Here at Dell’Oro Group we update our 5-year forecasts after the first and third quarter each year. With 1Q14 now behind us, we are starting to update the 5-year forecasts. For the RAN market forecasts, some of the historical data that we will study reveals the relationships between equipment revenues and Capex spending, as well as data growth.
If we analyze data over a 10-year period from 2000-2010, we will find that equipment revenues as a percentage of Capex tend to shrink as the cost of equipment generally declines faster than the cost of services and other non-equipment-related infrastructure.
If we analyze the data since 2010, we estimate that worldwide Capex was roughly 15% greater in 2013 compared to 2010 levels while total service provider equipment-driven revenues for vendors did not, on average, grow at the same pace (see chart). If this is any indicator of future performance, one challenge for the RAN market will be the anticipated slower growth in overall Capex spending after the Chinese LTE roll-outs have taken place.
For our base station estimates, we typically analyze both coverage and capacity-driven base station deployments for the various regions. And when it comes to data growth trends, we will pay close attention to the additional RAN capacity that is required for each region to accommodate incremental data traffic, as well as the proportion of the incremental data traffic that will be addressed with macro and small cell radios.