In 4Q17, the total IMS-VoLTE market (CSCF + HSS + VAS) grew 19% sequentially to $708 million. However, the market was down 13% compared to 4Q16.  The wireless/VoLTE component of the market, which accounts for over 80% of the total, fell 11% compared to 4Q16 as the seasonal increase was lower than expected.  While VoLTE services continue to gain in popularity, with 650 million subscriptions at the end of 2017, the overall penetration rate remains low at approximately 10% of total voice subscriptions. Therefore, much of the growth in the IMS market is ahead of us.  A discussion of what is hindering VoLTE adoption—and related IMS sales—will be included in the full report.

For the full-year 2017, the total IMS market was essentially flat compared to 2016, as a 6% increase in wireless/VoLTE-related sales offset a 23% decline in sales to wireline or fixed networks (including cable).  We forecast that the market will grow to reach $3.0 billion in 2018, as 17% growth in wireless/VoLTE will more than offset a decline in the wireline segment.  We have assumed that 5G system architectures will continue to use IMS for voice and other real-time communications services. If in the coming months the 3GPP elects to use an alternative method (like over-the-top) for voice services, then we will need to significantly reduce our forecast for IMS and allocate the investment funds to the alternative technology.