Video monetization and optimization market shares 2014

For those of you, loyal readers who have followed this report, now in its third edition, there will be no surprise as to why monetization is making its appearance in the title and figures so prominently in the analysis and opinions voiced there.

Mobile video optimization was a solution brought forward by web optimization, browsing gateway and mobile video vendors that was positioned as a means to drastically reduce the volume of video transiting through a mobile network. With a combination of lossless (caching, pacing…) techniques aimed first at reducing the inherent waste of delivering videos created for the internet and laptops in a mobile network, the solution evolved towards aggressively reducing video volume through lossy (transcoding, transrating) techniques.

Vendors in this space have evolved their offering from a broad, binary application of the technology, essentially proxying and optimizing all video traffic all the time to a more granular, targeted implementation that performs optimization to portion of the traffic, at specific points in time in specific locations, driven by policy engines or relying on network congestion detection, either on explicit indication from the RAN or interpolation relying on the state of the TCP traffic. Most vendors are also now launching customer engagement tools, sophisticated analytics or new video charging capabilities to enable early monetization plays.

As usual, I provide market share calculations in term of deployment per vendor, the unit being one operator / country. For instance, Verizon Wireless counts for one deployment, even though the operator might deploy 40+ data centres. Groups such as Vodafone, Deutsche Telekom or Telefonica count for each of the properties where the technology is deployed.

Market shares

1. Flash Networks
   Flash Network’s market share is 40% . It is the market share leader and has grown faster than the market since the last update, through organic growth and acquisition of Mobixell Networks.
2. Citrix
   Citrix’ market share is 30%. The company has grown faster than the market  since the last update.
3. Openwave Mobility
   Openwave Mobility's market share is 8%. The company has grown faster than the market since the last update.
4. Venturi Wireless
   Venturi Wireless markets is 8%. The company has lost market shares since the last update.
5. Others
   Allot, Avvasi, NSN, Opera, Vantrix (in alphabetical order) share the remaining 14%.

The market share calculations are based on a proprietary {Core Analysis} database, collecting data such as vendors, resellers, value of the deployment in term of total cost of ownership for the operator, operator name, country and region. These data are cross-referenced from vendors' and operators' individual disclosures. This database also includes over 130 opportunities in video optimization that are at different stage of maturity (internal evaluation, vendor trial, RFI, RFx...) and will close over the next 18 months.

The market share is valid at the time of publishing but change on a weekly basis, as new deals are awarded.

The market share in term of revenue is not published here but is available as part of my workshop on the video optimization market. The rankings in term of revenue per vendor are quite different from the installed market share, as different price strategies and different geographic markets are considered.

2013: the year of Big Video

In September of 2012, Vodafone Germany shocked the industry in announcing that video was consuming 85% of its LTE network.
As we have started a brand new year and vendors and operators alike are finalizing plans for Mobile World Congress, I thought it would be timely to review what the main vendors of video optimization were up to in 2012.

Allot / Ortiva Wireless:
The company, with the acquisition of Ortiva Wireless in April and Oversi in July has certainly made great strides in their strategic plan to provide a one-stop-shop traffic management solution to its customers. Between DPI, policy management, charging functions, transparent caching and video optimization for mobile, enterprise and fixed broadband, the company has a large tool set and addressable market. The challenge will be in the integration of the acquired technologies and talents, together with the formulation of a differentiating, competitive solutions offering that goes beyond analytics, charging, managing...

Avvasi:
The company has entered the fray with a fresh outlook. Leader in mobile video QoE measurement, they have been asked by their customers to help manage the video QoE and have launched a new product (Q-SRV) to "measure, manage and monetize" the video experience in mobile networks. One to watch in 2013.

Bytemobile / Citrix: 
The acquisition of Bytemobile by Citrix last year was a big shock for the market segment. The leading vendor in market share was acquired by an industry's outsider under the rationale to enter the mobile market. Citrix is definitely starting to tickle F5 and Cisco with Netscaler as a load balancer / proxy in mobile networks. What best introduction in the mobile space than the leader in mobile internet and video optimization? It will be interesting to watch how the replacement of Unison platform by the T3000 series, together with the suggested replacement of F5 by Netscaler plays out in the coming months...

Flash Networks:
The company started the year with a bang with 3 large tier 1 customers in video optimization (MTS russia, Globe telecom and Telekom Austria Group) announcements. Since then, it has been quiet, but the company has been busy upgrading and up selling their existing customer base. It will be interesting to see whether the company will take advantage of some of the market deals coming this year.

