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Friday, May 27, 2016

Why Value-Added Cloud Computing Services Matter

According to the latest global Cloud Price Index (CPI) study, the cloud services sector isn't a commodity market, with price barely impacting market share as customers look for value-added services. Moreover, cloud computing skills and proven experience are still in short supply. That's why cloud service buyers seek information, guidance and support from vendors.

The CPI research demonstrates that reduced cloud pricing hasn't significantly changed buyer sentiment. Instead, the supply of higher-value cloud services is key to long-term, sustainable and profitable vendor growth strategies.

451 Research finds that virtual machine pricing has dropped 12 percent on average over the past 18 months, while the price of storage, NoSQL, load balancing, bandwidth and other cloud services have remained stable and continue to provide margins.


Exploring the Cloud Market Dynamics

Analysts believe that as the price for cloud compute continues to fall toward zero, the savvy hyperscale vendors will add higher-value cloud services as quickly as they can, recognizing that the margins currently enjoyed on bulk sales of compute resources are not sustainable.

Furthermore, data from the CPI study shows that the lowest-cost service providers have not won greater market share as a result of their pricing strategy. Instead, customers value their additional services, local hosting and support by partnering with a familiar brand.

"Despite all the noise about cloud becoming a commodity, our research demonstrates a very limited relationship between price and market share. Certainly, being cheap doesn’t guarantee more revenue, and being expensive doesn’t guarantee less. Cloud is a long way from being a commodity," said Dr. Owen Rogers, research director at 451 Research. "In fact, the real drama is the race to the top, rather than a race to the bottom."

451 Research correlated global pricing for the CPI small basket of goods against market share data. The resulting Cloud Commodity Score (CCS) measures this price sensitivity -- the higher the CCS, the bigger the impact price has on market share.

According to the 451 Research assessment, the U.S. market is where a lower price is most likely to drive market share, yet even here, the CCS is only 18 percent. By virtue of its size and economies of scale, the U.S. is currently the cheapest market for cloud services.

Cloud Service Market Development Opportunities

451 Research analysts believe this low CCS score demonstrates that there are still opportunities to add-value in the U.S. market, although most service providers still need to find their key point of differentiation in a crowded me-too vendor marketplace.

In Europe, price has less impact on market share with a CCS of 12 percent, and customers paying on average 3 percent more than the U.S. market. With a CCS of just 4 percent, APAC cloud price changes have minimal impact on market share, reflecting the finding that services in this fractured market cost about 19 percent more than in the U.S. market.

451 Research analysts believe Europe and APAC present more opportunities for cloud service providers than the U.S. because the markets are fractured, with concerns about data protection across borders and a need for local services to meet local performance needs.

Thursday, May 26, 2016

Big Data and Business Analytics Upside Opportunity

According to the latest worldwide market study by International Data Corporation (IDC), revenues for big data and business analytics will grow from nearly $122 billion in 2015 to more than $187 billion in 2019 -- that's an increase of more than 50 percent over the five-year forecast period.

The consulting services-related opportunity will account for more than half of all big data and business analytics revenue for most of the forecast period, with IT Services generating more than three times the annual revenues of Business Services.

Software will be the second largest category, generating more than $55 billion in revenues in 2019. Nearly half of these revenues will come from purchases of End-User Query, Reporting, and Analysis Tools and Data Warehouse Management Tools. Moreover, hardware spending will grow to nearly $28 billion in 2019.

Big Data Analytics Market Development

The industries that present the largest revenue opportunities are Discrete Manufacturing ($22.8 billion in 2019), Banking ($22.1 billion), and Process Manufacturing ($16.4 billion). Four other industries -- Federal or Central Government, Professional Services, Telecommunications, and Retail -- will generate revenues of more than $10 billion in 2019.

The industries experiencing the fastest revenue growth will be Utilities, Resource Industries, Healthcare, and Banking, although nearly all of the industries profiled in the new Spending Guide will see gains of more than 50 percent over the five year forecast period.

Large and very large companies will be the primary driver of the big data and business analytics opportunity, generating revenues of more than $140 billion in 2019. However, small and medium businesses (SMBs) will remain a significant contributor with nearly a quarter of the worldwide revenues coming from companies with fewer than 500 employees.

"Organizations able to take advantage of the new generation of business analytics solutions can leverage digital transformation to adapt to disruptive changes and to create competitive differentiation in their markets," said Dan Vesset, group vice president at IDC.

