Lucent Technologies Identifies Potential $10 Billion Market for U.S. Carriers that Offer Converged Services to Enterprises and Consumers
First annual Lucent Converged Services Survey finds that youths, power users and employees requiring frequent interaction with workgroups make up bulk of opportunity
FEBRUARY 08, 2006, Murray Hill, N.J. — U.S. service providers can tap a market potentially worth almost $10 billion a year by offering personalized services that blend voice and data applications across fixed and mobile networks, according to results of the first annual Lucent Technologies Converged Services Survey.
Lucent Technologies launched the study to help the company and its service provider customers understand and evaluate the market for the personal services that can be enabled by an IP Multimedia Subsystem (IMS)-based network.
“Our body of research, including this study, indicates individuals want services that match their behavior, their lifestyle, instead of services driven by traditional market segments,” said John Giere, chief marketing officer, Lucent Technologies. “The potential $10 billion converged services market is one of the opportunities that’s driving the broadcast TV, Internet and telecom worlds to converge at the individual level, leading to the blending of real-time and non-real time services.”
The converged services market estimate is based on a projected offering of several bundles of services customized to fit the needs of specific market segments identified in the research and priced at $10 to $35 a month. The pricing and the projected take rates were derived from a combination of survey responses from 1,250 people and related business modeling.
Lucent’s research indicates that the types of applications that have the greatest value, depending upon the segment, are those that offer integrated communications, rapid real-time response that enables impromptu conversations and spontaneous collaboration capability.
“This research suggests that integrated packages of multiple services will generate the most revenue for service providers, even at higher price points, due to the value of personalized services,” Giere said. “And in the deployment of multiple, blended, personal voice, video and data services is where IMS can make a great difference to a service provider’s revenue and expenses.”
“Ultimately, the promise of IMS is tied to the notion of next generation applications and the service agility it can provide to help carriers achieve the same degree of feature richness, accessibility, and ease of use that’s associated with the Internet,” said Tom Valovic, IDC’s program director of VoIP Infrastructure. “For this to happen, equipment suppliers and carriers need to adopt a more proactive stance in terms of identifying end user needs and future requirements. The kind of extensive research that Lucent has conducted to develop service usage patterns while considering the nuances of pricing, demographics, and cultural adoption, will help address these important industry wide issues.”
Lucent is sharing detailed results of the research with its service provider customers to help them tailor their service introductions for specific markets.
People indicating most interest in blended services include “road warriors” at large companies who want a centralized database for communications needs (email, voicemail, addresses, etc.); customer service employees at mid-size companies who need real-time communications to meet customer needs; individuals in younger demographics — teens and those in their early 20s — who find spontaneous communications, such as click-to-conference, appealing and so-called power consumers, generally older professionals, who rely heavily on the phone but would like to be able to use it even more for multimedia communications.
The research shows that companies and other enterprises offer the greatest potential market for converged services, with the potential to reach an estimated $5.6 billion a year within five years after the services are introduced. The consumer market for these services has the potential to reach a projected $4.2 billion in that same time period.
“Lucent’s findings appear consistent with Pyramid’s own research and analysis of converged services,” said Guy Zibi, director for Communications, Media and Technology at Pyramid Research. “Under our estimates, blended services represent an incremental revenue upside of up to 5 percent of total communications revenue in the U.S. market over a five year period, a sizeable opportunity for service providers.”
The study showed that both enterprises and consumers want telecommunication services that allow them to cross barriers between voice and data and between fixed and mobile networks (same contact lists, calendars, etc.) and that are offered in bundles customized to meet their individual needs. Some of the key segments had the highest willingness to pay for the “right” combination of bundled services, not necessarily all services offered together.
In the enterprise market, the bulk of the revenue opportunity appears to lie in two segments — described as the “high group interaction” segment and “high customer interaction” segment.
The high group interaction segment is dominated by large companies that employ knowledge workers (professional services, financial services, etc.) who travel frequently, yet interact extensively within their work groups. People in this group said they need the ability to collaborate with mobile work group members and stay in touch while away from their office. This segment is interested in a central database allowing access to communications needs (voicemail, email, addresses, etc.), from any device (including wireless and wireline). This group indicated that capabilities, such as shared information update alerts, ability to contact others in real-time, buddy list and universal instant messaging, would be helpful to them.
Mid-size companies that employ service workers (e.g. restaurants, hotels, transportation, delivery etc.) dominate the high customer interaction segment. These workers continuously interact with customers and need immediate responses to their questions and requests. People in this segment are looking for capabilities that can improve the response to customer inquiries and increase the accessibility of employees to customers and employees to employees. This segment is interested in real-time communications features such as advanced call forwarding and click for live conferencing.
The bulk of the opportunity in the consumer converged services market appears to lie in two segments — the youth segment dominated by single males and power users consisting of older professionals.
In the consumer research:
* Youths placed high value on spontaneous communication with friends — such as click for live conferencing and universal instant messaging. They are heavy text messaging and chat room users, and frequently send/receive camera phone photos.
* As professionals, power users spend a lot of time on the phone/communicating with others and are comfortable with the mobile phone as a multimedia tool. The power segment rated high interest in features offering control over communications, such as network based call forwarding, conference call transcripts and shared data updated alerts.
The research, conducted last year, involved 1,250 men and women, ages 15 and over — 650 for the business survey and 600 for the consumer survey. The types of services covered in the survey were culled from focus groups. Survey questions were designed to determine which features were most valuable to people and the effect of various capabilities and pricing on demand.
The Converged Services Survey is one in a series of ongoing Lucent primary research into the types of blended lifestyle services that U.S. consumers and enterprises would find useful and their willingness to pay for the services. Lucent is now conducting market research on the demand for blended services in regions outside the United States.
Lucent’s survey results are in no way a predictor of the company’s future performance, and are meant only to identify potential market opportunities and estimates for the communications industry at large.
About Lucent Technologies
Lucent Technologies designs and delivers the systems, services and software that drive next-generation communications networks. Backed by Bell Labs research and development, Lucent uses its strengths in mobility, optical, software, data and voice networking technologies, as well as services, to create new revenue-generating opportunities for its customers, while enabling them to quickly deploy and better manage their networks. Lucent’s customer base includes communications service providers, governments and enterprises worldwide. For more information on Lucent Technologies, which has headquarters in Murray Hill, N.J., USA, visit http://www.lucent.com.
This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve estimates, assumptions, known and unknown risks and uncertainties that may cause actual outcomes and results to be materially different from those anticipated and discussed herein. Important factors that might cause such differences include improper or inadequate research methodology or sampling, changing personal behaviors and preferences, technological difficulties and the risk factors detailed in Lucent Technologies’ most recent annual report on Form 10-K and other reports subsequently filed with the Securities and Exchange Commission.
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