MSP Today Expert Feature
July 27, 2011

Visiongain Report Predicts Managed Services Market Will Reach $86 Billion by 2016

A new report from Visiongain predicts the managed services market will reach $86 billion by 2016. “Managed Services in LTE (News - Alert) Era Report 2011-2016” looks at the market for managed services with particular reference to the Long Term Evolution (LTE) boom.

The Visiongain research examines managed services growth, market sizing and analysis of managed services provider (MSP) prospects within the 2011-2016 timeframe. The report predicts growth from the 2010 market, which was around $55 billion.

The company specifically sees the LTE market as a high growth category within the mobile industry, with revenues predicted to grow to $68 billion by 2016. According to Visiongain (News - Alert), infrastructure vendors are tailoring their managed services offerings alongside their LTE product portfolios to capitalize on the momentum, with tier 1 vendors vying to take an early movers advantage with LTE managed services.

3GPP Long Term Evolution (LTE) is a standard for the mobile phone technology tree responsible for GSM/EDGE and the UMTS/HSPA network technologies. It is associated with the 3rd Generation Partnership Project (3GPP) and is a set of enhancements to the Universal Mobile Telecommunications System (UMTS). Much of the latest release of the standard focuses on 4G technology including an all-IP flat networking architecture.

Visiongain sees managed services contracts continuing to grow in size, tenure and value this year, with new contracts having a major impact on the wireless value chain and on wireless operators specifically. The report also examines managed services strategies for mobile network operators (MNOs) planning to deploy LTE. MNOs must adopt a lean business model and overcome their inherent organizational limitations within the LTE model, according to Visiongain, in order to reduce the payback period and maximize profits while also remaining competitive.

The report also finds that operators throughout the world are embracing managed services, and particularly in the EMEA region as well as Asia Pacific and emerging markets in India and China. In contrast, many US carriers see networks as a source of competitive advantage and are hesitant to launch a managed services strategy. Visiongain predicts those carriers will manage networks in-house through 2013 with LTE deployment offering the cost savings required to increase Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) levels.

The company predicts that with a well structured and executed managed service for LTE, networks will deliver from 10 to 20 percent in OpEx savings, which could have a real effect of increasing EBITDA by eight percent in some cases.

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Edited by Jennifer Russell