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Friday, April 29, 2016

Channel Partners Focus on Cloud and Managed Services

Most business technology vendors are already in the process of revamping their traditional marketing organizations to better support their IT channel partners. The ongoing shift to a progressive digital marketing methodology has challenged many leaders, due to the difficulty in re-training their legacy employees.

Moreover, demand for marketing talent that is skilled in the development of digital business transformation projects has increased over the last year, yet the available talent pool remains somewhat limited. As a result, the competition for recruiting (and retaining) digital polymaths is intense -- particularly for those marketers that possess knowledge of hybrid cloud and IT security technologies.

Market Development in the Channel

The global information technology (IT) channel remains optimistic -- despite predictions of a challenging 2016 -- according to a recent Canalys survey of 260 IT channel partners around the world. 75 percent of partners expect revenue growth in 2016, while 70 percent expect profitability growth. They'll likely achieve that growth via superior market development skills.

Revenue growth opportunities for the channel remain abundant in most sectors. Hyper-converged infrastructure, cloud-based applications and software-defined infrastructure were all highlighted as important growth categories. Of all the segments, IT security is expected to perform the best in 2016, with 87 percent of survey respondents expecting growth.

"IT security is already the number one priority for end customers, and is only going to grow in importance as they invest in next-generation data centers, digital transformation, cloud, mobility and IoT. But this also illustrates the complexity of the security landscape – to capitalize, partners will need to develop much greater levels of expertise," said Jordan De Leon, analyst at Canalys.

According to the Canalys assessment, the vast majority of channel partners see themselves in a state of transformation -- realizing that as the industry evolves, so too must the channel landscape. Cloud and managed services are becoming ever more important to the channel business model, with managed services in particular now contributing significantly to partner profitability.

Competition for New Managed Service Customers

For two thirds of respondents, managed services are now more profitable than reselling traditional IT products. That being said, Canalys believes that the channel must address both new buyers within existing customers -- especially Line of Business leaders -- as well as exploring and pursuing completely different IT sales opportunities.

But new competitors are emerging in the channel, from highly focused cloud-only resellers to savvy digital transformation consultants serving the specific needs of industry verticals, such as banking and healthcare.

These companies are application-literate and professional services-led. They're already helping their customers solve business issues, not just selling new technology or products. Channel partners must invest in developing their own vertical and pre-sales capabilities, in order to stay ahead of the game.

For IT vendors, these findings show the importance of building integrated relationships with channel partners. Maintaining simple, easy-to-use partner programs and predictable incentive schemes, while adapting ongoing training and certification to reflect the known technology buyer demands, will be vital for success.

Thursday, April 28, 2016

IoT Technology Apps are Expanding in Healthcare Sector

Across the globe, wireless technology vendors and telecom service providers are assisting companies in the healthcare sector to develop new telecare system applications. The huge amounts of data that's being created has fueled demand for cloud-based storage solutions.

It's all part of the growing Internet of Things (IoT) ecosystem that's growing rapidly during 2016 to support these trends. The number of people monitored using mobile telecare systems in Europe and North America was about 450,000 at the end of 2015, according to the latest worldwide market study by Berg Insight.

Growing at a compound annual growth rate (CAGR) of 40 percent, this number is expected to reach almost 3.4 million by 2021. There are several types of monitoring systems that can help elderly and people with cognitive disabilities to live independently in their homes for as long as possible.

These assistance systems are usually called telecare systems, telecare alarms or social alarms in Europe and Personal Emergency Response Systems (PERS) or medical alert systems in North America.

Market Development for Telecare Applications

Berg Insight estimates that there were close to 5.0 million telecare alarms in the EU28+2 and about 2.2 million PERS systems in North America at the end of 2015. The penetration among people 65 years and older is typically 3 to 5 percent in many countries in Western Europe and North America.

"Many insurance and social care programs now aim to reduce healthcare costs by providing care at home by using technologies like telecare and telehealth systems," said André Malm, senior analyst at Berg Insight.