IDC believes that these organizations don't just automate existing processes -- they treat data and information as they would any valued asset by using a focused approach to extracting and developing the value and utility of information.

Data-Driven Business Buyer Motivation

According to the IDC assessment, big data and analytics can have a considerable impact on just about every industry. It will improve margins and performance, while simultaneously enhancing responsiveness and delighting customers and prospects. Forward-thinking organizations turn to this emerging technology for better and faster data-driven decisions.

From a geographic perspective, more than half of all big data and business analytics revenues will come from the United States. By 2019, IDC forecasts that the U.S. market for big data and business analytics solutions will reach more than $98 billion.

The second largest geographic region will be Western Europe, followed by Asia-Pacific (excluding Japan) and Latin America. The two regions with the fastest growth over the five year forecast period will be Latin America and the Middle East and Africa.

Wednesday, May 25, 2016

OTT Video Revenues will Triple in Asia-Pacific Region

Pay-TV service providers across the globe are responding to the emergence of agile video entertainment competitors. The over-the-top (OTT) television and video service revenues for 17 countries within the Asia-Pacific region will reach $18,396 million in 2021 -- that's up from $5,741 million in 2015.

Furthermore, China will overtake Japan in 2016 to become market leader in the region. "Smartphone users will continue to drive OTT TV and video audiences. Smartphones are a more important OTT TV reception method than fixed broadband in the Asia-Pacific region -- with the notable exceptions of Australia and New Zealand," said Simon Murray, principal analyst at Digital TV Research.

Advertising on OTT sites will remain the main revenue source, bringing in $8,745 million by 2021 -- that's up by $6 billion from $2,609 million on 2015. China will supply $4,911 million of the 2021 total, with Japan providing a further $1,475 million.

OTT Video Market Development in APAC

Subscription video on demand (SVOD) revenues will increase from $1,816 million in 2015 to $6,439 million in 2021. China will add $1,838 million in revenues between 2015 and 2021.

Download-to-own and electronic sell-through movie and TV revenues are forecast to be $1,904 million in 2021 (with $692 million from Japan), that's up from $691 million in 2015. OTT TV and video rental will climb to $1,307 million in 2021.


Much of the OTT activity in 2015 and 2016 has involved local players establishing themselves in their domestic markets. However, according to the Digital TV Research assessment, a handful of companies are taking an international approach.

Although there is substantial demand for foreign fare, local content is necessary in each market to entice new subscribers. Furthermore, international players benefit from partnerships with local players to gain from their distribution and retail infrastructure.

Demand for Local Market Customization

International players must also adapt their prices to local conditions. With low levels of credit card ownership in most Asia-Pacific countries, local payment systems smooth the market development process.

Launched in March 2015, Netflix has achieved considerable success in Australia and New Zealand -- markets most receptive to predominantly U.S. produced content. However, its January 2016 launches were conducted with little local content, little local price and payment sensitivity and without local partnerships.

Mr. Murray believes that this may change, of course. For instance, Netflix signed a distribution agreement with Hong Kong’s 'Now TV' in March 2016 and has carriage deals with Singapore’s StarHub and SingTel.

Netflix may have to adjust its policy rapidly to secure market share before its rivals become too entrenched. Major markets such as China, India, Japan and South Korea are already dominated by domestic players. South East Asia provides greater opportunities for international platforms.

Tuesday, May 24, 2016

How Cloud, SDN and NFV are Transforming Telecom

The Telecom Infrastructure Services (TIS) market in North America will decline from $30.4 billion in 2015 to $27.4 billion in 2021 at a CAGR of -1.7 percent, according to the latest market study by Technology Business Research (TBR). Telecom network operators will shift their focus to software-mediated networks, specifically orchestration, automation, SDN and NFV.

Fifth generation (5G) networks will begin to be deployed commercially in 2020, but ongoing rollouts will be use case-driven rather than a nationwide build-out like what occurred in previous generations of wireless technologies, providing little relief to the market.

Software-Defined Networking Momentum

Decommissioning of legacy infrastructure -- and the  implementation of NFV and SDN -- will accelerate the decline in the maintenance market. Telecom network operators are decommissioning legacy infrastructure, with Tier 1 service providers leading the charge to an all-IP environment.

"The deployment and maintenance services that make up the product-attached services market will bear the brunt of the decline in the overall TIS market, as these areas will suffer the most during the transition from LTE coverage to densification deployments, the decommissioning of legacy infrastructure and the use of open-source software across commoditized hardware," said Chris Antlitz, senior analyst at TBR.

