The worldwide USD +36bn market increment will be split rather equally at the regional level with Asia Pacific generating USD +11bn, North America +11bn, and Europe +8bn increments by 2018. Different underlying drivers will characterize these regions, however, with investments in AP focusing mostly on new infrastructures while those in Europe and North America often targeting the upgrade of existing infrastructures.
Interesting is also the degree of market concentration in the various segments of the Networks market, with the top five companies in the CSP segment generating 62% of market revenues and the top five companies in the ENE segment generating 67% of market revenues. This high market concentration can be partly explained by the huge bulk investments needed to enter these segments, often representing a barrier to entry. Big market players will have the chance to leverage their dominant position to strongly invest in R&D activities and product development (e.g. investments in 5G technology) to lead the way in the future of the Networks market.
The Communications Service Provider segment (e.g. mobile infrastructure, Wi-Fi hotspots) is the biggest segment of the Networks market, accounting for 66% of the overall Networks market in 2015 (USD 165bn) and growing at the fast rate of +5.4% CAGR. This segment in the next few years will go through some major changes. Determinant in the mobile infrastructure space will be the transition from 2G/3G to LTE/4G technology as well as the first 5G infrastructure pilots and tests to be run. Furthermore, small cells will be increasingly deployed for carrier Wi-Fi hotspots in the near future, due to increasing demand and for cellular network coverage.
Enterprise Networks (accounting for USD 47bn in 2015 and growing at a +3.4% CAGR) will be impacted by a rather dynamic technology landscape, with network security equipment driving growth due to increasing demand for firewall and VPN equipment. In an increasingly connected world, network security will be a determining factor for business success, creating new opportunities for the companies operating in this market.
On the Unified Communications side, latest telephony and conferencing solutions are renewing the networks communications landscape. Overall, this segment accounted for USD 37bn in 2015, with CAGR forecasts of +2.7%. A new characteristic for this segment is the increasing switch of premises-based solutions to cloud-based solutions.
Changes in these segments will strongly influence the overall development of the Networks market, therefore impacting their supply chain solutions. There will be an increase in the need for end-to-end supply chain solutions for Mobile Infrastructure Networks including light assembly, local staging, and spare parts management. At the same time, investments at the global level will differ in supply chain requirements, with emerging markets demanding new networks infrastructures and mature markets focusing on networks improvement.