Competitor Comparison

Current Threat Index Threat Index Chart Title Rating Update Summary Current Threat Assessment Solutions Products/Roadmap Service/Support Strategy Execution Momentum/Traction Perspective Current Perspective

Alcatel-Lucent Telecom Vendor Services (*)

Aricent Group Telecom Vendor Services (*)

Ciena - Telecom Vendor Services (*)

Cisco - Telecom Vendor Services (*)

Ericsson - Telecom Vendor Services (*)

HP - Telecom Vendor Services (*)

Huaw ei - Telecom Vendor Services (*)

IBM - Telecom Vendor Services (*)

Nokia Siemens Tech Mahindra Netw orks - Telecom Telecom Vendor Vendor Services (*) Services (*)

Tellabs Telecom Vendor Services (*)

Alcatel-Lucent Telecom Vendor Services (*) POSITIVE

Aricent Group Telecom Vendor Services (*) MODERATE

Ciena - Telecom Vendor Services (*) POSITIVE

Cisco - Telecom Vendor Services (*) MODERATE

Ericsson - Telecom Vendor Services (*)

HP - Telecom Vendor Services (*) MODERATE

Huaw ei - Telecom Vendor Services (*)

IBM - Telecom Vendor Services (*)

Nokia Siemens Tech Mahindra Netw orks - Telecom Telecom Vendor Vendor Services (*) Services (*) POSITIVE POSITIVE

Tellabs Telecom Vendor Services (*) MODERATE

VERY POSITIVE

POSITIVE

POSITIVE

W e are maintaining a positive rating on Alcatel-Lucent in the telecom vendor services (TVS) market, and by a slim margin of one deal it w as the 2011 second place w inner behind Ericsson and NSN w ho tied for first, based upon the total number of deals logged in our database. In July 2011, Alcatel-Lucent formed its Softw are, Services and Solutions (S3) business segment making one of three primary focus areas the others being Netw orks and Enterprise. S3 ranks number tw o in terms of revenue contributing approximately 28% based upon FY 2011 revenue, behind Netw orks at 62% and ahead of Enterprise 8% and others w ith 2%. The S3 segment is effectively flat from a revenue standpoint although margins have been improving, reflecting results from previously implemented cost reduction programs. Alcatel Lucent Services is focused on offering services designed to help operators transform and leverage their netw orks as a business platform. It is now organized into three major practice areas.

W e are taking a positive stance on Ciena in the telecom vendor services (TVS) market. W here the company plays primarily design, deployment, optimization and in some cases, limited operational tasks related to its ow n equipment it does w ell. Ciena effectively placed fourth behind industry leaders Alcatel-Lucent, Ericsson and NSN in our TVS Tracker 2011 roundup. Historically Ciena has not promoted its managed services w ith the same vigor as its larger infrastructure rivals, positioning its service business as one of Specialists particularly in the area of optical and Ethernet. Ciena reports services revenues as an independent segment, apart from equipment sales, making it clear that the W ith solutions for company is telecom netw ork committed to vendors, device being a fully makers, application engaged partner providers and in Cienaoperators, Aricent pow ered Group addresses a netw orks. At 1. Consulting range of netw ork Ciena, services Services: Provides operator needs. are clearly tied recommendations to This breadth of to equipment help clients define experience gives it sales, w ith a run and prioritize a solid claim to end- rate of 19.6% of projects. The to-end service revenue in fiscal practice leverages expertise and 2011; the the depth and capabilities. As correlation breadth of its global operators focus betw een business and more and more on equipment sales technology user experience as and services expertise and Bell a differentiator, revenue could Labs innovation to end-to-end services compound a provide offerings and profit dip should recommendations credible claims to Cienas and best practices netw ork equipment sales

W e are taking a moderate stance on Aricent Group in the telecom vendor services market. Founded in 2006 from Hughes Softw are Systems and acquired by Flextronics Softw are Systems, w ho also acquired Frog Design, the privately held company consolidated all companies under the Aricent Group brand in August 2011. Today, Aricent Group provides Product Engineering Services, Carrier Services and Solutions, and design and innovation services. The Aricent Group has delivered design solutions from chip sets to devices to netw ork equipment to backend BSS/OSS systems. The company has 10,000 employees serving a w ide spectrum of the communications industry and ecosystem, helping it to substantiate its claim of an exclusive communications focus thats vendor agnostic.

W e are maintaining a moderate stance on Cisco in the telecom vendor services market. Although the company can point to a complete set of netw ork-focused services w ithin its technical services, remote management, and advanced services, its offerings do not share the same breadth and depth as other industry leaders such as AlcatelLucent, Ericsson, and NSN. The primary difference is Cisco purposely keeps its services offerings focused on the Cisco kit and does not provide managed multivendor support on products it does not produce. This makes sense, since Cisco does not offer products in some of these market segments, such as the radio access netw ork (RAN). Partnering helps to make up for these deficiencies; how ever, w hile partners are used to augment its reach, relying on partners is risky, as tensions betw een cooperation and competition arise and these partners are potentially marginalized. Cisco has recognized this and taken steps in the last couple years to make its service provider support services a more direct and high-touch offering including SLAs. Cisco is attempting to morph its services

W e are maintaining our very positive rating on Ericsson in the telecom vendor services (TVS) space. It tied w ith NSN for first place based upon the total number of deals logged in 2011 from our TVS data base and claimed 70 new managed services contracts during the same period. The vendors Global Services unit is one of the largest and most extensive in the w orld, covering 175+ countries and employing 56,000 service professionals. It once again generated approximately 37% of the companys annual revenue that ran at SEK 227.9 billion (USD 31.5 billion) in 2011. Its one of three reporting divisions -the others being Netw orks (58%) and Multimedia (5%). Its service portfolio is divided betw een professional services and netw ork rollout. Professional services include: managed services, consulting and system integration, custom, and project-based offerings and, in 2012, Ericsson led the pack for managed services aw ards, indicating a strong demand and consistent w ith these and other trends reported in our Telecom Vendor Service (TVS) tracker.

W e are taking a moderate stance on HP in the telecom vendor services (TVS) market. Even though it is not a manufacturer of telecom equipment, the company has used its organization, products (such as analytics), and partners to create a niche for itself w ithin the IT segment of the TVS market. HP claims hundreds of service provider customers, and annual revenues of $127.2 billion. W ith 28% of the companys revenues coming from Services, HPs size as a services vendor dw arfs the services businesses of even the largest of the traditional telecom netw ork vendors. Going forw ard, its deep set of IT products and expertise provide HP w ith increasing relevance as IToriented solutions like OSS/BSS and customer experience management (CEM) begin to The high percentage play a larger and grow th of role in operator managed services is a business clear indication of models. uptake for the higher- Additionally, as value services not virtualization tied to product and cloud revenue. Last year architectures saw several become significant aw ards: a increasingly seven year managed relevant as services contract to telecom-grade Clearw ire, a major services, HP has North American a natural service provider and opportunity to Sprint partner, and expand its more recently a four relevance in the

W e are raising our rating on Huaw ei from moderate to positive in the telecom vendor services market segment. Building on the consistent netw ork sales and service success over the last several years, the company can point to a grow ing number of service engagements beyond the basic technical services that all vendors provide in support of their platforms. Huaw ei offers perhaps a broader array of services over other vendors of its size and in addition to the standard, netw ork operation and integration or migration services it w ill supply facility construction as w ell. It is no surprise that Huaw ei points to managed services as the fastest grow ing segment of its business claiming a CAGR of 70% for the last six years. Huaw ei clearly view s professional and managed services as a strategic long-term company grow th engine and w ay to move up the value chain. Given its ascent in the equipment market - and demonstrated ability to achieve strategic grow th targets across a range of areas w ithin this market there is little reason to doubt Huaw ei cannot, in time, exert similar pressure in the services market.

W e are maintaining a positive stance on NSN, w hich due to this years series of announced service w ins, remains threatening to the competition in the telecom vendor services (TVS) market. W ith services consistently accounting for approximately 50% of revenues (EUR 14.04 billion, or $18.33 billion USD, in 2011), it is impossible to ignore the importance of services to the vendors bottom line. Last years announcement that it w ould focus its business on global service along w ith mobile broadband (including optical) and customer experience management (CEM) w as a bold yet necessary move. In terms of its focus on NSN must prove its the telecommunications sustainability by market, sales into the becoming vertical account for profitable, and it approximately 9.3% of has moved quickly the companys revenue. to divest itself of Specific offerings aimed business units that at Communications are not strategic to Service Providers this goal. NSNs (CSPs) include services global service aimed at data center, delivery plays to its cloud, mobility and focus on remote integrated delivery w hile communications. IBMs meeting specific strength in IT services, local and regional its credibility in vertical requirements markets that are offering 99.99% increasingly orientating availability to tow ards telecom-grade operators. It has netw orking solutions, supported the and the co-opetition build-out of Although Huaw ei has model w hich it enjoys additional Global done w ell w ith its w ith most major Netw ork Solutions baseline services netw ork equipment Centers (GNSCs) assets, capabilities, vendors, put the and Global Netw ork past project company in a strong Operations experience and vision position to benefit as Centers, having for the future, it has a netw ork operators are opened its last substantial amount of forced to devote Service Delivery w ork ahead to execute increasing attention to Center in Mexico in on this vision. the monetization and December 2011. Huaw eis products, business side of the NSN is taking and the resulting netw ork as w ell as proactive steps to opportunity to sell optimizing and narrow its services product attached transforming IT-related consulting focus services, are clearly a netw ork functions. and has targeted a

W e are taking a positive stance on IBM in the telecom vendor services market, because its global delivery capability, consulting and softw are integration expertise are in many w ays unrivaled. IBM strategically approaches Global Services as critical to providing support to IT infrastructure and solutions to clients. Global Services consists of Global Technology Service (GTS), w hich provides IT infrastructure and business services w ith employees in 40 countries supporting 430 data centers, and Global Business Services (GBS), w hich provides the professional services. Its combined revenue for FY 2011 w as $60.1 billion, and the services backlog number stood at $141 billion, indicating a strong business pipeline.

W e are taking a positive stance on Tech Mahindra in the telecom vendor services (TVS) market. W hile the company does not develop telecom netw ork equipment, it does engage in managed netw ork services contracts on a turnkey basis. Its true strength, how ever, is in the IT domain, w here it is w orld-renow ned, and its integration w ith sister company Mahindra Satyam should put the company in a prime position to leverage its telecom know -how across a broader range of vertical industries. W hile Tech Mahindra is not the first name that comes to mind w hen thinking of IT specialists focused on the telecom industry, it does hold the distinction of being the largest Indian player in the TVS market segment based upon revenue. In 2010, Tech Mahindra crossed the billion dollar threshold, and it w as recently named the number one telecommunications softw are service company in India by an Indian tech publication. Tech Mahindra claims a presence in 31 countries, employing 43,657 professionals and serving 128 customers, w ith 36 new logos added this quarter. It boasts a global reach and has an impressive resume of telecom operators as customers along w ith a quality reputation for softw are

W e are taking a moderate stance on Tellabs in the telecom vendor services market. The company has a solid reputation in packet optical and mobile backhaul transport for fixed-line applications. Poor revenue performance in the mobile packet core market has caused Tellabs to abandon this market completely; along w ith a 20% revenue drops in its Broadband and Transport segments, this has caused it to institute a restructuring program to get the company focused and back on track. Service revenue, w hich is the third of its reporting segments, came in at $223.0 million in 2011, a decline of 7.8%. This represented about 17% of revenue at a gross margin of 33%, w hich is about average for a company of its size. Based upon historical service revenue as a percentage of product revenue tacking w ithin a couple percentage points, it is clear that Tellabs services business is product-led and remains partially tied heavily to the ebbs and flow s of its equipment sales. To its credit,

to its customers. Specific consulting practices offered include: Operations Excellence, Customer Experience, Value Chain and Innovation, New Operator and W holesale, and Architecture. 2. Professional Services: Provides solutions designed to help customers transform and leverage their netw orks as a business platform. The Practice uses its industry leading netw ork planning, design, optimization, integration and applications support services to deliver innovative customer solutions. Specific areas of expertise offered include: NGN W ireless, NGN Endto-End Transformation, NGN OSS/IT, Advanced Communications, Application Enablement, Cloud, Customer Experience Management, Mobile Commerce, Payment & Charging, and Billing. 3. Operation Management Services: Provides transformational managed services and maintenance, to help service providers operate their netw orks more effectively, maximizing netw ork availability and quality for a high quality end-user experience. Specific offerings include: Managed Services, Proactive Services, Maintenance, and Multivendor Maintenance. Alcatel-Lucents telecom experience and offerings range from fixed and mobile infrastructure through OSS/BSS and application products all supporting customers in 130 countries. Service assets are equally broad: 90 w elcome and technical centers; seven regional solutions units; ten netw ork operations centers; five IP transformation centers; nearly 20,000 services staff. W ith a solid position in fixed access and mobile backhaul, the company is arguably the leading services player in the fixed netw ork market and w ith services being one of the companys consistently profitable businesses, ALUs commitment to the space is obvious. Despite its w ellknow n strengths, ALU still faces no shortage of obstacles in the TVS space. Like most vendors w ith a services business, ALU might have a tough time differentiating its offering and many service deals are product led. Its doing a good job bundling professional and technical services together in the support of customer transformation projects most recently w ith its end-to-end 4G LTE w ireless netw ork offering and this may lay the groundw ork for

agnosticism should become increasingly important. At the same time, key competitors in the services space w ill claim similar capabilities and those w hich deliver netw ork infrastructure are likely to be as credible. To this end, as Aricent Group pushes deeper into hot market opportunities such as OSS/BSS integration and LTE, it w ill continue to bump up against these netw ork services heavyw eights. Perhaps more importantly, w hile Aricent Group may actually sell into these vendors, its broader focus on a w ide array of telecom customers actually limits its expertise and image in the service provider space again, positioning it as a niche player against the markets entrenched vendor services players.

falter. W hats more, at least from a marketing perspective, the vendor does leave some relatively obvious gaps: namely backhaul and IP expertise. Competitors like Tellabs have specifically targeted these hot transportrelated areas offering an architected solution w here Ciena is less active, thereby ceding a degree of market credibility. Ciena is w orking on a microw ave backhaul based services capability it hopes to field this year.

strategy to address the needs of both operators looking for a partner (rather than just a vendor) as w ell as its sales and distribution channels (i.e., direct touch vs. partners). Services have become an integral portion of infrastructure build-outs and lifecycle costs, so operators are correctly view ing them as an important component to any deal, making them as strategically important as the technology being deployed. In fiscal 2011, Ciscos service revenue grew 12% year-overBeyond the year, and it is a Ciena Specialist significant Services contributor at positioning, the $8.69 billion, company providing slightly segments its more than 20% of capabilities into total revenue; four service w ith a gross suites: Consult margin of 65.0%, and Design it is very Services, profitable. For basically fiscal 2012, Cisco professional is on track to services tailored grow its service tow ards a revenue at 8-10% customers this year and unique netw ork again contribute environment; approximately Implementation 20% of revenues Services, w ith margins in designed to the sixties. Its provide tech service provider support, turn-up strategy is to and test, become a trusted through turnkey and preferred deployment; business and Manage and technology Maintain partner w orking in Services, collaboration w ith focused on its partners to mission-critical provide a netw ork complete solution. operational As an aspects, acknow ledged IP including specialist, the surveillance, company fault detection, maintains an performance advantage in IP services, and transformation inventory and projects. Likew ise, spare parts w ith a focus on management, unified computing, w hich Ciena w here Cisco sees terms logistics the netw ork management; integrated w ith and Ciena the data center Learning and Solutions, communication providing formal and content training on the services products and independent of netw orking to the netw ork, it help customers has w orked w ith best manage the its Global Service strategic aspects Alliances members of the netw ork for IT support and resource. Ciena a tighter also provides a integration of 24x7 NOC an these functions. integral building Cisco should block in support enjoy a stronger of many of the role for its offered services professional and and customers managed services directly for assets in nextcomplex and generation critical issues. solution delivery. The company has also adopted an aggressive focus on building out its presence in emerging markets using more of a direct touch strategy.

year engagement w ith MetroPCS for backhaul using microw ave. This show s uptake for Ericsson in the North American market and helps break the longheld tradition of netw ork operators being reluctant to outsource the running of their netw orks to third parties. Another marquee deal w as China Mobile, its largest ever, w hich calls for 22,000 sites over a three-year period. Ericssons acquisition of Telecordia clearly telegraphs a strategy of building immediate support and further penetration into the OSS/BSS market that Ericsson categorizes as one of its grow th levers. On the dow nside, how ever, Ericssons scale advantage has taken a hit over the last few years, as AlcatelLucent, Huaw ei and Nokia Siemens Netw orks can each boast of similar global reach and presence. As they do, Ericssons traditional w eak spot in the fixed realm (i.e., lack of share in fixed netw orks) is more pronounced.

netw ork operator ecosystem. In terms of packaging aimed at increasing visibility w ith operators, HP has re-launched its Solution Consulting Services (SCS) by adding prepackaged solutions to its OSS Transformation portfolio as w ell as benchmarking in support of transformation analysis. Finally, HPs joint venture w ith Alcatel-Lucent provides the company w ith a netw orking equipment play w hen competing for contracts such as data center transformation projects w here telecomgrade transport, routing and netw ork management are fundamental to a complete offering. On the other side of the coin, how ever, as much as HP may see itself competing w ith Ericsson, NSN, or other services-led telecom vendor organizations, the fact remains that beyond its JV w ith AlcatelLucent (w hich, by all indications is somew hat limited in scope to data center transformations) it comes up short in terms of telecom products and IP expertise. HP has much more in common w ith its IT-focused brethren, and w hile it may have a w ide array of service provider customers, many link directly to IT or enterprise components. It may partner (liberally) w ith telecom netw ork vendors, but so too do its closest competitors, all w hile increasingly competing w ith these same vendors. HPs emphasis on the enterprise market is clear, along w ith the specific and traditionally targeted verticals of government, health, and education, leaving one to speculate on the strategic value of the traditional telecom services vendor beyond their IT needs.

strength. Leveraging this, services revenues have grow n to around USD 5.4 billion and account for about 17% of company revenue (FY 2011) and have for the past tw o years. As a private company Huaw ei is not obliged to release the same level of financial reporting that public companies typically provide breaking out service revenue and expenses as it ow n P&L. This percentage level is more indicative of product-led services company as opposed to managed and professional, w hich w ould tend to run higher as a percentage of sales. How ever, it is equally clear that Huaw ei is making the investment to build out the infrastructure to support managed and professional services w ith a local touch and is gaining traction as a result. Huaw eis service business is still evolving and w ill take some more time to build out the infrastructure required and gain the experience and credibility on a number of fronts before it can be considered as robust a services player as its chief rivals.

