Monitoring more than 100 companies, products, and vertical sector developments.

Tuesday, February 27, 2007

Podcast advertising soared to US$80 million in 2006

According to eMarketer, most widely consumed podcasts still have less than 50,000 downloaders. Nevertheless, podcast advertising spending rose to $80 million in 2006, from a mere $3.1 million in 2005. In 2008, eMarketer predicts that this will reach to US240 million and attain US$400 million in revenue by 2011.

One big challenge as well is that podcast listeners is a niche segment as roughly 12% of Internet users do listen to podcast.

Tuesday, February 13, 2007

Top Ten Trends Among Small and Medium Businesses in 2007

The top ten IT trends for global SMB markets were released by New York-based Access Markets International (AMI) Partners, Inc., a consulting firm specializing in IT, Internet, telecom and business services market intelligence trends and strategy, with a strong focus on global small and medium business (SMB) enterprises.

1. Beyond the Big Four (B4) Emerging BRIC Countries (Brazil, Russia, India and China) — IT Vendors Will Focus On the “Next Ten” (N10) Emerging Markets; SMB spending In North America and Japan Will Surpass Large Business IT Spending In 2007

AMI forecasts the worldwide IT spending by SMBs to grow by 10% in 2007, fueled by continued high double digit growth in countries in the Big Four category. However, IT vendors will step up their efforts to explore the Next Ten (N10) emerging markets, namely selected countries from ASEAN (Thailand, Malaysia, Indonesia, Vietnam, and Philippines), SAARC (Pakistan, Sri Lanka and Bangladesh) and Lat Am (Argentina, and Chile). Collectively, these ten emerging markets are exhibiting GDP growth rates of over 7% and showing SMB IT spending growth rates exceeding 20% in 2007.
  • Vietnam and Chile have seen surges in foreign direct investment (FDI), both being increasingly recognized for their manufacturing potential. High adult literacy rates and increasing governmental support will drive the SMB sector.
  • SMB IT spending in Indonesia will equal that of Sweden and surpass it in 2008.
  • 2007 will also see the fall of the majority share of IT spend by large businesses in Japan and North America.
For the first time, SMB IT spending is poised to surpass spending by large businesses in the two countries as noted above. Such a trend has already occurred in other regions – Asia Pacific, Europe and Lat Am.

2. Storage and Security Convergence Will Help SMBs Move Up The Adoption Curve

Storage and security solutions will continue to converge, leading to market consolidation. SMBs will be more inclined to adopt dual-purpose solutions as they check their budgets against investment priorities. AMI forecasts storage and security spend will grow by 19% in 2007.
  • Storage optimization will be seen as an imperative among mid-market businesses.
  • 2007 will also see the introduction and adoption of “All-in-One network storage appliances” for the less than 250 employee segment.
  • While SMBs are rapidly implementing basic PC security solutions such as anti-virus, spam filters and spyware, many SMBs have yet to deploy more comprehensive server and network-based security schemas that would provide for more robust, end-to-end protection against the rising tide of security threats.
  • In 2007 SMBs will direct new spending on more advanced security solutions, such as intrusion detection, secure identity and access management, web filtering, encryption, and automated patch management.
  • Vendors that provide SMBs with easy to use vulnerability assessment tools, a choice of software, hardware and services-based security solutions, and the ability to deploy these solutions in an incremental, yet integrated manner, will be best positioned to capitalize on this market opportunity.
3. Software-as-a-Service (SaaS) Vendors Turn to Chapter Two

SaaS Chapter One was all about selling companies on the scale and skill advantages that SaaS provides, helping businesses take advantage of sophisticated solutions while minimizing IT investments, footprints and risks.

In Chapter Two, SaaS vendors will increasingly focus on how their solutions help customers streamline business processes for market advantage. Leading vendors will increasingly provide customers with blueprints for business process improvement, pre-built integration solutions, more varied and flexible pricing options, and ecosystems that facilitate community relationships. By doing so, these vendors will take advantage of the expected 19% rise in global SMB hosted/SaaS spending over the next five years.

Chapter Two will also see a continuation of SaaS industry consolidation, as powerhouses such as Microsoft, Google, IBM and battle to build “uber” SaaS ecosystems. At the same time, new SaaS players and solutions will continue to emerge, and the likelihood of any one player or ecosystem dominating the landscape is slim to none.