Berg analysts believe that telecare service providers and healthcare organizations are showing increasing interest in mobile telecare solutions that are better suited for some users than traditional systems that only work indoors.

As an example, mobile telecare systems are portable and incorporate cellular connectivity as well as GPS to support the needs of elderly with active lifestyles.

New Wearable Device Use Cases

Some mobile telecare systems are also designed to assist people suffering from Alzheimer’s and dementia that are prone to wandering, as well as people with autism and epilepsy or other medical conditions such as certain forms of cardiac arrhythmia and diabetes.

Several companies are now offering telecare systems in the form of wristwatches or wearables. Many different form factors are likely to co-exist since the needs of the users can vary considerably depending on their age, medical condition or cognitive ability.

Moreover, the product design is also becoming more important for devices aimed at the growing number of active seniors. "The look and feel of mobile telecare devices can be very important in some segments since many users do not want to feel embarrassed by wearing a device that can be perceived as age-defining," concluded Mr. Malm.

Wednesday, April 27, 2016

Hyperscale Cloud has Huge Impact on Vendor Strategy

Back when cloud computing services were first introduced, some industry analysts thought it was obvious that traditional telecom service providers would participate in this emerging new opportunity. Eager to uncover new sources of revenue, telecom incumbents would likely enter the market with high expectations.

However, as the market evolved, the largest and fastest growing competitors would drive ongoing demand for their public cloud offerings by emphasizing lower-cost -- typically, much lower than most enterprise CIOs were able to match in their on-premise data centers. And, telecom service providers were equally challenged to keep pace with the cloud pioneers.

These leading cloud providers built highly optimized, hyperscale data center infrastructure that utilized commodity system components and automated service provisioning. This business model created the market dynamics for what is now referred to as the "race to the bottom" phenomena. Moreover, if a telecom operator wanted to stay in the game, then they had to remain price-competitive.

According to the latest worldwide market study by Technology Business Research (TBR), Cloud as a Service revenue -- which includes public and private cloud services -- attained by the traditional telecom network operators, will reach almost $10 billion annually in 2019.

Cloud Computing Services Market Correction

Though telecom carrier cloud providers will continue to increase revenue annually, TBR believes that their growth will start to decline over the next several years due to strong competition from hyperscale 'pure plays' and other savvy cloud providers.

TBR study findings now project that public and private cloud revenue for telecom operators -- such as Verizon and AT&T -- are beginning to de-emphasize their public cloud business. Profitability concerns, regarding the competitor price-matching trend, are a significant factor in their decision making process.

"Public cloud revenue growth started decelerating significantly in 2015 due to more businesses shifting to private and hybrid cloud solutions," said Michael Sullivan-Trainor, executive analyst at TBR.

Though public cloud services will remain the prominent source of carrier cloud revenue, private cloud services are growing at a higher rate as more enterprises prefer the platform's enhanced security.

According to the TBR assessment, the shift away from public cloud is also influenced by competitive pressures. U.S. carriers are struggling to gain traction in the public cloud market against seasoned competitors that are offering broader, more affordable service portfolios.

Fundamental Shift in Go-to-Market Strategy

Instead of attempting to out-compete the leading cloud vendors, TBR says that the telcos are now focusing on partnering with these leading companies, and providing network connectivity to their services through interconnection platforms such as AT&T's NetBond.

TBR’s "Carrier Cloud Market Forecast 2014-2019" also examined the telecom carrier cloud market within service segments -- including IaaS, SaaS and PaaS. TBR believes there will be a limited number of public cloud IaaS vendors by 2019, as IaaS becomes even more commoditized than it is today.

Regional players such as Orange and BT could successfully grow scale in their respective countries of origin as more emphasis is placed on data location and privacy. Conversely, the maturing SaaS market will cause revenue growth to decelerate through 2019. To bolster SaaS revenue, carriers will collaborate with software providers to offer solutions targeting new lines of business and verticals.