At the same time, even w ithin its scale and telecom-related capabilities, IBMs core strengths, and the benefits of coopetition w ith vendors are coming under increasing pressure as the aforementioned equipment vendors are aggressively targeting OSS/BSS related opportunities and the consulting and systems integration services that IBM has traditionally brought to the co-opetition relationship. This, combined w ith IBMs lack of telecom equipment expertise, should require the IT giant to compete more directly than ever in the telecom market against companies that have traditionally served as partners.

couple select verticals w here it has some tenure, specifically transportation (railw ays), the public sector (governments), and enterprises. In the vendor services market, few vendors can match NSNs reputation, resources, and traction. It claims to be the second largest w ireless infrastructure and service provider in the w orld, and it is very active in the support and deployment of LTEbased netw orks globally, w ith over 58 commercial LTE deals. NSN serves over 600 service providers in more than 150 countries, w ith netw orks and systems supporting over 1.5 billion subscribers for mobile broadband services. NSN must rely on other infrastructure vendors for their IP core devices, having none of its ow n, and it has developed global alliances w ith both Cisco and Juniper, making it one of the few truly multivendor yet vendoragnostic and multitechnology options available. Such a large percentage of revenue draw n from services rivals could portray the company more as a services specialist than as a netw ork vendor, although NSN can claim a mobile access leadership position w ith 58 commercial LTE netw ork deals. Most w orrying, though, are NSNs financials, as it has been unable to demonstrate sustained viability. This has prompted the parent organizations to appoint an executive chairman and provide an additional EUR 1 billion in funding to help achieve the strategic imperative of financial independence. The program calls for a w orkforce reduction of 17,000 by the end of 2013, w ith operating expenses reduced by EUR 1 billion compared to current levels. A services business is largely built around qualified people and offers low er margins than product sales typically provide. This means the proper balance betw een product sales and service must be achieved to provide the stability sought, and the management team faces the challenge of doing all this w hile maintaining forw ard progress.

development. These strengths should help the company rise in the ranks of global telecom services heavyw eights in coming years. Its telecom-focused core services are split betw een netw ork services and IT services, w ith common service offerings of security, testing, and performance engineering being offered across each. The services themselves are provided as consulting, system integration, solution engineering, application development, product lifecycle, professional, or managed Services. As previously mentioned, its expertise in vertical industries, accentuated by the merger w ith Mahindra Satyam, puts it in an advantageous position in w hat many vendors see as the next major telecom netw orking opportunities particularly services opportunities, given the need in these markets for business-specific and customized solutions. Together, they are targeting 15 specific verticals identified as playing to their core strengths. Finally, a list of recent partnership activities (notably w ith ZTEsoft, BMC, Aeris Communications, Redknee, and CA Technologies, all unveiled in the first half of 2012) demonstrates that Tech Mahindra is aggressively building out its partner ecosystem to address the concern that it does not possess the requisite platform portfolio to understand netw ork operator needs. On the other side of the coin, w hile Tech Mahindras fact sheet w ould seem to place it near the top of the list of global TVS leaders, it is not w ithout issues. Although the company w as historically focused on telecommunications as a vertical, it does not focus all its resources exclusively on the telecom market segment of carriers and service providers. W ith its merger w ith Mahindra Satyam, telecom w ill now become one of 15 verticals the company targets. Moreover, recent partnerships notw ithstanding, the fact that it does not develop telecom netw ork equipment hardw are relegates the company to the role of an equipmentagnostic niche provider large though that niche might be vis--vis the likes of Ericsson, NSN, and Alcatel-Lucent. Naturally, Tech Mahindras lack of institutional product expertise impacts its credibility

Tellabs seems to have a solid grasp that it is largely a productattached services vendor, yet it seems intent on carving out a place for services as an increasingly selfsufficient unit. To this end, it has managed to execute on fixed netw ork and mobile backhaul product momentum and know -how to build a stable and sustainable services business. As a complement to its standard productattached services, it offers Tellabs Insight Analytics Services, a service offering that provides end-to-end analysis of a vendors netw ork as a professional services engagement. W ithout the product portfolio or services personnel reach of competitors, Tellabs has generally eschew ed managed services and built relationships w ith partners for both selling its services and bolstering its capabilities outside of its home territory of North America. Yet, even though Tellabs has played to its strengths and w orked to expand its services reach, the fact remains that it competes w ith vendors w hich can promise a fuller services portfolio (managed services, selfdelivered services in more places) and demonstrate broader expertise claims. Perhaps more importantly, these vendors can point to a longer history w ith mobility and consulting. W hile Tellabs plans to move into these spaces are encouraging, only w ith time w ill it be clear w hether it can execute on the strategy and compete w ith mobile heavyw eights.

potential managed services engagements in the future. The bigger issues facing ALUs services prospects, how ever, run beyond its S3 business. Regardless of the aforementioned efforts, the vendors reputation of fixedline strength could hurt its prospects w ith w ireless operators vis--vis acknow ledged w ireless pow erhouses of Ericsson and NSN.

deploying, managing, or operating another vendors equipment. This presents an interesting marketing challenge for Tech Mahindra to gain visibility and credibility for its netw ork optimization and systems integration services and capabilities against established telecom equipment vendors and a grow ing army of IT specialists, such as HP and IBM, w hich can also claim equally deep ties to the telecom space. Aricent Group Telecom Vendor Services (*) Aricent Group highlights an exclusive focus on the communications industry as a strategic differentiator. This focus gives the company a claim to deeper insights and expertise than companies w ith a broader purview . At the same time, a focus that extends to many aspects of the communications ecosystem (e.g., components, devices, netw ork R&D and services) gives Aricent Group access to the revenue diversity that is critical for stability. Aricent Groups development organization has been assessed and aw arded a CMMI Level 4 rating. Most development organizations are CMMI Level 1 or 2, w ith 5 being the highest. The achievement of this level is truly an accolade to its development discipline and predictability. Few companies in the w orld achieve this level of rating and it is not accomplished overnight, typically taking several years and requiring a serious management commitment. As operators look beyond narrow KPIbased netw ork evaluations to focus on end-user experience, Aricent Groups broad set of communications capabilities should be an asset. Endto-end optimization programs, for example, by necessity touch on the entire netw ork, but they could be taken more broadly to include locationbased service (LBS) delivery, locationbased advertising (LBA), device components and service design. W hen presented as a solution provider across all of these spaces, Aricent Group should benefit. Aricent Group claims a deep base of employees, customers and assets: 800+ customers, 10,000+ employees and 125+ licensable products. Employees and products are important for executing on major projects on a global scale. Customers, including a claimed seven of the top ten Tier 1 service providers, signal that Aricent Groups Ciena - Telecom Vendor Services (*) Ciena touts a robust set of hardw areattached professional services focused on design, deployment, maintenance and optimization. By doing so, the vendor plays to its strength as a netw ork specialist and positions its services capabilities as best of breed. It has many case studies to w hich it can point as evidence of its capabilities and customer success stories. The larger players in this space like to position themselves as services experts in all aspects concerning netw orks and the services that run over them. Since Q4 2011 and into 2012, Ciena has show n strength in w inning submarine optical cable system upgrades, a niche w ithin the optical infrastructure space served by only a handful of vendors. Of late, Ciena has w on three different submarine cable upgrade projects, the first w as for Reliance Globalcom in the Asia region, the second for Southern Cross Cable that serves Australasia and the third for PCCW Globals North Asian subseas routes. The latest project also included Cienas intelligent submarine netw orking solution that w ill help in the management of third-party devices as w ell. Though productled, the inclusion of Cienas technical and professional services in each of these projects provides a strong public endorsement of Cienas service offerings. Cienas service business is strong, accounting for 19.6% of company revenue in fiscal 2011, and has stayed w ithin +/1% since 2010. Cisco - Telecom Vendor Services (*) W ith FY 2011 service revenues of $8.69 billion and representing about 20% of its total revenue, Ciscos services business is notew orthy. Services revenue also grew 12% in 2011, outstripping the grow th in product areas such as routers and advanced technologies and delivering margins in the mid-sixties. For FY 2012, Cisco is on the path once again to grow service revenue in the 810% range w hile delivering margins in the mid-sixties. Cisco has spent years developing a solid set of services capabilities, including: TAC, training, and investing over $100 million in the tools required, particularly focused around product support, maintenance, and rollout. Perhaps more notably, the company has developed a broad portfolio of services partners in the telecom and service provider IT spaces, ranging from Nokia Siemens Netw orks (NSN) to IBM to Tech Mahindra and many others. Cisco has made these investments to support its partners, allow ing them to provide an equivalent level of support as a direct touch relationship. Ciscos is beginning to target service providers directly and enterprise customers through partners, w hich historically represented a key component of its services strategy. Embedded in its longstanding Lifecycle Services vision, the company targets mobile, cable, and fixed operators w ith a similar set of services: netw ork planning, design, rollout, production support, and netw ork optimization. To be sure, competitors offer the same services, making these table stakes; how ever, the quality and value of the companys offerings and services capabilities cannot be overlooked or Ericsson - Telecom Vendor Services (*) Ericssons depth of services expertise is matched by significant breadth. It is active in all areas of the telecom infrastructure services market, and the company can point to w ellestablished track records in such disparate services as managed operations, systems integration, applications hosting and managed field maintenance. Equally important is its 15year tenure providing these service solutions in a multivendor multitechnology environment w ith 50% of its managed nodes being nonEricsson; this is critical given the value of a vendors resume in terms of competitiveness. Ericsson points out that it is the market share leader in terms of services revenues in the telecom operator services segment, claiming its 10% larger than its closest competitor. It tallies 6,000 million subscribers connected to its netw orks and an additional 300 million covered by its field operations and spare part management for a total of 900 million users. This provides Ericsson w ith a large opportunity base that it can successfully leverage to w in longterm, high-value contracts w hich provide predictable, recurring revenue streams in an industry otherw ise prone to boom-bust business cycles. In support of the Global Services operation, Ericsson maintains the distributed resources necessary to be a strong services player. It has ten regional competence centers, w ith four global netw ork operations service centers (GCSs) located in China, India, Mexico and Romania. In total, the company claims 104,525 employees w ith 54% of them services professionals providing an organization thats 56,000 strong and globally distributed. W here the services business depends on having the right people in the right places, Ericssons resources are an undeniable asset. Ericsson is w ithout question one of the strongest GSM/W CDMA vendors in the market and a top contender in 4G, laying claim to the first managed service LTE netw ork for TDC in Denmark and HP - Telecom Vendor Services (*) HP is, by all accounts, a leading player in the IT products and services markets, w ith a presence in nearly all telecom service provider companies. Its history as a technology supplier provides it w ith a pow erful brand, important in establishing trust and credibility. Its revenues and Fortune 10 status (w ith fiscal 2011 seeing the company net $127.2 billion and service contributing 28% of revenues) provide the stability operators look for in a partner, as w ell as differentiation against mobile netw ork vendors that may be facing financial difficulties. HP is, first and foremost, an IT player; IT products and services are increasingly important to telecom operators, including: Application Modernization Services, Care Support Services, Cloud Consulting Services, Converged Infrastructure Services, Data Center Transformation Services, and Information Management and Analytics. This becomes especially relevant as CEM begins to take hold w ith netw ork operators as a crossorganizational imperative. To this end, HPs high regard as an OSS/BSS solution provider, and as an IT integrator bode w ell for the companys near term prospects to increase its w allet share w ith telecom netw ork operators. Beyond its position as an IT product and services player, HP has a portfolio of softw are-based telecom products to Huaw ei - Telecom Vendor Services (*) By all accounts, Huaw ei is one of the strongest telecom netw ork vendors in the market today, as evidenced by sustained revenue grow th, w hich reached USD 32.4 billion in 2011 a 13.7% yearover-year increase. Over the past few years, this sales and revenue grow th has outpaced competitors, quickly elevating it to a top three market share position in multiple product portions of the netw ork. W hile not specific to services, this success gives the vendor an increasingly significant opportunity to sell services to support its customers. Specific to services, Huaw ei does make a number of claims that testify to its recent momentum in building out services capabilities. For FY 2011, Huaw ei reported services revenue of approximately USD 5.4 billion, a 12.5% yearover-year increase, and claims the number one position in netw ork roll-out and integration services. On the managed services front, the vendor points to managed services contracts w ith 115 netw orks in 60 countries, and over 25,000 non-Huaw ei nodes under management. Taken as a w hole, the clear implication is that w here Huaw ei has chosen to play in services, it has successfully established itself as a major force. In terms of the ability to deliver on contracts, Huaw ei claims a solid set of resources to back up its services business: 26,000 services employees; 130+ services branch offices; 190 field stock locations; 16 regional services resource centers; 15 regional offices for managed services; 36 training centers; four Global Service Resource Centers, three regional Netw ork Operations Centers and a 77% localization rate in overseas markets. W hile every major netw ork services vendor relies on a W eb of globally distributed assets, the breadth of Huaw eis assets signals its ability to support operators in a variety of engagement models. Huaw eis Global Services division offers an extensive portfolio of services packaged to address the needs of the operator. Huaw ei offers complete services including: engineering, furnish and install (EFI) IBM - Telecom Vendor Services (*) IBM is the global leader in delivering services related to IT integration, optimization and transformation. As the originator of the multivendor turnkey model of IT, IBM has established more credibility than anyone else in helping customers manage the issues and challenges involved, and it can point to a business relationship w ith almost every major carrier in the w orld. Beyond the obvious sales reach and revenue benefits associated w ith this position, it also grants the firm access and advantage in delivering softw are and servicesbased solutions across the gamut of fixed and mobile netw ork domains. IBM has effectively productized its Service Provider Delivery Environment now up to level 4.0 (SPDE 4.0). The SPDE is a strategic architectural platform from w hich to develop solution for communications service providers (CSPs). It uses common softw are building blocks for information management, analytics and OSS/BSS transformation. This enables faster development times w ith low er and controls costing w hile reducing risk. It bridges the gap betw een middlew are and custom delivered softw are solutions to solve unique business issues. Beyond its specific focus on the telecom industry, IBMs status as a leading player among netw ork integrators for vertical markets such as the smart grid, financial, government, healthcare and transport spaces puts the company in position to benefit as netw orks in many verticals begin to demand the exacting requirements that characterize telecomgrade netw orks. To this end, w hile traditional telecom vendors seek to leverage their telecom experience to tap verticals, IBM is already deeply entrenched in most of these markets; thus, it does not have credibility barriers to overcome. Specifically related to optimization, IBM has arguably the most robust offering on the market involving the use of analytics as a w ay not only to gather data, but also to interpret its meaning to improve both customerfacing and back-office operations. As operators become increasingly attuned to the value of analytics as a business process improvement tool, IBMs Nokia Siemens Tech Mahindra Netw orks - Telecom Telecom Vendor Vendor Services (*) Services (*) NSN claims a solid position in the netw ork services space, as w ell as the resources to back it up. NSN Global Services employs w ell over 45,000 employees in 150+ countries, and it has added another 2,000 in support of the Motorola Solutions acquisition. It claims a number tw o position in managed and care services, managing 690+ million subscribers. Netw ork implementation, in turn, accounts for 350 mobile and 50 turnkey projects globally. In total, the result is a strong business backed by the resources and proof points operators seek in a partner. W hile all vendors slice the market to show themselves in the best light, NSN remains a generally accepted top-tier player across many segments in the market and its services business has benefitted. Several quantitative analyst organizations rate NSN a leader in LTE netw ork deployments. Recent services w ins point to NSNs penetration of w ireless operators moving tow ards LTE. As mobile broadband services transition to LTE and operators are constantly looking for w ays to run their w ireless netw orks more efficiently, NSNs position in w ireless and its high-profile w ork w ith LTE put it in a good position to reap the benefits. Similar to some other competitors, NSN can point to a renew ed focus on CEM and has moved aw ay from the products and associated support services for BSS/OSS systems. As operators look to maximize the return on their netw ork investments, the focus is logical. Having delivered 500 consulting engagements in the space for over 100 operators, the vendors capabilities are clear and they support its efforts to build its mind share and credibility in the space. Completion of the its most recent Service Delivery Tech Mahindra boasts a full range of telecom netw ork optimization service offerings including metrics analysis, RF benchmarking, access and core audit, design validation and netw ork performance monitoring. As the list implies, Tech Mahindras optimization offerings span the gamut of both w ireless and fixed IP/transport netw orks. W hile there is no shortage of companies offering optimization services, the ability to take an equipmentagnostic approach to addressing the full gamut of netw ork architectures potentially puts Tech Mahindra in a stronger position than some equipment providers (e.g., Ciena, ECI Telecom, and Tellabs) that specialize in a narrow er segment of the netw ork. Tech Mahindra, w hile not the first name in the TVS arena, claims an impressive roster of telecom operator customers, including five of the top seven European telcos and six of the top ten North American telcos. In 2011, the company w on Outstanding Supplier aw ards from AT&T and Bharti Airtel, as w ell as the Microsoft Communications Sector Partner of the Year Aw ard. The aw ard, w hich goes to partners for demonstrating excellence in the innovation and implementation of customer solutions based on Microsoft technology, strongly suggests that the company has customer relationships that not only add credibility to its value proposition aimed at prospective customers, but also provide valuable avenues to grow th via existing channels. Tech Mahindras integration w ith sister company Mahindra Satyam matches Tech Mahindras telecom industry expertise w ith Satyams enterprise IT expertise serving vertical industries Tellabs Telecom Vendor Services (*) Tellabs core services strengths include a variety of professional and technical offers, including deployment, support, training, netw ork optimization netw ork design, and traffic migrations. These are table stakes for any credible vendor services portfolio. How ever, as the requisite services, they are critical for any vendor services solution, as w ell as putting Tellabs in a good position to meet operator demands. Tellabs professional services have a good reputation for quality of service, and it shares lessons learned through its w hite papers and case studies. Tellabs is particularly credible in the transport netw ork. Its professional services developed around Ethernet, IP, and especially packet optical are built on its netw ork domain heritage as w ell as productindependent services traction in the space (backhaul consulting, transport optimization, performance management) and speak to its success w ith leveraging this expertise. As transport takes on a new ly important role in mobile broadband, the overall value cannot be denied. Tellabs has smartly figured out how to leverage channels and partners in support of its services business. Per the company, 2011 saw it make progress on inserting itself into partner services solutions, gaining additional channels into the market and opening up the specific countries of

Strengths and Weaknesses Strengths

Alcatel-Lucent Telecom Vendor Services (*) Alcatel-Lucent is, by most accounts, including our TVS database, a top three vendor in the infrastructure services space. Perhaps more importantly, it is one of the companys undisputed sw eet spots. In 2011, Services accounted for Euro 4.461 billion and w as a profitable business unit throughout the year, generating an operating profit of Euro 227 million for the segment. Ultimately, this position and momentum gives ALUs services business the internal leverage to demand continued investment, and an external perception of stability to gain customers and keep them happy. Alcatel-Lucent has made significant strides bundling product w ith managed services for mobile operators, especially those that have complex, multi-vendor mobile netw orks deployed. Its recent w in w ith Saudi Telecom Company for an LTE netw ork includes managed services for all sites, for example. Additionally recently extended contracts and have taken on a trusted advisor role w ith mobile carriers such as EPlus in Germany w ith a tw o year extension and Telecom New Zealand for a three year managed service extension. Extensions or renew al of existing managed service contracts point to a high degree of customer satisfaction. Though AlcatelLucent enjoys solid traction w ithin the mobile operator community, it has a particularly impressive reputation in the fixed space. Building on product strengths in optical, fixed access, carrier routing, and IPTV, the vendors w ireline services give it a differentiator over the predominantly w ireless-focused image of competitors like Ericsson and NSN as w ell as more narrow ly focused fixed line specialists such as Ciena, ECI, and Tellabs. Further highlighting AlcatelLucents fixed line prow ess, the company is

undeniably adept at mining opportunities w ithin its core strengths. W hereas there are no shortage of players that target the services aspect of optical transport deployments Huaw ei, Ciena, NSN, ECI, Tellabs, etc. Alcatel-Lucent has managed to demonstrate more public momentum in the past six months than, arguably, all of the five highlighted competitors combined except NSN. W hile tapping new markets is an aspiration for all businesses, executing on fundamentals provides the foundation for ongoing success. A large part of any telecom vendors service capabilities comes from the breadth and depth of its reach. Here, Alcatel-Lucent does w ell. Overall, the vendor claims more than 20,000 people in its global services organization. Staff members are based in 63 countries in 90 w elcome and technical service centers, 15 regional services centers, ten NOCs, and five IP transformation centers. Managed services touch 100+ netw orks and 250+ million subscribers. Alcatel-Lucents end to end integration capabilities enables it to w ork in a partnership approach w ith customers to mitigate risk associated w ith new service deployment and/or the migration from legacy to NGN netw orks. AlcatelLucent claims trusted partner status to 30 of the w orld's largest operators and over 100 enterprises w orldw ide. It has a track record in designing and deploying IMS netw orks as w ell as IP Transformation netw orks and more recently LTE migrations claiming over 200 mobile netw ork migrations and over 70 IP transformation projects.

service offering for operators is resonating in the market. OSS/BSS and LTE have emerged as key initiatives for Aricent Group. In conjunction w ith MindSpeed, it has created a small-cell optimized, LTE eNodeB reference design that runs on MindSpeeds chipsets. Since these are undeniably hot areas for operators, Aricent Groups focus is seem timely and on target. Beyond timeliness, Aricents June 2012 deal to license the softw are framew ork portion of the program to Latin American ICT R&D group, CPqD, opens up new business opportunities in one of w ireless hottest grow th markets. Aricent Group is w ell positioned to take advantage of emerging market opportunities in India through its partnership arrangements w ith NEC. Although the specific arrangement is for femtocell technology that is complementary to both companies strengths, it also provides additional opportunities for potential up-sell of additional sites and ongoing service business. NEC claimed nine femtocell deployments and another 24 trials in progress.

