Forecast: Revenue from services in support of enterprise customer premises expected to increase

March 17, 2005 - TIA report says revenue expected to reach $284 billion this year.

Revenue from services in support of enterprise customer premises and network systems equipment totaled $246.5 billion in 2004 and is expected to increase 15.2% to $284 billion this year, according to the TIA's 2005 Telecommunications Market Review and Forecast.

Healthy double-digit growth is predicted to continue at a 15.2% compound annual growth rate (CAGR) from 2005-2008, reaching $433.6 billion in 2008.

The market for services in support of customer premises equipment (CPE) and enterprise network systems has grown dramatically in recent years and is expected to continue, driven by spending on voice and data equipment. Convergence, development of new products and technologies, adoption of open standards and increased interoperability of equipment from different vendors have increased the options available to enterprise network managers. These developments have also increased the expertise needed to design, integrate and customize systems to meet enterprise needs.

In a parallel trend, enterprises have been outsourcing nonessential corporate functions to reduce overhead, provide greater flexibility and improve profits. Information technology has increasingly been outsourced. As a result, enterprises have turned to professional service providers to help them design, install, maintain, repair, integrate and support CPE.

"With the evolving communications industry and the rapid changes in telecommunications technology, it is difficult for businesses to rely solely on in-house staff to keep up with the latest developments, available options and solutions," says TIA President Matthew Flanigan. "Converging solutions, new technologies and the need to integrate products from different vendors into customized solutions have led companies to seek professional expertise.

"We will continue to see steady growth in this area of the market," Flanigan continues. . "In addition, we will see an increase in maintenance services revenue for converged networks because of the additional network support required to sustain reliability and quality of service for voice applications."

Spending on services supporting enterprise network systems made up 83% of this market segment with $204.3 billion in spending in 2004, compared with $42.2 billion for CPE services, according to the report.

Furthermore, services spending to support enterprise network systems will continue to outpace that for CPE support services, with a CAGR of 16.1% vs 10.3%. Services spending in support of enterprise network systems is projected to reach $371.1 billion in 2008, while an estimated $62.5 billion will be from CPE support services.

The TIA is based in Arlington, VA. For more information visit www.tiaonline.org.


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