Bookmark this article!
In May we did a quick roundup of industry analysts’ predictions for the Network Policy Control market. Fearless prognosticators that they are, the analysts took a shot at pegging a market growth rate for 2013. For convenience, I’ll repeat those predictions here:
|Analysts||2013 growth estimate|
|Frost and Sullivan Stratecast||~20%|
|Infonetics Research (DPI)||31%|
With half the year gone, how are the estimates holding up?
There are many vendors in our market, including some integrated network equipment providers that don’t separately report results for the Network Policy Control aspect of their business, so arriving at a true “market” growth rate is an imperfect science to be sure. However, the three main vendors who focus exclusively on best-of-breed Network Policy Control solutions (Sandvine, Allot and Procera) have all reported second quarter results, so those results can serve as a proxy. So far, it appears that the analysts have overshot. According to Azi Ronen’s Broadband Traffic Management blog (and verified by Sandvine’s calculations), “Total revenues for the 3 vendors during the first half of 2013 were $125.8M, compared to $116.3 in the same period of 2012 (+8.2%).” Only Sandvine has hit analysts’ average expected growth rate (26%) and as a result, has top market share in the period (39%).
One potential reason for the difference could be Sandvine’s relatively greater focus on “Service Creation” – turnkey, end-to-end solutions that automate the creation, management and real-time, enforcement of network policies that support new, innovative service offerings for subscribers. As these policy solutions enhance ARPU for service providers and choice for consumers, Sandvine has made the bet that they are inherently more strategic to the service providers’ success, particularly as their traditional revenue streams (voice, SMS, video) are under attack from OTT Internet applications. Nearly half of Sandvine’s software order value in recent periods relate to Service Creation solutions. Comparable figures are not available from the other vendors.
Another potential explanation is “lumpiness”. All three companies are relatively small and results are disproportionately affected by the largest orders from the largest customers. Timing of these orders is largely determined by the customers’ schedules, not the vendors. So, results can (and do) vary significantly between quarters. Finally it is also important to note that all three companies have indicated that second half revenue should be higher than that in the first half, but those results will also be compared to year-ago results that generally would have followed the same pattern. It remains to be seen what that will mean for the market growth rate at year-end, but we will wind up the roundup then.
Bookmark this article!