This consistent trend is an indication that Cienas is supplying its customers w ith the necessary maintenance programs and packages to keep the maintenance of its netw orks inhouse rather than being outsourced to multi-vendor services companies. W ith Nortels transport business in its fold, Ciena now has a greatly expanded pool of netw ork equipment it could potentially service, maintain and optimize. W hile the direct revenue implications are straightforw ard, having access to incumbent status at Nortels accounts also presents Ciena w ith the opportunity to use its services capabilities to serve as a catalyst for additional product pullthrough. Since professional services have become a critical piece of a vendors overall equipment value proposition, the fact that Ciena can tout strong, albeit targeted, service capabilities puts it in better position to defend and grow existing Nortel accounts. On the mobile netw ork front, Cienas October 2011 w in w ith Fibertech Netw orks to provide an optical backhaul netw ork for a w ireless service provider in Connecticut marks a milestone w in, in terms of penetrating both the mobile operator community and the geographic territory of North America that has seen few services aw ards of late. W hile Ciena may have the home field advantage, for this particular opportunity it is an important w in because it w ill help Ciena to gain the experience it needs in mobile backhaul and leverage this opportunity to help it w in other w ireless backhaul opportunities.

underestimated. Ciscos services footprint is global, w ith around 12,000 employees in service out of its 71,825 total employees. In part, this footprint derives from the vendors focus on partnering. At the same time, Cisco has aggressively been investing in emerging markets (including massive investments in India), improving its ability to support distributed services demands and setting it up to improve service support around the w orld to Ciscos focus on collaboration technologies and the virtualization of expertise centers. Cisco has used its strategic relationships to create its netw ork of Global Services Alliances for supporting IT projects around the w orld. Members include Dimension Data, HP, IBM, and Orange Business Services, and it provides a higher level of vendor collaboration throughout deployment and lifecycle. Cisco has developed a series of compatible routing and sw itching blades for HP, IBM, and others vendors servers, as w ell as special function blades for others. In a joint development w ith HP released in November 2011, Cisco announced the Nexus B22 Fabric Extender for HP, a special blade that allow s the integration of existing data center technology to a new environment, enabling investment preservation w hile providing better integration and control. Ciscos Assurance Services for IP NGN provide a great illustration of w here the vendor plays w ell in service provider netw orks. In short, the offer revolves around IP netw ork optimization extended by netw ork monitoring as w ell as proactive performance management, availability management, and capacity management. W hile productattached, it speaks to the value of Ciscos IP expertise, simultaneously moving it into proactive care at a time w hen netw ork quality and end-user experience have become operator buzzw ords. Ciscos has only in the more recent past taken a more direct touch approach to service providers and reducing its reliance on partners w ithin the services space. W hile customers may

subsequent LTE w ins at AT&T, Verizon W ireless and more recently Clearw ire. By dominating the w orlds foremost w ireless access technology, it has earned its place among the most important w ireless equipment makers, positioning it very w ell for services opportunities in the fast-grow ing w ireless and mobile infrastructure services market. Traditionally, w ireless netw orks account for tw o-thirds of the telecom infrastructure services market opportunity, giving Ericsson Global Services strong credibility in most of its addressable market. W ireless may dominate Ericssons reputation, but it is not the companys only focus. Ericsson has the expertise required to address fixed line netw ork services requirements beyond simple w ireless backhaul. In July 2011 it w as aw arded a managed services contract by Chunghw a Telecom for digital media infrastructure build out in support of IPTV service offerings. Ericsson realizes that for any company hoping to sell its endto-end services capabilities and mitigate competition in the w ireless netw ork services space, a strong mix of fixed and mobile expertise is critical. Ericssons recent acquisition of Telcordia, a major OSS/BSS player historically strong in the North American markets, w ill bolster its current offering allow ing support for legacy systems and support for the convergence of technologies moving forw ard. This move supports tw o aspects of Ericssons strategy of levers, one being OSS/BSS w ithin a product portfolio and the other being one of M&A. Additional benefits include building and strengthening its presence in North America, a potentially fertile market for services business.

drive its relevance further. The vendor can claim OSS/BSS products. It can point to service delivery platform products distinguished by a focus on integrating third-party partners and developers. HP has a proven ability to enter new markets and quickly gain a share, w inning against incumbents in their traditional accounts. HP enjoys global reach, w ith a distributed w orkforce located in 170 countries and 55% of revenues derived from outside the U.S. In addition to standard service offerings HP offers some unique capabilities like the HP Intel CME Solutions Centers of w hich it has three, located in Richardson, Texas; Grenoble, France; and Shanghai, China. These centers represent a joint initiative w ith HPs partner Intel and provide telecom operators w ith centers of expertise designed for proof of concept and benchmarking. HP is expert in partnering for mutual go-tomarket and delivery. The vendor can claim experience w orking w ith over 500 softw are, services, and telecom infrastructure vendors, including key partnerships w ith Huaw ei and Alcatel-Lucent. Its partnership w ith AlcatelLucent holds a ten-year term and has promised innovative solutions and offers since inception. Ultimately, these relationships present HP w ith a stellar channel into telecom providers as w ell as the benefit of added telecom know how w here needed.

that includes the build out of facilities, to managed services providing a depth of service coverage. It also complements the services w ith special offerings like Huaw eis SmartCare service that addresses special needs of the operator in the area of QoE enhancements and assurance. This is a good example of how Huaw ei w ill invest to developed specific competencies to allow it to become a more comprehensive service player. Huaw eis ability to help customers arrange financing be it through preferential relationships w ith Chinese banks, or through a strong financial position w hich puts Huaw ei in position to engage in shared risk financial terms yields a sales tool that cant be matched by all vendors. W here competitors might cast this as little more than vendor financing or even part of a standard buildoperate-transfer model, the reality is that Huaw ei can position this as a natural follow -on to its solid finances, and can point to successes in Europe, the Middle East and Asia Pacific as proof points. Huaw ei has developed some strategic partnerships w ith some key Tier 1 & 2 telecom operators that it has leveraged to help expand its managed service offerings. For instance in netw ork operator O2, Huaw ei is providing managed services for Germany, Czech & Slovakia; and in May 2012 w on a five-year deal in the UK. Its also providing managed services for Vodafone in Ghana and Czech and Telefonica throughout Latin America. This type of trusted partner relationship is w hat Huaw ei is w orking to establish through consistent achievement of its SLAs.

deep experience in delivering analyticsbased solutions puts the company in a good position to benefit going forw ard. IBM cooperates w ith nearly every major telecom equipment provider in some form in the fulfillment of managed/professional services engagements. Due to IBMs obvious expertise, and its w illingness to w ork in a collaborative fashion in a co-opetition model w ith equipment vendors, the IT services giant is able to tap into, and benefit from, not only its enormous sales reach, but also the reach of telecom equipment vendor giants such as AlcatelLucent, Ericsson, NSN and others. IBMs scale and business process experience provide it w ith the ability to offer a range of engagement models in the area of transformation services. Particularly, IBM has demonstrated the appetite to engage in aggressive risk sharing models that include financing w ith telecom operator customers (e.g., Bharti) that firms w ith less size and experience quite frankly cannot absorb as part of a profitable business model. As a result, IBM can oftentimes offer potential customers a value proposition w ith solution and financing that its competition cannot afford to match.

Center (SDC) in Mexico in December of 2011 represents a proof point of NSNs commitment to the GNSC delivery model and a solid strategy for expansion. This is its fifth SDC in the w orld, w ith tw o in India and one each in Portugal and China. Based on its initial center in India (opened in 2007 w ith a staff of 120), it has now grow n to over 3,000 people supporting 200 million subscribers and 1.1 million netw ork elements; new centers underscore the ongoing value of the concept. More importantly, they put skills closer to the operator and provide differentiation as competitors build their ow n centralized delivery capabilities. Based on geography, NSN has a w ell-balanced sales and service revenue distribution. It also highlights some territories w here NSN is particularly strong. The percentage breakdow n is as follow s: Europe (32%), MEA (10%), China (10%), APAC (27%), North America (7%), and Latin America (13%). This distribution show ing strength in Europe is not surprising, as it is the home field for both organizations. How ever, the strength in APAC (w ith China counted separately) and strong show ing in Latin America point to deep roots w ithin these regions. This should position NSN w ell, specifically in Latin America and APAC as these regions represent grow th markets for services as w ell as equipment sales. NSN is one of the few vendors that can deliver a turnkey core router solution from a customers major router vendor of choice: Cisco or Juniper Netw orks. NSN chose w isely not to attempt to develop its ow n core router organically, instead forming alliances w ith the major router players at the time. W ith transitions to the all-IP w orld, routers w ill continue to play a key role in the communications ecosystem and the netw orks they form. Alliances and partnering arrangements enable NSN access to the products and technology required, enabling it to be a multivendor, multitechnology, and somew hat vendoragnostic option. In this manner, NSN can position its service offerings as best-of-breed. NSNs financial performance history remains a cause for concern: w ith a EUR 686 million loss in FY 2010 on revenues of EUR 12.66 billion, its EUR 300 million loss in FY 2011 on revenues of EUR 14.04 billion is an

in BSS and BPO. It is no secret that telecoms relevance in a variety of vertical markets is creating a potential boon of opportunity for telecom equipment vendors and professional services organizations alike. The combination of capabilities brought to bear under the Mahindra umbrella should position the company to stay abreast of this w ave of opportunity as it continues to bring new solutions to market. The specific targeting of the 15 verticals w ill leverage both companies strengths, resulting in a better solution for the targeted market. Tech Mahindra has been very active in 2012, announcing partnerships that dramatically enhance its value in bringing solutions to netw ork operators. Arrangements w ith ZTEsoft (OSS/BSS solutions), BMC (Cloud lifecycle management platform), Aeris Communications (M2M platform), Redknee (billing and customer care platform), and CA Technologies (performance management and test automation solutions) demonstrate a strong commitment to filling out capabilities needed by telecom netw ork operators. In addition, the move demonstrates Tech Mahindras understanding that it must be able to coordinate contributions from multiple third parties in order to compete w ith the likes of Ericsson, etc. as a full service managed services provider. Tech Mahindra is a large, global operation and the fifth largest softw are exporter in India. W hile not all of these customers and employees are specifically dedicated to the telecom market, the companys telecom revenue base is impressive and establishes it as a deeppocketed, w ellresourced, and broadly entrenched services organization w ith size and scale advantages that few competitors can match.

Russia, Brazil, and Chile. Tellabs can point to the use of a combination of internal and external (including offshore) resources as a strategy for addressing larger deals and projects beyond its ow n capabilities. From an organizational perspective, Tellabs is trending tow ards improved support for its services business. Global Sales and Service is served by tw o executive-level positions w ith a dedicated VP of Professional Services and a VP of Global Customer Service. This separation of sales and service is an important distinction for any organization and is borne out further w ith its separate financials as w ell. This helps achieve a focus beyond productattached services as w ell as a clear internal focus on supporting the services business and its strategic goals. A good example is Tellabs analytics services, announced in September. From a financial perspective, Tellabs services business has held up w ell. For 2011, w hile all of the vendors business segments (i.e., Broadband, Transport, and Services) are dow n, Services w as the best performing, dow n only 7.8% in 2011. Service as a percentage of revenue is approximately 17%, w ith margins historically running in the upper-thirties range. This signifies a relatively healthy business w ith good potential for some incremental grow th, as new products and technologies generally require added service support in terms of rollout, integration, and consulting.

W eaknesses

Alcatel-Lucents Services business may be profitable for 2011 but, w hen the profit contribution is examined, the improvements in operating margins w ere driven by previously implemented

Aricent Group is not a traditional netw ork infrastructure vendor. It develops softw are and hardw are components that get sold into telecom vendors, but it is not a prime integrator

Best-ofbreed marketing campaigns aside, there is no denying that Cienas scope of services expertise is quite limited compared to many of its

Ericssons history w ith, and reputation in, the fixed line space may hurt it in the services business. Yes, the company can claim some impressive fixed services deals, including w ork w ith China Unicom and China Telecom on GPON and w ork w ith

As noted earlier, HP is first and foremost an IT player focused on the enterprise. The vendor lacks the deep telecom netw orking expertise in IP (outside of

Reputation in the services space has traditionally been built on a companys legacy, tenure, global reach, proven competencies that result in a deep customer list. Compared w ith top tier service competitors such as Alcatel-Lucent, Ericsson and NSN,

Despite IBMs strong middlew are and netw ork management background, and its strong levels of investment in telecomrelated research, the company lacks telecom netw ork products and related expertise that netw ork equipment providers can bring to

Despite Tech Mahindras ability to serve customers from an art to part perspective (i.e., w ith engineering, softw are, and system integration services), there is no denying that the company lacks traditional telecom

In 2011, Tellabs revenue w as dow n 22% over the previous year, causing another cost reduction plan to be put in place w ith a target to reduce expenses by $150 million by

expense reduction plans. The 2011 profit contribution number indicates expenses have been brought back under control. How ever, revenue grow th still remains the key to ensuring that Alcatel-Lucent maintains the resources required for ongoing product and services development efforts. To further elaborate on the implication of financial losses, beyond the potential to siphon off resources from product development efforts, it could also hamper the ability to finance new acquisitions w hich help to build out specific services capabilities. Boards are reluctant to agree to fund acquisitions w hile companies are running at a loss. To be clear, AlcatelLucent does not appear to be in dire financial straits. Nevertheless, ongoing losses do constrain the financial and operational flexibility of any company. Alcatel-Lucents reputation as a strong fixed-line vendor can represent a w eakness as much as a strength. To be fair, announced services deals in the mobile space have come to exceed the aw ard rate of fixed netw ork contracts in 2011. Simultaneously, ALUs w ireline division revenue declined 10% yearover-year impacting both revenue and potential service opportunities. The fourth quarter w as soft for AlcatelLucent in all its segments and should remain a concern for the vendor as w ireless netw ork deployments and transformations represent a critical part of the vendor services opportunity moving forw ard. Despite investing and competing in managed services business opportunities, there seems to be obstacles to AlcatelLucents success in this segment. During 2011 they only logged three managed services deals compared to its rival of NSN w ith seven and Ericsson w ith 18. W hile Alcatel-Lucent may not be as aggressive as it needs to be, choosing to pursue only those opportunities that provide higher margins to meet the corporate goals for profitability it needs to compete better against the likes of NSN and Ericsson. W hile AlcatelLucent is perhaps more earnest than most in its attempts to differentiate its services capabilities through marketing, ultimately, a number of the vendors claims can be marginalized by the competition as having little substance or being something that the competition can claim and deliver as w ell. For instance, ALU announced patent pending

and it does not sell end-to-end netw orking equipment solutions. To this end, the company w ill face tough competition from vendors that w ill claim much deeper (mobile and fixed) netw orks expertise and can deliver an end-to-end solution. As a supplier into other telecom vendors, it may be difficult for Aricent Group to highlight its expertise and netw orks know how effectively. Again, the companys w ork w ith product development directly contributes to its image and credibility as a netw ork services vendor. Its customers, how ever, may not be eager to highlight how Aricent Group helps them w orking under NDA somew hat squelching a prime marketing opportunity. Aricent Groups focus on OSS/BSS integration and LTE service development puts it in a highly competitive set of spaces. Yes, both are particularly hot areas as operators move to evolve their netw orks and better monetize their assets in new and sophisticated w ays. For this very reason, there is no shortage of competitors, many w hich are actively selling OSS/BSS and LTE products into operators. Communications and innovation may be Aricent Groups focus, but it is a focus that stretches to include many aspects of the space, and rivals could paint service providers as a niche component of its business. W hile broad product portfolios and expertise bases help to ensure revenue diversity, there is a reason most major netw orks vendors chose to divest their device businesses: a tighter focus delivers its ow n benefits, including insight and image, w hich cannot be obtained w hen splitting R&D across a broad sw ath of the market. As a private company, Aricent Group is not obliged to disclose financial information and other details about its operation. This lack of transparency makes it difficult to ascertain the tactical and strategic value for any given aspect of the business in part or w hole. Also, since Aricent Group is vendor-agnostic its support services are not automatically tied to specific product platforms that create their ow n revenue ecosystem. W ithout additional financial information the longer term viability of the company is difficult to ascertain.

