For me, the most eye-opening briefing at this year's Mobile World Congress (MWC) was with executives from Huawei's software division.
Huawei's aggressive expansion into the global network equipment market has already struck fear into the hearts of the established equipment providers. But according to its executives it also achieved $1.4 billion in software sales in 2007, 55% of which came from outside China. That would make Huawei's 7,000+ employee software business just under half the size of Amdocs, and around double the size of Telcordia. Should telecoms software vendors be quaking in their boots, too‾
The appearance of Huawei in the telecoms software landscape is certainly a clear sign of how much the industry has changed. For one thing, portfolio size is no longer everything.
The big equipment providers have long since maintained large and sprawling portfolios of software products, traditionally regarded as loss-making deal sweeteners rather than competitive in their own right. But Huawei is now playing the same game. Its software product brochure reads like one long tick-list, spanning every flavour of messaging: VAS, digital media and content-enabling platforms; enterprise communications products; customer care and IP contact centre; IN products; OSS; security; roaming; convergent charging and billing.
Of course, there are questions relating to Huawei's global delivery capability. On the one hand, most of its workforce is based in China - but on the other, the company has shown a willingness to throw engineers at projects which one does not see from every vendor.
It is not only equipment providers who are threatened. As Huawei cuts the upfront cost of solution acquisition, smaller telecoms ISVs who compete in any of the above areas are also potentially vulnerable, especially in the low-cost emerging markets where much of their growth potential lies.
Incumbent vendors can respond to the threat of Huawei in three ways:
"¢ keep pricing competitive by reducing their own costs; by outsourcing R&D to low-cost geographies and streamlining product portfolios, for example
"¢ have a strong story on running costs over the whole solution lifecycle, not just the upfront cost of acquisition, and keep this issue at the forefront of customers' minds
"¢ increase the business value of the solution to customers by offering additional services and support which help them reap additional strategic benefits over and above the basic technology solution. Smaller ISVs with limited delivery capabilities of their own should be building up highly specialised expertise to differentiate themselves from the competition.
It is perhaps unsurprising that many vendors - with some notable exceptions - are uncomfortable discussing the first two options publicly. This needs to change, as Huawei will ensure that price stays on customers' agenda.
But vendors have wholeheartedly embraced the third option, with this year's MWC providing ample evidence of creative thinking on business value. Just one example which emerged strongly is a new focus on the exploitation of customer data in all its forms.
Telcos have always been theoretically rich in customer data, and they now well understand the urgent need to exploit it.
The idea is to help telcos get additional value out of the solutions they have already invested in - with additional benefits to the vendor of increased lock-in, and revenues from professional services.
It all sounds good, but of course things are never that simple - customer (or subscriber) data management is a highly complex topic which we will be looking at separately.
Jessica Figueras, Practice Leader of Service Infrastructure at Ovum