Lines drawn

According to Adrian Ho, Senior Market Analyst, Networking Research, IDC Asia/Pacific, "telcos across the region rolled out Managed Services offerings and made acquisitions to mitigate stagnant data revenue." He added that network equipment vendors pursue strategic tie ups with telcos, while IT service providers refreshed their managed services portfolio to mark their territory against new competitors."

While leading IT services vendors will continue to be seen as scion in this industry, IDC expects a flurry of activity to take place in the small and medium-sized business (SMB) sector, which will provide a unique selling opportunity for the telcos who are aggressively finding opportunities to expand their addressable markets. Mr. Ho adds, "There is a strong tendency for SMBs to opt for a single party for all their managed communications services need. Telcos who are the sole providers for managed connectivity will be the de-facto choice of many SMBs." This is also the canvas on which networking vendors have decided to actively develop strategic relationships with telcos across the region. Resale of networking equipment to Telcos for their managed service bundling amounted to US$94 million in 2004 and almost US$24 million in Q1 2005.

"Telcos must and have started to realize that they cannot be a one trick pony to thrive," said Mr. Ho. "A supermarket of managed services products is essential." IDC advises telecom operators to quickly form partnerships beyond the networking vendor community, and reach out to software vendors in order to successfully exploit the growth in VAMS like managed applications.

In Q1 2005, Managed Connectivity, Managed Networks and Internet Data Centres/Hosting were the largest three categories of Managed Services.