Vendor strategies in the IMS ecosystem - Finding the right niche

> Opinion Paper Vendor strategies in the IMS ecosystem - finding the right niche 2008 / 06 www.detecon.com Vendor strategies in the IMS ecosystem Table of Contents 1 Management Summary ....................................................................................... 3 2 A new market for vendors and systems integrators ............................................ 4 3 Sourcing models for a complex system .............................................................. 5 4 A glance on the current supplier market ............................................................. 7 4.1 Flexible partnering, flexible approaches...................................................... 7 4.2 The allure of end-to-end solutions............................................................... 8 4.3 The telcos’ know-how and their sourcing decisions .................................... 9 5 Ecosystem strategies ........................................................................................ 11 6 Reading on........................................................................................................ 12 7 The Authors....................................................................................................... 13 8 The Company.................................................................................................... 14 Opinion Paper 2 Detecon International GmbH Vendor strategies in the IMS ecosystem 1 Management Summary The market for the IP Multimedia Subsystem (IMS) is emerging and promises substantial growth. Due to the modular, component-based architecture, specialized vendors can position themselves in the market next to the established large telco suppliers and IT players. From a network operator’s perspective the dynamic nature of the supplier market facilitates three archetype sourcing models – direct best-of-breed sourcing, sourcing via a systems integrator, or choosing an integrated end-to-end solution from a single supplier. In order to understand the current nature of the IMS market, we have performed a study among vendors and systems integrators. Our aim was to understand their partnering behavior and go-to-market approaches. Combining our findings with recent academic research, we can draw conclusions about the future dynamics of the IMS ecosystem. Vendors and systems integrators interviewed in our survey show a very flexible approach to partnering, supporting all three sourcing models. The current utilization of their sales channels, however, suggests that due to a lack of IMS know-how, operators favor end-to- end solutions, frequently provided by one of the experienced large network equipment providers. As the operators’ IMS knowledge grows, the vendor ecosystem is expected to evolve from its current tightly coupled constellation towards more flexible solutions based on tactical vendor partnerships and quick component interoperability. In the long-term, however, the telcos’ sourcing preferences are assumed to stabilize around loosely coupled ecosystems centered on a few large vendors and SIs. Opinion Paper 3 Detecon International GmbH Vendor strategies in the IMS ecosystem 2 A new market for vendors and systems integrators The IP Multimedia Subsystem (IMS) finally seems to become reality. After years of ongoing standardization and early trials, first real installations seem to be at hand and the forecasts for the market for the telcos’ new signaling architecture show significant growth over the next few years. The IMS is supposed to be the intelligent control center of next generation networks (NGN) for telcos and shall serve many purposes. Linking easily created, innovative multimedia The IP Multimedia Subsystem services with converged access and transport networks, the IMS serves as the flexible signaling core between the upper and lower The goal of the IMS is to have a layers of NGNs. The promises for operators are converged, IP-based network manifold. On the one hand, the IMS shall be the architecture for both voice and data single, efficient IP-based signaling network. On services. Access independence is the other hand, it is supposed to help network achieved by using the same underlying operators avoid being the bit-pipes in a margin- signaling architecture for different wireline squeezing battle for the cheapest access and wireless access modes. Services on provision. With an IMS in place, telcos have a top of the IMS profit from the unified platform to compete against the flurry of architecture and allow the users to communication services delivered via the open experience seamless mobility. The IMS Internet. shall replace the current multitude of service-specific stovepipes which often comprise many redundant functions. Driven by operators embracing IMS, the emerging market for IMS components is highly The architecture of the IMS is layered dynamic and new players are entering the and modular. Access-, transport- and arena. Many vendors have IMS components signaling network, and the other and services in their portfolio, among them not subsystems such as application platforms just traditional telecom suppliers but also IT- and user databases constitute based companies. To set a strategic course in components with standardized interfaces. the new surroundings, it is important for vendors and systems integrators to assess the forming IMS vendor ecosystem. Which players are in the arena? How do they work together? Who dominates the value network? In this Detecon Opinion Paper we will propose possible ecosystem models, present the results of a recent study among vendors and systems integrators in the market, and discuss the implications for IMS vendors and systems integrators. IMS and components Charging components Application User profile platform(s) server QoS / policy IMS core components Other IMS / components (SIP-based signaling heart of IMS) PSTN networks User Access network- Transport network- Device related components related components Figure 1: IMS and components Opinion Paper 4 Detecon International GmbH Vendor strategies in the IMS ecosystem 3 Sourcing models for a complex system The modular, component-based architecture of the IMS enables vendors to focus on a certain part of the system. With the components’ interfaces defined by 3GPP and other standardization bodies, the specialization enables component evolution while maintaining interworking functionality. In addition to a multitude of specialized vendors (among them many young companies), the large Network Equipment Providers (NEPs) have positioned themselves with rich IMS portfolios comprising many components in end-to-end solutions. The overall complexity of the IMS and the well-known fact that “product decomposability does not necessarily entail knowledge decomposability” 1 renders integration services necessary – someone must put the pieces back together. Sourcing models for IMS components Telco Telco Telco Systems Integrator NEP component vendors Direct model SI model OEM model Figure 2: Sourcing model archetypes Which kind of sourcing model does this situation imply from a telco’s perspective? Three “archetype”-like scenarios are conceivable for the IMS (see figure 2): • Direct sourcing of IMS components by telcos is one end of the spectrum. Operators choose their favorite component vendors with a best-of-breed approach and perform the systems integration themselves. The upsides of this scenario are clear – telcos can avoid dependencies and source from the top performing vendor. The flexibility of direct sourcing is maximal. However, integration work is complex and requires a significant level of knowledge about the IMS. The operator bears the risk of interoperability problems between the different vendors. 1 Dosi, Giovanni; Hobday, Mike; Marengo, Luigi; Prencipe, Andrea: The economics of Systems Integration - Towards an Evolutionary Interpretation. In: The Business of Systems Integration. Oxford Scholarship Online, Monographs, 2003, p.