Slow, Steady Growth Ahead for Service Assurance Market

Analysys Mason analyst Patrick Kelly said in his recent “Service Assurance Market Review – June 2009,” he sees a 5.3 percent compound annual growth rate (CAGR) for service assurance through 2013, pushing the market from a worth of $2.28 billion last year to $2.94 billion.

“The growth rate is not setting the world on fire at just over 5 percent,” Kelly said. “But it is better than this year which we expect to be a down year.”

Kelly said the economy will start to improve later in 2009, but that we will be well into 2010 before the spending shows up. “In a market where you are seeing less growth overall, it becomes even harder to justify an investment,” he said.

Growth over the next few years must overcome a 2.3 percent decline this year that will extend into the middle of 2010.

Despite the boom in mobile data service revenue, overall services revenue is not growing as fast as expected, Kelly said, and that ripples through to a cutback in spending on equipment, since additional capacity is not required and that, in turn, ripples through to software sales.

Spending is tied to growth and two-thirds of the spending comes from North America and the EMEA region — markets still in a recession and not expecting much in the way of GDP growth next year. “It’s dramatic how much the economy fell off in the fourth quarter of 2008 and first quarter of 2009. We’ve] never seen a deceleration at the rate we have seen it in the last two quarters,” Kelly said.

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