technology media & telecommunication innovation trend · ict (€ ion) €1,091.78 billion...

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Technology Media & Telecommunication Innovation Trend Key competitive areas

– In collaboration with Intesa Sanpaolo Innovation Center –

July 2016

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Context and Headlines (1/2)

• Investment in ICT across vertical and geographical markets will outpace average GDP growth in the

EU, reaching 2.4% CAGR in Italy (2014-19), with end-users channeling spend into 4 main areas which

will remain a priority in the short to mid term;

1. Applying cloud computing

• Infrastructure as a Service will overtake the traditional data center services in revenue terms in

Europe in 2019 with the technical and economic benefits expected to act as strong drivers of robust

growth of 38.9% CAGR (2014-19)

• Beneath the strong leader (Amazon Web Services), the IaaS market is a highly fragmented

comprising numerous global and regional vendors and customers choice of providers depends on a

range of factors

• From a technology perspective, integration of new IT environments with on-premise data centers is

necessary to allow seamless operations

2. Leveraging big data analytics

• Uptake of big data analytics, the process of analyzing data to uncover patterns using computing

algorithms, is driven by greater awareness and increased availability which will fuel a 35.9% CAGR

globally (2014-20)

• The banking, government and retail sectors have the largest “use cases” with demand from the

enterprise segment helping large vendors such as SAS, which offers a deep and broad portfolio of

solutions, maintain leadership

• Apache Hadoop has made huge strides in acting as a catalyst to BDA adoption but Apache Spark,

an open source data processing framework, is making up ground

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Context and Headlines (2/2)

3. Deploying next generation networks

• 5G, the next generation in wireless networks, promises to be faster with less latency and more

bandwidth than its predecessors and is estimated to represent a ~$250 billion opportunity with its

impact to be felt across a range of vertical end-markets

• Telecom operators and equipment suppliers are at the forefront of developing infrastructure,

products and services but opportunities in the automotive sector, in particular, are abound as 5G

facilitates the autonomous car and Over The Air updates

• South Korea, China, and Japan are working on deploying 5G technology with Asia in general ahead

of Europe and America

4. Maintaining network security

• Advanced persistent threats and distributed denial of service attacks are examples of

approaches that cybercriminals are using with increasing regularity and greater sophistication to

steal from and disrupt companies and other organisations

o Network security sandboxes offer protection against the former and represent a market

opportunity of $3.5 b globally by 2019

o Vendors such as FireEye sell to end-users in the financial and government sectors and are

leading the move to “sandbox-as-a-service” solutions

o DDoS appliances and services offer protection against the latter and represent a market

opportunity of $0.9 b globally by 2019

o Arbor Networks leads a segment which is being shaped by the development of new technologies

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Introduction

5

Investment in ICT across vertical and geographical markets will outpace average GDP

growth in the EU, reaching 2.4% CAGR in Italy (CAGR, 2014-19)

0,00

200,00

400,00

600,00

800,00

1.000,00

1.200,00

1.400,00

1.600,00

2011 2014 2019

Rest of Europe 205,03 224,72 259,85

Switzerland 33,73 36,87 42,16

Sweden 34,24 37,71 43,63

Netherlands 48,61 53,74 63,03

Spain 71,70 79,05 92,15

Russia 71,93 90,22 112,88

Italy 109,97 118,43 133,60

France 140,16 156,09 182,78

Germany 185,31 205,50 244,58

UK 191,09 212,36 252,20

ICT

Sp

en

din

g (

€ B

illi

on

)

€1,091.78 billion €1,214.68 billion

€1,426.85 billion

Year

ICT Spending in Connected Industries: ICT Spending by Countries, Europe, 2011, 2014 and 2019

Frost & Sullivan All figures are rounded. Base year = 2014

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ICT Spending in Connected Industries: Technology Drivers in the ICT Industry, Europe, 2015–2019

From a technology perspective, end-users are channeling spend into four main areas

which will remain a focus in the short to mid term

Technology Trends 1–2 Years 3–4 Year 5th Year

Applying Cloud Computing H VH VH

Leveraging Big Data Analytics H H H

Deploying Next Generation Networks H M M

Maintaining Network Security M H H

NFV/SDN M H VH

Enabling Mobility M M M

Deploying M2M/IoT M M M

Web 4.0 L M H

Wearables & Integration of Consumers L M M

IT/OT Convergence L M M

Impact Ratings: H = High, M = Medium, L = Low

Frost & Sullivan

7

Applying cloud computing, leveraging big data analytics, deploying next generation

networks and maintaining network security are key programmes

ICT

Industry

• Infrastructure for operational and

enterprise use requires ICT companies,

particularly communications service

providers, to rely on cloud computing as a

cost-effective service delivery mechanism.

• Enabling customers to deliver cloud

services would also require ICT companies

to invest in cloud-enabled networks to

support their cloud strategies.

• Telecoms network analytics are an

immediate revenue opportunity for ICT

companies as IoT gains maturity. A caveat

remains that privacy and data security must

be sufficiently established to ensure a

sustained revenue stream.

• Unexplored Big Data and analytics areas

will underpin investments in IT software as

the industry defines new market opportunity.

Applying Cloud Computing Leveraging Big Data Analytics

• LTE rollouts especially in Eastern Europe

Broadband access, particularly high speed

access for rural and remote communities

across most of Europe.

• Network optimisation investments such as

software defined networks (SDN) and

network function virtualisation (NFV) to

ensure a most cost effective service delivery

for customers.

• Establishing market leadership in data

security is a strategic goal for ICT

companies in this current hyperconnected

era.

• Complying with data security

regulations is another legislatively driven

factor for ICT companies to invest in ICT

solutions.

