Nokia, Huawei, VMware lead $4.4B network automation market

The global market for network automation software topped $4.36 billion in 2020 and remains Nokia’s to lose, according to a new Appledore Research report.

The Finnish vendor ended the year with a 17% share of the market on $758 million in related revenue, followed by Huawei with a 12% market share on $544 million in revenue. VMware, by grabbing $379 million in revenue and a 9% market share, indicates that a “structural transformation has taken place in this market,” the analysts wrote.

The top three vendors from Finland, China, and the U.S. accounted for about 38% of the market last year and a quartet of second-tier players in the market captured a combined 25% market share, according to the analysts. Ericsson snagged $284 million, followed by Cisco with $275 million, Ciena at $264 million, and IBM/Red Hat with $247 million in revenue.

“The final 37% of the market is in the hands of a combination of independent software vendors (ISVs), data communications and IT challengers, and specialist firms,” Appledore analysts noted, adding that none of the vendors in that group captured more than 5% market share last year. This set of vendors did, however, generate a combined $1.61 billion in revenue during 2020, according to the report.

Telecom network automation undergoes rapid change
“Telecom network automation has changed far more rapidly in the last two years than in any period in the history of element management systems, network systems management, and operations support systems,” the analysts concluded. “This new picture reflects both a distinct rethink within the industry about automation, and a distinct break” with these traditional categorizations.

Moreover, conventional definitions of these legacy systems “no longer adequately reflect the architectures, ambitions, or operating models of telecom communications service providers (CSP) in a world of increasingly software-ized networks,” the analysts wrote, adding that “automation is now the dominant driver of CSP spend on software.”

Network equipment suppliers Nokia, Huawei, and, to a lesser extent, Ericsson and Cisco remain market leaders, but their respective market shares are steadily eroding, according to Appledore Research.

The analysts broke the network automation software market down into seven segments, but excluded cloud-native network functions from this report, leaving it with six categories for analysis. Domain management, which includes network-facing functions and near real-time controllers, captured almost 46% of the market with $2 billion in combined revenue.

Distributed cloud infrastructure management generated $689 million last year, followed by AIOps (artificial intelligence for IT operations) with $558 million, service orchestration with $509 million, network data management with $430 million, and component lifecycle management at $176 million, according to Appledore Research. SDxCentral