Market Analysis – 43222639 – Internet protocol IP multimedia subsystem hardware

Executive Summary

The global IP Multimedia Subsystem (IMS) hardware market is valued at est. $4.8 billion in 2024 and is projected to grow at a 14.8% CAGR over the next three years, driven primarily by 5G network build-outs and the decommissioning of legacy PSTN infrastructure. While demand for IMS capabilities is strong, the single greatest strategic threat to this specific hardware commodity is the rapid industry shift towards network function virtualization (NFV) and cloud-native IMS (cIMS) solutions. This trend replaces dedicated hardware appliances with software running on commercial off-the-shelf (COTS) servers, demanding a fundamental shift in our sourcing strategy from CAPEX-heavy hardware to a more flexible, software-centric TCO model.

Market Size & Growth

The global market for IMS hardware and its associated software/services is robust, fueled by telecommunication carriers' transition to all-IP networks. The core demand is for hardware components like Session Border Controllers (SBCs), Media Gateways (MGW), and various call session control functions (CSCFs). The projected growth is strong, though increasingly captured by virtualized and cloud-native solutions which leverage COTS hardware rather than purpose-built appliances.

[Source - est. based on data from Mordor Intelligence, MarketsandMarkets, 2023]

The three largest geographic markets are: 1. Asia-Pacific: Driven by massive 5G deployments in China, India, and South Korea. 2. North America: Mature market focused on VoLTE/VoWiFi expansion and enterprise UCaaS integration. 3. Europe: Steady growth from PSTN shutdown mandates and 5G network upgrades.

Key Drivers & Constraints

1. Driver: 5G Standalone (SA) Deployment. IMS is a mandatory prerequisite for Voice over New Radio (VoNR), the native voice solution for 5G SA networks. As carriers move beyond non-standalone 5G, investment in IMS core capacity is non-negotiable.
2. Driver: PSTN Decommissioning. Regulatory and economic pressures are forcing carriers globally to shut down legacy Public Switched Telephone Networks, migrating all voice traffic to IP-based solutions like VoLTE and fixed-line VoIP, all of which rely on an IMS core.
3. Constraint: Shift to Virtualization (NFV/Cloud). The most significant headwind for dedicated hardware. Carriers increasingly prefer deploying IMS functions as software (vIMS/cIMS) on general-purpose servers in their private or public clouds. This reduces vendor lock-in and shifts spend from hardware CAPEX to software licenses and cloud infrastructure.
4. Constraint: High Capital & Integration Costs. Traditional IMS hardware deployments require significant upfront investment and complex, lengthy integration projects with existing OSS/BSS systems, creating a barrier for smaller carriers and slowing replacement cycles.
5. Driver: Enterprise Unified Communications (UC). Growth in enterprise adoption of SIP trunking and hosted UC services (UCaaS) requires carriers to expand the capacity and security of their IMS networks, particularly at the edge with SBCs.

Competitive Landscape

The market is highly concentrated among a few large Telecommunications Equipment Manufacturers (TEMs). Barriers to entry are extremely high due to extensive R&D, deep intellectual property portfolios, and long-standing, sticky relationships with global carriers.

⮕ Tier 1 Leaders * Nokia (Finland): Offers a complete end-to-end, cloud-native IMS portfolio with strong integration into its 5G core and radio products. * Ericsson (Sweden): A leader in mobile core networks; its IMS solution is tightly integrated with its 5G core, providing a single-vendor network path for major carriers. * Huawei (China): Dominant market share in APAC and other emerging markets due to a cost-competitive and feature-rich portfolio, but faces significant geopolitical restrictions in North America and Europe. * Ribbon Communications (USA): A key player specializing in real-time communications, particularly strong in carrier-grade SBCs and enterprise edge solutions.

⮕ Emerging/Niche Players * Mavenir (USA): A disruptive, software-focused vendor championing a fully cloud-native, open-architecture approach to IMS and mobile networks. * Oracle (USA): Strong position in Session Border Controllers (SBCs) and policy control functions, often deployed within multi-vendor IMS environments. * Metaswitch (UK/Microsoft): A leader in cloud-native communication software, now part of Microsoft, powering the Azure for Operators offering. * ZTE (China): A major global player with similar strengths and geopolitical challenges as Huawei.