peers. Now , w ith Nortel in hand, Ciena is one of the biggest w ireline players in the w orld. How ever, it is one of the few w ith little to no w ireless expertise. This fact w ill make it difficult for Ciena to play more than a subordinate role in any services project that is not focused narrow ly on w ireline transport in the metro and W AN. Due to its limited scope of basically technical and professional services, Cienas services business does not serve as a potential catalyst for equipment sales in the same w ay w hich competitors that provide multivendor care can benefit. To this end, the success of Cienas services business seems destined to correlate directly w ith the peaks and valleys of the vendors equipment business. Its Netw ork Transformation capability specifically targets the legacy Nortel installed base to hopefully create product sales pull through. Despite advertising managed services, the scope of Cienas offer is somew hat limited logging only a single deal in 2011 for Mobily in Saudi Arabia. This product led project included management and maintenance services. As managed services gain greater acceptance, the associated opportunity for recurring revenues along w ith the additional sales channel into an operator makes them an important concept for vendor services firms to address. To this end, beyond the fact that Ciena does not offer outsourcing services, for w hich netw ork operators in North America are beginning to demonstrate an appetite, the vendors lack of w ireless expertise should make it difficult for it to expand its current services offering w ithout a substantial acquisition. Despite the fact that services revenues are increasing as part of Cienas business, as a percentage of revenue it has only grow n slightly over the last year from 18.4% in 2010 to 19.6% in 2011. This underscores the

w onder about the long-term benefits of a direct approach versus partnership, partnering to leverage the skills of other vendors in the services space portrays the partner as the services expert and distances Cisco from the operator. In the services delivery organization, service providers are targeted as a global vertical and service engagements can be outcomebased w ith SLAs. On the topic of image, Cisco does not maintain the services profile of key competitors in the service provider netw ork. It does not have the same services employee resources as an Alcatel-Lucent, Ericsson, or Nokia Siemens. It does not offer complex multivendor or netw ork management services. It enjoys less breadth in terms of its telecom product portfolio (not present in the voice core or w ireless), limiting the reach of its services relevance. Cisco does invest heavily in analytics tools, transformational tools, and automation to get the best mileage from the personnel resources it does have. Outside the traditional service provider netw ork infrastructure, the cooperationcompetition dynamic looms large for Cisco w ith service provider IT. As IT becomes more and more important to service providers and their businesses, key IT partners such as IBM and HP w ill evolve into more direct competitors. This phenomenon has already been observed w ith Alcatel-Lucent and HPs partnership. Cisco does offer some limited levels of multivendor managed services. W hile it does not provide the same level of diversity as the top three providers, because of the difficulties of assuring crossvendor quality, it is questionable w hether the company has the depth and breadth of multivendor technical competency that its Tier 1 competitors have developed. This is an example of w here Ciscos relatively few services resources compared to key competitors have had a direct impact on the evolution of its portfolio. It also begs the question: How can a services supplier guarantee w hole netw ork infrastructures, subject to cost and revenue

AT&T on fixed-line integrations, as w ell as no shortage of transport w ork w ithin mobile netw orks. How ever, its fixed line pedigree comes up rather limited vis--vis its key competitors, a fact reflected by the company only announcing three fixed line deals in the past year as compared to 22 mobile netw ork aw ards and three netw orks having both. As Ericsson continues to become an increasingly services-led company, it w ill have to contend w ith the competing agendas of continuing to invest heavily in product-related R&D and professional services organization development. In fairness, Ericssons role as a w ireless equipment leader does not seem to be in any near-term jeopardy. That said, its fixed line product leadership is not as robust. Because netw ork operators look for product/technology leadership as a key decision criteria w hen making professional/managed services procurement decisions, Ericsson could face difficult either/or capital allocation decisions as the pressure to keep grow ing an already massive services business keeps increasing. Having some 56,000 services professionals and a total headcount of 104,525, Ericsson is a vendor w ith the scale to support all sizes of netw orks across the globe. Such a massive organization w ill undoubtedly suffer from a level of bureaucracy. To be fair, Ericsson seems to have managed this w ell along w ith its acquisitions that are notoriously difficult to maintain the staff of once they have been acquired and brought into the fold. Ericssons acquisition strategy w ith Telcordia seems w ell thought out w ith a good technical fit and synergies throughout the organization w ithout excessive overlap implying it also fills some product holes. It now faces the more difficult task of integrating the organization and making it a mainstream part of its product and services offering. Ericssons team roster has grow n significantly of late, increasing its total headcount to over 104,525 employees a 16% year-over-year increase in support of managed services contracts. Simultaneously, headquarters w as undergoing headcount reductions in Sw eden. This level of overall employee churn is unusual and can place undue strain on the organization in terms of financial impact as reported by restructuring charges, but equally important on the morale of the overall organization. Services businesses are based upon responsiveness, w hich is largely driven by good morale.

signaling and OSS) that sees netw ork operators choose telecom vendors for everything from IPTV integration services to legacy netw ork outsourcing. This lack of telecom-specific netw ork expertise makes it difficult for HP to apply its services business model expertise to the broader realm of service provider netw ork services beyond IT-related projects. HPs marketing does little to support its image as a services player for telecom operators. Any telecom specific services are buried w ithin the business units. Marketing around its telecom-related services business has been meager. Rarely does the vendor even announce w ins w ith netw ork operators. If HP suffers from a lack of broad telecom netw orks expertise, it suffers just as much by not highlighting the expertise and capabilities it does possess. HP lacks a clear global telecom partnering strategy for enabling it to provide end-toend solutions w ith KPIs, including SLA and QoE metrics. W hile HP and BT have a global alliance w ith over 100 deals signed, many of w hich include global service delivery, their customers are largely UK and Europebased enterprise customers. HP needs to have additional strategic telecom service provider partners around the w orld. On the topic of co-opetition, HPs partnership w ith AlcatelLucent w as supposed to represent a prime example of how the company could drive its relevance w ith telecom players, yet still play to its strengths. Since then, how ever, new s of the organizations momentum or even new go-tomarket offers has been limited, again casting its w ork w ith service providers in a marginal light. Further on the Alcatel-Lucent front, the vendors CEM approach highlighted a fundamental divergence betw een the tw o JV partners on w hat looks to become one of the most important new revenue

Huaw ei has not had as much time to build these proof points. To its credit, the company is grow ing this side of its business, has a solid set of references, and has articulated a coherent strategy for broader success. Nevertheless, in some key market areas like North America and some regions in Europe, its having difficulty establishing a foothold. Despite the fact that Huaw ei has articulated a coherent strategy for building out broad success in the services market (on multiple fronts including service provider netw orks, enterprise, cloud, verticals etc.), the reality is that achievement of these goals hinges upon the vendors ability to execute on w hat can best be described as ambitious strategy. Huaw ei may run the risk of trying to execute on too many things at once. Netw ork management and netw ork tools are extremely critical in the support of managed, professional and even technical services. Vendors like Cisco claim billion dollar R&D investments in the development of tools and management systems to support the products. Huaw eis approach to netw ork management and tools seems to be one of a fragmented nature lacking an overall cohesive architecture. W hile it has strategic partnering relationship w ith players like Amdocs for billing and is a Platinum Oracle partner, it also has a relationship w ith Telcordia, w hich is now ow ned by Ericsson and some of the smaller players in the OSS/BSS space like Aircom and Subex. In spite of Huaw eis massive development resources its pretty clear in certain areas it must still turn to other vendors for specific expertise w hich it has yet to develop for itself. Huaw ei has come into being in the all-IP w orld or transition there to and as such does not have the legacy of ever providing circuit sw itching and ATM based technologies to the global market as the majority of its chief rivals have. This provides rivals the upper hand in netw orks requiring transition as the legacy vendor typically has the inside track w hen an operator needs help in transitioning elements of the netw ork. This could effectively limit Huaw ei competitiveness to only those greenfield netw orks opportunities. Huaw eis messaging at this and last years analyst conference spoke directly to the trend of IT capabilities and netw ork equipment capabilities becoming more integral to the delivery of services and goal of providing a great array IT capabilities in concert w ith its netw ork equipment capabilities, the vendor stopped short of explicitly highlighting plans to begin offering IT system integration services w ith respect to OSS/BSS platforms, and other softw arereliant solutions. W hile Huaw ei does partner w ith a number of IT firms namely HP and

an engagement model. As such, this means it is unlikely to compete w ith netw ork vendors for the bulk of productattached market opportunities in netw ork transformation and be relegated to the back-office integration efforts of professional and business services. Beyond the lack of telecom netw ork products and, again, despite strong levels of investment in telecomrelated research, IBM w ill alw ays suffer from the notion that telecom is just another vertical for the company. Despite the fact that telecom represents nearly 10% of IBMs, that pales in comparison to other verticals such as Finance or Public Sector, w hich represent almost 30% and 15%, respectively. To this end, IBM must content w ith the image that it is less committed to serving the needs of telecom operators than smaller competitors, such as Aricent or Tieto, for example, that maintain a much sharper focus on the telecommunications industry as their primary verticals. As the co-opetition moniker implies, IBM does compete directly w ith the traditional telecom service vendors in netw orkrelated professional services consulting. W hile IBMs background in business consulting is much deeper, it is still heavily reliant on partners for crafting complete technical solutions. To this end, as equipment vendors continue to fine-tune their OSS/BSS and Consulting/Systems Integration credentials, IBM w ill come under increased pressure to hone new business and technology skills, or risk seeing its role as a partner to netw ork equipment vendors diminish over time. Like many companies over time, IBM has had to transform itself to keep pace w ith the changing market conditions not an easy task for any large organization. Because of its size its sphere of operations IBM is a bit of an ecosystem unto itself. The w ay the company communicates its approach to the telecom vendor services market can appear somew hat confusing and out of step w ith the industry. To this end, the w ay in w hich all softw are vendors define and communicate their value proposition to telecom market stakeholders needs to be in step w ith industry standard vernacular or it could hinder sales efforts through confusion and misunderstanding. As IBMs nickname, Big Blue, indicates, the company is perceived as a large organization that has been built to deliver on engagements w ith similarly large clients. To this end, the companys approach can be seen as intimidating, if not outright incompatible w ith the needs of nonTier 1 telecom netw ork operators. This could cause smaller operators to be put off by w hat they see as a bureaucratic organization that is unable, or uninterested, in meeting their needs. This, plus the perception that IBM is not as cost-competitive as some of its rivals in the services space, may

improvement in some respects, but it is still not a good situation. W here services are largely a people business, the impact on morale could be felt if the companys financial prospects do not turn around. At the same time, operators looking for NSN to be a stable vendor w hich can afford to build new service centers and finance new deals are unlikely to look at its finances favorably. NSNs services business faces a strategic gap and lacks momentum in the fixed-line market, causing it to divest itself of this business segment. In December 2011, ADTRAN agreed to acquire NSNs fixed line Broadband Access business (BBA) and associated professional services and netw ork management solutions. W ith NSN having identified fixed line (and video netw orking) as an exit part of its new strategic focus, its new challenge w ill be how to accomplish this w ithout negatively impacting or losing momentum in mobile broadband in general. NSNs focus on GNSC development is both a blessing and a curse. Again, the strategy has been successful in allow ing the vendor to scale key monitoring and management tasks on a global basis. At the same time, how ever, the need to build additional centers in support of emerging markets is expensive and capital-intensive. Not building them could obscure the companys ability to deliver services; if it signals that customers demand these centers to be relatively close to them, it could even drive the need for additional centers in the near term as a key aspect of the overall service delivery strategy to succeed. Many of NSNs strategic services agendas do not offer substantial differentiation. To be fair, this is a problem facing many of its competitors w hich, naturally, need to play in many spaces. Regardless, as much as NSN might claim solid assets in the w ireless infrastructure space and experience in select verticals, the same can be said for most other vendors in the services space. W ith these same vendors talking up their ow n centralized delivery strategies, even NSNs GNSC assets could be marginalized going forw ard. W ith 50% of 2011 revenues derived from services, NSN risks being portrayed as a services company, rather than an equipment vendor. Its new strategy to focus on end-to-

netw ork products along w ith the institutional know ledge that netw ork equipment providers system engineers bring to an engagement. Though one may argue a productcertified system engineer is the same w hether they w ork for the parent company or not, there is no denying that the one w orking for the parent has the inherent advantage as an insider, if nothing more. W hereas IT giants, such as HP, IBM, etc., often partner alongside netw ork equipment providers in services engagements, Tech Mahindra is less of a partner w ith equipment vendors and more of a direct competitor and threat in areas such as netw ork optimizations, and increasingly softw are design and integration. Indeed, Tech Mahindras recent partnerships w ould serve to reinforce this notion as a direct competitor to equipment vendors. W hile the companys IT counterparts also compete increasingly w ith equipment vendors, via the co-opetition concept, Tech Mahindras rivals are also pulled into equipment-led deals more often by virtue of a more robust set of equipment vendor partnerships. W hile the lines of competition betw een Tech Mahindra and traditional telecom netw ork vendors w ill continue to blur over time as OSS/BSS integrations, netw ork optimizations, and BPOs w ithin vertical markets take on an increasing importance. From an IT integration perspective, most equipment vendors now identify OSS/BSS implementations as a strategic imperative. As netw ork equipment vendors continue to build out skills in these formerly nontraditional areas, IT pure plays such as Tech Mahindra w ill be faced w ith new competition. To help counter this threat, Tech Mahindra is investing heavily in both the NGN IMS Forum and the Netw ork Test Automation Forum (NTAF) to help the company increase its profile and visibility w ith the netw ork operator community and gain potential timeto-market advantages. Despite Tech Mahindras overt focus on the telecom industry, it is not the only market w ith w hich the company deals. Going forw ard, as it is integrated w ith Mahindra Satyam, the telecom focus runs the risk of being obscured w ithin a larger set of businesses. Much like the telecom business w ithin a firm such

the end of 2012. In terms of headcount, there has been no specifics provided, but this w ould equate to a significant number of employees, some of w hich w ill come from the services w ork force. This level of staff reduction is significant and bound to have some level of operational impact across the organization. This w ill also provide competitors w ith the opportunity to spread FUD regarding Tellabs, especially w ith respect to services, w here deep financial resources and expanding global reach are critical performance indicators. W hile Tellabs might be moving to address more consultative and strategic services opportunities, productattached services have traditionally driven the companys services revenues, and it seems as if this is still the case. For the last tw o years, the service revenue has directly tracked the product revenue to almost a quarter of a percentage point. To this end, Tellabs ability to grow its services business may be directly related to its ability to grow its equipment business. By contrast, rival vendors w ith strong managed services practices are better positioned to sell services independent of netw ork equipment sales. In many w ays, Tellabs is a niche player in the telecom netw orks space, w hich impacts its services business. From a product perspective, the company is primarily a player in the transport layer fixed line and mobile backhaul. From a geographic perspective, North America delivered as much as 70% of revenues in 2010. Although this mix shifted to 51/49 in 2011, providing a more balanced revenue distribution (w hich is considered a good thing), it w as achieved through a decline in sales to North America and an increase in sales to international customers. Ideally Tellabs needs to target the international opportunities to

delivery models, but preventing the duplication of patented processes is notoriously difficult to enforce. It highlighted a new w ireless netw ork optimization service, but many competitors can claim deeper expertise and customer proof points. Finally, on the IT front, ALU highlights a JV w ith HP, but the vendor has done little to demonstrate how this relationship is different from HPs other partnerships.

fact that Cienas services business is closely tied to its equipment business, meaning that unlike other vendors w ith standalone services business units, Cienas services business is unlikely to serve as a grow th engine during periods of lean equipment sales. The Nortel acquisition did not substantially help Ciena much in terms of global services delivery capabilities. W hile Nortel had a global customer footprint, only about 2,000 Nortel employees w ere offered employment in the acquisition. This means that Ciena did not gain much, if anything, in the w ay of scale that could help the vendor build out its services footprint in the markets w here it gained equipment customers. Quite the opposite, increased customer footprint w ithout an increased services footprint could result in increased services costs and impact profits, something that Ciena continues to struggle w ith. W hile the Netw ork Transformation capability is a good program aimed to create opportunity in the legacy installed base, its effectiveness has yet to be determined. Just as Ciena is looking to tap grow th services such as cloud computing and mobile backhaul, its competitors, w hich are attacking these same opportunities, are leveraging broader portfolios to provide more complete solutions. Ciena does not offer components such as IP routing, mobile packet core and IMS solution elements to support these new applications. As a result, some service providers may look for partners w ith more experience in, and products for, these highgrow th applications.

penalties, if it does not take responsibility for third-party products? Cisco, how ever, is considering managed services that w ill help to drive adoption of its technology. Ciscos strategic services focus risks alienating some operators. View ing services as a tool for enabling netw ork services and driving key technologies is understandable. Operators are asking their vendors for partnering relationships w ith some serious risk sharing or skin in the game. This implies that certain operators w ill get preferred attention. Even the suggestion or implication that Cisco may be less of a partner to some operators could hurt its prospects at linking products and services into a compelling solution. Based upon geography, Ciscos services revenue is heavily w eighted tow ards the North America region, w hich provides 66% of service revenues. EMEA is the next highest region at 20%, follow ed by APAC w ith 14% as of Q2 2012. This distribution exemplifies the home field advantage afforded a vendor; how ever, it also points to a potential w eakness in its strategy outside its home field. W ith emerging markets grow ing faster than the mature markets of the U.S. and Europe, vendors are beginning to understand that service is integral to product sales and they achieve better results w ith a higher-touch strategy.

opportunities in the coming years. CEM presumably represented the ideal opportunity for Alcatel-Lucent and HP to w ork together to form a best of breed partnership that rivals Ericsson, NSN, and even IBM w ould struggle to match. That Alcatel-Lucent appears to be going alone on the CEM front represents a missed opportunity for both HP and Alcatel-Lucent. HPs Communications Industry Solutions and Service approach represents its blueprint and go-to-market strategy for services. The blueprint defines HPs vision in terms of a set of processes for business transformation broken dow n into key investment areas, solution lifecycle services, and finally its solutions portfolio w hich is more application or platform specific. Competitors w ill be quick to tout their ow n business transformation process-based offers and successes making it hard to differentiate the true value propositions of the various offerings. Differentiators in the services space are hard to demonstrate and prove to potential new prospects.