Huawei:
The secretive Chinese vendor has seen its market share in browsing gateway increase dramatically over the last 3 years with over 114 operators and this is the traditional Trojan horse for video optimization to enter the market. Mobile internet is becoming a focus on the company's strategy in the core network and it looks like the slides on video optimization presented last year in Barcelona are morphing into a product offering. It is still early days, but Huawei can move fast when needed.

Mobixell Networks:
The company has digested its 724 solutions acquisition and made good progress in converting its installed base and winning new deals in video optimization. Not enough to satisfy its investors, apparently, with the replacement of its CEO in December last year. The company is clearly looking for different growth parameters and it is likely that we will see more strategic activities from them in 2013.

NSN:
Not much to report for the Nordic giant, struggling to impose its vision of self organizing networks in core. The sale of its OSS/BSS division to Redknee will either see a refocusing or spin off of the video assets.

OnMobile:
The company acquired Dilithium assets in 2010 and has been struggling to have a video strategy since. They briefly considered video optimization, but video is no longer a focus for the company in 2013.

Openwave Mobility:
After a rough couple of years, seeing its CEO replacement, and the spin off to an equity venture, the company is starting to re focus and to reboot its traffic management and video optimization strategy. They have a few references in the space and are working to update their browsing gateway's installed base with video optimization. It will be interesting to see if they are up to the challenge in 2013.

Skyfire:
The company took the market by storm by launching cloud-based video optimization and simultaneously announcing Verizon Wireless as a customer and investor. Since then, with a fresh round of financing, the company has been expanding its reach to Europe. It will be good to see how cloud takes in mobile networks.

In September of 2012, Jens Schulte-Bockum , CEO Vodafone Germany shocked the industry in announcing that the 10% of their customer base who have elected to shift to their LTE network had a fundamentally different usage pattern than their 3G counterparts:

“Voice, text, other messaging and data - everything that makes money for us - uses less than 15%. The bit that doesn’t make money uses 85% of the capacity. Clearly we are thinking about how we can monetise that. ”

“The bit that does not make money for us” is mobile OTT video. As mobile video threatens to overgrow every other traffic types, operators start to look at ways to alleviate the costs associated with the necessary capacity upgrades to meet the demand, as well as strategies to monetize this large, untapped opportunity. I will be releasing my report "Mobile Video Optimization 2013" on March 15 where I will examine the latest strategies from the dominant vendors in the space.

NSN buoyant on its liquid net

I was with Rajeev Suri, CEO of NSN, together with about 150 of my esteemed colleagues from the press and analyst community on February 26 at Barcelona's world trade center drinking NSN's Kool Aid for 2012. As it turns out, the Liquid Net is not hard to swallow.

The first trend highlighted is about big data, big mobile data that is. NSN's prediction is that by 2020, consumers will use 1GB per day on mobile networks.
When confronted with these predictions, network operators have highlighted 5 challenges:

1. Improve network performances (32%)
2. Address decline in revenue (21%)
3. Monetize the mobile internet (21%)
4. Network evolution (20%)
5. Win in new competitive environment (20%)

Don't worry if the total is more than 100%, either it is was a multiple choice questionnaire or NSN's view is that operators are very preoccupied.

Conveniently, these challenges are met with 5 strategies (hopes) that NSN can help with:

1. Move to LTE
2. Intelligent networks and capacity
3. Tiered pricing
4. Individual experience
5. Operational efficiency

And this is what has been feeding the company in the last year, seeing sales double to 14B euros in 2011 and turning an actual operating profit of 225m euros. The CEO agrees that NSN is not back yet and more divestment and redundancies are planned (8,500 people out of 17,000 will leave) for the company to reach its long term target of 10% operating profit. NSN expects its LTE market share to double in 2012.

Liquid Net

Liquid networks is the moniker chosen by NSN to answer to the general anxiety surrounding data growth and revenue shrinkage. It promises 1000 times more capacity by 2020 (yes, 1000) and the very complex equation to explain the gain is as follow: 10x more cell sites (figures...), 10 times more spectrum and 10 times more efficiency.

The example chosen to illustrate Liquid net, was I think, telling. NSN has deployed its network at an operator in the UK where it famously replaced Ericsson last summer. It has been able since to detect devices and capabilities and adapt video resolutions with Netflix for instance that resulted in 50% less engorgement in some network conditions. That is hard to believe. Netflix being encrypted, I was scratching my head trying to understand how a lossless technique could reach these numbers.