Deploying Next Generation Networks Maintaining Network Security

ICT Spending in Connected Industries: Technology Drivers in the ICT Industry, Europe, 2015–2019

Frost & Sullivan

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1. Applying cloud services

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Infrastructure as a Service (IaaS) will overtake the traditional data center services in

revenue terms in Europe in 2019

Traditional Data Centre Services versus IaaS Revenue Growth, Europe, 2014-2019

Infrastructure as a service (IaaS) is defined as hosted, scalable data centre infrastructure resources,

available on-demand, without term or usage commitments, and charged through a pay-per-use model.

IaaS comprises ‘raw’ infrastructure, onto which users can build and deploy applications or workloads.

Though enterprises are migrating some applications to the cloud, they continue to run certain

applications – notably, retail colocation and managed hosting – in traditional data center environments.

Definition/Segmentation Frost & Sullivan Base year = 2014

10

Drivers Short Mid Long

The scalability, flexibility, and agility of IaaS continue to drive demand H H H

Cost savings resulting from a pay-per-use model is an attractive feature of IaaS for

customers H H H

The developer community is attracted by the test and development and high-

performance computing potential of IaaS H H H

Ease of global expansion contributes to IaaS uptake across verticals M M M

The technical and economic benefits offered by multi-tenant IaaS are expected to act as

strong drivers of robust growth

Market Trends Frost & Sullivan

IaaS Market: Key Market Drivers and Restraints, Europe, 2015–2019

Restraints Short Mid Long

Concerns about data security are expected to slow down uptake of IaaS M M M

Regional and vertical market regulations cause uncertainty about IaaS M M M

Concerns related to interoperability with existing systems delay IaaS adoption M M L

Variations in cloud definitions cause confusion among customers M L L

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In Europe, the IaaS market was valued at $2.9 billion in 2014 and will expand to reach

$10.1b by 2019, a 38.9% CAGR

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2012 2013 2014 2015 2016 2017 2018 2019

Revenue 766,3 1.277,5 1.954,5 2.858,3 4.078,2 5.695,2 7.717,6 10.117,4

Growth Rate - 66,7 53,0 46,2 42,7 39,6 35,5 31,1

Gro

wth

Rate

(%

)

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nu

e (

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illi

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)

Year

Market Analysis & Forecast Frost & Sullivan

IaaS Market: Revenue Forecast, Europe, 2012–2019

Market demand for IaaS continues to grow exponentially, thus resulting in year-on-year (YoY) revenue

growth rates in the 30%–70% range. As the service evolves out of the introductory stage, medium-sized

and large businesses are leading the drive towards cloud adoption.

All figures are rounded. Base year = 2014

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Beneath the strong leader, the IaaS market is a highly fragmented comprising numerous

global and regional providers

Number of Companies in the Market ~20

Competitive Factors Security, quality of service, network access, portfolio, technology, cost

Key End-user Groups Enterprises across vertical sectors such as finance, retail, healthcare,

manufacturing, automotive, digital media and public sector

Major Market Participants and their share in

revenues terms in 2014

Amazon Web Services (49.2%), Microsoft (5.8%), Rackspace (4.0%),

CenturyLink (2.7%), Verizon (2.6%)

Market Share of Top 3 Competitors 59.0%

Other Notable Market Participants

35.7% amongst British Telecom, Colt, CSC, Google, IBM, Interoute,

LeaseWeb, NTT Communications, Orange Business Services, Sungard

Availability Services, T-Systems and Telefonica

Notable Acquisitions and Mergers IBM acquired SoftLayer in 2013

Key Players & Forecast Frost & Sullivan

IaaS Market: Competitive Structure, Europe, 2014

13

0

1

2

3

4

5

Interoperabalitywith Existing

Systems

Local DataCentre

Price

NetworkIntegration with

Cloud

Cloud Portfolio

CustomerRapport with

Cloud Provider

Competitive Factors

Cloud Portfolio: When choosing an IaaS solution,

customers prefer different environments based on the

type of application hosted. They may want a public cloud

solution for certain business applications, but a more

secure private cloud service for hosting sensitive

customer data. Moreover, they may prefer to self-serve

some environments, while outsourcing management for

others. Flexibility is central to the customer’s choice

Local Data Centre Services: Vertical market

specifications and country laws often stipulate that data

should be housed within the country of origin. These

regulations tilt the market in favour of local providers with

more points of presence in the region than global

counterparts. To overcome this challenge, some global

providers use colocation sites near the customer to host

their cloud services.

Interoperability with Existing Systems: It is important

for cloud services to be compatible with existing

enterprise systems. Enterprise decisions to migrate to a

third-party cloud are governed by its compatibility with

the third-party provider’s cloud platform. It is, therefore,

important for service providers to offer customers a

choice, rather than to restrict their platform to a particular

hypervisor.

Customers’ choice of provider depends on a range of factors among which the breadth

of its cloud portfolio, the location of its data centers and the extent to which its services

are interoperable with existing systems are key

IaaS Market: Competitive Factors

Affecting Customer Choice of Cloud

Providers, Europe, 2014

Frost & Sullivan Customer Analysis

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Technology Frost & Sullivan

From a technology perspective, integration of new IT environments with on premise data

centers is necessary to allow seamless operations

Enterprises’ challenges

• Disparate environments

• Security

• Latency

Providers’ solutions

Many providers have identified customers’

requirement for hybrid cloud solutions. However,

each provider has a different understanding of

hybrid cloud and the extent of its importance in

the long term. Broadly, it includes a combination

of hosted IaaS services in different cloud

environments (public and private), on-premise

infrastructure, and traditional hosting services

(managed hosting and colocation services).