IBM, and OSS/BSS providers Aircom, Amdocs, Subex and Telcordia, the lack of in-house IT integration capabilities could hurt its ultimate value as the prime in multivendor professional and/or managed services engagements. Huaw ei might embrace a culture of putting the customer first and has taken on local staff to ease operations, but feedback suggests that communication betw een Huaw ei HQ and its local operations and customers is sometimes strained. Stories of stellar service support combined w ith w eak coordination are troubling but are somew hat understanding in a company that has grow n as fast as Huaw ei. Recommended Actions Recommended Vendor Actions As Huaw ei seeks to portray itself as a more comprehensive services partner to its customers, the vendor must be diligent in highlighting as broad a range of successes as possible as they occur. This w ill allow Huaw ei to look back over its announced service w ins and raise its visibility throughout the year as a company capable of delivering on sophisticated services engagement models, on a global basis, Huaw ei needs to take every opportunity to highlight exactly w hat capabilities it is bringing to help operators make their ow n businesses more successful. As Huaw ei seeks to establish its reputation as a services partner capable of helping netw ork operators become more successful at running their businesses (as opposed to simply helping make netw orks meet operations KPIs), the vendor has provided additional details on how it defines the key quality indicators (KQI) methodology that it claims w ill help operators increase end-user satisfaction (i.e., QoE). Expanding on this concept, Huaw ei has provided examples of how it can leverage these KQIs to then help operators implement programs that directly result in higher customer satisfaction and increased ARPU potential. Huaw ei is helping to make this QoE an industry standard through the IEEE and ETSI and should continue w ith its involvement in these standards bodies. As Huaw ei seeks to move up the value chain from an equipment vendor to a more comprehensive business partner, the vendor w ould be w ell served to highlight examples of how it is helping netw ork operators leverage the netw orks optimized by Huaw eis services organization to become more efficient at monetizing their netw ork assets. W hile netw ork operators tend to be conservative in adopting new technologies and/or business models, Huaw ei (and its competitors) are becoming increasingly active in touting their ability to deliver business consulting

keep operators from considering the company for service engagements beyond the required basic technical support.

end mobile netw ork infrastructure and services that specifically target mobile broadband may be marketed as more of a solution offering bundled products and services. Either w ay, services w ill remain a priority for the company. Vendors traditionally cite their netw ork expertise, staff levels, and broad product portfolio as a key services business proposition. To that end, if customers begin to see NSN as a narrow ly focused services specialist rather than a netw ork vendor offering service support, it could jeopardize the vendors ability to sell services. It could even cause the company to lose out on netw ork and service control opportunities tied to larger netw ork deals.

as IBM is easily overlooked, so too could Mahindras telecom business be overlooked against the broader backdrop of its IT, enterprise, and consulting w ork. In turn, this could provide an opportunity for smaller IT specialists w hich focus specifically on telecom, such as Asia/Info, to position themselves favorably against the perception of Mahindra as a spraw ling conglomerate that lacks the requisite focus to meet the nuanced needs of telecom netw ork operators. W hile Tech Mahindras revenue stream seems w ell balanced based upon the geographic distribution of 47% Europe, 33% North America, and 20% ROW , its revenue based upon clients tells a different story. At first blush, Tech Mahindra has a majority of its clients in the less than $10 million per quarter category, making for a seemingly solid revenue base. How ever, its top five clients contribute approximately 68% of revenue and a single client accounts for 37%, potentially leaving it vulnerable to the loss of a key client or a general economic dow nturn that curtails spending.

expand its addressable market and provide new service opportunities. Building credibility as a mobile netw orks services provider has not been easy for Tellabs, w hich has only been in the mobile core (outside of transport) since the acquisition of W iChorus in December 2009. It obviously hoped to garner some revenue grow th opportunities, but perhaps it underestimated the difficulty in attacking this segment against established and hardened competitors such as AlcatelLucent, Ericsson, and NSN, all of w hich have their ow n global services businesses and mobile core offerings. Its decision to exit this market segment w ill clearly tarnish its credibility in this segment and may even spill over to other products or services. Tellabs has indicated it w ill continue w ith a strong presence in mobile backhaul. Tellabs is faced w ith a poor track record in actually highlighting its services momentum and capabilities using customer announcements. To be fair, the company does not generally announce customer w ins to the extent that many of its rivals do, and most fixed line operators (especially in the U.S.) like their vendors to operate under NDA. Thus far in 2012, Tellabs has reported one professional services deal w ith Agile Netw orks for emergency services for the state of Ohio. W ith approximately $223 million of service revenue, there should be more deals that could be announced or highlighted either directly or in conjunction w ith its partners, and Tellabs marketing should highlight them all. Tellabs new launches into services could help it move aw ay from the mostly productattached (i.e., analytics) business it is w inning. How ever, it is entering a crow ded field in w hich nearly every equipment vendor w ith a service group is focusing on analytics as a w ay to increase their relevance to operators.

services aimed at increasing netw ork ROI. Providing concrete examples of success w ith existing customers w ill help instill confidence in other w ould be customers to engage more deeply w ith Huaw ei in the consulting services front w hich in term could lead to managed service engagements. Huaw ei should provide specific examples of successes that it has had in terms of executing on multi-vendor managed services contracts. W hile the vendor does point to having more than 25,000 nonHuaw ei nodes under management, its capabilities as the prime in a multi-vendor services engagement are not w ell know n. Since nearly all medium to large netw orks in the developed markets that Huaw ei seeks to penetrate are multivendor, operators w ill w ant to see evidence of its capabilities in this regard. Huaw ei should put an emphasis on highlighting success that it has achieved w ith HP in terms of delivering on joint engagements. Because Huaw ei has made the near-term decision to focus its attention on areas other than developing its ow n IT consulting practice, it w ill have to rely heavily on partners such as HP and IBM. W hile plausible, it does put the onus on Huaw ei to identify the w ays in w hich it stands ready to help its customers tap into the requisite IT integration capabilities necessary in number of todays netw ork migration and/or transformation projects. As one of the top telecommunications vendors, Huaw ei should use its influence to help harmonize industry standards, support multi-vendor interoperability, and continue to identify w ays to help service providers improve their role in the overall value chain. Huaw ei can leverage its leadership in standards bodies such as the ITU, IEEE, 3GPP and others to accelerate the adoption of new standards that w ill help advance its netw ork vision. Recommended Actions Recommended Vendor Actions Alcatel-Lucent Telecom Vendor Services (*) Now that NSN has strategically chose to target mobile and optical, AlcatelLucent should prepare itself for a full frontal attack on its product and service offering and capability in the mobile segment. Alcatel-Lucent w ill need to show its w ireless optimization capabilities, tools, training, and professional services are as robust as any on the market. This w ill require specific marketing investment for the development of sales collateral. Alcatel-Lucent should consider taking a more aggressive stance on its optical marketing. Since the company formed in 2006, w ith a 25% optical market share, it has seen Aricent Group Telecom Vendor Services (*) Aricent Group needs to consider pushing deeper into vertical enterprise markets. The vendor has noted its w ork w ith M2M in the past. It should not be too difficult to extend this into a specific vertical focus, particularly to the extent that verticals often require customization of existing equipment to their specific and unique needs (something Aricent Group should be able to deliver quickly to the market). Any vertical market strategy w ill need to be backed up by a show of expertise in the space. A focus on verticals w ould drive Aricent Group into narrow er sales efforts. At the same time, how ever, the Ciena - Telecom Vendor Services (*) Given its current focus on the topic, Ciena should look to raise its visibility in managed services via logistics management. Services related to inventory management and equipment reuse have real OpEx benefits and are something that netw ork operators are becoming increasingly interested in exploring. W hats more, this is an area w here even large companies such as Ericsson sometimes rely on partners to deliver. If Ciena can establish a reputation for expertise in this area, it could serve as a Cisco - Telecom Vendor Services (*) Cisco needs to consider highlighting how selective services initiatives have delivered insights extensible to other operators. The vendor has made a decision not to be everything to everyone w hen it comes to service support. Unfortunately, customers w ill still w ant deep support and insights no matter how big or small they are. Noting that its track record w ith specific services initiatives has lent it important insights, and these insights are shared w ith integration and deployment partners, w ill help bridge the gap betw een Ciscos strategy and Ericsson - Telecom Vendor Services (*) Despite claiming a number of fixed lineoriented services deals, it is clear that Ericssons history in w ireless infrastructure skew s its services success. A vicious cycle results, w ith fixed line sales hurt by a w eaker services reputation and services sales hurt by w eaker netw ork pullthrough. To compete w ith rivals both larger (Alcatel-Lucent, Nokia Siemens Netw orks) and smaller (Tellabs, ECI, etc.), Ericsson needs to position its recently announced Smart Services Router (SSR) aggressively for both mobile packet core and fixed access netw orks. The SSR offers the proper capabilities to support netw ork transformation projects supported w ith professional services. Ericsson needs to take full advantage of HP - Telecom Vendor Services (*) HP needs to go full throttle after positioning itself as one of the leading CEM solution partners in the telecom industry. In fairness, the vendor highlights many services that are applicable to CEM. To this end, leveraging its OSS/BSS platform capabilities, its analytics and business process consulting skills and IT integration pedigree, HP is clearly positioned to make a run at becoming a premier CEM player if it chooses to dedicate the proper marketing and Huaw ei - Telecom Vendor Services (*) As Huaw ei seeks to portray itself as a more comprehensive services partner to its customers, the vendor must be diligent in highlighting as broad a range of successes as possible as they occur. This w ill allow Huaw ei to look back over its announced service w ins and raise its visibility throughout the year as a company capable of delivering on sophisticated services engagement models, on a global basis, Huaw ei needs to take every opportunity to highlight exactly w hat capabilities it is bringing to help operators make their ow n businesses more successful. As Huaw ei seeks to establish its reputation as a services partner capable of helping netw ork operators become more successful at running their businesses (as IBM - Telecom Vendor Services (*) IBM should launch a concerted effort touting its successes w ith telecom netw ork operators in Cloud and Analytics in the same w ay it has highlighted its w ork in cutting edge areas such as SmartGrid. Indeed, IBM has identified both Cloud and Analytics as key grow th drivers for the business in the coming year. Reaching out to the telecomspecific analyst community w ould be a good means to reestablish itself and define its role in w hat is still one of the premier grow th industries in the w orld today. IBM should leverage its position in vertical industries to help telecom netw ork operators attack the space. As netw orks in vertical industries such as finance, energy, government, healthcare and transportation begin to look more like telecom-grade Nokia Siemens Tech Mahindra Netw orks - Telecom Telecom Vendor Vendor Services (*) Services (*) To help better penetrate the North American services market segment, NSN needs to consider building out a Global Netw ork Solutions Center (GNSC) in North America. W ith a commitment to the GNSC concept and services customers such as CenturyLink (formerly Embarq) and NII in the region, w e have long argued for a bigger in-region presence. Now that it has opened a center in Russia and Sao Paulo, the need for local support is further highlighted, particularly in a market such as North America, w here NSN has long sought to build a deeper presence (and it is currently running the NOC for Tech Mahindra needs to consider being more vocal about its success w ith telecom operator engagements. W hile it can point to impressive proof points in terms of serving large operators in North American and Europe, the company has announced BPO operations in the Philippines w ith an unnamed customer. Clearly, the company has w on contracts, as evidenced by its continued buildouts of innovation and development centers around the w orld, including Toronto, Canada; Bellevue, W ashington (U.S.); and especially in Africa. Nevertheless, as competition among services players Tellabs Telecom Vendor Services (*) Tellabs needs to show case its professional and technical services w in w ith Agile Netw orks for the Ohio broadband infrastructure netw ork that w ill support 911 and first responders. This project w ill provide Tellabs w ith the opportunity to blueprint the netw ork architecture and implementation methodology for potential reuse across its customer base. It w ill also provide Tellabs w ith additional professional and technical services credibility. W here Tellabs needs to focus its services marketing in particular is

its market share ranking decline and has ceded its market leadership role to Huaw ei. Of late it seems that the optical market has experienced resurgence and customers around the w orld are deploying new optical infrastructure and upgrading the old to keep up w ith user demand for bandw idth that is being driven by the proliferation of smart mobile devices. Follow ing on its w ork w ith OJSC Mobile TeleSystems (MTS) in Russia for a turnkey mobile IP netw ork supporting 3G services w ith a transition plan to LTE, Alcatel-Lucent should use this as a show case for its AnyG to LTE backhaul solution. It should use the MTS project as an example and to highlight its netw ork transformation skills, similar to how HP presents its capabilities. More so than ever now that rival Ericsson has purchased Telcordia, Alcatel-Lucent should consider additional acquisitions in OSSand BSS-related professional services to help jumpstart its organization in this market segment; a space w here opportunities are grow ing but the ability to take them on can be inhibited by a lack of relevant in-house resources. For Alcatel-Lucent it w ould also signal that its finances are not holding it back from making strategic acquisitions. High Leverage Netw ork and Application Enablement has been a major component of Alcatel-Lucents marketing for the past year. It has done w ell in pulling this focus into specific services offers hosting everything from advertising to commerce solutions. The strategy seems to be w orking based upon data collected in our TVS database. AlcatelLucent w on more deals during the latter half of 2011, almost beating out rivals NSN and Ericsson. It should use these as both case studies for others as w ell as potential references to further aid the marketing effort.

company needs to look more broadly as it markets its services capabilities and managed services practice. Presently, its primary focus seems to be on the OSS/BSS side of the operator netw ork. Looping in service assurance or even managed testing (something it has performed) w ould better depict the extent of its capabilities and offer. Aricent Group needs to leverage its partnership and w ork w ith NEC to help penetrate the emerging market opportunities in India and other emerging regions and become the preferred partner for NECs femtocell solutions deployments. It should also leverage the w ork done w ith its provisioning system for a major private telecom provider, also in India, to demonstrate the scale of its solution. Aricent Group has been w orking w ith NEC to provide support for trials and initial service deployment of their femtocell solutions and w ith nine contracts w orldw ide should provide some upside revenue potential. Optimization does not factor into much of Aricent Groups operator services story; it is barely existent in the companys offer or public-facing momentum. That said, much of w hat the company does actually plays into the optimization space: application optimization, service assurance, and netw ork consulting and integration. W here optimization has become a key operator concern and interest, Aricent Group needs to prepare to tap the demand. Aricent Group positions its mobile device softw are development practice tow ards device manufacturers. W hile understandable, these capabilities need to form a more cohesive part of its Experience Engineering and service launch practices. Operators are looking to understand how they can support new application store business models across multiple device operating systems; Aricent Group needs to pull together its resources to support them.

grow th engine for its services business. More importantly, it w ould be a grow th engine that w ould not be directly tied to the sale of Ciena equipment. Ciena should articulate its vendor agnostic strategy of a core IP-optical integration to illustrate how its optical netw ork w ill respond to the real-time bandw idth needs of routers and servers connected to the netw ork. Ciena is not the only optical vendor providing transport connectivity betw een routers and NSN is also a major distributor of Juniper routers and has demonstrated smart core router interconnections. Ciena needs to distinguish itself w ith its optical netw ork prow ess and deliver higher functionality through its interw orking w ith interconnected routers and servers in data centers and cloud computing, w hich it has demonstrated. Ciena should elaborate on the type of optimization and transformational services that it can deliver, especially beyond the confines of its ow n equipment. The definition of optimization services can vary to mean fairly basic physical deployment optimization to very sophisticated service delivery and quality of experience optimization that relies heavily on analytics softw are. Given Cienas focus on netw ork maintenance it seems that the optimization services are limited in scope to its equipment only although Ciena claims its tools are multivendor and multilayer. Operators, nonetheless, could benefit from a clearer picture of exactly w hat Ciena brings to the table in this regard. To refine its optimization message further, Ciena needs to expand its transport optimization messaging to include services that the vendor can deliver w ith respect to backhaul buildouts. The importance of backhaul in the new paradigm of any screen, multimedia services has been w ell documented over the past year. The fact that Ciena has chosen not to address the

customer demands. Cisco should pursue a Global Service Alliance partnership w ith the new ly merged Tech Mahindra and Mahindra Satyam. This organization earns approximately $2.4 billion in revenue, but more importantly, it has 75,000 employees. Tech Mahindra historically targeted telecom operators and Satyam targeted as many as 15 verticals from an enterprise IT standpoint. The combined company is ideally positioned to provide telecom and IT services for enterprises, and it is an ideal partner to help Cisco penetrate local as w ell as new markets. Cisco should elaborate on any plans for offering out-tasking, hosting, and other types of managed services to operator customers, something from w hich the company has traditionally shied aw ay, but also suggested as a go-forw ard opportunity. Cisco needs to add a managed capacity component to its service offering as w ell. Key services competitors are already in the space and gaining product sales advantages from the effort. Cisco cannot afford to be on the sidelines for long. Beyond just providing professional services, Cisco needs to consider moving into the managed, multivendor maintenance and monitoring space. Cisco has the components to make this w ork, including a service assurance product offer and proactive netw ork operations center (PNOC) tools w hich claim to help provide visibility into nonCisco products, particularly w hen customized in tandem w ith Cisco Advanced Services. More importantly, multivendor maintenance is required for dealing w ith the reality of operator netw orks, including legacy and new ergeneration gear. Cisco is prudently approaching this as a technology enabler, and the company should be very selective as to w hat type and kind of legacy gear it is w illing to assume responsibility for under a managed services contract. Cisco should consider leveraging its w ork w ith NET in Brazil, w here it is taking a direct approach and managing the system integration for the deployment of its content delivery system (CDS) in support of a

its announcement w ith Clearw ire to highlight its managed services capabilities. The scope of the project a seven year managed services contract for the North American carrier in support of its W iMAX netw ork -is a pow erful testament to the value that Ericsson can bring to bear on a market opportunity that many vendor services organizations w ould be unable or unw illing to handle. Over the past six months, Ericsson has also seen a decline in margin for its Professional Services business due to a drop in its integration business and negative impact from restructuring. W ith tw o-thirds of professional services sales coming from recurring revenue streams any impact from restructuring should be minimized. Non-profitable deals should be scrutinized and potentially renegotiated but customers should not be lost. Ericssons acquisition of Nortels CDMA and GSM businesses has catapulted North America to its top market by sales revenue w ith a 23% share. Going forw ard, this success must be leveraged into additional services show cases. Managed services at Sprint w ere a major boon in terms of marketing and building a service presence in the U.S. The follow on w in w ith Clearw ire for a seven year managed services contract helps Ericsson gain a larger foothold into this market. Ericsson should highlight these w ins as a tribute to its managed service acumen as opposed to technology because much of the Clearw ire netw ork is W iMAX-based, a technology that Ericsson has never endorsed. Ericsson needs to leverage projects such as its Consumer Labs study on TV view ing behavior and w in w ith Chunghw a Telecom supporting IPTV to demonstrate that it has not only the product and services capabilities, but also the requisite market insights to help video content distributors design netw orks and service offerings that appeal to the w idest possible audience. As Ericssons study show s, TV w atching patterns are fragmenting into a number of different scenarios that can make service offerings difficult to plan. Ericsson must make it clear that it has all the tools at its disposal to be a valuable partner in helping customers overcome these challenges.

development resources required to articulating a clear and concise vision. CEM aside, HP should focus on positioning itself as a leader in OSS/BSS transformational services for telecom netw ork operators, HP must highlight the breadth of engagement models that it can bring to the table. It should emphasize its value add like its analytics capability that can complement the solutions it brings to the market. How these translate into specific offers solving specific problems, how ever, is not necessarily selfevident. To help operators understand their options and how HP is ready to help them, specific engagement model messaging w ith some detail of w ork breakdow n (ideally w ith real w orld examples) is necessary. More broadly, HP needs to highlight every deal it w ins w ithin the telecom vendor services space. To be clear, HP does this in spurts such as the w in w ith TMobile in May 2012. How ever, it is also true that w hile the company can claim that over 50% of its business w ith operators is from services, it places much greater emphasis in its public messaging directed at service providers is related to HP hardw are and softw are products. To convince operators that services are a focus and skill, a greater emphasis on building mind share as a services player should be a priority. HP should consider detailing the overall size, scope, and depth of its organization focused on services and those specific to telecom netw ork operators. It needs to highlight the number of dedicated professionals in terms of number of people and geographic presence w ill help to reinforce HPs level of commitment to the global telecom market. Especially as CEM becomes more important, HP has its story to tell. As equipment vendors support their deeper move into IT services by communicating their services

opposed to simply helping make netw orks meet operations KPIs), the vendor has provided additional details on how it defines the key quality indicators (KQI) methodology that it claims w ill help operators increase end-user satisfaction (i.e., QoE). Expanding on this concept, Huaw ei has provided examples of how it can leverage these KQIs to then help operators implement programs that directly result in higher customer satisfaction and increased ARPU potential. Huaw ei is helping to make this QoE an industry standard through the IEEE and ETSI and should continue w ith its involvement in these standards bodies. As Huaw ei seeks to move up the value chain from an equipment vendor to a more comprehensive business partner, the vendor w ould be w ell served to highlight examples of how it is helping netw ork operators leverage the netw orks optimized by Huaw eis services organization to become more efficient at monetizing their netw ork assets. W hile netw ork operators tend to be conservative in adopting new technologies and/or business models, Huaw ei (and its competitors) are becoming increasingly active in touting their ability to deliver business consulting services aimed at increasing netw ork ROI. Providing concrete examples of success w ith existing customers w ill help instill confidence in other w ould be customers to engage more deeply w ith Huaw ei in the consulting services front w hich in term could lead to managed service engagements. Huaw ei should provide specific examples of successes that it has had in terms of executing on multi-vendor managed services contracts. W hile the vendor does point to having more than 25,000 nonHuaw ei nodes under management, its capabilities as the prime in a multi-vendor services engagement are not w ell know n. Since nearly all medium to large netw orks in the developed markets that Huaw ei seeks to penetrate are multivendor, operators w ill w ant to see evidence of its capabilities in this regard. Huaw ei should put an emphasis on highlighting success that it has achieved w ith HP in terms of delivering on joint engagements. Because Huaw ei has made the near-term decision to focus its attention on areas other than developing its ow n IT consulting practice, it w ill have to rely heavily on partners such as HP and IBM. W hile plausible, it does put the onus on Huaw ei to identify the w ays in w hich it stands ready to help its customers tap into the requisite IT integration capabilities necessary in number of todays netw ork migration and/or transformation projects. As one of the top telecommunications vendors, Huaw ei

communications netw orks, service providers should have a role to play. To this end, IBM should likew ise have the opportunity to partner w ith service providers directly to improve and/or enable their goto-market strategies. IBM should consider launching a marketing program that speaks specifically to its ow n deep skill set involving netw ork and business process transformations in the telecom market and its ability to deliver high value CEM solutions. Through its focus on analytics, IBM addresses the concept indirectly. How ever, analytics is as much about optimization as transformation, if not more so. By packaging these capabilities together, IBM can better address the needs of the telecom operators and position itself as a leader in CEM solutions. Overall, IBM needs to become more active in highlighting w ins w ith telecom operators. W hile the vendor derives almost 10% of its revenue from the telecom vertical, it has announced only a handful of telecomrelated services deals in 2012. Especially as competition from telecom giants like Ericsson, Huaw ei and Alcatel-Lucent heat up, IBM cannot afford to give credence to the notion that its focus on this market is slipping. IBM should consider becoming more active in highlighting the aspects that it brings to the table as a nonprime contributor to a netw ork equipment vendors managed services engagement model. Oftentimes, it is not uncommon for IBM (or one of its direct IT competitors) to fulfill portions of a managed services engagement w here an equipment vendor is the prime contractor. To help build increased aw areness of the value that IBM brings to the telecom market, IBM should take advantage of every opportunity to highlight its project experience, even w here it is not in the prime role.

