Telecom Infrastructure Developers Turning Software-Centric - Analyst Blog

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The telecom infrastructure developer's market is witnessing a technical change globally. So far the main thrust of the communications service providers was on developing advanced hardware, which would enable them to attain enhanced speed, scalability and reliability.

However, recent developments suggest that operators are gradually shifting focus from a hardware centric growth model to an IT/software centric one. The primary reason behind this shift is the significant growth of cloud-based virtual networking.

Massive growth of software-defined networking (SDN) and network function virtualization (NFV) encouraged newly emerging digital media companies to invest heavily in the communications infrastructure market. SDN facilitates customers enjoy increased bandwidth utilization, higher reliability and reduced capital spending.

NFV is designed to consolidate and deliver the networking components needed to support a fully virtualized infrastructure - including virtual servers, storage and other networks.  It utilizes standard IT virtualization technologies.

According to a recent research report of IDC, the global SDN market size is likely to reach $8 billion mark by 2018 compared with $960 million in 2014. Using SDN, data centers and enterprise networks can enjoy automated network provisioning, network virtualization and network programmability to bring efficiency and agility of the network. 

As the internal dynamics of telecom vendor market is shifting towards software centric approach, the traditional large network hardware developers are facing severe competitive threat. On the other hand, IT/software telecom vendors like VMWare Inc. ( VMW ), Citrix Systems Inc. ( CTXS ), Juniper Networks Inc. ( JNPR ), Ciena Corp. ( CIEN ) and ConteXtreme are expected to gain from the new trend.   

Large business enterprises generally have operations throughout the world. A strong and robust wireless network is essential for these companies to maintain connections with remote sites.

Thus, cloud-managed infrastructure has become indispensable for these large business houses as it offers several advantages like central manageability, smaller physical footprint and linear scalability. 


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: VMW , CIEN , JNPR , CTXS

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