Pricing Mechanics

IMS hardware pricing is a complex mix of hardware, software, and services. The initial purchase is typically a CAPEX-heavy transaction, but a significant portion of the total cost of ownership (TCO) comes from recurring OPEX. The price build-up consists of the core hardware appliance (chassis, blades, processors), per-session or per-user software licenses for specific features (e.g., VoLTE, STIR/SHAKEN compliance), annual maintenance and support contracts (often 15-22% of net hardware cost), and professional services for deployment and integration.

The shift to virtualization is changing this model towards subscription-based pricing for the virtual network functions (VNFs), with hardware costs moving to the underlying COTS server infrastructure. The three most volatile cost elements for traditional hardware are:

1. Specialized Semiconductors (ASICs/FPGAs): est. +20-30% increase over the last 24 months due to supply chain constraints and high demand from adjacent industries.
2. Software License Fees: While list prices are stable, vendors are aggressively pushing subscription models, which can increase long-term costs compared to perpetual licenses.
3. Skilled Labor (Integration Services): Rates for specialized network engineers with IMS integration experience have risen by est. +10-15% due to talent shortages.

Recent Trends & Innovation

• Cloud-Native IMS Becomes Mainstream (2022-Present): Major vendors like Nokia, Ericsson, and Mavenir have fully containerized their IMS solutions to run on Kubernetes platforms. This allows for automated scaling and deployment in any private or public cloud environment, representing a major architectural shift away from dedicated hardware.
• Microsoft's Telecom Push (July 2020): Microsoft's acquisition of Metaswitch, a leader in virtualized IMS software, signaled the entry of hyperscalers into the core telecom network space, offering carrier-grade solutions on public cloud infrastructure (Azure for Operators).
• VoNR (Voice over New Radio) Goes Live (Q2 2022): T-Mobile US launched the first commercial nationwide VoNR service, a key milestone validating the critical role of IMS in 5G Standalone networks and triggering investment cycles at other carriers.
• Increased Focus on SBCs for Security (2023-Present): With the rise of sophisticated DDoS attacks and illegal robocalling, carriers are investing heavily in upgrading and expanding their Session Border Controller (SBC) capacity to secure the network edge and comply with anti-fraud mandates like STIR/SHAKEN.

Supplier Landscape

Regional Focus: North Carolina (USA)

North Carolina represents a significant demand market for IMS hardware, but not a manufacturing hub. Demand is strong, driven by the state's population growth and the presence of a major tech corridor in the Research Triangle Park (RTP). Major carriers like AT&T, Verizon, and Charter Communications are actively deploying 5G and upgrading fixed-line infrastructure, requiring IMS capacity expansion. While no IMS hardware is manufactured in-state, key suppliers including Cisco (major RTP campus) and Ericsson have a substantial local presence for sales, support, and R&D, providing excellent access to engineering talent and logistical support. The state's favorable business climate and robust IT labor pool make it an ideal location for network operations centers (NOCs) that manage this infrastructure, but all hardware will be sourced from outside the state.

Risk Outlook

Actionable Sourcing Recommendations

1. Mandate Dual-Architecture Bidding. To mitigate the High risk of technology obsolescence, all new RFPs for IMS capacity must require suppliers to provide two distinct proposals: one for traditional hardware appliances and one for a virtualized, software-only solution. Evaluate both on a 5-year TCO model to ensure future-proofing and alignment with the industry's shift to NFV, avoiding stranded CAPEX.

2. Qualify a Secondary SBC Supplier. To counter High geopolitical risk and increase price leverage, initiate a formal qualification of a secondary supplier for Session Border Controllers (SBCs), a critical and high-spend IMS component. Engaging a specialist like Ribbon Communications or Oracle alongside an incumbent (e.g., Nokia) can create competitive tension, potentially reducing unit costs by est. 5-10% and ensuring supply chain resilience.