Changewave Research: Corporate Telecom Equipment Buying

ChangeWave Research: Corporate Telecom Equipment Buying

ChangeWave Research Report:

Corporate Telecom Equipment Buying Trends

Cisco Strengthens Domination Over Telecom Equipment Markets

Overview

This report presents the findings of an October 4 – 10, 2007 ChangeWave Alliance survey on corporate spending for telecom carrier, wireless & optical equipment. We also looked at the impact of video over the Internet on corporate network upgrade plans. A total of 431 respondents involved with telecom equipment purchases in their organization participated.

Bottom Line. Compared to our last survey in April, the current results point to a slight uptick in the corporate spending growth rate for wireless (up 1-pt) and telecom carrier equipment (up 4-pts). The picture for optical gear (-3) is not as dynamic, however, with the spending growth rate declining for the third consecutive survey.

A close-up look at these spending growth findings can be found on pages 4-5 of this report.

Leading Equipment Categories – Wi-Fi and WiMax. Wi-Fi (41%; up 5-pts) is the leading telecom equipment category companies have purchased over the past six months. And it also has the most momentum going forward (32%; up 8-pts). While WiMax (14%; up 2-pts) has a much smaller share of the telecom equipment market, looking ahead it also shows significant momentum (19%; up 4-pts).

Cisco Strengthens Its Domination Over the Telecom Equipment Markets

The current survey shows Cisco (CSCO) exercising an unprecedented – and still growing – level of domination over the telecom carrier, wireless and optical equipment spaces. Here’s a quick rundown:

Cisco Leads Among Telecom Carrier Equipment Vendors… Two-thirds (66%) of respondents say their company has purchased carrier equipment from Cisco over the past six months, a big 6-pt increase since April. Nortel (NT; 28%; up 5-pts), Motorola (MOT; 18%; up 6-pts) and Ciena (CIEN; 11%; up 6-pts) are also doing well in this space.

Looking ahead, Cisco (53%; up 1-pt) continues to lead in terms of future buying plans, but again Nortel (24%; up 6-pts), Motorola (18%; up 7-pts) and Ciena (9%; up 5-pts) show impressive momentum. We note that Carrier Access (5%; up 3-pts) shows signs of momentum among smaller equipment companies.

…Cisco Leads Among Wireless Equipment Vendors… Cisco (49%; up 1-pt) still holds a commanding lead as the top vendor for wireless equipment purchases. Nokia Siemens Networks (13%; up 3-pts) and Nortel (13%; up 2-pts) show some positive movement.

…And Cisco Leads Among Optical Networking Vendors. Cisco also holds an imposing lead in the overall optical networking market, with strong momentum (51%; up 6-pts) going forward. Alcatel-Lucent (19%; up 3-pts) and Fujitsu (10%; up 3-pts) also appear to show positive movement.

In terms of optical components, Tyco (8%; up 3-pts) has shown some strength over the past 6 months and is showing it over the next 6 months as well (6%; up 3-pts).

Video Over the Internet. We also asked about corporate network spending to handle increased demand for video over the internet. More than two-in-five (42%) say video over IP has caused an increase in their company’s network spending to improve capacity.

Once again, Cisco (56%; up 4-pts) is the equipment supplier seen as benefiting most from this increased spending – and it’s the fiber-optics upgrade that appears to have all the momentum in terms of solutions.

Summary of Key Findings

The ChangeWave Alliance is a group of 11,000 highly qualified business, technology & medical professionals in leading companies of select industries—credentialed professionals who spend their everyday lives working on the frontline of technological change. ChangeWave surveys its Alliance members on a range of business and investment research and intelligence topics, collects feedback from them electronically, and converts the information into proprietary quantitative and qualitative reports.

