Software : An Untapped Revenue Source For Network Element Vendors
Ovum surveyed major telecom equipment vendors to gauge their views on how they package
, market, and sell network equipment software. Vendors are still struggling to move software development from an overhead to a profit center model.
Table of Contents
Executive summary
In a nutshell
Ovum view
Key findings
No one has figured out a software business model for network telecom equipment
Software is a critical element of network telecom equipment sales
Element layer software is treated differently than management layer software
Software maintenance is most often provided as part of an annual maintenance contract or subscription
Market analysis
Software products survey overview
Software is key, but it remains a cost, not a revenue center
Breadth of software provided
Importance of telecom equipment software
Software as a profit center
Software is homegrown
Software packaging and pricing strategies
Approaches depend on type of software
Remote activation of software functionality
How vendors charge for software varies significantly
Element layer software is rarely bundled with management software
Most vendors consider control plane software to be part of the element layer software
Most vendors charge per network element for software licensing
New element layer software is provided once or twice per year
Software revenues as a percentage of system sales
How vendors organize software development groups
The management layer software opportunity
Additional revenues possible for value-added features
Management layer pricing models
Multivendor interoperability is limited
Software maintenance contracts increase margins
Competitive perspective: nobody has worked out their software business model
List of Figures
Figure 1: What types of software do you provide for your telecom network equipment?
Figure 2: How important is software to your overall product line strategy?
Figure 3: Do you view telecom equipment software as a profit center or as overhead for your NE P&L center?
Figure 4: Are software sales allocated to a separate profit/loss center from the NE P&L?
Figure 5: Is element layer software (NE operating system and control plane software) treated differently than management layer software?
Figure 6: On what do you base your charging model?
Figure 7: Is element layer software provided on a stand-alone basis or is it bundled together with management layer software?
Figure 8: Do you consider control plane software (if you offer it) to be part of element layer software or a separate product?
Figure 9: How vendors charge for element layer software
Figure 10: How often do you provide major software releases?
Figure 11: Percentage of total systems sales typically related to software
Figure 12: How vendors charge for management layer software
Figure 13: Vendor strategies for multivendor element management
Figure 14: How vendors sell software maintenance
Figure 15: If you charge annual RTU fees, is software maintenance included?
Figure 16: Frequency of software upgrades
Figure 17: How telecom equipment software is delivered
Figure 18: What percentage of total systems sales is related to software maintenance?
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