4. Managed Services Shape Up—Helping SMBs Manage More With Less

SMBs in mature technology markets are already highly penetrated in terms of PC, Internet, server, security, telecom and mobility solutions. Increasingly, they also struggle with the same IT complexities that larger enterprises face, such as mounting regulatory requirements, more remote and mobile employees, and multiple locations. AMI’s global primary research results indicate that SMBs are increasingly likely to offload cumbersome IT chores to outside experts, so they can focus on their core business.

AMI predicts vendors will offer SMBs more inclusive IT-based managed services packages over the next year. Though initially aimed at testing the waters among early adopter and mid-market businesses, these services will go beyond the piecemeal approach, building towards more comprehensive portfolios.

Historically, most SMBs have turned to smaller, local players for these services, but in 2007, major IT vendors—including IBM, HP and others—will increasingly capitalize on this opportunity. These giants will expand their managed services portfolios with new infrastructure, help desk, storage, security and other offerings, tailored to meet SMB solution, packaging and pricing requirements, and sold via their channel partners.

2007 will also see traditional telecom and cable companies launch initiatives to try and position themselves as key suppliers of managed infrastructure, managed security solutions and web-based services geared to the sub-20 employee segment, where they already have strong market presence with voice, network, and Internet services. All vendors vying for a piece of this growing pie will need to carefully calibrate their SMB offerings, value-add and channel programs to succeed in this quest.

5. Outsourcing Revisited; Incorporation of BaaS

AMI forecasts that the traditional IT services market will continue to see double digit growth in 2007 among global SMBs as an increasing number of businesses spend on different types of services. The IT outsourcing market will get a boost as a direct fallout. IT service vendors in India, China, Philippines, and Russia will continue to reap benefits as mid-market IT outsourcing gains momentum. However, “business-as-a-service” outsourcing will gain ground, with different components of human resources (HR) including recruitment services, background checking, payroll, employee self-service and HR administration leading the way in 2007.

SMBs are continually looking for ways to streamline their business processes and lessen the burdens of regulatory/compliance concerns. With focus on micro-verticals by IT vendors and as IT becomes secondary, AMI predicts that in 2007 and beyond vendors will create micro-vertical offerings for SMBs catering to their specific business processes with “embedded IT.”

6. SMBs will Mobilize – The Road Frequently Traveled

From San Francisco to Singapore, city governments are picking up the tab to provide the public with free or low-cost wireless Internet access. The number of municipally funded Wi-Fi/WiMax projects is soaring, with cities large and small participating. 2007 will see fixed mobile convergence (FMC) between fixed IP infrastructure/applications and mobile (cellular) infrastructure/applications with increased focus on ubiquitous mobility.

AMI predicts that global SMB notebook shipments will grow by 20% in 2007 over 2006, outpacing desktop PC growth by five times. Combined with the SmartPhone shipment growth of 18% globally, SMBs will increasingly depend upon mobility and convergence as the use of public wireless internet will grow by over 30%. The increasing usage of mobility will prove a challenge for telecom providers as they scramble to work with software developers and application providers to design and offer viable solutions for SMBs in order to monetize the adoption of ubiquitous connectivity.

The year will finally see the arrival of WiMax which will take off first in key countries in Asia, followed by Europe and then the US. Fixed WiMAx is already deployed in some parts of Korea (such as WiBro), but 2007 will see more cases of commercial fixed WiMAx being deployed.

7. Vista – 12 to 18 months or More Away for the SMB Hug Factor Due to Industry-Fueled Caution – As You Like It!

Despite all the hype about pent-up demand for Vista, 17% of mid-market businesses, and less than 7% of small businesses in the U.S. plan to adopt Vista in the next 12 months, according to AMI’s U.S. small and medium business survey. The above translates into 447,000 US PC SMBs who have expressed an interest in Vista adoption during 2007. Most SMBs tend to take a wait-and-see attitude when it comes to deploying something new, and in this case, will use extra caution due to concerns generated by the media and industry pundits regarding potential incompatibilities and security loopholes, and uncertainty about the benefits of migrating from their current OS to Vista.

SMBs may be reluctant—even as PC prices dip—to invest in upgrading to new hardware necessary to run Vista. The increasing use of software-as-a-service (SaaS) applications—which require only a web browser—is another factor that may have an impact. However, much will depend on Microsoft’s marketing prowess and the support of the broader ecosystem of partners. After all, there is a pent-up demand for PC replacements and some 40% of PC-owning SMBs would like to standardize their operating systems.

#8: Unified Communications: To Unify Or Not to Unify

AMI predicts that VoIP will begin a long transition from a market-driven attraction of all-in-one VoIP appliances that supports voice/unified messaging/security/mobility with provisions for remote management and desktop/server collaboration application integration.