Network operator transformation will support growth in the professional services market, according to the TBR assessment. Ongoing adoption of open source for SDN, NFV, cloud and IoT will drive growth in the market. Software-mediated transformation requires a full range of professional services from savvy vendors with skilled and experienced technical staff.

Telecom Managed Services Market Transition

In contrast, the managed services market will decline during the forecast period for several reasons. First, network operators are accelerating their transition away from legacy technologies. Second, they are moving more functions onto a cloud platform and leveraging XaaS solutions to reduce costs and increase operational flexibility and scalability.

And third, they are squeezing the telecom managed service vendors for price reductions when renewals are up for renegotiation. For telecom vendors, the North America TIS market remains dynamic and diversified, with no single vendor leading in more than one services category.

All the leading TIS suppliers that are heavily exposed to telecom service provider hardware-related services saw their revenue decline in 2015, while software-centric and professional services firms grew market share.

This trend will continue through the forecast period, as demand for product-attached services declines.

Monday, May 23, 2016

Wearable Device Usage Drives New Data Applications

The wearable devices market is evolving rapidly, fueling the explosion of big data apps within the Internet of Things. A combination of new device releases, retail price reductions, and company rationalizations marked the first quarter of 2016 (1Q16) in the worldwide wearables market.

According to the latest global market study by International Data Corporation (IDC), the wearable device total shipment volumes reached 19.7 million units in 1Q16 -- that's an increase of 67.2 percent from the 11.8 million units shipped during the same period in 2015.

Moreover, the first quarter of 2016 saw its fair share of significant events to entice customers, with multiple fitness trackers and smartwatches introduced at the major technology shows.

Wearable Device Category Expansion

There were post-holiday price reductions on multiple wearables, including Apple's Sport Watch; and greater participation within emerging wearables categories, particularly clothing and footwear.

Conversely, several new device start-up companies announced headcount reductions or shut down entirely, underscoring how competitive the wearables market has become. "The good news is that the wearables market continues to mature and expand," said Ramon Llamas, research manager at IDC.

IDC believes that the wearables that we see today are several steps ahead of what we saw when this market began, increasingly taking their cues from form, function, and fashion. That keeps them relevant. The downside is that it is becoming a crowded market, and not everyone is guaranteed success.

Still, there are two areas where the market shows continued growth -- smart watches and basic wearables (devices which do not run third party applications).

Wearable Market Development Segmentation

According to the IDC assessment, there's a clear bifurcation and growth within the wearables market. Smart watches attempt to offer holistic experiences by being everything to everyone, while basic wearables like fitness bands, connected clothing, or hearables have a focused approach and often offer specialized use cases.

IDC says that it's shortsighted to think that basic wearables and smart watches are in competition with each other. Right now, both are seen as being essential to expand the overall market opportunity.

The unique feature sets combined with substantial differences in price and performance sets each category apart, and leaves plenty of room for both to grow over the next few years.

Friday, May 20, 2016

Worldwide 3D Printer Market will Reach $22.4B in 2020

The traditional printer market has been turbulent during the last few years, due to shrinking demand and vendor consolidation. However, the upside for 3D printing is a bright spot. Canalys predicts that the worldwide market for 3D printers, and associated materials and services will reach a value of $4.9 billion by the end of 2016.

The total market is expected to grow by a compound annual growth rate (CAGR) of 43.5 percent from 2015 to 2020 -- reaching a value of $22.4 billion. Shipments of 3D printers are forecast to grow at a CAGR of 67.2 percent -- to reach 2.4 million units by 2020.

Worldwide, vendors shipped 182,000 3D printers in 2015, a 37 percent year-on-year increase, with strong performances in both the enterprise and consumer sectors. That being said, challenges remain as the market evolves.


The market continues to have mixed results, from a growth perspective. While industrial expenditure on 3D printers fell, educational establishments ordered thousands of systems for their students.

Overall, Taiwanese vendor XYZprinting held onto the top spot as the world’s largest 3D printer vendor, accounting for 38 percent of total shipments, according the the latest market study by Canalys.

3D Printer Market Development Outlook

"2015 was a tough year for many large vendors," said Joe Kempton, analyst at Canalys. "Many struggled to maintain their growth rates and, as a result, have been forced to take stringent cost-cutting measures."

Some, such as 3D Systems, have even been forced to leave an entire section of the industry. At the low end of the market, this has cleared the way for many new vendors to fill the gap, launching 3D printers at ever lower prices.

