Is Telecom Growing at 10%?

Here's an interesting take on the current state of the telecom sector: According to Gartner Inc. , the global market for telecom equipment is set to grow by 10.8 percent year-on-year to be worth $377 billion in 2012.

What's more, it's expected to grow by a further 8.3 percent next year to be worth $408 billion.

That's an outlook that clearly favors companies in the wireless networks sector, where a great deal of investment is headed currently (at least in North America), as noted recently by Jefferies & Company Inc. (See US Carrier Capex: Wireless Squeezing Wireline.)

For vendors with a wireline focus, such growth numbers look like wishful thinking. I'm thinking particularly of Acme Packet Inc. (Nasdaq: APKT) right now only because its sales warning is still fresh in my mind. (See Acme Packet Points to Capex Weakness.)

But there are plenty of other vendors that might also be wondering where those extra purchase orders are going.

Gartner's forecast is set out below, showing positive developments for other broad technology sectors and for telecom services too.

Table 1: Worldwide IT Spending Forecast (billions of US dollars)
2011 spending 2011 growth (%) 2012 spending 2012 growth (%) 2013 spending 2013 growth (%)
Computing hardware 404 7.4 420 3.4 448 6.6
Enterprise software 269 9.8 281 4.3 301 6.9
IT services 845 7.7 864 2.3 905 4.8
Telecom equipment 340 17.5 377 10.8 408 8.3
Telecom services 1,663 6.0 1,686 1.4 1,725 2.3
All IT 3,523 7.9 3,628 3.0 3,786 4.4
Source: Gartner

If Gartner is right, which companies are set to benefit most from this upturn? All thoughts welcome on the message boards below.

— Ray Le Maistre, International Managing Editor, Light Reading

Steve0616 12/5/2012 | 5:28:16 PM
re: Is Telecom Growing at 10%?

If it is growing at 10% and the annual price reductions are at 14%, is the net a minus 4%?

gtchavan 12/5/2012 | 5:28:15 PM
re: Is Telecom Growing at 10%?

Here is what I think is happening, they are actually spending 10% more because they have to but they are buying 1.2 times more hardware and squeezing the margin of their suppliers and their suppliers are putting the screw on their suppliers.  The binary event is the introduction of iphone 5 which apparently, all indications are, that it been pushed out at least 6 months.

gtchavan 12/5/2012 | 5:28:15 PM
re: Is Telecom Growing at 10%?

The numbers appear to be absolute numbers so it appears that 10% is the number.

Steve0616 12/5/2012 | 5:28:15 PM
re: Is Telecom Growing at 10%?

Absolute? How so?  WIth historically 10-15% annual price reductions, the carriers can "grow" at that rate without ever having to spend an extra dime, no?

Flook 12/5/2012 | 5:28:13 PM
re: Is Telecom Growing at 10%?

Right--it's the new business math

digits 12/5/2012 | 5:28:12 PM
re: Is Telecom Growing at 10%?

Surely not that new -- for how long have vendors been giving their carrier customers a little bit more for quite a lot less? Quite a few years now, I'd say - you could say it coincideed with Huawei becoming a big hitter on the global stage.

If Gartner is correct, this surely will mean some more encouraging noises from the vendor community when it reports Q3 and Q4, because I don't see any indications of 10% growth (any growth?) in H1.

shygye75 12/5/2012 | 5:28:11 PM
re: Is Telecom Growing at 10%?

I'm guessing that "telecom equipment" includes handsets in Gartner's world.

xieyaohui 12/5/2012 | 5:28:11 PM
re: Is Telecom Growing at 10%?

I think so too. Who can confirm?

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