While the transition will not be complete in 2007, the die has been cast by Office 2007 and MS Exchange which embed unified communications as a feature. Adoption of broadband VoIP applications such as Skype, Yahoo and Vonage will grow rapidly, especially among small SBs (1-4 employees); hosted VoIP adoption will increase among the 5-20 employee segment as these solutions become more reliable, secure and scalable.

Among MBs, there will also be steady growth in enterprise messaging applications such as IBM/Lotus Sametime and Exchange Instant Messaging services as these companies realize the benefits and convenience of real-time communications. AMI forecasts that IP PBX penetration amongst SMBs will grow by 67% in 2007 while penetration in hosted VoIP-based systems will grow by 75%. 2007 will also see the debut of integrated unified communications appliances that integrate voice/data/video/security/mobility for the small business segment.

9: Changing Channels and the Rise of the Value-Added Provider (VAP) – They Came, They Saw, and Now They Would Like to Conquer

The IT channel continues to be in a state of flux, as value-added resellers (VARs) and regional systems integrators (SIs) struggle to adapt to the changing market demands and the evolving business models of IT vendors. While SMBs continue to spend a significant portion of their IT budgets with local and regional VARs, the nature and scope of what they purchase through these providers is changing. With hardware becoming a commodity purchase, and as manufacturers improve direct service and support capabilities, the percentage of direct hardware purchases through retail will continue to rise. Likewise, SMBs are also buying SaaS solutions directly from SaaS vendor putting pressure on VARs and SIs to provide other value-added services to SMBs.

Channel partners will need to invest in building integration and business consulting skills, and to maintain market advantage. In addition, they will need to partner with large manufacturers, such as IBM and HP, who are increasingly “productizing” many basic IT services, and providing partners with opportunities to resell these services and add value around them.

Traditional VARs, DMRs and distributors need to re-examine their offerings and become service providers. AMI predicts that at least the VAR channel will transform itself to a “value-added provider” or VAP moniker, as providers incorporate more value-added integration and infrastructure managed services into their business models. The VAPs will also see a greater percentage of their business coming from the SMB segment.

10. The Battle for the Web-based Operating System Takes Shape—The Storm Gathers Speed (Apex and AppExchange) and Amazon (Amazon Web Services) have led the charge to build web-based operating systems and ecosystems, providing developers and customers with access to their technology platforms, infrastructure, tools and knowledge base. As they do so, they are transforming the Internet from an ecosystem to a new computing platform. The Web-based operating system embodies the same core components as traditional operating systems, such as processing power, storage and memory. But, unlike traditional operating systems, the Web-based operating system is comprised of a huge distributed computer network that many users can access virtually. Developers and start-ups will be the early adopters of these Web-based operating systems, using them, in many cases, as an easy, low-cost and dependable foundation on which to develop and deliver new solutions—many of which are likely to be aimed at small business customers. Can Google, IBM and Microsoft be far behind in what may be the most important battle on the Internet? AMI expects these giants—and others—will weigh in and up the ante.

Bonus Prediction: The IT Generation Gap Materializes, Dramatically Changing the Way IT Decisions Are Made

As baby boomers retire and are replaced by younger Gen X workers and entrepreneurs, a significant IT generation gap will emerge and grow, especially in mature technology countries. Younger decision makers, reared on the Internet, video games, MySpace and iPods, will demand business applications that are as easy to use and as flexible as the consumer applications they’ve become accustomed to.

This segment will expect a more “consumerized” business application shopping experience, in which it is easy to access, evaluate and purchase solutions. Younger decision-makers will also demand solutions with minimal training requirements, smaller IT footprints, automatic upgrades and fast ROI. In addition, they will expect their business solutions to enable community participation and allow for personalized, contextualized information access. This dynamic bodes well for vendors who are powering their solutions with next generation, Web 2.0 capabilities, and creating transparent sales, pricing and packaging strategies.

Asia Pacific reaches 1 billion cellular connections

At the end of 2006, Asia-Pacific cellular connections passed the 1 billion mark according to Wireless Intelligence. It has been the third fastest-growing region with a 27% increase year-on-year. In mature markets such as Western Europe and North America, market growth is softening. However, Asia-Pacific reached a 30% penetration rate and is expected to grow by 19% between 2006 and 2007.