Helping You Profit From A Rapidly Changing World ™

www.ChangeWaveResearch.com

Table of Contents

Summary of Key Findings 2

The Findings 4

(A) Overall Equipment Purchasing Trends 4

(B) Leading Equipment Vendors 8

ChangeWave Research Methodology 15

About ChangeWave Research 16

I. The Findings

Introduction

Total Respondents (n=431)

Respondents Working in Companies That Purchase Telecom Carrier Equipment (n=176)

Respondents Working in Companies That Purchase Wireless Equipment (n=230)

Respondents Working in Companies That Purchase Optical Equipment (n=158)

(A) Overall Equipment Purchasing Trends

Telecom Equipment Spending Next 6 Months

(1) Question Asked: Let's focus on the future. Thinking about your company's spending on telecom carrier equipment, wireless equipment and optical equipment over the next 6 months – would you say your company intends to increase their spending, decrease their spending, or will spending remain the same compared to the previous 6 months?

Telecom Carrier Equipment

Slight Uptick in Telecom Carrier Equipment Spending… Among respondent companies that purchase telecom carrier gear, 39% say they plan to Increase their equipment spending over the next 6 months and 12% say it will Decrease. The net difference score (+27) represents a 4-pt improvement over our previous survey in April 2007.

Wireless Equipment

And a Slight Uptick in Wireless Equipment Spending Growth. Two-in-five (40%) who work in companies buying wireless equipment say spending will Increase over the next 6 months – 2-pts more than in April. Another 9% say spending will Decrease – 1-pt worse. The net difference score (+31) is a 1-pt improvement over the previous survey.

Optical Equipment

But Optical Equipment Spending Growth Slows. One-in-three (32%) respondents working in companies that purchase optical equipment say their spending will Increase – 4-pts less than previously, while 15% say it will Decrease (down 1-pt). The net difference score (+17) is down 3-pts from the previous survey.
Spending for Video Over IP Capacity Next 2 Years

(2) Question Asked: Is video over IP causing an increase in network-related spending at your company in order to improve capacity over the next 1-2 years? (n=431)

Current
Survey
Oct ‘07 / Previous
Survey
Apr ‘07
Yes, Significant Increase / 8% / 7%
Yes, Moderate Increase / 16% / 15%
Yes, Slight Increase / 18% / 24%
No Increase / 33% / 34%
Don't Know / 16% / 13%
Not Applicable/ No Answer / 10% / 7%

Video Over Internet Protocol. We We also asked about corporate network spending to handle increased demand for video over the internet. More than two-in-five (42%) say video over IP has caused an increase in their company’s network spending to improve capacity.

Telecom Equipment Categories

(3A) Question Asked: Which of the following categories of telecom equipment has your company purchased in the past 6 months? (Check All That Apply) (n=311)

Current
Survey
Oct ‘07 / Previous Survey Apr ‘07
Wi-Fi Equipment / 41% / 36%
VoIP Equipment / 40% / 41%
Optical Equipment / 31% / 30%
3G Wireless (TD-CDMA/1xEV-DO/HSPA) Infrastructure/Networking Equipment / 17% / 15%
3G Wireless (W-CDMA - including UMTS/3GSM/FOMA) Infrastructure/Networking Equipment / 17% / 21%
WiMAX Equipment / 14% / 12%
Don't Know / 14% / 13%
Other / 22% / 16%

(3B) Question Asked: Over the next 6 months, which of the following categories of telecom equipment will your company be purchasing? (Check All That Apply) (n=311)

Current
Survey
Oct ‘07 / Previous
Survey
Apr ‘07
VoIP Equipment / 36% / 38%
Wi-Fi Equipment / 32% / 24%
Optical Equipment / 28% / 30%
WiMAX Equipment / 19% / 15%
3G Wireless (TD-CDMA/1xEV-DO/HSPA) Infrastructure/Networking Equipment / 14% / 13%
3G Wireless (W-CDMA - including UMTS / 3GSM / FOMA) Infrastructure/ Networking Equipment / 14% / 13%
Don't Know / 28% / 24%
Other / 18% / 17%

Leading Equipment Categories – Wi-Fi and WiMax. Wi-Fi (41%; up 5-pts) is the leading telecom equipment category companies have purchased over the past six months. And it also has the most momentum going forward (32%; up 8-pts). While WiMax (14%; up 2-pts) has a much smaller share of the telecom equipment market, looking ahead it also shows significant momentum (19%; up 4-pts).

