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August 14, 2012

Cisco News - Manufacturers like Cisco Embracing Services as a More 'Holistic' Approach to Technology Delivery

By Jacqueline Lee, Contributing Writer

According to recent data from Infonetics Research (News - Alert), Cisco leads the manufacturer-provided service market, which is expected to grow to $25 billion by 2016. According to Infonetics’ directing analyst for enterprise networks and video, Matthias Machinowski, vendors are embracing a more “holistic” approach to technology delivery.

“Services already make up a sizable chunk of manufacturers’ overall revenue, and the share of services will grow robustly over the coming years,” said Machinowski in a statement released by Infonetics.

“One of the key growth segments is hosted services, which many vendors are starting to offer to deliver technology in any fashion, including both CPE (customer premises equipment) and cloud-based models, and to respond to shifts in customer preferences.”

For manufacturers, maintenance and support remains the largest engine of service-related revenue. However, these functions are growing more slowly than services like professional and hosted/managed services. In fact, Infonetics forecasts that these advanced services will grow at double-digit compound annual growth rates over the next four years.

While network infrastructure manufacturers are the primary gatherers of service-related revenue, Infonetics expects that communications vendors, like those who make video conferencing, unified communications and phone system equipment, will start to snatch up a larger share of service-related revenue.

Overall, global revenue from maintenance, support, professional services and hosted/managed services grew by nine percent to $17 billion last year.

In the manufacturer service-provider market, Cisco (News - Alert) is trailed by Avaya and Siemens (News - Alert). After the top three companies, the market is highly fragmented into hundreds of vendors who capture single-digit market share or lower.

All of this information comes from Infonetics’ Manufacturer-Provided Services for Enterprises report. The survey captures data from manufacturers of network infrastructure, security products and communications equipment who derive income from providing services to their enterprise customers.

Those companies, in addition to serving large enterprises, often serve small- and medium-sized businesses and governmental organizations as well.

Want to learn more about the latest in communications and technology? Then be sure to attend ITEXPO West 2012, taking place Oct. 2-5, in Austin, TX.  Stay in touch with everything happening at ITEXPO (News - Alert). Follow us on Twitter.

Edited by Rachel Ramsey

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