Vendor strategies: Tellabs fights back against larger full-service rivals Market Research Report
Tellabs is a vendor in transition
Tellabs is a vendor in transition. The company has been moving in a new direction since naming a new CEO in early 2008. As part of its new strategy, Tellabs realigned its product lines and marketing organization to focus on specific market applications for optical networking, mobile backhaul, business services, and professional services where its products best fit. This is in direct contrast with network infrastructure vendors that have pursued a growth strategy based on full-service breadth. Recent results have validated Tellabs' approach: it was one of the few vendors to actually increase its operating profits in 2009. Ovum is encouraged by the company's next-gen products and its prospects for growth in the mobile market beyond backhaul. Its optical networking, IP/Ethernet, and broadband access product lines provide good solutions that the company sells to tier-1 and tier-2 markets in North America, EMEA, Asia-Pacific, and SCA. It counts 43 of the top 50 global operators as customers.
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Executive summary
In a nutshell
Ovum view
Tellabs' specialist approach has boosted profitability
Key messages
Being small but nimble, with a focus on growth markets, allows Tellabs to compete with larger rivals
Tellabs is leveraging strength and relationships gained in mobile to move up the value chain
Tellabs is back in bandwidth management, long a strong point
Market position
Analysis of competitive position
Tellabs is a specialist infrastructure vendor
Tellabs' strategy to exit unprofitable business appears to be working
Tellabs is evolving from TDM to IP
Strategy
Strategic objectives
Tellabs' goal is to provide innovative connectivity solutions addressing the highest-growth applications for global network operators
Strategy implementation
Tellabs has reorganized and refreshed its strategy for a new market reality
Market strategy
Tellabs' market strategy is to focus on mobile, ON, and business service applications
Overview of Tellabs' services and product strategy
Customer service strategy
Tellabs moving to expand its ICT service capabilities
Product strategy
Tellabs R&D focused on next-gen products for high-growth markets
OTS 7100 metro ROADM evolution aims to pick up where the 5500 DCS left off, as Tellabs' flagship product
Carrier Ethernet lowers cost and adds next-generation functionality across Tellabs' product set
Tellabs redirects GPON to higher-margin applications
IP/MPLS is a key piece of Tellabs' product migration strategy
Tellabs is expanding into new mobile applications
Tellabs focuses its solutions on the hottest markets
Mobile solutions expand beyond backhaul into mobile packet core
Tellabs has a long history providing mobile backhaul
Tellabs expands presence to mobile packet core
Business solutions accounts for a growing part of Tellabs' revenues
Enterprise networking and government defense infrastructure are the key applications
Tellabs' packet-optical solutions underpin its strength in transport
Financial highlights
Tellabs is financially strong and stable
IP/MPLS and metro WDM driving Tellabs growth
New products replacing legacy cross-connect business
Edge IP/MPLS is a healthy business for Tellabs
Tellabs is an increasingly stronger player in the North American metro WDM market
List of Tables
Table 1: Ovum's overall rating of Tellabs
List of Figures
Figure 1: Tellabs' mobile solutions
Figure 2: Tellabs' business solutions
Figure 3: Tellabs' optical solutions
Figure 4: Select vendor operating profit margins, 2008 vs. 2009
Figure 5: Tellabs' rolling 4-quarter equipment sales by segment, 1Q07-4Q09
Figure 6: Edge IP/MPLS annualized revenues and quarterly sales growth, 4Q05-4Q09
Figure 7: Global edge IP/MPLS rolling 4-quarter market share growth versus prior quarter, 1Q08-4Q09
Figure 8: Tellabs' metro WDM market share by region, 2009
Figure 9: North American metro WDM market share changes, 2008-09
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www.visionshopsters.com Vendor strategies: Tellabs fights back against larger full-service rivals Market Research Report
By: Visionshopsters
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