India overtook China in terms of growth rate in Q1 2007 and will boost the regional figures in the forthcoming quarters running at almost 6 million per month. India grew by 87.4% year-on-year, stealing China's thunder. Six of its 15 local operators are listed in the top 20 fastest growing operators within the region for Q1 2007. This phenomenal growth in India has been driven by efforts from vendors and operators to push down prices and tariffs. This price war and competitive pressure was quoted during the Motorola and Nokia earnings results last quarter.

By late 2006 China's growth rate was running at around 18% quarter-on-quarter. It is still leading the way in terms of total connections, with 443 million compared to India's 142 million, but it will take 15 months to gain the next 51 million connections in China and match the growth we saw in 2006. By the end of 2007 China will reach a 38% penetration rate whereas India will just be on its way to 20% penetration.

Bangladesh, Pakistan, Indonesia
Bangladesh, Pakistan and Indonesia have gained strong momentum over the past few quarters with almost 50 million net additions between 2005 and 2006. According to Wireless Intelligence forecasts they are expected to reach market growth of 45%, 42% and 25% respectively by the end of 2007, bringing a total of 43 million net additions for the year.

In Bangladesh, Grameen Phone is expected to stabilize at around a 50% market share during 2007, losing ground to Banglalink (Orascom), which will more than double its subscriber base by December 2007. Pacific Bangladesh, which deployed its cdmaOne and CDMA2000 1x networks in 2005, is likely to reach 1 million connections by the end of 2007, following fairly slow uptake so far. Overall, Bangladesh should reach 29 million subscribers by December this year, giving a market penetration of 18%.

In Pakistan, Mobilink (Orascom) is likely to stabilize at around a 50% market share through this year, to Telenor's advantage - it is expected to grow by 72% year-on-year. Ufone and Warid are also fast growing operators, growing by more than 45% year-on-year and forecast to take share from Mobilink. Millicom is migrating its TDMA network to CDMA2000 1x, although it represents a tiny portion of the total market. By the end of 2007, Pakistan is expected to reach 63.2 million subscribers, reaching a penetration rate of 37%.

In Indonesia, Telkomsel and Indosat are leading the market with 55% and 23% market shares respectively by the end of this year. Both operators are deploying their WCDMA networks in early 2007. Mobile 8 is gaining momentum quarter-on-quarter to reach 5% of the market with its CDMA2000 1x and CDMA2000 1x EV-DO networks, but we forecast that it will slowly be overtaken by WCDMA take-up. By the end of 2007, Indonesia will reach 78.7 million subscribers, with a penetration rate of 34%.

High-speed technology roll-out
A wave of WCDMA network rollouts is expected in most markets by the end of 2007, overtaking the number of CDMA2000 1x EV-DO networks.

In Asia-Pacific ten CDMA2000 1x EV-DO networks, 29 CDMA2000 1x networks, 43 W-CDMA networks, 26 HSDPA networks and 103 GSM networks have been launched commercially. These are cellular networks although there are fixed wireless networks adopting the same.

High-speed networks will gain momentum in most markets by the end of 2007. Wireless Intelligence forecast that WCDMA will reach over 75 million connections in Asia-Pacific by the end of 2007, about 29 million more than in 2006. GSM is going to gain over 184 million connections thanks to fast growth in India, China, Indonesia, Pakistan and Bangladesh.

Monday, February 12, 2007

IP and Ethernet transport and services spending up 36% over last year

Ovum-RHK posted its analysis of global fourth-quarter 2006 service provider switching and routing equipment sales. Revenues in 4Q06 grew to $2.5B overall, up 8 percent from last quarter and up 17 percent compared to one year ago.
"Alcatel and Cisco continue to experience strong growth, even in what is developing into a trend of hard-to-predict fourth-quarter spending. Juniper also experienced some significant growth in the core for the first time since 1Q06," said Mark Seery, Vice President, Switching and Routing, at Ovum-RHK. "Both IP and Ethernet over MPLS continue to grow strongly, driven by NGN transformation and the impact of video."

4Q06 highlights for technology-focused market segments:

  • IP/MPLS core = $535 million, up 19 percent versus 4Q05
  • IP/MPLS edge = $141 million, up 40 percent versus 4Q05
  • IP/Ethernet = $439 million, up 12 percent versus 4Q05

4Q06 highlights for application-focused market segments:

  • IP transport and services = $933 million, up 36 percent versus 4Q05
  • Ethernet transport and services = $885 million, up 35 percent versus 4Q05
  • Subscriber services/BRAS = $232 million, up 5 percent versus 4Q05