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Telcos, IT vendors compete for network services market: IDC

Telecommunications companies and information technology vendors are expected to compete heavily for the same Managed Network Services (MNS) market in the future, according to an International Data Corp report.IDC's latest report, entitled "Australian Managed Network Services 2003 - 2008 Forecast and Analysis: Telcos and IT Vendors Moving Up or Down the Value Chain," says the Australian MNS market will be worth AU$1.

Telecommunications companies and information technology vendors are expected to compete heavily for the same Managed Network Services (MNS) market in the future, according to an International Data Corp report.

IDC's latest report, entitled "Australian Managed Network Services 2003 - 2008 Forecast and Analysis: Telcos and IT Vendors Moving Up or Down the Value Chain," says the Australian MNS market will be worth AU$1.4 billion by 2008.

A compound annual growth rate (CAGR) of 14 percent is expected, with the market expanding at double-digit rates for the next five years.

IDC defines the market as including managed WAN, managed IP VPN and managed VoIP services.

The IDC report said the IP VPN market has outgrown the managed WAN market for the first time in 2003. The highest growth will remain in managed VoIP services, reaching AU$288 million by 2008.

"The latest developments in next generation network services have led to a dramatic change in market landscape and dynamics during the past two years with system integrators, equipment vendors and telecom carriers competing for the same MNS market," said IDC Research Program Manager, Telecommunications, Landry Fevre.

"Traditionally, organisations would have gone to a carrier for their voice/video requirements but it is not necessarily the case anymore today with IT suppliers, network integrators and equipment vendors entering the fray and building skills to provide managed network services including VoIP", " added Fevre.

The research shows that 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 co-operating and vying for the same business.

"The flagrant area of overlap and friction between IT vendors and telecom carriers is around convergence areas such as VoIP and IP video services," said Fevre.

Survey says CIO and IT managers are concerned more about operational issues on reducing costs and getting the most value in terms of network uptime and performance for a given price.