CenturyLink in the U.S.). This could help bolster its product and service contribution from North America beyond the modest 7.67% it contributed in 2011. As a demonstration of its financial w herew ithal to sustain new initiatives during soft quarters, NSN should provide an update on the operation of its GNSCs and any plans for future locations. Additionally, as it builds out additional GNSCs, it needs to explain the specific role each one serves. If the purpose of each additional center simply concerns localized delivery, the value proposition of remote delivery is somew hat lost (along w ith the argument that operators should be comfortable w ith delivery from India). To this end, each center should ideally be a source of specific expertise and NSN should explain how centers w ill collaborate to deliver a complete service offer. NSN needs to continue its strategic focus on LTE netw ork buildouts and touting its w ins. W hether by choice or accident, NSN has obtained perhaps the number one position as a turnkey supplier of LTE-based netw orks. Its recent w in at Telecom Italia (for a 7,000-base station LTE netw ork) and w ork w ith LG U+ in Korea (to deploy its LTE netw orks) should become case studies for others. Its recent additional w ins w ith STC in Saudi Arabia for a TD-LTE 4G netw ork, Latvijas Mobilais in Latvia for a LTE netw ork, TeliaSonera in Finland for LTE and 3G modernization, a tw o-city trial w ith China Mobile, and Bell Canada demonstrate both expertise and serious traction in this emerging space. NSN should highlight the w ork it has done in the areas of specialized service offerings such as special event support, spectrum refarming, and transformational services as part of its services pitch. These are topical for most mobile netw ork operators, and having them canned or productized already demonstrates NSNs deep experience w ith these unique service engagements. NSN has publicly announced that it w ill leverage the experience w ithin Motorola to establish the quality control system and philosophy for NSN as a w hole. It can do this to improve joint organization processes and serve as a product and service differentiator. Motorola w as

becomes fiercer, conglomerates such as Mahindra must be more vigilant than ever to demonstrate their commitment to telecom netw ork operators. Highlighting customer traction is a pow erful demonstration not only of commitment, but also of success. Also on the traction demonstration front, Tech Mahindra should detail any and all success that it is having w ith telecom netw ork optimization projects, particularly on an endto-end basis. Since the company claims that it can address netw ork optimization from w ireless access through the mobile core and into the IP/transport domains, it could gain a measure of differentiation over equipment provider specialists that focus only on specific portions of the netw ork. By the same token, it w ould also help raise Tech Mahindras profile vis--vis Ericsson, NSN, etc., w hich hang their hat on end-to-end optimization capabilities. Tech Mahindra should take care to highlight instances w here it cooperates w ith traditional netw ork infrastructure players in outsourced R&D, for example. As a global generalist, it is in Tech Mahindras interest to w ork together w ith all market participants throughout the industry value chain. More importantly, w orking w ith telecom specialists (to help develop products, partner on integrations, etc.) is essential for helping Tech Mahindra to build its credibility and visibility w ith telecom operators w hich might otherw ise see it as nothing but an IT and consulting player. Tech Mahindra has publicized its broadening of telecom-focused engagements in vertical markets. As highlighted repeatedly throughout this report, verticals are an important emerging area of opportunity for telecom services players. How ever, w hereas telecom equipment vendors are w orking hard to establish credibility, Mahindra Satyams existing reach into vertical markets should provide it w ith ample sales channels already at its disposal. Along these lines, if Mahindra can quickly demonstrate that it is successfully leveraging its telecom capabilities in vertical markets, it could become a difficult market leader to displace. Tech Mahindra should make it a strategic imperative to broaden the key

around the mobile space, but given that Tellabs has publicly announced that it is moving aw ay from the mobile core, it must now focus on mobile backhaul. Tellabs sees mobility as a grow th space for its services business. How ever, unless the company can prove that it truly understands mobility and mobile netw orks, its efforts there w ill be w asted. Its recent professional services w in w ith Agile Netw orks is a good opportunity to demonstrate proficiency in both mobility and analytics. Tellabs should highlight its breadth of service offerings and depth w ith its established processes and tools. Specific and unique tools remain one of the key w ays for services players to differentiate their offers. To this end, Tellabs needs to consider show casing any tools fixed or mobile it has developed to better optimize or manage operator netw orks. Claiming a solid understanding of netw orks is one thing. Translating that understanding into tools (and/or processes) that give Tellabs an edge over its competitors w ill be key for remaining relevant. Tellabs should highlight its Business Continuity Program, stressing its tenure in offering such services and the true value they bring not only the netw ork operator, but also the community served. Local disasters that can quickly destroy the communications infrastructure do occur and the equipment vendors themselves are in the best position to support such a service offering.

concept directly in its professional services marketing efforts represents a missed opportunity to play up its transport-centric expertise. In September 2011, Colt and Ciena announced a partnership to provide managed services for enterprise customers across Europe. Should this business venture produce the desired results, Ciena may w ant to consider using this approach globally, to address customers needs for managed services at the Enterprise level. Instead of trying to sell directly to carriers the Enterprise market could be more lucrative w ith less competition. W ith optical and metro Ethernet being geographically bound, this may provide Ciena a better business opportunity.

video-on-demand service. Cisco should use this as a show case for the region and the capabilities of Cisco Advanced Services. Cisco is also enabling the local manufacturing of its STBs in support of the operator as w ell. Rare is the opportunity to point to customer w ork that spans netw ork design, rollout, and even manufacturing support. NETs video service launch w ith Cisco as its partner demonstrates some unique capabilities that operators might not alw ays associate w ith Cisco. Cisco needs to keep its service offering sights focused on the cloud computing and virtualization of data center environments. These environments represent highgrow th opportunities, are heavily IP routing/sw itchingbased, and are typically colocated to the server farms they support. This makes for an ideal and controlled environment for Cisco to test the w aters for its ability to provide all aspects of a turkey service offering, including multivendor support, should it desire.

strength and global provider status, HP needs to follow suit by more aggressively touting its telecom capabilities. HP needs to provide an update on its w ork w ith Alcatel-Lucent. The ten-year alliance promised unique go-to-market initiatives that leveraged both companies portfolios and skill sets. Synergies betw een service provider and IT businesses w ere obviously front and center in the partnerships rationale. How ever, beyond AlcatelLucents DCNC offer, both companies have been relatively quiet on how the JV w orks. To prove its relevance and signal how it can be a partner for other players on a broader scale, HP must show how w ell the partnership is w orking and the results it is generating.

should use its influence to help harmonize industry standards, support multi-vendor interoperability, and continue to identify w ays to help service providers improve their role in the overall value chain. Huaw ei can leverage its leadership in standards bodies such as the ITU, IEEE, 3GPP and others to accelerate the adoption of new standards that w ill help advance its netw ork vision.

know n as a pioneer in many of the original aspects of quality control. In a distributed multinational company environment such as NSN, quality control and procedure are key to delivering both products and services. Achieving quality level compliance for products and the vendors organization is a mandatory requirement for many RFPs and can be a strong competitive differentiator. NSN now needs to provide periodic updates on the progress being achieved in this endeavor. NSN needs to better highlight its product ecosystem available around its partnering equipment vendors and w hat it can provide. NSN has Cisco Gold certification and claims the largest distributor of Juniper equipment, enabling it to provide the customers preference at competitive price and service. This also highlights its vendor-agnostic positioning as the best-of-breed service provider. CEM is also an area w here NSN can leverage its experience and expertise to address the needs of their installed base in this area.

customer base to reduce the revenue reliance on these key customers. Having a single customer account for as much as 37% of revenue on a quarterly basis exposes the company to potentially substantial risk. How ever, since this is not something that can be accomplished in quarters, but is measured in terms of years, programs aimed at new market opportunities and territories are both good w ays to w in new customers w hich should be started immediately. Tech Mahindra should specifically add IP analytics as a service offering area of expertise. There is little doubt it has the in-house expertise, and this could become a service differentiator in the evolving 4G space. W ith all 4G netw orks being IPbased and combined w ith the mobility factor, this w ill create a dynamic netw orking environment that w ill be difficult to understand and maintenance from a capacity and grow th standpoint. Already many of the router vendors have begun to offer analytic services to address this type of problem. Tech Mahindras decision to deploy its sister companys iDecisions for telecom onto Microsoft platforms is a good move in this direction, improving its BIS offering. IBM should play up its informal partnership w ith Asia/Info to send the message that w hile it has broad and deep telecom know ledge, it also has specialist partners that can fill know ledge gaps w here they might exist. For its part, Tech Mahindras integration w ith Mahindra Satyam promises to match a lot of the holistic telecom/IT/verticals capabilities that IBM can tout. How ever, w ith specialists such as Asia/Info already w orking w ith IBM, Big Blue can also point to additional value-added resources that could help set it apart from fellow behemoths such as HP and/or Mahindra. Smaller, yet still important, pure plays such as W iPro need to respond to Mahindras integration of its telecom and enterprise practice so as to let the market know w here they stand w ith respect to Mahindras new value proposition. As the largest telecom pure play in the market, Mahindra clearly w arranted attention before its announced reorganization. Now that it is aligning tw o of its most pow erful divisions to attack Tier 2-3 service competitors and IT integrators should not compete directly against Tellabs in the transport arena or mobile backhaul applications. This is w here Tellabs differentiates itself, because it is largely a niche player specialized on the transport layer, and competing w ith the company w ill require highlighting this know ledge, including best practices it has developed in those same areas. ITSPs should consider exploring w ays to w ork w ith Tellabs as Dimension Data has done, integrating the vendor into their services offer. Beyond competing on specific technologies and expertise sets, AlcatelLucent, Ericsson, and NSN services competitors need to play up the value of their end-to-end netw ork know how and capabilities. As customer experience management (CEM) based upon key performance

Recommended Competitor Actions

Ericssons sw eet spot is clearly mobile managed services and despite claiming a number of fixed-oriented services deals, it is clear that Ericssons history in w ireless infrastructure skew s its services success. W ith fixed-line service sales declining (w ith the possible exception of optical deployments and upgrades) the available market for all players and services are hurt by w eaker netw ork pull-through and demand. To compete w ith rivals such as AlcatelLucent, Ericsson needs to address the issue by bundling its process expertise and technology expertise to offer better and more compelling service solutions for IP netw ork transformations projects. NSN needs to move forw ard w ith more details and momentum behind its success w ith Juniper Netw orks. Since NSN is dependent upon others vendors IP kit it needs to demonstrate a strong understanding of IP in general and then specifics as applied to the models that are being deployed. NSN has done a good job w ith its marketing of IP transformation service vendor

Major netw ork infrastructure vendors should consider w orking w ith Aricent, or rivals such as Tieto and Tech Mahindra, w hen targeting vertical market opportunities. Most infrastructure vendors have identified so-called strategic industries as a natural market adjacency that could help to boost revenues going forw ard. Yet industries such as utilities, transportation and public safety often need customized products fitting unique requirements. Aricent is in a position to deliver this customization, leaving the netw ork vendors to focus on their ow n scalable R&D. Beyond product customization, infrastructure vendors should engage w ith Aricent (and similar firms) w hen the time comes to end of life product lines. Long after they have become part of a vendors legacy portfolio, many products still must be supported to keep customers happy. Offloading ongoing product support to players such as Aricent plays into its strengths, w hile keeping internal R&D resources focused on cutting edge innovation

Similar to Ciena, Tellabs needs to announce more services deals. W hile mainline services players such as AlcatelLucent, Ericsson and NSN may be able to get aw ay w ith letting their deployments and capabilities speak for themselves, smaller players cannot follow suit, particularly as the market gets more and more competitive. Tellabs should highlight its breath of service offerings and depth w ith its established processes and tools and point to the success of its 8600/8800 series platforms as a mobile backhaul solution as proof that Tellabs is meeting the needs of mobile operators as they evolve from 2G/3G to LTE netw orks. Tellabs should also tout the unified management of its optical and IP portfolio, as w ell as point out that it has over 15 deployed netw orks and many more in trials for its SmartCore 9100 mobile core (EPC) solution. In response to any potential

Alcatel-Lucent should paint itself as better positioned to help operators w ith IP transformations, netw ork optimization, and netw ork management. Cisco may be best know n for its IP capabilities and products. It may offer netw ork monitoring and design services. Alcatel-Lucent, how ever, can point to a longer track record w ith services and a deeper role in deploying and managing service provider netw orks, all things that can outw eigh the product edge Cisco claims. Beyond AlcatelLucent, Juniper is the next logical thought leader in terms of service provider IP. Juniper has historically taken a partnership approach to services, and it needs to execute on this position w ith a more aggressive focus on services. To be sure, key Juniper strategic initiatives from data center connectivity, to IP transformation, to EPC, to the integration of applications in the transport layer all benefit from service support, if only given their complexity and

W hen Ericsson bought Nortels CDMA RAN assets, it w as argued that in the long term Ericsson w as partly interested in the services revenues associated w ith supporting CDMA netw orks as they age. It is also an opportunity that should belong to others as w ell, especially AlcatelLucent, Huaw ei and ZTE, given their market position in the CDMA RAN an opportunity it should target by continually highlighting the importance of a tight linkage betw een CDMA expertise and services capabilities. Alcatel-Lucent needs to increase and improve its momentum in its services business. W ith another round of management changes at the top, its services business is in clear danger of stalling. It also hinders the vendors ability to address holes in the areas of OSS and BSS-related professional services proactively, a space w here opportunities are grow ing but the ability to take them on is dependent on having the right expertise and inhouse resources as Ericssons acquisition of Telcordia demonstrates. Although AlcatelLucent has a JV w ith HP for IT-type services, that is not the same as having the expertise inhouse. As IT capabilities become a

IBM Global Services, as one of HPs biggest competitors in the enterprise and IT services space, needs to follow our recommendation for HP by highlighting the breadth of engagement models it can offer to service providers, especially w ith respect to CEM. As part of a general marketing campaign, the vendor needs to focus on differentiators such as its history w ith analytics, business optimization, business process optimization, and servicelayer assets. At a more fundamental level, how ever, it needs to focus on simply telling the market w hat it can offer. IBM should launch a concerted effort touting its successes w ith telecom netw ork operators in Cloud and Analytics in the same w ay it has highlighted its w ork in cutting edge areas such as SmartGrid. Indeed, IBM has identified both Cloud and Analytics as key grow th drivers

Now that Huaw ei has announced its intentions to become a more pervasive services player, Ericsson, NSN and Alcatel-Lucent should all claim much longer tenure than Huaw ei in the managed and professional/consulting services space. They w ill position Huaw ei as a new comer that is just learning. W hile Huaw ei brings size, strong product momentum and enviable finances to the table w hich figures to make them more prominent services player in due course its still building out its services organization, w hat the vendor cannot claim today is vast experience in successfully completing a number of complicated services engagements. W hile Huaw ei is still gaining this experience AlcatelLucent, Ericsson and NSN must make sure existing and potential customers are aw are of their deeper know ledge. In an effort to point to their services traction, Alcatel-Lucent and NSN should consider breaking out their managed services revenues. Ericsson already breaks out this share of its services revenues. Right or w rong, it paints the vendor as a leader in the space and highlights managed services as a strategic business unit. W here services may be questionably strategic for Huaw ei, there should be no question

HP needs to take advantage of its relationship w ith Alcatel-Lucent to bring into focus the full extent of its relevance to the telecom industry. As the recent deal w ith Telefonica w here ALU performed systems integration w ork on HP platforms as part of a back office modernization project demonstrates, HP and Alcatel-Lucent are collaborating to solve key OSS/BSS and data center modernization issues facing netw ork operators. For its part, HP needs to make sure that the market know s how deeply it is involved in many of these projects. Tech Mahindra has publicized its broadening of telecomfocused engagements in vertical markets. As w ith all IT services firms, verticals are an important area of opportunity for telecom services players. How ever, w hereas telecom equipment vendors are w orking hard to establish credibility, Mahindra Satyams existing reach into vertical markets should provide it w ith ample sales channels already at its disposal. Along these lines, if Mahindra can demonstrate that it is successfully leveraging its telecom capabilities in vertical markets, it could become a difficult to displace market leader. NSN needs to decide the extent to w hich it plans in playing in the IT consulting and systems integration space. W ith its BSS