Tuesday, April 26, 2016

Ongoing Transition to Cloud Disrupts Legacy Vendors

Last year was challenging for many traditional software vendors, particularly those that have been slow to embrace the shift to cloud services. Worldwide application infrastructure and middleware (AIM) software revenue totaled $23.9 billion in 2015 -- that's 0.1 percent growth from 2014, according to the latest study by Gartner.

The rapid adoption of enterprise platform-as-a-service (PaaS) cloud offerings, often applied as a foundation for digital business transformation projects, may have caught some legacy software vendors by surprise. Meanwhile, those with strategic foresight were able to adapt to the market development momentum.

"The PaaS segment showed the most impressive growth, not just in the AIM market but across the entire enterprise software market," said Fabrizio Biscotti, research director at Gartner. "Integration PaaS (iPaaS) grew 55 percent in U.S dollars, while application PaaS (aPaaS) grew 40 percent, despite headwinds from the appreciating U.S. dollar."

Demand for Cloud-First DevOps Models

While older technology remains the first choice for the most demanding application scenarios, the evolving maturity of cloud application infrastructure now offers greater agility, scalability and efficiency than traditional on-premises technologies. These benefits are key components of DevOps methodologies.

This ongoing transition to cloud services and the emerging wave of innovation surrounding the Internet of Things (IoT) further pushes application infrastructure spending away from older models toward event-driven analysis and processes.

"Market concentration among the largest vendors is diminishing under pressure from specialists, and open source and cloud providers," said Mr. Biscotti. "The growth of iPaaS and aPaaS has, largely, not worked out to the benefit of the market incumbents."

Gartner says that Salesforce continues to disrupt the AIM market, with its revenue growing more than 36 percent. Their recent growth performance underlines the trend of cloud-only firms and smaller specialists picking up market share at the expense of large traditional software vendors.

Marketing, Not Technology, Drives Transition

This trend is consistent with AIM buyers' pursuit of innovation -- not necessarily from a technology perspective, but most of all from go-to-market, business model and delivery channel perspectives. That being said, the successful vendors have excelled at marketing. They articulate a distinctive business transformation story to Line of Business (LoB) leaders and IT buyers.

"2015 was the year that iPaaS became a serious alternative to traditional software-based integration approaches," said Keith Guttridge, research director at Gartner.

Buyers are choosing iPaaS due to its lower entry costs, reduced operational demands and improved productivity. Vendor interest in this space is also growing rapidly, with the number of offerings doubling in the past 12 months.

Monday, April 25, 2016

8.5 Million 5G Small Cells will be Deployed by 2020

The next wave of mobile internet service adoption will be supported by fifth-generation (5G) wireless technologies that form the foundation for many new applications, including numerous iterations of the Internet of Things (IoT).

ABI Research has forecast that mobile broadband service provider 5G revenue will reach $247 billion in 2025 with North America, Asia-Pacific, and Western Europe being the top markets. Moreover, mobile network operators, vendors, and standards bodies will finalize technical details by 2020.

"5G will be a fast growing cellular technology, most probably faster than preceding generations including 4G," said Joe Hoffman, vice president at ABI Research. "The technology migration over the next few years will mean the continued decline of 2G. 3G and 4G will grow in many markets but 5G will generate new use cases and market revenues."

Challenges for 5G Market Development

As infrastructure vendors and mobile network service providers prepare for 5G, the market faces several key challenges. Obstacles include spectrum fragmentation, standards development, coverage range, availability of devices -- and most importantly, the development of use cases that ensure profitable outcomes from the unique competitive advantages of 5G.

Unlike the case with 4G LTE, 5G stakeholders are trying hard to achieve spectrum harmonization. As with LTE, however, 5G will also include unlicensed and shared spectrum schemes. ABI believes that government organizations worldwide will need to work together to regulate the 5G spectrum and set the new standard.

Additionally, Enhanced Mobile Broadband coverage will be best achieved in urban areas that require faster speeds and greater capacity. While smart antenna technology can extend coverage reach, it will mean a small cells deployment.

