Fujitsu 2014 Annual Report Download - page 46

MARKET TRENDS
2013 Global Market Trends
System Products: The server market in Japan increased 1.5%
year on year to US$5.0 billion. In 2013, the domestic market saw
an increase in shipment amounts of x86 servers in particular, as
their share of the overall market grew. The average price of x86
servers increased by more than 10% from the previous year due
to a rise in materials costs as a result of the weaker yen and
enhanced performance enabled by server integration. Moreover,
partly due to the economic recovery, there were prominent large-
scale business deals in the fields of finance, manufacturing, and
the public sector. Meanwhile, the market for RISC servers such as
UNIX servers was driven mainly by replacement demand.
Network Products: In Japan, the optical transmission market
grew year on year. The growth was driven by ongoing invest-
ment to enhance backbone infrastructure as the full-scale roll-
out of LTE services expanded. In the IP equipment market,
including routers, the cycle of investment to enhance carrier
routers in the face of increasing traffic came to an end, but the
market saw greater investment year on year in routers and
switches for use in LTE networks. The mobile infrastructure
market also reported year-on-year growth, as the full-scale
rollout of LTE services expanded investment in LTE base stations
and other equipment, although 3G investment ran its course.
The North American optical transmission market grew com-
pared to the previous year as companies continued their
investments to strengthen mobile backhaul and other back-
bone infrastructure to cope with the rollout of LTE and increased
data traffic.
Outlook for 2014
System Products: The server market in Japan is projected to
decline by 10.1% to US$4.6 billion. The x86 server market is
expected to maintain growth given the penetration of cloud
computing and mobile devices. On the other hand, the high-end
and middle-range mainframe server and UNIX server markets are
expected to be driven mainly by replacement demand.
Globally, the server market is expected to grow 1.6% year on
year to US$54.2 billion amid increased demand for datacenters
driven by expansion in emerging markets and the adoption of SNS
and cloud computing.
Network Products: In Japan, the optical transmission market
investment in LTE networks is expected to remain strong, while
investment in 100 Gbps optical transmission and the integration
of optical transmission and packet processing is expected to
enter full swing atop efforts to cope with increasing traffic and to
simplify network configurations. In the mobile infrastructure
market, 3G investment is winding down, but investment is pro-
jected to expand in order to increase LTE service area coverage
and transmission speeds.
In North America, the optical transmission market saw the
latest round of investment by major communications carriers in
the US-wide rollout of LTE network services come to an end, but
active investment is expected in 100 Gbps optical transmission
and the integration of optical transmission and packet process-
ing as networks prepare for the shift to “All IP” and the even
higher transmission speeds.
OPERATIONAL REVIEW AND INITIATIVES
Fiscal 2013 Business Results
The System Platforms sub-segment, comprising System Products
and Network Products, reported sales of ¥615.7 billion, an
increase of 10.9% from the previous fiscal year.
System Products: Sales of system products for the fiscal year
ended March 31, 2014 increased 3.7% year on year to ¥272.7
billion. In Japan, sales rose on the contribution of large-scale
systems deals in the public sector and growth in x86 servers,
storage, and other systems, despite weak performance in
UNIX servers.
Network Products: Sales increased 17.4% year on year to
¥343.0 billion.
While demand for 3G communications equipment to deal
with the increased volume of communications traffic has run its
course, overall sales increased on spending by telecommunica-
tions carriers to increase LTE service area coverage and transmis-
sion speeds. Sales of optical transmission systems outside Japan
increased significantly with the deployment of LTE networks and
investments to reinforce optical transmission equipment in
preparation for the shift to “All IP.” Sales of optical transmission
equipment in Japan increased sharply due to a surge in demand
for use in LTE networks.
Sales of mobile systems and network solutions rose signifi-
cantly due to the full-scale rollout of LTE, although sales of 3G
equipment contracted.
Operating profit for the System Platforms sub-segment
totaled ¥57.9 billion, an increase of ¥8.6 billion from the previ-
ous year. Overall, System Products results were flat as an increase
in costs, due to the impact of foreign currency exchange, was
covered by highly profitable business deals in Japan. Profit from
Network Products increased significantly, driven by strong perfor-
mance in mobile systems and optical transmission systems.
044 FUJITSU LIMITED ANNUAL REPORT 2014
OPERATIONAL REVIEW AND OUTLOOK
Technology Solutions/System Platforms