All players in the vendor services space need to consider packaging their services offers in a more productized manner. Vendors are fond of saying that discretely labeling their services runs counter to the notion that they are solution providers and it is unnecessary since their customers know w hat they deliver. This may have been true in the past w hen netw orks w ere simpler to run and competition in the space w as less fierce. W e have given credit to NSN for its recent services launches of spectrum refarming and RNC cloning. To that end, competitors should consider follow ing suit. Alcatel-Lucent (especially w ith its core router, the 7950) w ill position its solutions as end-to-end, singlevendor integrated solutions, as opposed to multivendor solutions that are cobbled together. In addition, w ith Alcatel-Lucent, the service logistics are simplified, because all the pieces come from a single vendor that produced them originally, not third parties. The services support staff are direct employees,

agnostically. This IP equipment agnostic approach is an advantage in professional services and yet a deterrent w hen it comes to product led technical and managed services. Like many vendors looking at w ays to gain greater exposure in the managed services mark, Huaw ei should consider formalizing a product lifecycle and inventory management service. As w ith most vendors, Huaw ei already supports buyback. End-to-end inventory management is a natural extension w hich plays into operator demands around OpEx reduction, TCO reduction, sustainability, etc. IBM should make every effort to highlight the managed services aspect that played a key role in its w ins w ith Bharti in Africa and Australians NBN project. Both projects represent enormous undertakings, and they should provide IBM w ith flagships and proof points that it can leverage in other projects as w ell. Since the Australian government project w as done as a competitive bid, IBM can use this know ledge to help establish its offerings as pricecompetitive against similar capabilities from other vendors. It should make the NBN netw ork a show case for other potential netw orking clients. HP needs to continue w orking to differentiate its IT w ork w ith AlcatelLucent. If HP hopes to make the partnership successful, it needs to show ALU that the w ork isnt just a me too effort and HP value adds the solution beyond w hat others are even capable off. Since, HP w orks w ith many different telecom netw ork vendors and doesnt w ant to alienate any of them it needs to provide each a unique capability to their solution. This w ill help to build on the strategic value of the relationship as opposed to a simple fulfillment source. Given its more direct competition w ith Alcatel-Lucent, as a result of the Nortel acquisition, Ciena needs to expand and highlight its transport optimization messaging to include services that the vendor can deliver w ith respect to submarine, backbone, and backhaul build-outs. Optical transport has taken on a renew ed importance especially as robust new access infrastructures are beginning to strain older backbone netw orks. Ciena has garnered tw o publically announced submarine projects it can leverage to play up its transport-centric expertise in this w et environment.

and product creation. Netw ork infrastructure players need to take a page from Aricents playbook: developing and highlighting their design capabilities. Vendor services are quickly evolving from simple product support and netw ork optimization to more complicated service creation and launch support. As operators scale dow n their ow n R&D, relying more and more on their vendor partners, the service creation side of the business w ill become increasingly more important. Design is a key component of any service offer; w hile every vendor has design expertise, they need to make sure that these capabilities are regularly highlighted. Now more than ever, vendors need to make domain expertise a core component of their services marketing. Netw ork infrastructure pricing pressures and competition have driven more and more vendors to target the services space as strategic. Cooptition has allow ed many vendors to enter the space and address specific market segments beyond their ow n product portfolio. Yet as cooperation evolved into tougher competition, vendors must be ready to sell their ow n netw ork know how on an end-toend and more granular level. This w ill be specifically important for traditional OSS/BSS players fighting w hat should be an unknow n player such as Aricent. From an expertise and credibility standpoint, IT players need to develop and highlight specific telecom netw ork domain expertise. To be fair, they already do this in specific enterprise domains, acquiring specialists in finance, utilities, retailing, etc. Aricent can claim a solid know ledge of carrier netw orks, along w ith IT integration capabilities. If IT players hope to better penetrate service providers, they need to follow suit.

challenge from Ciena, AlcatelLucent should cite greater Ethernet/optical capabilities than Ciena, not to mention robust w ireless capabilities and organic IP products that Ciena lacks. W hile Ciena is unlikely to press Alcatel-Lucent for a major managed services deal, its positioning as a best-of-breed transport player could pit Ciena against AlcatelLucent for optical netw orking deployment and maintenance contracts. In such cases, Alcatel-Lucent can simply point to the w ealth of direct and indirect capabilities w hich it brings to the table that Ciena cannot match. Alcatel-Lucent needs to cite its services expertise as a key advantage of its offering over others in the transport domain space such as Ciena, Fujitsu and Tellabs. W ith Ciena already selected by AT&T, there is opportunity for a second supplier. Against this backdrop, Alcatel-Lucent should point out that its selection w ould mitigate a great deal of risk associated w ith the need for robust services capabilities in the transport domain. ZTE should attempt to make its services name via optical projects. According to ZTEs ow n numbers, the vendor is surging in equipment sales, based in large part on the grow ing strength of its optical business. As announcements from AlcatelLucent, NSN and (to a lesser extent) Ciena prove, optical is a legitimate area of opportunity for professional and (on a more limited scale) managed services. To this end, ZTE should seek to leverage its strength as an optical player to demonstrate services success, in the process building its stature as a services player. As a long-term consideration, Ericsson should do some due diligence on the prospect of buying Ciena. This w ould give Ericsson additional credibility as a fixed line professional services player, and on the equipment side, it w ould provide Ericsson w ith the fixed line scale to complement its w ireless girth. In practical terms, it w ould also position

new ness. Huaw ei and ZTE need to prepare proactively for competition from Cisco and others. Ciscos focus on emerging markets is undeniable. Brazil, Russia, India, and China make up the BRIC list of emerging markets being targeted by most global companies, as they represent some of the most fertile regions for revenue grow th. This focus w ill bring more competition to markets w hich have been traditional sw eet spots for Huaw ei and ZTE. Therefore, ZTE and Huaw ei need to stress their advantages over the IP behemoth: breadth of telecom netw orking products, multivendor maintenance and optimization, managed risk support, and managed services support. At the same time, they must move to ramp up their capabilities and proof points in mature markets w here Cisco enjoys a solid presence. NSN, w ith its new focus on w ireless and services, needs to ramp up its IPrelated services credibility. W hile NSN is no stranger to IP and a partner to both router rivals, Juniper and Cisco, it is not the first to come to mind w hen thinking about IP expertise. Its new service offering, called Transformational Outsourcing, does a good job of defining the service architecture from the customer experience dow n to KPIs at the netw ork level. NSN can position this approach as vendor-agnostic to the underlying IP netw ork foundation, w ith its value-add being the KQIs and CEM overlay levels that abstract the required information from the netw ork below . Ericsson should heavily market its w ireless success and ability to provide outsourced managed multivendor services w orldw ide as its clear differentiator, including the IT aspects as w ell as its recently added OSS/BSS capabilities through the Telcordia acquisition. Ericsson should highlight its complete outsourcing w in w ith Clearw ire, a major North American mobile operator. The scope of the project (i.e., seven years for managed services, including the transfer of 700 employees from Clearw ire) w ould appear to

bigger part of telecom netw orks, so does the opportunity for services grow th. This makes it all the more important for AlcatelLucent to demonstrate continued momentum in bulking up its product and services capabilities in the area of both OSS/BSS and IT. Huaw ei should highlight its recent 4G netw ork w in w ith Etisalat for a turnkey LTE netw ork in the UAE that includes support services and its netw ork expansion project w ith TeliaSonera for its GSM/HSPA+ LTE netw ork in Norw ay. Both are LTE-based, allow ing Huaw ei to demonstrate its skill and experience w ith this emerging technology as w ell as some industry tenure, having w orked w ith TeliaSonera to deploy the first commercial LTE netw ork in Norw ay. NSN needs to consider building a larger footprint of Global Netw ork Solutions Centers (GNSCs) in the Americas. The GNSC concept revolves around standardized tools and competencies to deliver services w orldw ide, originally from low er-cost locations. Nonetheless, the location of these centers helps to prove a commitment to a region w hile enabling tailored services to meet specific local demands. NSN may have three Global Delivery Centers in the Americas already through its w ork w ith Embarq and NII; how ever, a bigger presence in the Americas seems w arranted. At the very least, NSN should spell out its plans and roadmap for moving in that direction. Tellabs needs to draw attention to its portfolio of services offerings by publicizing new customer w ins and capabilities, especially w ith respect to mobile backhaul. Its w in w ith Manitoba NetSet in Canada is a good example of professional services helping to pull through the product business. Also, its recently announced Insight Analytics Service offering included as part of the aforementioned deal is a clear service differentiator. In order to been seen as a credible services player, Tellabs must alert the market to its successes, not only in terms of revenue grow th, but also w ith respect to deepening project capabilities. IBM should consider more actively highlighting the aspects that it brings to the table as part of a netw ork equipment vendors managed services engagement model. IBM should make every effort to highlight the managed services aspect that played a key role in its w ins w ith Bharti in Africa and Australians NBN project. Both projects represent enormous undertakings, and they should provide IBM w ith flagships and proof points that it can leverage in other projects as w ell. Since the Australian government project

for the business in the coming year. Reaching out to the telecom-specific analyst community w ould be a good means to reestablish itself and define its role in w hat is still one of the premier grow th industries in the w orld today. Like HP, Ericsson should consider articulating a more concise CEM services message. Among telecom vendors, Ericsson is most equipped to compete directly w ith the likes of HP and IBM not only on the IT aspects of CEM, but also more broadly for back office transformations and IT managed services. How ever, to do this, it needs to move beyond its somew hat narrow OSS/BSS transformation marketing to demonstrate how it can help operators take advantage of a range of CEMbased capabilities that the Sw edish vendors services organization can help enable. Tech Mahindra, W ipro, and other IT integrators need to alter their positioning to focus on service enablement and advisory as much as integration. To be sure, these vendors w ill tout their history w ith linking OSS/BSS and IT infrastructure as a critical part of new service launches or evolutions. In general, how ever, they are more often seen as integration specialists. To the extent that consulting and advisory earn better margins and can lead to integration w ork, this aspect of their businesses needs to be front and center. IT players that w ant to move deeper into telecom services should consider telecom-related acquisitions. On the one hand, these products can help to deliver productattached service sales. On the other hand, they are critical for imbuing IT specialists w ith the expertise needed to compete w ith traditional telecom specialists. Obvious fits are service layer components in the policy or content optimization spaces. Less obvious could be w ork in the small cell ecosystem, to the extent that small cell netw ork integration is a critical

of their importance to Alcatel-Lucent and NSN. All telecom vendor services players both equipment vendor and IT consultant should follow Huaw eis lead and articulate a strategy for tying the equipment and enterprise aspects of the Cloud together under a services umbrella. Going a step further, w hile Huaw ei has done this only at a high level to date, key players such as Cisco, IBM, Alcatel-Lucent and others have the opportunity to demonstrate tangible momentum in each area, w hereas Huaw eis enterprise play is still a w ork in progress and evolving. Cisco needs to elevate the role that services plays w ithin its service provider business lines and offer its customer a higher touch model. To be clear, Cisco offers deployment services as w ell as consulting and integration support but has historically shied aw ay from taking on managed services engagements. For the most part, how ever, these services are admittedly aimed at helping to sell products and keep customers happy. How ever, through its enterprise play, Huaw ei is taking dead aim at Cisco on all fronts, equipment and services. To this end, demonstrating deeper, more complex service capabilities w ith higher executive level touch points is one key w eapon for Cisco to employ to get closer to service provider customers. Due to Huaw eis professed lack of current interest in competing directly in the IT systems integration space, integrators of all stripes need to w ork to partner w ith Huaw ei as it begins to execute on its enterprise, cloud and operator QoE consulting plays. All three areas contain some element of IT capabilities. If Huaw ei is content to partner for the time being on the IT integration side of things, this could represent a boon of opportunity for firms w ith these capabilities including the potential for possible acquisition. ZTE needs to step up its messaging in support of its services business. To the vendors credit, it did announce a managed services contract w in w ith Hutchison Austria in Q1 2011. Beyond that, how ever, the vendor has been largely quiet over the past year. W hile operators typically aw ard equipment contracts under NDA prohibiting vendors from releasing details of their contract arrangements. How ever, if ZTE w ants to be seen on equal footing as its local rival and other players, it must do a better job of highlighting its successes in new areas such as services.

business rumored to be up for sale, its overt focus on CEM-related consulting services, and its announced intention to pull back from noncore activities, there is justifiable concern over NSNs commitment to IT-related services. W hile the space undoubtedly offers a large addressable market for vendors w ith the w herew ithal to target the opportunity, it can also be a trap for companies that cannot make a complete commitment to the space. To this end, NSN needs to let the market know in w hich direction it is heading. Netw ork equipment vendors such as Alcatel-Lucent, Ericsson and Huaw ei must continue to provide as much evidence as possible that w ill demonstrate their strengths in areas such as OSS/BSS integration and business transformation services and in the process differentiate themselves from the IBMs of the w orld. W hile IT services firms such as IBM are w ell know n in the aforementioned areas, the equipment vendors can claim superior operational expertise based on their experience in running netw orks on behalf of a grow ing number of service provider customers. Ericsson should consider selectively positioning its products and services capabilities directly vis-vis IBM. Over the past tw o years, Ericsson has made steady progress on the IT services front via acquisition and subsequent contract w ins that leverage the assets and capabilities it has acquired. Ericsson should now be considered a direct threat to the bread and butter capabilities that the likes of IBM, etc. depend on heavily, and as such, should market itself in that regard. IT players that w ant to move deeper into telecom services should consider telecomrelated acquisitions. These products can help to deliver productled service sales and are critical for providing IT specialists w ith the expertise needed to compete w ith traditional telecom specialists. Obvious fits are service layer components in the policy or content optimization spaces. Amdocs acquisition of Bridgew ater is a good example of this, as it w ill use Bridgew aters products immediately to improve its phone billing system and continue to sell its mobile optimization products to the telecom operators.

facilitating training and product know ledge. Ericssons acquisition of Nortels CDMA and GSM businesses has catapulted North America to its top market by sales revenue w ith a 23% share. Ericsson has leveraged this success into additional services show cases. Managed services at Sprint w ere a major boon in terms of marketing and building a service presence in the U.S. market. Its most recent w in w ith Clearw ire to provide managed services for its netw ork demonstrates proof points (or advantages) to both parties for a netw ork outsourcing model, something many thought carriers w ould never risk. Ericsson should use these examples to produce actual business case justification for the outsourced model. As Huaw ei seeks to portray itself as a comprehensive services partner to its customers, the vendor must be diligent in marketing as broad a range of successes as possible as they occur. In order to raise its visibility as a company capable of delivering on sophisticated services engagement models on a global basis, how ever, Huaw ei needs to take every opportunity to highlight exactly w hat capabilities it is bringing to help operators make their ow n businesses more successful. Providing concrete examples of success w ith existing customers w ill help instill confidence in other w ould-be customers to engage more deeply w ith Huaw ei on the consulting services front. Beyond just providing professional services, Cisco needs to consider moving into the managed, multivendor maintenance and monitoring space. Cisco has the components to make this w ork, including a service assurance product offer and proactive netw ork operations center (PNOC) tools to help provide visibility into nonCisco products, particularly w hen customized in tandem w ith Cisco Advanced Services. More importantly, multivendor maintenance is key for dealing w ith the reality of operator netw orks including legacy and new ergeneration gear. Cisco is prudently approaching this as a technology enabler and should be very selective as to w hat type and kind of legacy gear it is w illing to assume responsibility for under a managed services contract. IT vendors and integrators should pay attention to

all telecom-related market opportunities (i.e., verticals in addition to the telecom market itself), the W iPros of the w orld need to remind the market of how they can bring similar capabilities to bear and add similar value to their customers. Alcatel-Lucent needs to provide as much evidence as possible that w ill demonstrate its strengths in areas such as OSS integration and business transformation services. W hile IT services firms ranging from major players such as Tech Mahindra to smaller players such as Subex are w ell know n in the OSS and BSS spaces, equipment vendors can claim superior operational expertise. In doing so, they can secure their part of the business and make good on claims of supporting end-toend operator quality of experience demands. Netw ork equipment vendors such as AlcatelLucent, Ericsson, NSN, etc. also need to play up the value that developing telecom products brings to the professional services arena. The equipment vendors can rightly point out that Tech Mahindras value in a netw ork optimization project w ill be inherently limited by the fact that it does not develop the netw orking equipment w hich it w ill be optimizing, limiting it to vendor-supplied data or benchmarking analysis. By contrast, an equipment vendors optimization services w ill be rooted in the deep know ledge that they have in designing and deploying the platforms that are being optimized. Telecom netw ork vendors need to be careful w hen tackling vertical market netw ork opportunities. To be fair, it is clear that enterprises in the banking, energy, healthcare, government, public safety, or transport spaces are natural adjacencies for vendors given communications needs w hich are more akin to netw ork operators. Operators, how ever, are also interested in penetrating these markets, potentially putting services vendors in a competitive position w ith their primary customer base.

indices (KPIs) becomes an operator mandate, services vendors w ill increasingly be tasked w ith taking a more holistic netw ork view . This can leave players such as Tellabs on the sidelines, as long as vendors can point to examples of how end-to-end know ledge and services support are delivering concrete value. On the topic of know -how , services specialists w ith plans to move deeper into telecom netw ork services need to consider an acquisition. Thanks to their netw ork products, infrastructure vendors enjoy immediate credibility in delivering netw ork services. Services specialists do not. W here some such as Aircom or Actix have built that credibility, the acquisition by a larger player such as IBM or Tech Mahindra w ould immediately boost the latter vendors expertise, visibility, and position in the market. W hether or not they acquire their w ay deeper into the space, IBM and HP need to make a more concerted push on telecom services in the near term. Analytics, service-layer consulting, and business process consulting: these are all strong suits for the major IT and consulting players and the foundation of their strategies to get closer to operators. Yet, the fact that companies such as Tellabs see them as potential services offerings highlights that they cannot afford to go slow . Juniper, Ciena, and ECI need to look to Tellabs as an example of the services opportunities in front of them. For all of the hype around consulting, managed, and optimization services in w ireless netw orks, services touching on fixed netw orks w ill remain important, if only because mobile netw orks require fixed components in the transport and service layers. Juniper, Ciena, and ECI can all point to solid fixed netw ork know how , similar to Tellabs, and they need to find w ays to translate that

Ericsson in the long term to match, if not exceed, Huaw ei in all aspects of the telecom equipment market on a global scale.

be a potentially pow erful testament to the value that Ericsson can bring to bear in support of a market opportunity that most other services organizations could not perform.

w as done as a competitive bid, IBM can use this know ledge to help establish its offerings as price-competitive against vendors of similar capabilities. It should make the NBN netw ork a show case for other potential netw orking clients.

component of any launch and operators are beginning to look at enterprise femtocell deployments. Telecom netw ork services vendors should consider productizing their offers for vertical markets. From a product perspective, these enterprises represent a strategic focus across the market, a w ay to leverage existing products into additional sales, often driven by consulting and system integration business lines. To be sure, some degree of productizing (i.e., pre-packing services offers for specific verticals) is taking place. It needs, how ever, to be an integral part of their services marketing in order to build clout w ith enterprises w hich may not be as familiar w ith telecom/vendor capabilities as they are w ith the offers from IBM, HP, etc. W ould-be customers of HPs telecomfocused services need to look for proof points around the vendors product agnosticism and track record for each service type. The company has been particularly successful at using product sales to drive services revenues, especially in the enterprise. How ever, to be considered a trusted advisor or netw ork integrator, operator demands must be put above any one vendors products. If only as a negotiating technique, service providers looking to do business w ith HP w ill push for some proof of this mindset and business practice. W here service providers do engage w ith HP around services, they need to begin by w orking w ith the vendor around its telecomrelated strengths. To be sure, the company can promise a broad set of hardw are and softw are integration offers, business consulting, and netw ork analytics backed by a standard set of processes. Yet, as a starting point for understanding the vendors telecom expertise, several offers are obvious targets: SDP implementation As Huaw ei seeks to establish its reputation as a services partner capable of helping operators become more successful at running their businesses, it has called out the use of a KQI methodology that it claims w ill help operators increase end-user satisfaction. Operators need to understand how it defines these KQIs in order to understand their relevance as all vendors are claiming KQIs in support of their CEM offering. Taking the concept one step further, operators must press Huaw ei for examples of how it is leveraging these KQIs to implement programs that directly result in higher customer satisfaction and increased ARPU. Operators need to seek evidence of Huaw eis QoE professional services consulting capabilities that are the most relevant and parallel to their ow n netw orking environment. Huaw ei should provide a reference list from w hich a qualified prospect can randomly call a similar user to discuss their project experience and results all under NDA. As operators are seeking to replicate success they w ill w ant to explore how Huaw ei managed these projects, and w hat lessons the vendor has learned in the process. Enterprises w ith large-scale deployment or integration needs may w ant to engage w ith Huaw ei, particularly in light of the vendors recent commitment to the space. Over the past few years, enterprise products have become a more significant part of Huaw eis portfolio, and the vendor is looking to push into specific enterprise verticals w ith its services Service providers should exploit but carefully manage the cooperative/competitive environment w ith netw ork vendors and softw are-focused integrators. Despite attempts by all parties to expand their skill sets, both groups of suppliers bring expertise that the other lacks. To this end, w ell-managed partnerships remain one of the most effective w ays for netw ork operators to ensure that they are tapping into the best skills possible to solve any given netw ork and/or business process transformation challenge. Netw ork operators looking to increase their penetration of service offerings into vertical industries such as the energy, financial, government, healthcare and transport should profile their typical or ideal customer using a combination of their historical success combined w ith the netw ork service footprint. They should then seek to leverage the position that IT companies such as IBM, HP, Mahindra Satyam, etc. hold in these markets. W hereas netw ork equipment providers are attacking verticals to help players in these industries build their ow n netw orks, the IBMs of the w orld could serve as valuable partners to help telecom netw ork operators integrate and/or transform their netw orks to meet needs for projects such as smart grid buildouts, etc. W hile public references are somew hat few and far betw een for IBM, service providers should look to IBMs engagement w ith Bharti in Africa as an indicator of how successfully even the w orlds foremost IT expert can manage the complex logistics of integrating 16 countryw ide IT operations into

NSN as a cautionary tale. Increasingly, the vendor is pushing into business consulting. Increasingly, its momentum in the service layer and OSS/BSS and CEM layers is bumping up against IT integration projects. These are all traditional strong suits for IT services vendors, making this their business to lose unless they can redouble their marketing and R&D in order to better battle vendors such as NSN.

know -how into a bigger share of vendor services revenues.