At the high end of the 3D printer market, companies have been left vulnerable to attack from newer enterprise-focused vendors, such as HP, which are just starting to enter the market.

As a result, Canalys expects to see a dramatic shift in the 3D printing vendor landscape over the course of the next few years, and we will likely see more substantial consolidation occurring in the market as some vendors are forced to leave.

Thursday, May 19, 2016

Technical Talent Shortage Drives Hosted Cloud Growth

Numerous industry analysts have reported that organizations continue to report that a shortage of skilled and experienced technical staff in their market inhibits their ability to adopt cloud computing service options. Those that can find the technical talent often discover that the salary requirements of the most capable cloud architects are beyond their traditional IT pay scales.

Some organizations have solved the near-term technical staffing challenge by reaching out to vendors that can offer a comprehensive hybrid cloud managed services solution, and can provide staff training and skills certification as a solution to their long-term knowledge transfer needs.

Meanwhile, cloud computing consultants and other skilled specialists fulfill the requirement to augment an organization's technical staff -- just-in-time, as needed on new digital transformation projects.

Cloud Services Ongoing Market Development

The market for cloud computing solutions will continue on a strong growth trajectory through 2020, driven by IT and Line-of-Business (LoB) leader acknowledgment of the proven business benefits, according to the latest market study by Technology Business Research (TBR).

TBR expects the cloud computing professional services market will reach $65 billion in 2020, due to the emerging demand for cloud brokerage, as a result of continued cloud workload deployment that prompts integration and orchestration challenges.

Cloud brokerage and integration tools are also breaking down the barriers to public cloud and hosted private cloud adoption, as enterprise IT departments can now have access to these SaaS and PaaS solutions to help automate cloud adoption.

In addition, for certain workloads, such as those with confidential employee information, private cloud services remain an important enterprise option. Given these trends, TBR expects the hosted private cloud market to grow to $43 billion in 2020.

Demand for Cloud Management Automation

"The cloud professional services market will grow through 2020, but the worst case scenario is that vendor portfolio build-outs with automated tools and solutions will cut into the managed services opportunity, largely impacting professional services vendors," said Cassandra Mooshian, senior analyst at TBR.

Hosted private cloud's growth trajectory will face similar obstacles to that of cloud professional services. TBR believes that although the hosted private cloud market is significantly smaller than public cloud, it will continue to grow over the next four years as IT departments with security concerns remain on single-tenant private cloud for certain workloads.

However, some potential customers with the most security concerns may keep applications on-premises, avoiding cloud deployments altogether. Hosted private cloud vendors may also face a growing number of customers that see public cloud services as the final destination for their enterprise IT applications.

Wednesday, May 18, 2016

Telecom Networking Market Disruption is Now Inevitable

There once was a time when traditional telecom service provider networking vendors were gratified that their proprietary platforms ensured continued success. As long as carrier customers agreed to buy products that locked them into the market leader's technology and associated ecosystems, they were assured high-profit margins and limited competition.

In fact, not that long ago, some industry analysts actually believed that Cisco could maintain 50%+ market share in several of their product categories, for an unlimited period of time. After all, they had already achieved that goal -- in some cases, for more than two decades. The market outlook seemed to be predictable, until one day it wasn't.

Why Telecom Networking is Primed for Disruption

For the past several years, the telecom industry has been moving toward a major network and operational transformation epitomized by software-defined networking (SDN) and network functions virtualization (NFV) with the top goals of automation and service agility.

Carriers have defined the vision, goals and architectures and are progressing through use cases, proof-of-concept projects, field trials and a small but growing number of commercial deployments.

The partially proven promise keeps the industry moving as fast as it can, but this is still early days in this long-term -- 10- to 15-year -- digital transformation of service provider networks.

SDN deployments started in Japan with NEC and NTT, and the nation's forward-looking service providers have been active in deploying real (but relatively small) commercial deployments. China is coming on strong, with many sizeable commercial deployments in 2015 and 2016.

And, telecom service providers in North America and Europe are also leading the charge to deploy SDN, and are anticipated to account for 13 percent of total 2015–2020 SDN revenue.

Given these factors, the telecom service provider SDN market -- including hardware, software and services -- is forecast to grow from $289 million in 2015 to $8.7 billion in 2020, with a 2015–2020 compound annual growth rate (CAGR) of 98 percent, according to the latest worldwide market study by IHS Technology.