Demand for Small Cell Infrastructure

ABI Research forecasts 8.5 million small cells to be deployed by 2020, setting in place the infrastructure for a rapid 5G millimeter wave adoption. And, according to the ABI assessment, in-band backhaul is a new tool to solve connectivity issues.

At the early stage of deployment, the leading 5G use case is enhanced mobile broadband, closely followed by critical and massive machine-type IoT communications. Leading mobile operators in North America and Asia-Pacific recently announced projects and plans to roll-out their own 5G initiatives.

"The 5G network of tomorrow will, over time, evolve to embrace cellular, Wi-Fi, and wired connectivity, in addition to millimeter wave," concludes Hoffman. "It will be better, cheaper, greener, and incredibly high-speed wireless data access for the mass market that will cause business innovation to explode."

Friday, April 22, 2016

Global VoIP Services Market will Reach $83 Billion

The global voice over IP (VoIP) service market totaled $73 billion in 2015 -- that's a 5 percent increase over the prior year, according to the latest worldwide market study by IHS. The growth was fueled by more companies shifting to cloud-based services and the adoption of Session Initiation Protocol (SIP).

VoIP communication services, including residential and business offerings, have become viable alternatives to legacy landline telephone services in most developed countries around the globe.

Although residential VoIP service remains a significant portion of VoIP services revenue, business services and the dynamic supplier landscape are driving new growth in the market.

VoIP Market Development Trends

The competitive landscape has become highly fragmented for VoIP business services, with an increasing number of PBX and Unified Communications (UC) vendors, enterprise agents and resellers expanding into the market along with traditional telecom service providers.

Additionally, hosted PBX and UC services are being pitched alongside SIP trunking as more multi-site businesses seek out hybrid solutions.

Continued strong worldwide growth is expected for the VoIP service market over the next five years, when it is forecast to reach $83 billion in 2020.


Other VoIP Market Study Highlights Include:

  • Residential VoIP services continued to make up the majority (62 percent) of VoIP service revenue in 2015.
  • There were 230 million residential VoIP subscribers worldwide in 2015, an increase of 3 percent from 2014.
  • Roughly 10 to 20 percent of new IP PBX lines sold are part of a managed service or outsourced contract depending on region; as a result, managed IP PBX services, including private cloud services, are expected to comprise the largest segment of business VoIP services over the next several years.
  • SIP trunking posted another year of solid growth in 2015, driven predominantly by activity in North America.
  • In 2015, UC-as-a-Service (UCaaS) revenue grew 6 percent over the prior year and seats were up 25 percent; the slower revenue growth is due to a highly competitive situation in North America that led to significant price cutting by many providers.

Thursday, April 21, 2016

Global PC Market Stagnation Continues in 2016

Personal computer (PC) demand is still a major concern. Worldwide PC shipments totaled 60.6 million units in the first quarter of 2016 (1Q16) -- that's a year-on-year decline of 11.5 percent, according to the latest market study by International Data Corporation (IDC).

IDC also anticipated slow progress during the first half of 2016, as Microsoft Windows 10 enterprise upgrades largely remained in a pilot deployment phase. IDC believes that the global volatility in stocks, commodities and currencies has depressed PC shipments. Moreover, the outlook remains a problem.

Inventory reductions in the channel now seem to be over. A rebound in economic conditions could support both commercial and consumer activity going forward. Nevertheless, channels, vendors, and users remain cautious about new PC purchases. Overall, Asia-Pacific and EMEA performed slightly better than forecast, while the Americas pulled down worldwide results.

Overcoming Market Development Stagnation

"In the short term, the PC market must still grapple with limited consumer interest and competition from other infrastructure upgrades in the commercial market," said Jay Chou, research manager at IDC.

PC shipments to the U.S. fell by 5.8 percent to 13.6 million units in 1Q16. PC channels remained challenged with aging inventory -- although inventory churn has reportedly improved throughout the last two quarters. That being said, PC market inhibitors that were present in 4Q15 lingered through 1Q16.

