Just as the telecom industry has not been as hard hit by the current economy as it was by the dot-com-led bust in 2000, neither is it likely to experience the same exhilarating growth rates when things turn in a more positive direction next year as research firm Analysys Mason says it will.
But grow it will, and with it will go the service assurance market. Analysys Mason analyst Patrick Kelly said in his recent “Service Assurance Market Review – June 2009,” he sees a 5.3 percent compound annual growth rate (CAGR) for service assurance through 2013, pushing the market from a worth of $2.28 billion last year to $2.94 billion.
“The growth rate is not setting the world on fire at just over 5 percent,” Kelly said. “But it is better than this year which we expect to be a down year.”
Kelly said the economy will start to improve later in 2009, but that we will be well into 2010 before the spending shows up. “In a market where you are seeing less growth overall, it becomes even harder to justify an investment,” he said.
Growth over the next few years must overcome a 2.3 percent decline this year that will extend into the middle of 2010.
Despite the boom in mobile data service revenue, overall services revenue is not growing as fast as expected, Kelly said, and that ripples through to a cutback in spending on equipment, since additional capacity is not required and that, in turn, ripples through to software sales.
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“Mobile data services are growing at double-digit rates, but it is a small segment of the overall marketplace at this point. It is a high-growth segment, but in the relative scheme of a $1.4 trillion marketplace, it doesn’t really move the needle,” Kelly said.
Spending is tied to growth and two-thirds of the spending comes from North America and the EMEA region — markets still in a recession and not expecting much in the way of GDP growth next year. “It’s dramatic how much the economy fell off in the fourth quarter of 2008 and first quarter of 2009. [We’ve] never seen a deceleration at the rate we have seen it in the last two quarters,” Kelly said.