MPLS

Core

Cloud

services

Retail

Colocation

Managed

Hosting

On premise

IaaS Market: Hybrid IT, Europe, 2012–2019

Delivering Hybrid IT

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In Italy, the IaaS market was valued at $198 million in 2014 and will expand to reach $1.2b

by 2019, a 44.3% CAGR

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2012 2013 2014 2015 2016 2017 2018 2019

Revenue 81,9 127,0 198,1 305,0 461,8 673,8 944,2 1.238,0

Growth Rate - 55,1 56,0 54,0 51,4 45,9 40,1 31,1

Gro

wth

Rate

(%

)

Reve

nu

e (

$ M

illi

on

)

Year


IaaS Market: Revenue Forecast, Italy, 2012–2019

In general, sales cycles for IaaS in Italy are long. This combined with the economic crisis means that

uptake has been slower than elsewhere. Italian clients prefer regional providers but growing realization

of technology benefits is expected to spur rapid growth over the next 4–5 years.


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2. Leveraging big data analytics

17

Big data analytics (BDA), the process of analyzing data to uncover patterns using

computing algorithms, breaks down into data discovery and visualization (DDV) and

advanced analytics (AA)

Big Data Analytics (BDA) is defined as the process of analyzing data to uncover

patterns using computing algorithms, programming, and statistical modeling

techniques to find valuable and timely correlations, resulting in actionable insights

that drive business decisions inside an organization.

BDA supports an organization’s capability to make proactive real-time decisions. This

helps position companies to be more predictive than reactive. BDA facilitates access to

traditionally “siloed” data sources and uncovers previously inaccessible information.

Analytics capabilities further help detect anomalies.

Frost & Sullivan breaks BDA down into two categories: Data Discovery and

Visualization (DDV) and Advanced Analytics (AA).

1. DDV solutions integrate, transform and analyze disparate, relational, and non-

relational data sources using complex data mining and exploration on large data

sets to find correlations for insights into a business and its performance.

2. AA does all that a DDV solution does, but is much more bespoke in terms of

building use case-specific predictive or prescriptive data models using advanced

modeling techniques.

Both DDV and AA differ from traditional Business Intelligence (BI) in that they can

handle large sets of data and perform complex analysis that querying in BI does not

accomplish.

Definition/Segmentation Frost & Sullivan

Big Data

Correlations

Insights

Business Decisions

18


The high demand from business users for interactive analysis and insights from

disparate sources of data developed on top of Hadoop drives growth H H M

The recognition that analytics can drive competitive and operational advantages

increases BDA uptake H H M

The availability of enterprise-grade security and data governance, offered by the

vendor community, drives BDA adoption H M L

The push for cloud-based, subscription licensing models, with easy start-and-stop

abilities, increases adoption, especially within the SMB segment M M L

The market is driven by growing demand, greater awareness and increased availability

but integrating solutions into legacy infrastructure in a secure and cost-effective manner

remains a challenge


BDA Market: Key Market Drivers and Restraints, Global, 2016–2022


Challenges in terms of integrating a secure BDA solution into existing legacy

infrastructure and workflows slow adoption H M M

The high cost barrier around deploying an analytics solution and hiring the necessary

talent prevent adoption among SMBs, thus slowing growth M M L

The lack of best practices to solve industry-specific business problems for BDA

prevents growth M L L

Home-grown solutions prevent organizations from making a business case for

external vendor solutions L L L

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Globally the BDA market was valued at $4.5 billion in 2014 and will expand to reach

$22.7b by 2020, a 35.9% CAGR

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30.000,0

35.000,0

40.000,0

2015 2016 2017 2018 2019 2020 2021 2022

Revenue 4.497,8 6.073,5 8.444,8 12.070, 16.838, 22.774, 29.603, 36.855,

Growth Rate 31,4 35,0 39,0 42,9 39,5 35,3 30,0 24,5

Gro

wth

Rate

(%

)

Reve

nu

e (

$ M

illi

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)

Year


BDA Market: Revenue Forecast, Global, 2015–2022

The high demand for DDV solutions to democratize analytics for business users drives growth; Hadoop

acts a catalyst for advanced analytics adoption. The rising demand also

helps keep the pricing high, which results in increased revenue.


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BDA Market: Percent Revenue by

Vertical, Global, 2015

The banking, government and retail sectors are the largest with use cases in healthcare

and life sciences on the rise

17,7%

15,1%

11,4%

10,1%

10,0%

7,2%

6,4%

22,1%

Banking & Financial Services Government & Intelligence

Retail Telecommunication

Healthcare & Lifesciences Business Services

Manufacturing Others

Customer Analysis

Others includes education, energy, fitness, food & dining, home services, ICT, legal services, media & entertainment, real estate, travel & hospitality and utilities

Banking & Financial Services continues to be the

most profitable vertical due to popular use cases such

as fraud detection & security. This helps companies

identify the patterns hidden in their data to distinguish

fraudulent activity. Compliance & regulatory reporting

is another prevalent use case with organizations

implementing BDA to meet requirements that, for

example, swap traders document their trades.

Government & Intelligence requires specific

solutions for applications such as law enforcement,

suspicious activity tracking, crime management and

the prediction of tax fraud. Mature vendors such as

Palantir, SAS, IBM, Splunk, and SAP dominate this

vertical. BDA applications help authorities improve

intelligence, reduce crime, and determine illegal

activities by disseminating data from various sources.

Retail applications for BDA fall under use cases such

as customer insight, marketing, merchandising,

planning, pricing analysis, and demand forecasting.

