Telecom Strategies and Trends
International expansion, unified communications and cloud-based services are driving the demand for managed LAN services as business customers seek to homogenise and upgrade their infrastructure or else outsource the management of their existing network infrastructure to managed service providers so that they can cut down on operational and personnel costs and concentrate on their core activities. For a managed LAN service that includes the infrastructure, around 50% to 70% of the total contract price goes into hardware costs and so business customers and service providers alike are seeking cost-saving strategies in this area in order to respectively lower down their monthly OPEX and protect their margins. The TS&T issue on “Strategies and trends in Managed LAN and WLAN services” discusses some of these cost-saving strategies. Some companies like HP attempt to innovate on pay-per-use models in order to increase revenues from the service through an on-demand type of offer. Nonetheless, the market for managed LAN services currently remains a low differentiation and low margin area for services providers.