(B) Leading Equipment Vendors – It’s All Cisco

The current ChangeWave survey shows Cisco exercising an unprecedented level of domination over the telecom carrier, wireless and optical equipment spaces. The results also point to several other companies with momentum, and a few laggards.

We asked our respondents to tell us which vendors their company purchased specific types of telecom equipment from in the past 6 months and which ones they plan on using going forward for the next six months. Here’s what we found:

I. Telecom Carrier Equipment

Respondents Working in Companies That Purchase Telecom Carrier Equipment (n=176)

(4) Question Asked: From which of the following telecom carrier equipment vendors did/will your company purchase telecom carrier equipment (including new tech and applications) over the past 6 months/next 6 months?(Check All That Apply)

Purchasing
Past 6 Months / Purchasing
Next 6 Months
Current
Survey
Oct ‘07 / Previous
Survey
Apr ‘07 / Current
Survey
Oct ‘07 / Previous
Survey
Apr ‘07
Cisco / 66% / 60% / 53% / 52%
Nortel / 28% / 23% / 24% / 18%
Alcatel-Lucent* / 27% / 27% / 22% / 21%
Motorola / 18% / 12% / 18% / 11%
Avaya / 20% / 21% / 18% / 14%
Adtran / 16% / 13% / 13% / 13%
Juniper / 14% / 11% / 12% / 9%
Nokia Siemens Networks / 12% / 10% / 11% / 12%
Tellabs / 12% / 9% / 10% / 6%
Ciena / 11% / 5% / 9% / 4%
Ericsson (including Redback Networks) / 11% / 7% / 9% / 6%
ADC Telecommunications / 13% / 11% / 7% / 8%
JDS Uniphase / 9% / 4% / 6% / 5%
Tekelec / 5% / 4% / 5% / 3%
Huawei / 4% / 3% / 5% / 3%
Foundry Networks / 4% / 5% / 4% / 4%
Andrew Corporation / 5% / 5% / 4% / 4%
Harris / 3% / 6% / 3% / 3%
3Com / 5% / 7% / 3% / 4%
Alvarion / 4% / 3% / 2% / 3%
Other / 7% / 6% / 3% / 4%

Cisco Leads Among Telecom Carrier Equipment Vendors… Two-thirds (66%) of respondents say their company has purchased carrier equipment from Cisco over the past six months, a big 6-pt increase since April. Nortel (NT; 28%; up 5-pts), Motorola (MOT; 18%; up 6-pts) and Ciena (CIEN; 11%; up 6-pts) are also doing well in this space:

Looking ahead, Cisco (53%; up 1-pt) continues to lead in terms of future buying plans, but again Nortel (24%; up 6-pts), Motorola (18%; up 7-pts) and Ciena (9%; up 5-pts) show impressive momentum.

II. Smaller Telecom Carrier Equipment Vendors

(4A) Question Asked: What about smaller companies? From which of the following smaller telecom carrier equipment vendors did/will your company purchase telecom carrier equipment (including new technologies and applications), over the past 6 months/next 6 months? (Check All That Apply)

Purchasing
Past 6 Months / Purchasing
Next 6 Months
Current
Survey
Oct ‘07 / Previous
Survey
Apr ‘07 / Current
Survey
Oct ‘07 / Previous
Survey
Apr ‘07
Carrier Access / 7% / 5% / 5% / 2%
Zhone Technologies / 5% / 4% / 5% / 3%
Occam Networks / 3% / 3% / 3% / 3%
Metalink / 1% / 1% / 2% / 0%
Verso Technologies (including Verilink) / 1% / 0% / 1% / 1%
Other / 2% / 3% / 2% / 5%

Smaller Telecom Carrier Equipment Vendors. We note that Carrier Access (5%; up 3-pts) shows signs of momentum among smaller equipment companies.