These issues included softened demand due to global economic concerns, the Microsoft Windows 10 free upgrade path stalling some consumer PC purchases, and increased attrition towards detachables. According to the IDC assessment, overall demand for PCs in the U.S. market continues to be weak.

United States PC Vendor Highlights

In the U.S. market, Dell overtook HP Inc. for the first place ranking for the first time since the third quarter of 2009. Dell's U.S. PC shipments rose 4.2 percent year over year to 3.48 million -- that's a 25.6 percent market share.

HP Inc's PC shipments to the U.S. fell 14.1 percent to 3.44 million units (25.3 percent share). Lenovo continued its aggressive growth trajectory as its 1.9 million units shipped represented 21.1 percent year-over-year growth and accounted for 14.1 percent of total U.S. PC shipments.

Apple's Mac shipments rose 5.6 percent year-over-year to nearly 1.8 million (13.0 percent market share). Acer's shipments fell 10.4 percent to 0.7 million, but the company overtook ASUS and Toshiba to regain a seat in the U.S. top five.

Wednesday, April 20, 2016

Storage Drives Demand for Hyperconverged Systems

Converged systems infrastructure is gaining increased adoption for data center workloads and large-scale consolidation projects, according to the latest worldwide market study by Technology Business Research (TBR).

As a result, global converged systems revenues will grow at a CAGR of 11 percent from 2015 to 2020 reaching nearly $22 billion. The forecast growth will likely occur at the expense of traditional, stand-alone server, storage and networking infrastructure.

"The value of converged systems in reducing critical IT pain points such as costly and complex IT deployment and management is well known, leading to a period of mainstream adoption," said Krista Macomber, senior analyst at TBR.

Moreover, TBR says that the long-standing hardware OEMs seek to maximize the success of their converged systems businesses as a strategic priority.

More Converged System Use Cases

Customers are deploying converged systems optimized for key use cases such as big data analytics. These deployments enable customers to realize the full value of converged systems, building the foundation for expansion across IT environments.

As adoption continues, TBR expects that vendors will expand their go-to-market initiatives to address the rising influence of line-of-business (LoB) executives on purchase decision making.

Savvy vendors will message the platform benefits -- such as increased business agility -- to bridge the gap between the IT department and the C-Suite. Success in the converged systems market increasingly means ensuring coverage across traditional and the more nascent but faster-growing hyperconverged segments.

The holistic workload coverage and mature, proven technologies that traditional converged systems bring to customers will remain attractive, especially for large enterprises investing in broad consolidation initiatives.

Mainstream Apps for Hyperconverged Platforms

However, hyperconverged platforms -- previously deployed for highly segmented use cases such as virtual desktop infrastructure delivery -- are steadily becoming the infrastructure of choice for a widening array of business-critical workloads, especially for SMB customers with limited internal technical resources.

"Traditional converged systems revenues will continue to grow globally, but deployments will become increasingly concentrated as more customers opt for the radically reduced management complexity and innovative storage features included in hyperconverged systems," concluded Macomber.

Tuesday, April 19, 2016

Video Surveillance as a Service Gains Cognitive Insights

Capturing data from video is a growing application within the Internet of Things (IoT). Video asset management and big data analytics software are enhancing the inherent benefits of high-quality IP cameras. As a result, the video surveillance market is experiencing a significant transformation.

ABI Research forecasts global value-added services market revenues will reach $10 billion by 2021. Data and analytics services, as well as device and application platform services, show the strongest revenue growth within the non-consumer video surveillance market.

"With hardware revenue margins destined to decline, many industry players are adopting a more service-oriented approach to find new revenue opportunities," said Eugenio Pasqua, research analyst at ABI Research. "The intersection of video surveillance and IoT opens the doors to a whole new set of players."

Big Data Analytics and Cognitive Demand

Enterprises can derive valuable insights from the data generated by video surveillance systems, which the organizations can then use to drive their operational, marketing, and merchandising decisions forward. ABI Research anticipates that savvy vendors will offer solutions that integrate operation data from a variety of sources -- including cameras and control systems.