Using sales data to identify clusters to plan shelf space

and product assortment, inventory management

across categories and price optimization are examples

of ways in which the retail sector is leveraging

analytics for in-depth insight into customer behavior. Frost & Sullivan

21

Demand from the enterprise segment has helped large vendors maintain leadership

with SAS & IBM winning large deals and Qlik &Splunk demonstrating growth with well-

integrated product suites

Number of companies in the market ~28

Competitive factors

Depth and breadth of product line, customer verticals served,

geographical footprint, M&As, partnerships and funding activities, and

price-performance ratio

Key end-user groups Enterprises



SAS (16.5%), Qlik (12.2%), IBM (11.1%), Splunk (11.1%), Tableau

(9.3%)

Market share of top 3 competitors 39.8%

Other notable market participants

39.8% among 1010data, Alpine Data Labs, Alteryx, Ayata, Centrifuge

Systems, Context Relevant, Datameer, FICO, Guavus, HP, Lavastorm

Analytics, Microstrategy, Palantir, Pentaho, Platfora, Revolution

Analytics, SAP, Sisense, Dell, TIBCO, Zettics, RapidMiner, KNIME

Distribution structure Direct sales, OEM partners, value-added resellers, technology partners,

and professional service partners


BDA Market: Competitive Structure, Global, 2015

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1010data Alteryx

Splunk

IBM

Palantir

Pentaho

Microstrategy

Datameer

Guavus

SAP

Pro

du

ct

Lin

e a

nd

Co

mp

eti

tive

Str

ate

gy f

or

the

BD

A M

ark

et

Market Penetration

TIBCO

Lavastorm

Analytics

Revolution

Analytics

Platfora

Tableau

SAS

Qlik

TIBCO

SAS

TIBCO

SAS

TIBCO

Dell

SAS

FICO TIBCO

SAS

TIBCO

SAS

TIBCO

SAS

TIBCO

SAS

TIBCO

SAS

TIBCO

SAS

TIBCO

SAS

TIBCO

SAS

TIBCO

SAS SAS SAS SAS

Sisense

KNIME RapidMiner

Reni

Analytics

BDA Market: Competitive Landscape, Global, 2015

SAS is the clear market leader when measured in revenue terms but also in respect of

the depth/breadth of its portfolio, the end-user verticals that it serves, and its customer

education/support services

Niche Participant Contender

Emerging/Receding Participant

Market Leader

Challenger

SAS offers a wide portfolio of products for DDV and AA, many of which are industry-specific. It finds

applications in industries including retail, financial services, government, business services, and

manufacturing. SAS offers training online and at demo centers, and is making huge strides in terms of

helping its customers overcome some of the common challenges that decrease productivity Bubble size indicates company size by revenue Frost & Sullivan Key Players & Forecast

23


Apache Hadoop has made huge strides in acting as a catalyst to BDA adoption but

Apache Spark, an open source data processing framework, is making up ground and

offers notable benefits

Apache Hadoop has made huge strides in acting as a catalyst in the BDA adoption cycle.

While the Hadoop stack is still emerging, the cost and agility benefits it offers are encouraging several

companies to complement their existing Enterprise Data Warehouse (EDW) environments with Hadoop

implementation, primarily for data warehouse optimization. That said, Hadoop’s open source system

requires a company to have all the necessary technical know-how to implement it, which can offset the

cost benefits it offers.

Apache Spark is an open source data processing framework that runs in-memory computations for real-

time data querying and interactivity. It has seen rapid adoption in the Big Data and analytics community as it

offers some notable technology benefits, including the following:

• Spark can run up to 100 times faster than MapReduce for large-scale data processing

• As opposed to Hadoop, Spark has a library of function calls that can be invoked for parallel computation

• Spark lets users quickly write applications in Java, Scala, or Python. It offers a built-in collection of more

than 100 operators for data transformation and processing

• Spark comes with support for SQL queries, machine data and unstructured data, and streaming data

and graph processing. These capabilities provide tremendous flexibility for developers, thus improving

their productivity

Cloudera is the first company to have commercially shipped Spark with its Hadoop distribution. At present, it

has more than 200 customers using Spark, over 60% of whom are using Spark in production. Recently, IBM

launched an Apache Spark-as-a-Service offering that allows IBM Analytics users to capitalize on their

structured and unstructured data by accessing real-time insights in the cloud.

24

3. Deploying next generation networks

25

Speed: 100Mbps

Latency: 10-15ms

Bandwidth: 20MHZ

Year: 2010

4G LTE Speed: 500Mbps

Latency: 5-7ms

Bandwidth: 100MHZ

Year: 2013

LTE-A

Speed: 400Kbps

Latency: 60-70ms

Bandwidth: 200KHZ

Year: 2001

3G

Speed: 1-10Gbps

Latency: 1-5ms

Bandwidth: 6-30GHZ

Coverage: 100%

5G

Primary Services:

• Phone calls

• Messaging

• Mobile TV

Primary Services:

• Phone calls

• Messaging

• Data transfer

• Cloud computing

• Video streaming

Primary Services:

• Phone calls

• Messaging

• Data transfer

• Voice

• Video streaming

• High-speed connectivity

• Autonomous vehicle

• IoT

Primary Services:

• Phone calls

• Messaging

• Data transfer

• Cloud computing

• Video streaming

• High-speed

connectivity

5G, the next generation in wireless networks, promises to be faster with less latency and

more bandwidth than its predecessors

Wireless Networks, Global, 2015–2020

Definition/Segmentation

26

Technical specifications are yet to be confirmed but the telecom industry faces a number

of challenges in order to meet high expectations


5G Market: Key Market Expectations and Challenges, Global, 2015–2019

Expectations

from 5G

High Download

Speed Close to

1–10Gbs/s

100% Network

Coverage

Support 1,000X

more Traffic

Volume

Latency Period

Close to 1–5ms

Higher Battery Life

and Lower Power

Consumption

10–100X Number of

Connected Devices

5G operates at bandwidth between 6GHz-100GHz. Higher

frequency bands offer small cell radius coverage, so

achieving widespread coverage through a traditional setup

is a challenge

Achieving latency time close to 1 millisecond requires all

content be served from a physical position very close to the

base station, less than 1 kilometer. To attain this, an inter-

operator connection point is needed, which is a challenge

Setting up infrastructure to support wide coverage of

network to attain low latency will end up increasing

operation expenditure. The added cost will frame 5G as a

costly technology. This challenge needs to be addressed.

