The latest developments in next generation network services have led to a dramatic change in market dynamics during the past two years with system integrators, equipment vendors and telecom carriers competing for the same managed network services (MNS) market.
IDC has positioned six different vendors — Telstra, Optus, AAPT, IBM, Dimension Data and HP — that all have different backgrounds, heritage and go-to-market strategies but now find themselves vying for the same business. The MNS market dynamics have become more complex for carriers and IT vendors who find it difficult to move up or down the value chain by competing instead of cooperating.
As competition intensifies and margins shrink, the Australian market is already seeing consolidation such as IBM’s recent acquisition of Logicalis’ A/NZ operations for $88.5 million. This provides IBM with additional skills at the lower level of their service value chain — especially in convergence areas like VoIP or IP video.
Taking a different direction and looking to go higher in the value chain is Telstra’s acquisition of the Kaz Group for $333 million. IDC believes this IT-centric acquisition is stretching Telstra into the business process outsourcing (BPO) market but its existing managed network services offering needs clearer definition and strengthening.
The challenge for both organisations in the next 12 months will be the retention of Kaz employees and the integration of Kaz with the other end of the spectrum, the almighty tier one Telstra and its semi-annual morphing organisation. The flagrant area of overlap and friction between IT and telecom vendors is around convergence areas such as VoIP and IP video services. Traditionally, organisations would have gone to a carrier for their voice/video requirements but it is not necessarily the case anymore with network integrators and equipment vendors entering the fray and building skills to provide managed services.
The enterprise convergence phenomenon is taking place with companies deploying IP PBXs and all providers are looking to take a share of the converged LAN market.