Gartner Says Worldwide Telecom Market Revenue to Grow 7.6 Percent in 2008

For First Time in History, North America Will No Longer Be the Largest Regional Telecom Market as It Is Surpassed by Asia/Pacific

STAMFORD, Conn., September 17, 2008 —

The worldwide telecommunications market is on pace to reach $2 trillion in 2008, a 7.6 percent increase from 2007 revenue of $1.8 trillion, according to Gartner, Inc. The industry does face challenges as growth in the fixed voice sector and in the most developed countries has slowed or even begun to shrink.

"Revenue from telecom services has traditionally dominated the market, accounting for four out of every five dollars earned in the sector," said Will Hahn, principal research analyst at Gartner. "We forecast that this historic proportion will now shrink, an indication that legacy revenue is no longer sufficient for carriers to justify their investments and that the growing equipment sector is being deployed to support new and converged services, as well."

Revenue in the telecom service segment is expected to reach $1.6 trillion in 2008 and account for 81 percent of overall telecom revenue. In 2007, total telecom service revenue was $1.49 trillion, four times higher than total telecom equipment revenue at $353 billion. Gartner forecasts that by 2012, the service segment will have a CAGR of 4.4 percent, compared with 8.7 percent for the equipment segment. As a result, the relative proportions of the two segments will finally begin to move downward, closer to 3-to-1.

Gartner predicts that by 2012, the ratio of mobile to fixed connections will exceed 4-to-1. "We now forecast that revenue in the mobile sector will top $1 trillion by 2010," said Mr. Hahn. "Our breakdown of services clearly shows that fixed voice is in decline, but mobile voice, though currently growing, will also stagnate as a proportion of the market by 2012. The baton has clearly been passed to data services in the legacy sector."

From a regional perspective, North America has been the largest telecommunications market, but Asia/Pacific is forecast to surpass North America in telecom revenue in 2008. North American telecom revenue is forecast to total $511.6 billion in 2008, a 4.5 percent increase from 2007. The telecom market in Asia/Pacific is projected to reach $513.1 billion in 2008, up 8 percent from 2007. Meanwhile, the Middle East and Africa will be the fastest-growing region with a CAGR of 8.6 percent between 2007 and 2012.

"Traditional telecom service providers and equipment manufacturers are seeing convergent trends eroding their margins while rising Asian players and other entrants eat away at their share within the total market," said Mr. Hahn. "Telecom service providers and equipment manufacturers alike must prepare growth plans that transform their offerings and their organizations. Growth in legacy markets is ebbing fast, and the only way to maintain it will be via the scope to offer converged solutions, to provide service in nontraditional sectors and to enter and win in emerging markets whose profile is very different from more-mature regions."

Additional information on the telecom and enterprise networking and communications industries will be presented at the Gartner Enterprise Networking & Communications Summit taking place November 17-19 at the Gaylord Palms Resort & Convention Center, Orlando, Florida. The Summit provides a vision of how networks and communications will evolve, the best practices emerging from early adopters, and practical advice on defining an enterprise road map. This event defines how unified communications, mobility, and voice over Internet Protocol (VoIP) are combined with specific business context to provide real returns on investment and competitive differentiation. Additional information is available at www.gartner.com/it/page.jsp?id=638625.

Members of the media can register for the event by contacting Christy Pettey at christy.pettey@gartner.com.

A detailed breakout of the telecom forecast is in the Gartner report "Global Telecommunications Market Take, June 2008". The report is on Gartner's Web site at http://www.gartner.com/DisplayDocument?ref=g_search&id=728111&subref=advsearch.

Contacts:


Christy Pettey
Gartner
+1 408 468 8312
christy.pettey@gartner.com

Holly Stevens
Gartner
+44 0 1784 267412
holly.stevens@gartner.com


About Gartner:
Gartner, Inc. (NYSE: IT) is the world's leading information technology research and advisory company. Gartner delivers the technology-related insight necessary for its clients to make the right decisions, every day. From CIOs and senior IT leaders in corporations and government agencies, to business leaders in high-tech and telecom enterprises and professional services firms, to technology investors, Gartner is the indispensable partner to 60,000 clients in 10,000 distinct organizations. Through the resources of Gartner Research, Gartner Consulting and Gartner Events, Gartner works with every client to research, analyze and interpret the business of IT within the context of their individual role. Founded in 1979, Gartner is headquartered in Stamford, Connecticut, U.S.A., and has 4,000 associates, including 1,200 research analysts and consultants in 80 countries. For more information, visit www.gartner.com.