As the first-quarter reporting cycle gets underway, we continue to see a mixed picture for OSS/BSS vendor results.
Ericsson, which has rejiggered its reporting structure once again (now lumping OSS/BSS in with cloud, NFV/SDN, telecom core and IP routing) posted March quarter IT and cloud revenue down 3% year-on-year (down 7% at constant currency), with 7% growth in services offset by a 14% decline in products. The compares with a 7% revenue decline for the division in 2016 with services revenue up 1% and products down 16%.
By comparison, Nokia’s Applications & Analytics unit posted flat sales in the March quarter -- a marked improvement from the 13% decline in 2016. Nokia said the unit showed "significant, even if early, signs of improvement" with robust new orders, particularly in BSS, driven by demand for new charging models. However, Nokia notes Applications & Analytics' profitability has room for improvement.
As discussed in Heavy Reading's latest report, OSS/BSS Vendor Landscape: Industry Outlook & Company Analysis, the B/OSS market declined around 6% in 2016, to circa $17 billion. In the report, we estimate the market should be broadly flat in 2017. Beyond 2017, growth in the market is likely to depend on operator appetite to invest in digital transformation, new entrants (e.g., MVNOs) looking to launch telecom services on third-party infrastructure, and the financial health of the traditional CSP industry per se.
OSS/BSS Vendor Landscape evaluates the size of the addressable market, based on a bottom-up analysis of the top 50 vendors, and assesses the distribution of market share. It examines the revenue progression in 2016 for the 16 companies for which we were able to gather reliable data and makes a forecast for 2017 based on the outlook statements from six companies brave enough to make a prediction.
The report investigates the average revenue per employee across the 50 companies and assesses the profitability of the 13 companies for which we were able to gather data. We also look at M&A activity in the sector over the last 12 years. In addition the report provides an extensive comparison of the product offerings of 45 vendors across three main categories: fulfillment, assurance and BSS. Finally, the report contains detailed profiles on 19 vendors.
The B/OSS market is likely to undergo significant change in the coming years, driven by the move to network virtualization and, more broadly, by the transformation of CSPs into digital service providers. Whether these forces lead to a consolidation around a handful of full-suite providers or a proliferation of best-of-breed vendors remains to be seen. However, modernization of B/OSS will be key to the automation of network and customer operations, as well as the increase in openness and agility that CSPs need to compete as we approach the 2020s.
— James Crawshaw, Senior Analyst, OSS/BSS Transformation, Heavy Reading