II. Characterization of Broadband Telecommunications Market
The North American telecom market is the world’s most competitive market. Understanding current and future market and customer trends and the drivers that cause these trends have to be the key components
of a successful product design process.
The degree of competitiveness of the market is a key factor that should be considered in product planning and it is directly related to the following factors:
1 Scale of investment required 2 Scale of market size and reward
3 Regulatory conditions 4 Customer driven factors
5 Market trends 6 Influence of computing on telecommunications market
A. Scale of Investment
The smaller the scale, i.e., up to U.S. 50 million dollars, the more players, especially the small existing companies or start-up companies, will try to enter the market. These small size players are able to tap
into the venture capital and stock markets to finance their product development. However, in order to attract this external capital, these companies have to come up with a very attractive product that
addresses a specific need and it has to be highly market and customer oriented. Typically, these products either target a specific present need ignored by other players a niche market or they bring an innovative
approach based on a new technology or existing technology to achieve a significant cost-benefit value for a particular market segment.
These small players operate under great pressure from the venture capitalists and the stock market that provide the necessary capital and from other players to prove themselves in the marketplace. As a result
of such pressure, they tend to operate very efficiently and are able to bring their products to the market in a very short period of time. Probably the best way to describe this mode of operation would be that
At this end of the spectrum, the players tend to operate in a cooperative manner forced upon them by the market and regulations. Both the customers and regulators want to make sure that there is some degree
of competition so that one company does not become a dominant player and move towards a monopolistic behavior. These few players move toward a balance in terms of market share based on the
market forces as well as the capacity of the players.
Due to the decreased competitiveness, the products tend not to be cost efficient or customer oriented. In other words, they do not operate in the mode of survival instinct. In a small company operating on
survival instinct, there is an intense focus on a product and the resources of the company are allocated very efficiently according to the intensity of the focus. However, in a large company, the focus is not as
intense as it should be and the product has to compete with many other products addressing different markets, in some cases competing for the same market segment, for company resources.
The failure of one product does not significantly impact the financial operation of a large company. Thus, the lack of focus causes an inability to adapt quickly to the changes in a highly competitive
marketplace. It is very typical in large companies to see a product roadmap covering a 4 to 5 year period even for a very competitive market that is constantly changing due to intense competition. On the other
hand, a small start-up company does not have 4 to 5 years to survive in the marketplace. These small companies are able to change or enhance the product quickly as the market evolves to a new state.
As an example, consider the LANWAN networking and related access transport market for a highly competitive market versus the public broadband backbone networking market for the other end of the
scale as a less competitive market.
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Copyr ight © CRC Pr ess LLC
by Abhijit S. Pandya; Ercan Sen CRC Press, CRC Press LLC
ISBN: 0849331390 Pub Date: 110198
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B. Scale of Market Size and Reward
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