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Kristofer Kimbler


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New Opportunities in the SDP Market

Kristofer Kimbler, Executive Editor, The Moriana Group

SDP Market 2009-2012

The Service Delivery Platform (SDP) market has enjoyed substantial growth, from just $0.1 billion in 2002 to nearly $1 billion in 2008. In the recently published Analyst Report, SDP Market 2009-2012 Moriana (www.morianagroup.com) forecasts that, despite the current economic downturn, this market segment will steadily grow year-by-year and will exceed $3 billion in 2012, as the result of increasing mobile saturation in the emerging markets and growing penetration of broadband access services in the mature markets.

Not surprisingly, the SDP market segment has attracted all leading Network Equipment Providers, System Integrators and IT infrastructure suppliers as well as innovative Independent Software Vendors (ISVs) and Application Providers. Due to strategic importance of SDP investments, large Telecom and IT suppliers consider this relatively small market segment as key to their business, because it is ‘added value’ driving the sales of their core offerings. This is also becoming apparent for relatively new SDP players such as Huawei.

Even after the intense period of merger and acquisitions, including those happening among leading Network Equipment Providers (Alcatel-Lucent, Nokia-Siemens Networks) and Enterprise IT suppliers (Oracle-BEA-Sun), there is still healthy and intense competition in the SDP market. The recent Moriana market research has shown that there were over 300 SDP deployments by the end of 2008. Several innovative ISVs, such as Telenity successfully compete in this market by using their unique capabilities and differentiators and by focusing on specific markets and applications.

Drivers for SDP Market Growth

There are several factors that will drive the growth of Service Delivery Platform market in the coming years. Communication Service Providers (CSPs) will require more openness, extendibility and flexibility from such service platforms to quickly boost their service delivery capabilities and will be more alert in avoiding vendor lock-ins. This will also drive adoption of SDP for new classes of services including VoIP, IMS and NGN rich communications, IPTV, VoD, mobile commerce, mobile banking, mobile payment, mobile advertising, as well as convergent and real-time charging.

However, the most important SDP market growth is expected to be in the emerging markets. The global number of mobile subscribers will increase from 3.3 billion in the beginning of 2008 to over 5 billion in 2011-2012. This will mainly come from markets such APAC, LATAM and MEA. Due to the increasing saturation, Mobile Network Operators (MNOs) in these markets will no longer enjoy rapid revenue growth from expanding subscriber base.  They will have to find new ways of increasing ARPU through attractive service bundling, mobile content and advertising and advanced services to their prepaid customer base.

New SDP Opportunities in the Emerging Markets

Mobile content and messaging services, mobile commerce and money transfer, mobile advertising and real-time charging will be main classes of SDP applications in the emerging markets. Mobile Network Operators (MNOs) will also look for cost-efficient alternatives to traditional IN-based solutions for voice services including both Next Gen IN and VoIP platforms. There will be substantial growth from data services over mobile networks because in many places in Asia, Africa or Latin America wireless is, and for many years to come will be, the only access to Internet. 

According to the Moriana forecast, APAC will be the single biggest contributor accounting to nearly 50% of all SDP investments in 2012. Africa and Latin America are other geographical areas where the SDP market is poised to grow. For example, once the basic mobile voice service gets deployed, there will be demand for personalized content services (prayer time alerts, horoscope, etc.) and content download. Real-time charging, advertising, content downloads and mobile wallet-type services will have also significant impact on the SDP market growth in these regions.

For ISVs like Telenity, there is a great potential in providing a standard-based, pre-integrated SDP with set of ready-to-deploy services to Tier 2/3 MNOs in the emerging markets. These types of pre-packaged SDPs can both simplify the deployment and cut the CAPEX and OPEX costs for these MNOs. This concept will be obviously most attractive in the areas of value-added voice and messaging services, mobile content and real-time charging. However, the flexibility of SDP platforms will certainly allow agile vendors to provide many new attractive offerings in the areas of location-based services, mobile advertising or multimedia.

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