The overall savings claimed for implementing liquid networks were 65% capacity increase, 30% coverage gain and 35% reduction in TCO.

Since video delivery in mobile networks is a bit of a fixation of mine, I decided to dig up more into these extraordinary claims. I have to confess my skepticism at the outset. I am familiar with NSN, having dealt with the company as a vendor for the last 15 years and am more familiar with its glacial pace of innovation in core networks.

I have to say, having gone through a private briefing, presentation and demonstration, I was surprised by the result. I am starting to change my perspective on NSN and so should you. To find out why and how, you will need to read the write up in my report.

Mobixell update and EVO launch

Mobixell was founded in December of 2000 to focus on mobile multimedia adaptation. Their first product, launched in 2002, was for MMS (Multimedia Messaging) adaptation and was sold through OEMs such as Huawei, Ericsson, NSN and others. It launched a mobile TV platform in 2008, and a mobile video optimization product in 2010. Along the way, Mobixell acquires Adamind in 2007, and 724 Solutions in 2010.


Mobixell has 16% market share of the deployed base of video optimization engines. Nearly 18 months after the launch of the video optimization module in their Seamless Access product suite, Mobixell launches EVO (for Evolved Optimization).


As a follow-up from the 360 degrees review of the video optimization market and in anticipation of the release of my market report, I had a recent chat with Yehuda Elmaliach, CTO and co-founder at Mobixell about their recent announcement, introducing Mobixell EVO.


"We wanted to address the issue of scalability and large deployments in video optimization in a new manner. As traffic grows for Gbps to 10's and 100's of Gbps, we see optimization and particularly;y real-time transcoding as a very CPU intensive activity, which can require a lot of CAPEX. The traditional scaling model, of adding new blades, chassis, sites does not make sense economically if traffic grows according to projections."
Additionally, Yehuda adds "We wanted to move away from pure volume reduction, as a percentage saving of traffic across the line to a more granular approach, focusing on congestion areas and peak hours."


Mobixell EVO is an evolution of Seamless Access video optimization that complements Mobixell capabilities with cloud-based services and benefits. The current Seamless Access product sits on the Gi Interface, after the GGSN and performs traffic management, shaping and video optimization. The video optimization features at that level are real-time transcoding, dynamic bit rate adaptation, offline transcoding and caching. Mobixell EVO proposes to complement or replace this arrangement with a cloud-based implementation that will provide additional computational power and storage in an elastic and cost effective manner for real time transcoding and for a hierarchical caching system.


Yehuda adds: "We have launched this product based on customer feedback and demand. We do not see customers moving their infrastructure to the cloud only for the purpose of optimization, but for those who already have a cloud strategy, it fits nicely. EVO is built on the principles of virtualization, geometric and automatic scalability and self replication to take advantage of the cloud architecture. "


An interesting development for Mobixell. EVO has no commercial deployment yet and is planned to be generally available in Q2 2012 after current ongoing trials and proof of concepts. Mobixell sees this platform being deployed first with carriers private clouds, then maybe using mixed private and public clouds. The idea is a waterfall implementation, where routine optimization is performed at the Gi level, then moves to private cloud or public ones as peak and surges appear on the network. The idea has a certain elegance, particularly for operators that experience congestion in a very peaky, localized manner. In that case a minimum investment can be made on Gi and complemented with cloud services as peaks reach certain thresholds. It will be interesting to see if Mobixell can live up to the promises of EVO, as security, bandwidth, latency and scalability can reduce the benefits of a mixed core / cloud implementation if not correctly addressed.
Mobixell is the second vendor to launch cloud based optimization after Skyfire.

Video optimization 2.0, market reset

On the heels of broadband traffic management's show in London last week, I thought it was time to take stock of that market segment as most vendors have launched their second generation product recently.

The market leader, Bytemobile (with 55% market share of deployments), started the trend this summer, when launching their new dedicated appliance, the T-3000. While this is not strictly a new version of their Unison product, it is a new computing platform sold as an appliance, departing from the software infrastructure business model. It is a first step towards solving some of the scalability issues experienced by the former solution, that saw dpi, policy, charging, web and video optimization inextricably amalgamated, whether you wanted to use all products or not. It gets rid as well of these expensive load balancers that were a high cost low yield proposition. Bytemobile is not the only one to experience price pressure and to take the knife to load balancing as the bandwidth requirements increase.

