The market for Evolved Packet Cores (EPCs) is flourishing, according to research firm Dell’Oro group, hitting a record level in the fourth quarter of last year in part due to North American wireless operators upgrading their equipment for their forthcoming 5G networks.
And Ericsson continues to lead the EPC market, according to the firm, marking that vendor’s seventh year in a row at the top of the sector. Dell’Oro said Huawei came in second place in the EPC market and Nokia came in third.
Evolved Packet Cores essentially work at the primary traffic director within the center of an operator’s wireless network.
“Other than Huawei—who experienced weakness in China—all major vendors experienced a strong fourth quarter. The growth was primarily driven by Tier 1 operators, especially in North America, preparing their EPC to carry 5G traffic over the 4G infrastructure,” said Dell’Oro analyst David Bolan in a release from the firm. “This was due to the EPC standard being updated in June 2017.”
Indeed, AT&T, Verizon, T-Mobile and Sprint have all announced plans to launch initial 5G services late this year and early next year—making the carriers likely some of the first in the world to deploy commercial 5G services.
Importantly, Dell’Oro’s Bolan said the firm expects the EPC market to continue to grow this year due to a number of factors including the increased growth of wireless traffic globally from unlimited data plans, as well as the increased deployment of VoLTE technology. And, Bolan said, the rise of 5G technology will continue to push additional operators in China, Japan, Korea and elsewhere to upgrade their EPC equipment to the new standard.
Ericsson’s position at the top of the EPC market is likely welcome news to the company. Ericsson said during its fourth quarter earnings report in January that it is seeing increased momentum in 5G, including in North America, but it continues to struggle as the demand for LTE gear dwindles, reporting its fifth straight quarter of losses while announcing a shakeup in the executive ranks.
Indeed, following the release of Huawei’s recent fourth quarter financials, it’s clear that the Chinese vendor is now pulling away from Nokia, Ericsson and the rest of the world’s wireless equipment vendors as the world’s largest supplier of network kit. As analyst Chris Nicoll recently pointed out, it’s a “new world order” with Huawei’s network revenues clocking in at $45 billion and Nokia’s network revenues putting the company in second place with $28 billion. Ericsson is third in that ranking with $24 billion in network revenues.
But all of those vendors may well enjoy growth in the coming years, according to at least one outlook. Research from IHS Markit said recently that the worldwide market for network equipment expanded by 15% in the fourth quarter of last year—and revenues in the space are set to grow by $25 billion over the course of the next five years.