Specification such as speed, bandwidth, and latency time

are not accepted globally. Without a set global standard,

cashing in on the new technology is difficult.

Expectations

Challenges

27

It is estimated that 5G represents a ~$250 billion opportunity with its impact to be felt

across a range of vertical end-markets


5G Market: Revenue Forecast, Global, 2016–2020


Cumulative Market Size (2016-2020)

The wireless networking industry will experience a paradigm shift in the next 2 to 3 years as 5G

development takes over the communication industry by storm. With current prototypes, R&D, and trials set

through 2020 for 5G development, it is estimated that 5G penetration by 2020 will already generate

significant annual services revenue, with opportunities across verticals

Telecommunication – For the telecommunication industry, 5G

wireless broadband addition would provide faster speed and

meet new technological enhancements such as the Internet of

Things. 5G would facilitate natural disaster communications,

broadcast services, and lifeline communications with enhanced

connectivity.

Automotive – With the introduction of 5G connectivity, the

automotive industry will go through a technological

transformation that would allow vehicles to be interconnected

on a mass scale using an Internet of Things approach. With this

addition, an opportunity for an advanced automation level will

pierce through industries’ research initiatives where 5G would

be a supporting technology for high-end automation in the

automotive industry.

Information Technology – The revolution of 5G in the

information technology industry will drive improvements to

all aspects of communication and services delivery. This

implementation will impact virtualized infrastructure,

service-driven networks, real-time performance and

incorporation of M2M and IoT. Another major area that will

be enabled by 5G is Haptic Internet.

Healthcare – The industry has become technologically

advanced, where many breakthroughs were achieved

using information and communication technologies. With

the implementation of 5G and the IoT platform, consistent

user behavior monitoring in various situations and

environments would allow real-time monitoring of patients.

Big Data analytics would also break through with the

penetration of 5G.

28

Use Cases

Autonomous/ Connected

Vehicle OTA Updates

Augmented/ Virtual Reality

Contextual and

Personalized Services

Wearable Technology

5G Market: Automotive Use Cases, Global, 2015–2019

Utilizing cloud

and location

for multimodal

services

Alerts to actual

real-time

information to

increase safety

Focus on

in-vehicle

firmware

update

High speed

connected

brain

requirement

Vehicle soon to

be extension of

the connected

home

• Real-time

sensor fusion

• Entertainment

services

• Third-party app

integration

• Firmware

updates

• Software

updates

• Vehicle status

• Real-time

traffic

• Real-time

parking

• ADAS

information

• Personalized

driver

preferred

services

• Setting vehicle

interior

parameters

• Communicatin

g with home

appliances

In particular, opportunities in the automotive sector are abound as 5G is needed to

support the massive amounts of real time data processing that are required to facilitate

the development of truly autonomous vehicles

Customer Analysis Frost & Sullivan

29

5G Market: Automotive Use Cases, OTA Updates, Global, 2015–2019

5G to Support

OTA Updates

Key Challenges:

• Need to reduce the download time of the firmware update

• Network coverage for firmware update

• Able to connect only ~10-50 devices for download to create network traffic

• To reduce recalls and expenses/customer experience on recalls

What?

How?

• With 5G network coverage

close to 100% the firmware

updates can be performed

anywhere, anytime.

• With increased download limit

close to 2Gbs/s the updating

can be completed within

seconds.

• 5G has the capability to

connect more than 100

devices at the same time and

offer services.

Parameters Comments

Market Status Conventional OEMs will start offering FOTA updates as of

2018. Currently, Tesla offers this feature

Level of Impact

Initially, the impact will be limited because unlike Tesla,

conventional OEMs want to use OTA only for the software

and not for the electronic control unit (ECU)/firmware

Future Use

Cases

Updating firmware in the ECU, functional software

(infotainment), security patch updates

Example:

Tesla, through 3G and Wi-Fi, offers OTA for its software and requires download

time of close to 45 minutes. With the help of 5G speed and its reliable network,

Frost & Sullivan anticipates that the download time will be reduced close to 80%,

which is approximately 5 minutes.

In the shorter term, Firmware Over The Air (FOTA) upgrades will become a popular

feature of all new vehicles, improving the driving experience and reducing the time spent

on recalls and the cost of warranties

Customer Analysis Frost & Sullivan

30

Telecom operators, equipment suppliers and research institutions are at the forefront of

developing infrastructure, products and services


5G Market: Competitive Structure, Global, 2015

o Founded in 1972, InterDigital develops and

designs advanced technologies that enhance

common mobile communications and

capabilities. The company designed and

developed various innovations that are used in

digital cellular, wireless products, and wireless

networks, including 2G, 3G, 4G, and IEEE 802-

related networks and products.

InterDigital develops advanced

communication technologies

NTT DOCOMO providing

secured mobile services

Alcatel-Lucent collaborative 5G deployment

o One of Japan's largest telecom companies,

NTT DOCOMO emphasizes on the

importance of integration efficiency of higher-

and lower-frequency bands in order to satisfy

its requirements of achieving 1,000-fold

increase in system capacity and 100-fold

increase in data transaction rate.

o Alcatel-Lucent is a key participant in the

networking and communication industry. For

5G initiatives, it has collaborated with Verizon

and Huawei to deploy 5G services in the near

future. Alcatel has launched Bell Labs

Consulting services to help consumers develop

a strategic 5G plan for their individual usage.

o For 5G, Samsung has participated in the EC-

Korea Cooperation Agreement on ICT & 5G

between South Korea and the European Union.

