Stimulated by substantial investments in Internet protocol (IP) products and the increasing use of packaged software over custom-developed software, the market for next-generation operational support systems (NextGen OSS) is well positioned to grow. And grow it will. IDC estimates revenues will more than double from under $3 billion in 1999 to over $7 billion in 2004.
"Service providers` investments in IP products are fundamentally altering the network infrastructure. Adoption patterns of specific technologies such as broadband, wireless, and optical will have a formative influence on operational support system spending," said Elisabeth Rainge, program manager for IDC`s Network and Service Management research. "Additionally, the growing shortage of skilled networking professionals will compel service providers to choose commercial software over custom developing projects, which will further drive the market."
IDC splits the NextGen OSS market into the following segments: provisioning, assurance, and billing. Assurance, which includes applications and tools that monitor, tune, and report on the service-provider infrastructure, is the fastest-growing segment of the market. Revenues in this submarket will increase at a compound annual growth rate (CAGR) of 32% from 1999 to 2004, compared with a 19% CAGR for the overall market.
The provisioning segment will also grow faster than the overall market. "In the near term, provisioning revenues will have strong momentum as service providers build out and formalize broadband, optical, and wireless networks," Rainge said. Nevertheless, in 2003, the assurance segment will become larger than provisioning. Throughout IDC`s forecast, billing will be a stable but important component of the NextGen OSS software market.
IDC believes the overall market is very much in the development phase. Right now best-of-breed players and network equipment manufacturers, and consultancies are coming together to create OSS solutions, and coopetition is the norm. However, IDC expects competition to heat up soon, and service providers will be faced with challenges involving technology, customers, business modes, and industry structure.
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International Data Corporation (IDC)
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