Mobixell, with 16% market share, seems to be at last in a position to digest their 724 solutions acquisition. While both product lines were quite complementary and had little overlap, it was a tough proposition for Mobixell to acquire 724, rationalize the technologies and workforce and face the ire of their traditional resellers and OEM (NSN, Huawei, Ericsson...). These were weary to see their supplier compete head to head with them in mobile broadband as Mobixell was rolling out 724 seamless gateway proposition along with their streaming and transcoding platform. The result saw Mobixell practice a tough price attrition in the market, helped by a low cost structure (724 solutions technology comes with integrated routing and inter process UDP-based communication that provides great scalability at low cost). Mobixell announced the launch of the new product release, called EVO, taking some of the computational power to the cloud. While some are skeptical about how much can be accomplished in the cloud for real time video optimization, it certainly is a good step towards cost and CAPEX containment worth exploring.

Flash networks with 8% has been quite busy on the market, silently plowing ahead, upgrading existing customers and winning a handful of deals. They have announced the new version of their product and are as well taking a big step in technology investment in that space.

Ortiva wireless with 3% market share has seen some very good progress this year, bagging some good high profile accounts, nearly tripling their year on year revenue, from an admittedly small footprint. The company has not announced a new version of their product yet, staying on their existing appliance model.

Skyfire labs, with 2% market share, a very innovative start up with a cloud based approach, evolved from their tablet and smartphone browsing app has also been able to grab some high profile tier 1 carrier, together with high profile VAR agreement with infrastructure vendors.

Openwave, with 1% market share, as you know, has had a very busy year on the corporate and financial front (here, here, here, and here), but has not announced much from a product, technology or customer standpoint. They are fighting for their survival and seem to be focusing to a return to financial stability (PS revenue increase, licensing of their patents to Microsoft) before investing further in technology or customer acquisition.

NSN has been developing their homegrown technology, wanting to end the reliance on their traditional partners in the space and came out with a very basic first attempt, focused around loss-less transmission. Nowadays, they are trying to push their "liquid" network concept and seem to be going at it in a fairly scattered manner.

These new product announcements signal, beyond the usual technology investment from start ups and established vendors, a market reaching a level of maturity fast, only 2 years after inception. Some might even say that this segment is commoditized before having really taken off. According to my calculations, this is a market that has generated about $90 millions for vendors this year. We can see from the number of players why price attrition plays an important role, even though traffic is increasing fast. We will see some consolidation and attrition in that space soon, as insufficiently capitalized vendors wont be able to sustain the market growth.

RGB networks, Juniper, Cisco, Huawei, Acision are all active in this space too, while others are preparing to enter the market. The market share are {Core Analysis} calculations, part of an upcoming report on the mobile video optimization space. Details and questions can be addressed here or at patrick.lopez@coreanalysis.ca.

Openwave CEO replaced - Consolidations to come in the traffic management market

Openwave announced today the resignation of its CEO, Ken Denman, quoting personal reasons. Denman is being replaced by Anne Brennan, the company's CFO.

As we have seen in a previous post, Openwave has been struggling for a while to deliver on the expectations it has raised in the market to provide an integrated traffic management solution for video.

After failing to show the results on over 40 announced trials, after failing to upsell their installed base with their next generation of products, after after buying back old patents and suing RIM and Apple, Openwave sees its CEO resign and, the same day,  is nominating Peter Feld as Chairman of the Board, replacing Charles E. Levine.

This market segment, born from the ashes of the wap gateway market, sees companies like Acision, Bytemobile, Comverse,  Ericsson, Flash Networks, Huawei, Mobixell, Nokia Siemens Networks, and others become the intelligent gateway in the network. That gateway's role is to complement and orchestrate DPI, charging, PCRF, video optimization. It is a key network function.

As most data traffic is browsing related, companies that used to sell wap gateway are the best positioned to capitalize on upselling a richer, more sophisticated gateway that can provide means for operators to control, monetize and optimize browsing and video traffic in their network.

Openwave has not been able to negotiate that trend early enough to avoid its market share being eaten up by traditional competitors and new entrants. Additionally, as the traffic has fundamentally changed since tablets and smartphones have entered the market, key capabilities such as TCP, web and video optimization were late to appear in Openwave's roadmap and proved challenging to build rather than buy.

Mobixell started the consolidation with the acquisition of 724 solutions last year.
I bet we will see more consolidations soon.