Additional highlights from the study include:

  • SDN and NFV represent the shift from a hardware focus to software one: Software and outsourced services will comprise 46 percent of SDN revenue in 2020.
  • SDN orchestration and controller software revenue is forecast to grow to over $1.8 billion in 2020.
  • But by 2020, there will be more value in SDN apps than in orchestration and control, which will be priced reasonably due to competitive pressure.

Tuesday, May 17, 2016

Exploring Next Generation Digital Banking Platforms

The banking industry is being disrupted by new agile, digital-savvy competition. Traditional banks must now increase their efficiency and reduce costs, all while preparing to delivering next-generation digital services, according to the latest worldwide market study by Gartner.

Gartner predicts that by the end of 2019, about 25 percent of retail banks will use innovative startup providers to replace legacy online and mobile banking systems. These digital transformation vendors are emerging to make banking easier to accomplish on the various devices that today's customers want to use.

"Startups and emerging providers of digital banking platforms offer banks interesting opportunities for innovation," said Stessa Cohen, research director at Gartner. "However, CIOs must prepare to manage the challenges of evaluating and selecting new vendors that may not have proven track records in the financial services vertical or may simply be new and untried without an extensive customer base."

Digital Banking Market Development

Gartner advises bank CIOs to work with business leaders and other key stakeholders to assess the bank's comfort with, and ability to manage, the risks associated with using new providers, especially financial technology startups.

One of the most important reasons why the market for digital banking solutions has evolved is because most legacy vendors that offer software applications have been slow to react to demands of progressive digital banking services.

Incumbent vendors often don't support open architectures that decouple the presentation of services from the banking services and transactions -- that handicaps the bank, by making it very difficult to offer innovative digital services.

As a result of the forward-looking requirements, new vendors have emerged with digital banking capabilities that enable bank business and IT staff to offer software applications that support personalized, customer-centric banking experiences.

Open Unified Digital Banking Platforms

New solutions make it possible to deliver digital products and services, and create a multi-dimensional customer experience across all devices and channels. They enables the bank to develop and deliver online services for use by both bank staff and customers, via any device or channel.

According to the Gartner assessment, digital banking platforms may include a broad range of capabilities including financial management, payments, marketing, loyalty, analytics and customer communication management.

Gartner views open unified digital banking platforms as an emerging technology, even though some of the solutions on the market -- including some from niche banking system vendors -- have been available for several years.

Monday, May 16, 2016

Retailer In-Store Wireless Apps Boost Wi-Fi Usage

Retailers across the globe were one of the first sectors to adopt big data applications, as a way to gain new in-store shopper traffic insights. Wireless technology is key component of the solution. ABI Research reported greater growth in Wi-Fi location analytics within the retail market during 2015.

ABI analyst calculations show that total Wi-Fi location technology installations in retail were up almost 400 percent year-over-year. And, the growth trend is forecast to continue in 2016.

Driving the growth is a combination of start-ups and legacy access point vendors, such as Cisco Systems, Ruckus Wireless, and Zebra Technologies, that are adopting new pricing models, technologies, and a large number of platform partners to help them win new business.

Market Development of New Wi-Fi Apps

"Previous iterations of Wi-Fi location platforms were expensive and not ideal for customer engagement," said Patrick Connolly, principal analyst at ABI Research.

According to the ABI assessment, retailers and vendors quickly grasped that Wi-Fi's role in this space centers on gathering customer analytics. Besides, iBeacons are good for engagement and advertising but very limited in the short-term for customer data analytics.

Zebra Technologies, for example, shows marked innovation in combining Wi-Fi and beacon technology with third party app offerings, to maximize analytics and customer engagement capabilities for their retail partners. The resulting retail data explosion is creating new demand for object storage solutions.

Independent Wi-Fi analytics start-up providers, such as Euclid, Walkbase, Cloud4Wi, and, in particular, Purple, experienced rapid growth of their customer bases over the past two years, even expanding beyond retail into public venues like hospitality, stadiums, airports and cities/tourism.

Demand for Next Generation Technologies

There are also some very significant Wi-Fi based deployments at advanced stages of planning, which will ensure 2015 was not a one-off. "The ongoing challenge is a simple one: there is always new technology around the corner," concludes Connolly.

Retailers are only beginning to grow accustomed to Wi-Fi and iBeacons, yet the industry is already shifting toward a new generation of technologies, such as magnetic field, sensor fusion, and Google’s Project Tango.

Many Wi-Fi and beacon vendors are also developing their own high accuracy proprietary solutions, which will start to penetrate the market in 2016. Overall, ABI expects to see a big shift towards hybridization and increased accuracy in 2016.