Further 5G developments have enabled

Samsung to achieve successful beta testing for

5G transmission that recorded a 7.5Gbps or

940MB per second transmission rate in

October 2014.

Samsung innovative 5G

enabling development

Ericsson robust 5G

initiatives

KT Telecom initiating 5G

wireless services

o Ericsson, being a strong participant in the

telecommunication industry, is driving 5G

technology development with its partners and

leading operators to provide a solid foundation

for network capabilities in mobile broadband,

IoT, and media delivery. Ericsson collaborated

with Telstra to provide 5G services for the 2018

Commonwealth Games in the Gold Coast.

o KT Telecom, one of South Korea's major

telecommunications companies, is conducting

extensive 5G trials to launch its 5G wireless

services for the 2018 Winter Olympic Games

that will be hosted in Pyeongchang.

31

South Korea, China, and Japan are working on deploying 5G technology with Asia in

general ahead of Europe and America

5G Market: Technology Deployment, Global, 2015

Europe

• Agreement signed by EU commission with 5G-PPP, Dec 2013

• Public funding of Euro 700 million through the Horizon 2020 program

• June 2014: agreement with South Korea to reach a global consensus by

end of 2015 on the broad definition and key functionalities of 5G

• May 2015: agreement with Japan, similar to South Korean agreement

• Service providers still improvising on the LTE connection and infrastructure

• March 2, 2015: MoU signed between 4gamericas and 5G PPP for

examining the various elements of use cases, requirements, and

component and infrastructure for 5G technology

• 4gamericas members: Alcatel-Lucent, AT&T, Cable & Wireless, Cisco,

Ericsson, Nokia, Qualcomm, Sprint, T-Mobile US

• $1.4 billion invested by South Korea for 5G development and set to launch

5G commercial use services in 2020

• South Korean big 3 providers SKT, LGU+, and KT working very closely to

deploy the technology by 2020

• Japan to realize its 5G commercial use during the 2020 Olympics in Tokyo

North

America

Asia

5G commercialization

expected between

2020–2025

Carriers:

Ericsson, Deutsche

Telekom, Vodafone


expected between

2020

Carriers:

SKT, KT, China Mobile,

Huawei


expected between

2020–2025

Carriers:

Verizon, AT&T


32

4. Maintaining network security

33

4. a. Protecting against Advanced Persistent Threats (APT)

34

APTs, which are run like a business by cybercriminals, have forced security vendors

to take a different approach to detecting malware

• Advanced persistent threats (APTs) is an umbrella term that is used to describe threats which:

o Utilize a type of advanced “zero day” malware

o Evade signature-based detection techniques

o Target or focus on specific individuals or organizations

o Aim to achieve a monetary or intellectual property gain and are run like a business with a return on

investment (ROI) objective

o Look to penetrate an environment (network or endpoint)

• APT’s have forced security vendors to take a different approach to detecting malware: instead of trying

to detect malware based on what it is (signature based), behavioral malware detection relies on what the

malware does.

• A network security sandbox, one of the a growing number of solutions, is an analysis environment

(often virtualized) in which a suspicious program is executed and the behavior of the program is observed,

noted, and then analyzed in an automated manner.

• This approach is more effective than just looking at the appearance of the executable, because

sandboxing goes beyond just the mere appearance of the binary, and observes what the binary does;

and, therefore, it is much more conclusive in determining if an executable is malicious.

• Network sandboxes, although powerful, are not a magic bullet.

• The cybercriminal community has not remained complacent and, as sandboxing technologies have

become more popular as a form of protection for enterprise networks, cyber miscreants have developed

evasive binaries. Definition/Segmentation Frost & Sullivan

35


Increasingly complex and advanced cybercrime drives demand for network security. H H M

Complexity of Advanced Persistent Threats (APTs) rendering signature-based defences

less effective H M L

Integration into existing platforms like UTM ease implementation. M H L

Spear phishing attacks creates difficult to manage threat vector M M M

The complexity of APTs has rendered signature-based defences less effective with

network security sandboxes offering a solution


Network Sandbox Market: Key Market Drivers and Restraints, Global, 2015–2019


Network security tools required to provide cybersecurity increase while corporate

security budgets are not keeping pace. H M M

Organizations are challenged to recruit and retain security professionals to implement

and manage new solutions M M L

The network sandbox market is highly fragmented M M M

Perimeter-centric security implementations are becoming the new “signature-based

defenses” as customers look to analyze East-West traffic L M H

36

0

50

100

150

200

250

300

0

500

1.000

1.500

2.000

2.500

3.000

3.500

4.000

2011 2012 2013 2014 2015 2016 2017 2018 2019

Revenue ($ M) 30,4 103,2 229,1 536,8 1.012,6 1.597,7 2.238,5 2.922,5 3.506,6

Growth Rate (%) 239,8 122,0 134,3 88,7 57,8 40,1 30,6 20,0

Globally the network sandbox market was valued at $0.54 billion in 2014 and will expand

to reach $3.51 billion by 2019, a 45.6% CAGR

Re

ve

nu

e (

$M

illio

n)

Gro

wth

Ra

te (

%)

Year

Network Sandbox Market: Revenue Forecast, Global, 2011–2019

Market Analysis & Forecast Frost & Sullivan All figures are rounded. Base year = 2014

37

Network Sandbox Market: Percent

Revenue by Vertical, Global, 2014

Network security sandbox solutions have their genesis in the financial services and

government sectors but healthcare is a growing area with security needs increasing and

compliance requirements strengthening

23,7%

15,5%

8,5% 9,4%

14,1%

28,9%

Financial Government Healthcare

Education Technology Others

Customer Analysis

Network security sandbox solutions have found their

application with organizations that have acute

security needs and are driven by strict compliance

requirements.

It is no surprise, therefore, that the market has its

genesis in the United States, especially in the

financial sector which remains the dominant industry

on a global basis with a 23.7% share.

