“We’re talking big money here,” says Jim Eller, principal analyst, wireless infrastructure at ABI Research. “In 2016, mobile network operators will spend more than $1.8 billion on web/video optimisation, more than $1.2 billion on policy management, more than $1.5 billion on deep packet inspection (DPI), and billions more on other test equipment, network probes, and other optimisation solutions. Ten years ago, most of these products did not exist, so the market growth looks like the proverbial hockey stick.”
It is no longer just drive testing. A few years ago, optimisation of mobile networks was primarily technicians in blue jeans climbing towers with RF test equipment and driving around to measure signal strength and dropped calls. Today, optimisation focuses on managing the flood of data surging through mobile networks, and soon self-optimising networks fine-tuning themselves without human intervention will be common, said Eller. Blue jeans are no longer required.
Although some of the mobile network optimisation revenue will go to the big network equipment vendors like Alcatel-Lucent, Ericsson, Huawei, Nokia Siemens Networks, and ZTE, ABI Research said most of the money will go to smaller companies specializing in technologies like DPI and video streaming. “With so much money on the table, some of these smaller companies will be attractive targets for M&A activity,” added Aditya Kaul, practice director, mobile networks.
Most of these small start-ups are funded by venture capital. Some of the newer ones have not even shown a profit yet. But the growth potential for these companies looks very positive and the valuation of these companies is still relatively cheap. As a result, acquisitions in this space are already occurring.