III. Wireless Infrastructure/Networking Equipment

Respondents Working in Companies That Purchase Wireless Equipment (n=230)

(5) Question Asked: From which of the following wireless equipment suppliers did/will your company purchase wireless equipment/services – including WiMAX and WiFi equipment/services – over the past 6 months/next 6 months? (Check All That Apply)

Purchasing
Past 6 Months / Purchasing
Next 6 Months
Current
Survey
Oct ‘07 / Previous
Survey
Apr ‘07 / Current
Survey
Oct ‘07 / Previous
Survey
Apr ‘07
Cisco / 58% / 57% / 49% / 48%
Motorola / 20% / 22% / 18% / 17%
Nokia Siemens Networks / 13% / 12% / 13% / 10%
Nortel / 14% / 12% / 13% / 11%
Alcatel-Lucent / 14% / 13% / 11% / 10%
Ericsson (including Redback Networks) / 9% / 6% / 7% / 7%
Qualcomm / 7% / 9% / 5% / 7%
Harris Corp / 2% / 4% / 0% / 3%
Other / 7% / 5% / 4% / 3%

…Cisco Leads Among Wireless Equipment Vendors… Cisco (49%; up 1-pt) still holds a commanding lead as the top vendor for wireless equipment purchases. Nokia Siemens Networks (13%; up 3-pts) and Nortel (13%; up 2-pts) show some positive movement.

IV. Smaller Wireless Infrastructure/Networking Equipment Vendors

(5A) Question Asked: What about smaller companies? From which of the following smaller wireless equipment suppliers has/will your company purchased wireless equipment/services – including WiMAX and WiFi equipment/services – over the past 6 months/next 6 months? (Check All That Apply)

Purchasing
Past 6 Months / Purchasing
Next 6 Months
Current
Survey
Oct ‘07 / Previous
Survey
Apr ‘07 / Current
Survey
Oct ‘07 / Previous
Survey
Apr ‘07
Alvarion (ALVR) / 4% / 4% / 5% / 6%
Airspan Networks (AIRN) / 3% / 4% / 4% / 4%
Proxim Corp (PROXQ.PK) / 3% / 5% / 3% / 5%
Wi-LAN Inc. (Toronto: WIN) / 2% / 2% / 1% / 0%
Ceragon Networks (CRNT) / 1% / 0% / 1% / 0%
Other / 3% / 1% / 2% / 1%

V. Optical Networking Vendors

Respondents Working in Companies That Purchase Optical Equipment (n=158)

(6) Question Asked: From which of the following optical networking vendors has/will your company purchased optical equipment/services over the past 6 months/ next 6 months? (Check All That Apply)

Purchasing
Past 6 Months / Purchasing
Next 6 Months
Current
Survey
Oct ‘07 / Previous
Survey
Apr ‘07 / Current
Survey
Oct ‘07 / Previous
Survey
Apr ‘07
Cisco / 58% / 48% / 51% / 45%
Alcatel-Lucent* / 22% / 20% / 19% / 16%
Nortel / 24% / 24% / 16% / 22%
Ciena / 11% / 8% / 10% / 10%
Fujitsu / 10% / 8% / 10% / 7%
ADC Telecommunications / 13% / 8% / 7% / 7%
Motorola / 10% / 9% / 7% / 8%
Tellabs / 10% / 11% / 6% / 10%
Ericsson (including Redback Networks) / 7% / 8% / 5% / 8%
Hitachi / 3% / 3% / 4% / 3%
NEC / 6% / 3% / 3% / 2%
Other / 3% / 5% / 1% / 4%

…And Cisco Leads Among Optical Networking Vendors. Cisco also holds an imposing lead in the overall optical networking market, with strong momentum (51%; up 6-pts) going forward. Alcatel-Lucent (19%; up 3-pts) and Fujitsu (10%; up 3-pts) also appear to show positive movement.