This is followed by the government vertical (15.5%).

Although the healthcare industry is a strong

consumer of security services, it is not subject to the

same compliance requirements as other sectors

Without a “checkbox” on the compliance checklist for

network security sandbox, healthcare organizations

have not adopted network security sandbox services

at the rate that one might expect.

Over the forecast period, Frost & Sullivan expects the

adoption of network security sandbox solution to

accelerate as healthcare organizations are becoming

increasingly motivated to prevent breaches and

not just maintain compliance.

Frost & Sullivan

38

FireEye dominates the network sandbox market, continuing to capitalize on its first

mover advantage and supporting more files and operating systems (OS) than its top

competitors such as Palo Alto and McAfee


Competitive factors Files Supported, OS Support, Systems Activity Detection, Deployment

Options, Protocols, Emulation, Anti-Evasion, Features

Key end-user groups and their share in


Large organizations and enterprises (86%) in the Education, Financial,

Government, Healthcare and Technology sector


revenues terms in 2014 FireEye (62%), Palo Alto (14%), McAfee (12%)

Market share of top 3 competitors 88%

Other notable market participants 12% among Blue Coat, Check Point, Cisco, Fortinet, Lastline,

Symantec, Trend Micro, Websense and Zscaler

Distribution structure Direct sales, Value Added Reseller (VAR), Managed Service Provider

(MSP) & Distributors


Network Sandbox Market: Competitive Structure, Global, 2014

39

The company did not invent the sandbox but made the term part of the vocabulary of

security professionals and is at the forefront of developing the next generation sandbox-

as-a-service solution

• FireEye did not invent the sandbox, but it certainly made the term part of the everyday vocabulary of

security professionals. FireEye developed and brought to market a purpose-built, virtual machine-based

sandbox platform, the core of which is branded MVX engine.

o It is important to note that FireEye does have a patent on their approach to virtual machine-based

security but Acquisitions of companies such as Mandiant and organic product development has

evolved the FireEye offerings to be a holistic approach to APT defense.

• The platform employs a virtualized execution engine and a cloud-based threat intelligence network that

protects organizations at all stages of the attack lifecycle (exploit, malware download, callback, data

exfiltration and lateral spread) and across all primary threat vectors (Web, email and file systems). The

MVX engine detonates Web suspicious objects, attachments and files, including attacks that leverage

unknown vulnerabilities. The MVX can detonate and correlate attacks across multiple attack stages (or

stages of kill chain) and multiple vectors to be able to identify the more evasive threats.

• FireEye has an advantage at the scale of analysis that can be provided. The platform can scale over

2,000 simultaneous micro-VMs, enabling FireEye to do multi-vector, multi-flow analysis at line rates or

close to line rates. If an organization wants to be able to also inspect html and Javascript traffic, such

capabilities are important.

• Market Innovation: FireEye-as-a-service

• FireEye has created an innovative new offering, enabled by the acquisition of Mandiant, which removes

the implementation and operation complexities associated with the addition of another network security

technology and, most importantly, supports increasingly stretched security departments with combatting

complex threats.

Frost & Sullivan Technology

40

4. b. Protecting against Distributed Denial of Service (DDoS) attacks

41

DDoS attacks are coordinated, malicious attacks against specific organisations which

can be mitigated by deploying appliances and/or services

• Distributed Denial of Service attacks (DDoS) are targeted attacks against specific organizations.

• Threat actors utilize DDoS attacks to disrupt business operations, communications capabilities, and to

harass and embarrass targeted organizations.

• DDoS attacks accomplish this goal by overwhelming the victim's network bandwidth and computing

resources, thereby blocking access or degrading performance for legitimate users.

• However, DDoS attacks range in effectiveness, complexity, size, frequency, and duration, making them

difficult to anticipate, prepare for, detect, and mitigate without specialized solutions.

o A volumetric attack, for example, is a coordinated and purposeful deluge of unsolicited traffic that is

designed to consume all available network resources and bandwidth.

o An application layer attack is a more sophisticated attack that targets weaknesses in logic in Web

applications. Some require little bandwidth and are therefore stealthy and difficult to detect.

• Businesses have many options to mitigate DDoS attacks. Some of these most basic and low-cost options

include setting Access Control Lists (ACLs) and rate-limiting in switches and routers to drop traffic that

“looks like” a DDoS attack or that comes from known bad IP addresses.

• This overview includes two segments: DDoS mitigation appliances and services.

o The appliance segment includes solutions that inspect traffic inline, in real-time, and solutions that

sample network flow data.

o The services segment includes cloud-based services offered as “always-on” routed monthly service

and “on-demand” DDoS mitigation services.

Definition/Segmentation Frost & Sullivan

42


More frequent DDoS attacks creates stronger customer awareness H H M

Massive scale DDoS attacks test the limits of deployed mitigation solutions H H M

Internet access and Web services will increase in importance to businesses in every

industry H H M

DDoS mitigation offers a measurable return-on-investment (ROI) H H M

Increased interest in acquiring protection against DDoS attacks is directly related to the

greater frequency with which they occur


DDoS Protection Market: Key Market Drivers and Restraints, Global, 2015–2019


Lack of technical expertise limits customer willingness to invest in sophisticated DDoS

mitigation solutions H M L

The potential damages of a DDoS attack may not warrant a full DDoS mitigation

solution M M M

Availability of several different DDoS mitigation solutions confuses customers M M L

The targeted nature of DDoS attacks reduces the urgency to deploy mitigation solutions M M L

