarterly revenue, growth, margin, headcountand geographic data• Analysis of top suppliers in each service category and region• Insight into vendor strategies and market trendsNISNIS Benchmark Overview
    • 14. TBR14 TBR Webinar Series | 5.7.13 | www.tbri.com ©2013 Technology Business Research Inc.For further information, please contact:Kate Price James McIlroyPractice Manager, Networking & Mobility Vice President of Saleskate.price@tbri.com mcilroy@tbri.comScott DennehySenior Analyst, Networking & Mobility PracticeEmail: scott.dennehy@tbri.comTwitter: @scottdTBRQ&AQuestions?
    • 15. TBRT ECH N O LO G Y B U SIN ESS RESEARCH , IN C.About TBRTechnology Business Research (TBR) is a leading independent technologymarket research and consulting firm specializing in the business and financialanalyses of hardware, software, networking equipment, wireless, portal andprofessional services vendors.Serving a global clientele, TBR provides timely and accurate market researchand business intelligence in formats that are tailored to clients’ needs. Ouranalysts are available to further address client-specific issues or informationneeds on an inquiry or proprietary consulting basis.TBR has been empowering corporate decision makers since 1996.To learn how our analysts can address your unique business needs, pleasevisit our website or contact us today.Contact Us1.603.929.1166info@tbri.comwww.tbri.com11 Merrill DriveHampton, NH 03842USAThis report is based on information made available to the public by the vendor and other public sources. No representation is made that this information is accurate or complete. TechnologyBusiness Research will not be held liable or responsible for any decisions that are made based on this information. The information contained in this report and all other TBR products is notand should not be construed to be investment advice. TBR does not make any recommendations or provide any advice regarding the value, purchase, sale or retention of securities. This reportis copyright-protected and supplied for the sole use of the recipient. Contact Technology Business Research, Inc. for permission to reproduce.

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