Recommended Alcatel-Lucent End-User/Customer must be referenced Actions w hen operators engage w ith its competitors around new application business models and the service support they require. ALU has set out to make a name for itself in terms of netw ork monetization. Its done an admirable job of tying together efforts that link product and service offers on this front. From a solution standpoint, competitors w ill make a claim to the same capabilities, but w ithout specific, productized offers, there is obvious room for questioning and negotiation using ALU as a counterpoint. Netw ork operators should consider engaging w ith Alcatel-Lucent as they look to sell into vertical markets. W hile vertical markets has become somew hat of a w atchw ord for equipment vendors as they seek to expand their addressable markets, netw ork operators also have an interest in selling services both w holesale and managed into customers in vertical markets. W ith ALUs dual focus on netw ork monetization and vertical markets coming to the fore of the vendors strategic efforts, it should be able (and w illing) to help its operator customers more effectively address opportunities in vertical industries. As alw ays, operators need to follow the finances of their service partner(s) closely. In Alcatel-Lucents case, the company has w aged an ongoing battle w ith

Service providers exploring their managed services options should consider engaging w ith Aricent Group. Publicly, the companys primary w ork w ith operators seems to focus on the OSS/BSS realm: new launches have focused on services assurance; announced deals focus on system OSS/BSS and charging integration; even the companys explanation of its managed services capabilities led w ith OSS/BSS. In reality, the company has delivered a broader scope of managed services, including managed testing and IOT services, and it could use additional references to help highlight them. Mobile operators should include Aricent Group in their investigations of business models around monetization and application delivery. Around the globe, mobile operators are trying to deal w ith third-party application stores. More specifically, they are trying to understand how they can leverage the market interest in mobile applications w hile providing a more unified, multi-OS experience. Aricent Group has expertise across the entire valuechain from device softw are to content creation to billing and it could be a good bridge betw een content providers and netw ork infrastructure vendors. Mobile operators should consider driving their netw ork vendors to engage w ith Aricent Group around new

Service providers that have deployed Nortels MEN solutions should now have the product roadmap for their products lifecycle, feature content and any end-of-life plans for existing platforms. End users should monitor closely Cienas progress on delivering on its product plans w ith a critical eye tow ards any delivery slippage. Operators w ith a large capital investment in the original Nortel kit w ill w ant proof points that Ciena and its employees can adequately support and service the products. Service providers w ith Ciena kit deployed should look into w hat Ciena terms logistics management as a w ay of reducing netw ork OpEx through streamlining inventory and spare parts management and equipment reuse. It is a fact that industry consolidation has left many netw ork operators w ith a number of disparate netw orks cobbled together as a loose confederation of assets managed by a number of different divisions. If this state of affairs has created a boon of opportunity for IT integrators, it stands to reason that a partner to help manage the

Operators need to seek proof points of Ciscos Assurance Services for IP NGN. Launched last year, the concept of proactive monitoring and optimization w as not completely unique. The benefits in terms of service experience and operational efficiencies, how ever, cannot be denied. By now , Cisco should have several customers to w hich it can point that could help potential customers identify use cases, understand Ciscos capabilities, etc. Operators looking at Ciscos netw ork management and assurance services need to encourage it to go into multivendor management. Its Assurance Services for IP NGN offer has a focus on Cisco gear. At the same time, Ciscos Carrier IP NGN Management Solution (CIMS) claims to be multivendor-ready based on SNMP and potential integration w ork w ith Cisco Advanced Services. If nothing else, connecting these dots for Cisco may be a negotiating tool w hen comparing Ciscos capabilities and focus w ith other vendors w hich gladly tout their multivendor management credibility. Operators need to realize that services are only selectively strategic for Cisco. The vendor w ill move into a deep

Mobile netw ork operators should consider engaging w ith Ericsson about managed application support. From the perspective of monetizing mobile broadband traffic grow th, service enablement is on the minds of operators around the w orld. To this end, Ericsson should be w illing to help these operators discover the best w ay to roll out applications that deliver on the monetization promise (w hether exclusively based on Ericsson assets or via partners), and it should be interested in hosting applications as a w ay to drive services revenues and minimize operator risk. Mobile operators should also consider engaging w ith Ericsson w ith respect to the vendors recent push on mobile RAN netw ork sharing. For its part, Ericsson seems intent on pushing the topic as a logical w ay for operators to streamline their netw ork equipment spend and optimize netw ork operations costs. W ith so much focus on finding w ays to low er both CapEx and OpEx costs to offset declining revenue-per-bit metrics, operators should be open to innovative approaches that attack the issue from both the fixed and variable cost perspective. Operators traditionally reluctant to accept a managed services offer should consider the space more broadly. Managed services are about more than turning over control of a netw ork to a vendor. They are about more than just transferring staff. Engaging w ith vendors to manage components of a netw ork

As alw ays, operators need to follow their service partner finances closely. A company of NSNs size is unlikely to see massive fluctuations in R&D or service delivery capability based on quarter-to-quarter revenue shifts. Regardless, fierce competition in the telecom netw orks space has clearly impacted NSNs financial health over the past few years (and quarters) and driven an increasing share of its revenues from services both potentially dangerous realities w here financial health plays into a companys stability and the netw orks stature supports its credibility as a services player. Service providers should look for w ays to leverage NSNs new GNSC launches in order to explore the limits of w hat services can be delivered locally vs. remotely. W hile the vendor has used its centers in India and Portugal to highlight the viability of remote service delivery, its new centers signal that the model has its limits. W here, exactly, those limits exist is an important thing for operators to understand as they negotiate their deals and the w ay in w hich services are delivered w ith the vendor. NSNs SON w ork implies a linkage betw een products and services, in particular tying LTE netw ork elements and its NetAct solution into a service offer. Beyond the implication, how ever, the explicit messaging

Major netw ork infrastructure vendors should consider w orking w ith Aricent, Tieto, or Tech Mahindra (all rivals) w hen targeting vertical market opportunities. Most infrastructure vendors have identified so-called strategic industries as a natural market adjacency that could help to boost revenues going forw ard. Yet, industries such as finance, utilities, transportation, and public safety often need customized products fitting unique requirements. These niche vendors are in a position to deliver this customization, leaving the netw ork vendors to focus on their ow n platforms specific development requirements. Mobile and fixed operators across the globe should take notice. Tech Mahindra w on back-to-back AT&T Supplier Aw ards, one of only six companies to receive such public phrase for its services. In June 2011, it also w on the Communications Sector Partner of the Year aw ard from Microsoft and w as one of the top three aw arded the DSCI excellence aw ard of security in IT services in 2011. Tech Mahindras ability to provide superior customer service, as exemplified by these cases, makes its value proposition an alternative w orth considering vis-vis some larger, perhaps better know n competitors. Netw ork operators in developed markets

Potential services customers need to look for proof points of Tellabs mobile netw ork know -how and capabilities. The 2011 w ins w ith Manitoba NetSet (for a W iMAX-toLTE transition) and Yoigo (for a 3G mobile backhaul netw ork in Spain) are a good start. This gives it access to a deep understanding of mobile traffic and a w ay to drive monetization. How ever, it does not mean that Tellabs has figured out how to leverage the product fully or integrate its mobile and fixed know -how in the same w ay that competitors have. As Tellabs attempts to prove its mettle, there are opportunities for operators w illing to be early reference customers. No operator w ants to be a guinea pig for a vendors new capability. Engaging w ith Tellabs around its mobile services capabilities, how ever, could provide access to a level of service customization (and favorable pricing) w hich the vendor w ill not be so w illing to offer as its mobile solution and credibility mature. Operators should consider the Tellabs Business Continuity Program, w hich supplies emergency

profitability for a number of quarters. A tenuous financial position can impact a vendors services capabilities in terms of linkage to product capabilities, employee morale, and the ability to roll out new services initiatives.

services launches. W hile Aricent Group can claim netw ork insights from its ow n R&D capabilities, netw ork infrastructure vendors w ill alw ays have a more intimate know ledge of their ow n products. Aricent Group, how ever, can bring a service design view and provide the product customization necessary to target a specific demographic or market segment.

complexity on the physical asset side of things w ould be no less valuable in many respects. Netw ork operators should press Ciena for details on its capabilities as they relate to professional services aimed at backhaul netw orks. As one of its closest competitors, in terms of market focus, Tellabs has done a good job at casting itself as, among other things, a backhaul specialist. Ciena has not. Nevertheless, w ith Ciena pushing Ethernet access and metro transport, its ability to support backhaul rollouts effectively should be a key question in the minds of w ouldbe customers.

partnership role w here it finds that it is advancing a specific aim, such as Smart+Connected Communities or advanced video services. This means operators w hich find that their strategic aims align w ith Ciscos should actively engage w ith the vendor, and others should not expect much advanced support.

(sparing/stocking, training and backhaul) falls far short of relinquishing netw ork control. At the same time, they can help an operator to understand the scope of managed services opportunities w hile delivering OpEx savings. Operators and large enterprises should consider Ericsson for their IT service needs as w ell as the netw ork. Ericsson has completed some large IT consolidation projects for 3 in Italy, resulting in a reference account and an endorsement of its capabilities to deliver.

services, integrated service management (OSS/BSS), digital content management, and device management. As traditional IT players such as HP push deeper into the telecom realm, operators need to investigate the IT-related services offers from traditional services players such as AlcatelLucent, Ericsson, Huaw ei, and NSN. All of these services vendors are eager to get into the IT side of the business, either on their ow n or in tandem w ith partners such as HP. Even if serving as nothing more than an integrator for IT partners, this eagerness (and need for ITrelated references) should open up an opportunity to secure particularly responsive or customized solutions. HP - Telecom Vendor Services (*)

business. As it seeks to build credibility, it w ill quickly need to prove its capabilities and w in reference accounts. North American operators need to anticipate Huaw eis interest in breaking into the market. After penetrating Europe, Huaw ei has made it clear that North America is an important target market. To this end, the vendor should be very w illing to support specific demands in terms of custom netw ork and service offers, more than it might in other parts of the w orld. Huaw eis offerings should be evaluated as a means to potentially provide services to regions other than the operators home and key territories - cost effectively.

a single entity. As netw ork operators begin to merge multiple, complex OSS/BSS systems, IBMs engagement w ith Bharti should serve as a high-profile show case in terms of both IBM capabilities and some potential pitfalls to avoid. Operators considering offering Cloud-based services but concerned about security should take a look at w hat IBM has to offer, in terms of both managed security and the organizations experience safeguarding resources w ithin its ow n and customer-ow ned data center facilities. Clearly, the move to the Cloud has begun, and IBM offers a number of both public and private Cloud w ith a number of options that could provide a good solution for operators and large enterprise customers.

here has been generally limited. For their part, operators need to understand how vendors are tying SON into their services offers: for continual optimization, for outsourced operations, and for simplified deployment. W hile still far from mature, w e have moved past a time w here operators can be satisfied w ith a vague understanding of how SON fits into services offers. W here NSN and its direct netw ork vendor competitors are all pushing deeper into the delivery of business services, operators need to consider actively engaging w ith them on this front. All of these vendors clearly w ant to ramp up this aspect of their business, competing w ith players such as IBM and Accenture. This interest, in turn, gives operators an opportunity to gain attractive terms w hile serving as a reference.

should look into the details of Tech Mahindras relationships w ith large, Tier 1 operators in North America and W estern Europe for insight into the companys role and ability to w ork effectively in mature markets. To be sure, Tech Mahindra has the proof points to validate its capabilities outside India, including w ork w ith the top three European operators, six of the top eight North American operators, and the top five telecom equipment manufacturers. W ith this in mind, other operators in these markets should be investigating Tech Mahindra as a possible alternative to better know n and likely more expensive consultants.

equipment and support during disasters. Local disasters, including seismic activity, w eather, and w ar, are capable of quickly destroying infrastructure and causing major netw ork outages w hen needed the most. This service could go a long w ay to completing or complementing any disaster recovery plan the operator may have in place.

Company Description Company Name Locations

Alcatel-Lucent Telecom Vendor Services (*) Alcatel-Lucent HQ: Paris, France. Sales: Global.

Aricent Group Telecom Vendor Services (*) Aricent Group HQ: Palo Alto, CA

Ciena - Telecom Vendor Services (*) Ciena Corporation Linthicum, MD

Cisco - Telecom Vendor Services (*) Cisco

Ericsson - Telecom Vendor Services (*) Ericsson

Huaw ei - Telecom Vendor Services (*)

IBM - Telecom Vendor Services (*)

Nokia Siemens Tech Mahindra Netw orks - Telecom Telecom Vendor Vendor Services (*) Services (*) Nokia Siemens Netw orks Espoo, Finland (HQ); services staff in 150+ countries Tech Mahindra Ltd. HQ in India, 17 regional offices w orldw ide, 15 delivery centers across the globe & presence in 31 countries

Tellabs Telecom Vendor Services (*) Tellabs Naperville, Illinois: Corp. HQ

Hew lett-Packard Huaw ei Corporation W orldw ide HQ: Shenzhen, China (100+ branch offices)

San Jose, CA (HQ) HQ: Stockholm, Sw eden; 10 regional headquarters

Primary Markets

Telecommunications, Telecommunications Optical and Enterprise carrier Ethernet transport

Enterprise and telecom operators

Telecommunications

Telecom Vendor Services

Telecommunications Operators

Mobile broadband, IT services, optical communications Telecommunications netw ork services infrastructure services EUR 14.041 billion (2011) 73,686 (December 31, 2011); Global Services: 45,000 April 1, 2007 Rajeev Suri, CEO; Bosco Novak, Head of Global Services $1.156 billion, March 31, 2012 40,500, March 31, 2012 1986 Vineet Nayyar, Vice Chairman, Managing Director & CEO BT, AT&T, Etisalat DB, Microsoft, Bell Canada, Motorola, CA, Cisco Mobile infrastructure Optical infrastructure Infrastructure services & CEM Nokia Siemens Tech Mahindra Netw orks - Telecom Telecom Vendor Vendor Services (*) Services (*) Nokia Siemens Netw orks (*) Nokia Siemens Netw orks NOK Tech Mahindra (*) Tech Mahindra

Telecom equipment

Revenues

EUR 15.696 billion (FY 2011) ~ 78,000

N/A (private)

$1.7 billion

$43.218 billion FY 2011 (ending July 2011) 71,825 July 2011 1984 John Chambers

Approximately SEK 227 billion (FY 2011) 104,525 June 30, 2011 1876 Hans Vestberg, CEO

$32.4 billion (2011)

$1.29 billion (FY 2011) 3,246

Employees

10,000

4,339

~110,000

Founded Management

November 30, 2006 (merger) Ben Verw aayen, CEO

2006 Sudip Nandy (CEO)

1992 CEO Gary Smith

1988 CEO: Ren Zhengfei

1975 Robert W . Pullen: President & CEO Various

Key Partners

HP, various

HP, Symbian, W ind River, Intel

Accenture, AT&T, BT, IBM, Nokia Siemens Netw orks, Oracle, SAP, Sprint, W ipro Professional services Technical services Service provider routing and sw itching, mobile core, service provider video

Numerous

Aircom, Amdocs, HP, IBM, Oracle, Subex, Telcordia

Product Lines

EnterpriseMobile Netw orksFixed Netw orks Core & TransportManaged, Technical, Professional Services Alcatel-Lucent Telecom Vendor Services (*) Alcatel-Lucent (*) Alcatel-Lucent ALU

Product Design and Development, Managed Services, Professional Services

Managed services Professional services Technical services

Technical ServicesManaged ServicesProfessional Services

IP/Ethernet, optical, fixed access, mobile core

Overview Alias YBVendorName YBStockSymbol

Aricent Group Telecom Vendor Services (*) Aricent Group (*) Aricent Group

Ciena - Telecom Vendor Services (*) Ciena(*) Ciena Cien

Cisco - Telecom Vendor Services (*) Cisco (*) Cisco CSCO

Ericsson - Telecom Vendor Services (*) Ericsson (*) Ericsson ERIC

HP - Telecom Vendor Services (*) HP (*) HP HPQ

Huaw ei - Telecom Vendor Services (*) Huaw ei (*) Huaw ei

IBM - Telecom Vendor Services (*) IBM (*) IBM IBM

Tellabs Telecom Vendor Services (*) Tellabs (*) Tellabs TLAB

All m aterials Copyright 1997-2013 Current Analysis, Inc. Reproduction prohibited without ex press written consent. Current Analysis logos are tradem ark s of Current Analysis, Inc. The inform ation and opinions contained herein have been based on inform ation obtained from sources believed to be reliable, but such accuracy cannot be guaranteed. All views and analysis ex pressed are the opinions of Current Analysis and all opinions ex pressed are subject to change without notice. Current Analysis does not m ak e any financial or legal recom m endations associated with any of its services, inform ation, or analysis and reserves the right to change its opinions, analysis, and recom m endations at any tim e based on new inform ation or revised analysis. Current Analysis, Inc. 21335 Signal Hill Plaza, Second Floor, Sterling, VA 20164 Tel: 877-787-8947 Fax : +1 (703) 404-9300 Current Analysis, Inc. 2 rue Troyon, 92316 Sevres Cedex , Paris, France Tel: +33 (1) 41 14 83 17 http://www.currentanalysis.com