43

0

5

10

15

20

25

30

0

200

400

600

800

1.000

1.200

2011 2012 2013 2014 2015 2016 2017 2018 2019

Revenues ($ M) 257,9 297,3 354,8 449,5 569,0 677,0 779,5 883,3 977,2

Units ('000s) 5,5 6,8 8,6 11,5 15,2 18,4 21,5 24,6 27,4

Globally the DDoS protection market was valued at $449.5 million in 2014 and will

expand to reach $977.2 million by 2019, a 16.8% CAGR

Re

ve

nu

e (

$M

illio

n)

Un

its

(0

00

s)

Year

DDoS Protection Market: Revenue and Unit Shipment Forecast, Global, 2011–2019

Market Analysis & Forecast Frost & Sullivan All figures are rounded. Base year = 2014

44

DDoS Protection Market: Percent

Revenue by Vertical, Global, 2014

DDoS attacks have traditionally targeted the entertainment, retail and high tech markets

but the problem has spread across verticals

39,8%

13,3%

12,0%

8,0%

7,8%

7,5%

11,7%

High Tech Financial RetailEntertainment Government EducationOthers

Customer Analysis

Others includes hospitality, manufacturing, travel and utilities

Financial markets face a range of attack types,

including DDoS attacks. These organizations have

robust network defenses and tend to invest in the best-

of-breed appliances available.

• In 2012, financial organizations faced blended

attacks as part of the “Operation Ababil” DDoS

campaign.

• In 2015, hacker groups launched DDoS extortion

campaigns against many financial organizations in

which they demanded payment in Bitcoins.

Government agencies are regularly targeted for

DDoS attacks as part of cyber warfare, activism, and

espionage campaigns. This vertical is a relatively

slow adopter despite the large number of attacks.

The education market is a rapidly emerging vertical

market. Students with technical savvy or access to

DDoS tools launch DDoS attacks against school and

district systems, often during mid-term or final exams.

Traditionally, retail (e-commerce), high tech, and

entertainment (gaming, gambling, media, adult, and

news) have been the vertical markets with the most

demand for DDoS mitigation solutions Frost & Sullivan

45

Arbor Networks and Akamai are the leading providers of DDoS mitigation solutions,

notably competing on accuracy, scalability and usability


Competitive factors Accuracy, scalability, usability, latency, cost of ownership, roadmap

Key end-user groups and their share in


Enterprises (46.3%) and Service providers (42.3%) in the Education,

Entertainment, Financial, Government, High Tech and Retail segments


revenues terms in 2014 Arbor Networks (40%), Akamai (23%), Radware (13%)

Market share of top 3 competitors 76.2%

Other notable market participants

23.8% among A10 Networks, Allot Communications, Andrisoft, Citrix,

CloudFlare, Corero, DOSarrest Proxy Defense, F5 Networks, Fortinet,

GenieNRM, Huawei, Imperva, Juniper Networks , Level 3 (Black Lotus),

Nexusguard, Neustar, NSFOCUS, Psychz Networks, Radware, RioRey,

Verisign, X4B

Distribution structure Direct sales, OEM partners, value-added resellers, technology partners,

and professional service partners


DDoS Protection Market: Competitive Structure, Global, 2014

46

The various types of DDoS mitigation solutions provide a wide range of options to

meet customer requirements whilst new technologies e.g. Software Defined Networking

have the potential to bring additional benefits

• The DDoS mitigation appliance segment includes products deployed inline for real-time inspection of

network traffic as well as products that function by sampling network flows and metadata to identify

patterns indicative of an attack. High-end DDoS mitigation appliances utilize high performance hardware

to accelerate inspection of network traffic. This hardware allows the solution to inspect traffic without

also becoming a potential point-of-failure or performance bottleneck.

o The engineering, R&D, and high quality materials used in these products are expensive and DDoS

mitigation appliances can be cost prohibitive for many organizations.

• The DDoS mitigation service segment includes content delivery network (CDN) based DDoS mitigation

services and cloud-based DDoS scrubbing services.

o DDoS mitigation services feature a monthly subscription price that is much lower than an equivalent

DDoS mitigation appliance. Multiple years of DDoS mitigation service can add up to be more

expensive than a DDoS mitigation appliance. However, the DDoS mitigation service may still be

appealing as it transforms a very large capital expense into a more manageable operational expense.

• New technologies may change the process of mitigating DDoS attacks

o Software-defined networking (SDN) and network function virtualization (NFV) is the process of

separating networking processes from the underlying hardware.

o Separation and abstraction of network functions has the potential to provide many benefits including

more efficient and resilient networks. Theoretically, these advanced networking technologies could

minimize the need for DDoS mitigation solutions.

o The effect of this trend is contingent upon the widespread adoption of SDN.

Frost & Sullivan Technology

47

Appendices

48

Principal abbreviations

AA Advanced Analytics

ACL Access Control List

APT Advanced Persistent Threat

BDA Big Data Analytics

BI Business Intelligence

EDW Enterprise Data Warehouse

DDV Data Discovery & Visualization

DDoS Distributed Denial of Service attacks

CAGR Compound Average Growth Rate

CDN Content Delivery Network

EU European Union

Gbps Gigabits per second

GDP Gross Domestic Product

GHZ Gigahertz

IaaS Infrastructure as a Service

ICT Information & Communication Technology

IP Internet Protocol

IoT Internet of Things

IT Information Technology

Kbps Kilobits per second

KHZ Kilohertz

M2M Machine To Machine

Mbps Megabits per second

MHZ Megahertz

MoU Memorandum of Understanding

MSP Managed Service Provider

NFV Network Functions Virtualization

OEM Original Equipment Manufacturer

OS Operating System

OT Operational Technology

ROI Return on Investment

SDN Software Defined Networking

SMB Small Medium Business

VAR Value Added Reseller

49

Frost & Sullivan

www.frost.com

July 2016

Study carried out exclusively for

Intesa Sanpaolo Innovation Center

All rights reserved.

The partial or full reproduction, use, distribution, publication, transmission, amendment or sale of

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