IT firms eye telecoms

A robust communications sector offers an area of continued growth for IT companies hit by falling demand for technology

Tags: Hewlett-Packard CompanyUnited Arab Emirates
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IT firms eye telecoms
By  Roger Field Published  April 18, 2009 Communications Middle East & Africa Logo

Like many corporations involved in the ICT sector, Hewlett Packard has been suffering of late. Revenue from the firm's printing division was down by 19% during the first quarter of 2009, while income from desktop PC sales fell by 25%.

The downturn doesn't show many signs of letting up in the immediate future, with analysts at Gartner predicting that the computer business will continue to suffer, with PC shipments estimated to fall by 11.9% this year.

In contrast to the declines suffered by HP's product divisions, the only area where revenue didn't decline was in the company's services divisions, aided by last year's purchase of technology services provider EDS for $13.2 billion. As HP CEO Mark Hurd said in a letter to employees in February: "When you take HP services out of the mix, it's a very different picture".

For many ICT firms, telecoms is providing some relief from the economic downturn, and it is certainly helping HP.

Telecom plays a vital role in the fortunes of HP, according to Amin Kayal, HP Middle East's industry and sales director for the recently formed Communications, Media and Entertainment unit, which sits in HP's Technology Solutions Group.

"Telco is probably the single largest vertical in HP," Kayal says. "Our customers there do a significant amount, probably more than 10% of the business of HP is done through telco."

HP's Communications and Media Solutions team was created earlier this year to address the needs of telecoms operators and network vendors, says Erwan Menard, VP and general manager of the recently formed unit. Menard says that HP has been involved in the telecoms industry for 30 years, and that the new unit consolidates the company's telecoms and digital content management software with services capability, with the aim of accelerating solution development and delivery.

Menard told CommsMEA that HP had formed the department through the merger of existing country based consulting teams and product teams.

In the Middle East, HP counts Etisalat, Wataniya and Turkcell among its customers, and it provides telcos with services from fault and service management, customer provisioning, to business support systems such as mediation, billing and subscriber management. The digital media area, which Amin describes as "the bridge between telco and media companies", is catered for through the alliance of the communications and media units, and it is this category which Menard says is a prime market for the Middle East.

"The attractiveness of high tech devices in the Middle East shall translate into innovation in bridging between the web and telecom," Menard says. "That exposure of the telecom network to the web is an important priority."

Not all of the areas that the unit will focus on are currently being catered for by the Middle East arm of the unit, but it is something that is being worked on, Kayal says. "HP is very successful in North America, Latin America, in Africa and Asia at subscriber management, which is traditionally the backyard of the network operators," he says. "So that's an area that we are bringing here.

Traditionally, subscriber knowledge was part of the switch, and HP was one of the first companies that took that knowledge off switch and put it on a standard computer." Once the information has been transferred to a database it can be used to model user behaviour, providing an operator with vital information about the habits of its users.

Another area that Amin is keen to change is emerging markets' aversion to taking risks, which can tie them to fewer suppliers, he says.

"North American carriers tend to have very deep technical and business knowledge, so they tend to make their own architectures and they choose best of breed."

This is in contrast to less developed countries, which aren't so adventurous because they don't have the knowledge and the resources. "They tend to be a lot more risk averse," he says. "They end up getting less than the optimum state of the art solution because no one supplier in a market, in any industry, has all the latest and greatest in every area.

"HP has claim to fame in many areas, but not all of them, and we don't claim that and we don't offer it. We have a strategy that if we are not the best first or second in an area then we diversify, so we only play where we feel we have a competitive advantage. If you go to company ‘X' because it offers everything, then you have to live with what they offer you."

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