First quarter 2015 Carrier IP Telephony revenues were assisted by the end-of-life announcement of a major vendor’s proprietary hardware system. This means that existing and new customers that want this vendor’s VoLTE-capable system will need to buy software-only systems that run on general purpose servers. Interestingly, this caused some North American service provider customers of this vendor to place very large orders in 1Q15, and in fact took delivery of a significant part of this order in the same quarter.
This raises the question – what does this mean for future spending? If this service provider purchasing behavior is any indication, we think it may have bought enough hardware (and to a lesser extent, license) capacity to satisfy subscriber growth for as much as 1-2 years. We expect that many more SPs will decide to sweat their assets (run at increasingly greater rates of utilization) over the next several quarters as they trial and integrate NFV-based software systems into the service provider (SP) core network. Most indications are that some large SPs will be starting the deployment of NFV-based Carrier IP Telephony and Evolved Packet Core systems, with some early commercial launches in late 2015.