Three trends in the video surveillance market depict the convergence of IoT and video surveillance: Video Surveillance as a Service (VSaaS), the integration and unified management of video surveillance within other systems, and the use of video analytics as a business intelligence tool.

VSaaS, specifically, is an emerging business model that enables access to the system and its services from virtually anywhere, while relieving user organizations and enterprises from service management.

While large-scale adoption of a fully cloud-based VSaaS model is a nascent use case, many vendors are already incorporating VSaaS functionalities into their traditional video management solutions. They're then integrating and connecting them with other security systems -- such as access control, fire detection, and building management.

Harvesting Actionable Insights from Data

"The increasing demand of IT and physical security convergence and video integration will provide a fertile ground for players with a good IP understanding," concludes Pasqua. "This will ultimately push many firms to closely collaborate and reduce the complexity in delivering a viable end-to-end solution."

As for video analytics, Pasqua believes that its use as a business intelligence tool will be a major driver for growth in the sector. Moreover, the growing desire to achieve a higher ROI from video surveillance systems will push more commercial users to implement intelligent solutions, such as those enabled by cognitive analysis.

And while the majority of surveillance cameras currently installed in the enterprise environment still use fixed line analog connections, this will not handicap market development. ABI Research believes that both wired and wireless IP connections will continue to grow at a double-digit CAGR for at least the next five years.

Monday, April 18, 2016

Why IoT Vendor Pioneers are Reaping the Rewards

Be forewarned, the Internet of Things (IoT) will be a disruptive force across many industries. Moreover, total commercial IoT revenue among 21 benchmark companies grew by 14.8 percent year-to-year in 4Q15, reaching $6.7 billion, according to the latest market study by Technology Business Research (TBR).

TBR believes North America is currently the epicenter of IoT activity due to rising interest in the efficiency benefits from commercial IoT applications among energy, manufacturing, transport, retail and healthcare vertical customers in the region.

North America represented 40.3 percent of the benchmark commercial IoT revenue and grew 14.1 percent year-to-year to $2.7 billion in 4Q15. APAC and CALA, while growing faster at 16 percent and 26.3 percent year-to-year, only represented 24.8 percent and 5.5 percent of total revenue, respectively.

Commercial IoT Market Development

"Effectively, every type of IT and operational technology (OT) vendor will have a stake in the growing market, as IoT solutions will drive increased use of diverse IT and OT products and services," said Dan Callahan, analyst at TBR.

In addition to building interest in established IT products, commercial IoT will create growth in specialized business consulting, hardware, network, development, management and security components.

TBR believes savvy vendors are pursuing early adoption to drive higher-than-average gross profit for IoT solutions in the nascent stages of market development as a result of lower competition, more custom solutions, and decreased ability to outsource due to security concerns and the complexities of early IoT.

The segments tracked by TBR include business consulting, IT services, information and communications technology (ICT) infrastructure, software, security software and services, cloud services and connectivity.

Cloud services, despite growing from a smaller base, displayed the highest overall growth rate at 79 percent year-to-year to reach $604 million in 4Q15 -- due to the evolving need for compute platforms and object storage.

Demand for IoT Big Data Analytics

Fast followers, include business consulting and security software firms, are also growing due to the widespread nature and numerous components of IoT management -- such as the confidential data that's generated from a multitude of sensors and connected devices.

IT services and ICT infrastructure, which accounted for 51.4 percent of total benchmark revenue in 4Q15, also achieved strong growth due to increasing capacity requirements associated with deploying, storing and making actionable insights with the massive amounts of data generated by IoT applications.

Demand for diverse skills benefits what TBR defines as hybrid IT vendors: those that deliver a suite of IoT components, containing hardware, software and services. But while buyers may choose hybrid IT firms based on their broad capabilities, they may seek specialized partners to tap industry-specific knowledge.