Wednesday, May 21, 2008

Euro Telcos: Managed LAN Contracts Up

Looking at 177 major enterprise deals signed by European telcos in the second half of 2007, Forrester Research analyst Phil Sayer finds a dramatic increase was in managed local area network services, from seven percent in the first half of the year up to to 13 percent in the second half.

That doesn't necessarily mean desktops. There was a big drop in the number of deals including desktop services.

The the most unexpected trend, Sayer says, was the reduction in the number of deals including managed audio and video conferencing.

Managed audio and video services were present in only one percent of deals, compared with four percent in the first half of the year.

The percentage of converged deals, those with both telecom and an IT services component, was up from 22 percent to 27 percent.

The number of deals was up significantly from the 120 signed in the first half of the year.

The total contract value fell to €2.1 billion, down from €2.6 billion in the previous half-year, because the average deal size shrank, the number of small contracts increased, and there was a big drop in the number of "megadeals".

Large telcos have more than dabbled in the managed IT services arena for some years, with mixed success. Going forward, though, there is little doubt that they will have to do better in that regard. Volume-wise, more business in the consumer segment is going to be taken by cable companies and other mass market specialists.

In the SME space, small specialist firms will continue to compete effectively based on "local touch" and "local presence." But large tier one providers will continue to have the best position in global deals needed by large trans-national businesses.

As all communications and computing-based applications reach further towards the actual end user devices, more control and management is needed. So tier one providers have no choice but to reach past the traditional points of demarcation and support applications and software running on all sorts of end user devices.

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