To understand white box economics, we need to look at what happened in the computer industry.
Historically, computer manufacturers aggregated chips, hardware and software, and sold it all together.
However, in the mid-90s, new players made the industry more horizontal by offering the possibility to provide software (Microsoft) and hardware (Intel, Dell, etc) to several other players.
The manufacturers had been making 70% growth margins but today, this margin is split among all players amounting between 10% to 15% each.
The same thing can be seen happening with the telecom networks. Cisco, Juniper, Ericsson and Huawei can be regarded as IBM from the 70s as they sell with very high margins.
But customers now want to and can customize the devices such as routers and switches, using the hardware (Intel, Broadband, or any OEM) and the software (mostly open source) of their choice. So, they are now trying to bring the white box concept into the telecommunications industry.
How do the equipment vendors react?
Hardware manufacturers make money based on volumes. The only thing that is changing, is the distribution of the margin to different component providers.
Historical players at first resisted but they now understand that they will have to adapt their business models according to the changing demands.
All the companies that did not make the shift in the computer industry has gone out of business. And the same will happen with networks if they do not change.
How do the Telcos react ?
The operators want to adopt this because of business reality. The traffic they manage is growing at a fast scale (videos) and their Capex and Opex are also growing with the traffic.
Therefore, they need to build extra capacities, which is expensive, especially if they do it the old way.
Ericsson, Huawei & Co. can make rebates on volume, but they will still have flat fixed costs. And at the end of the value chain, they can hardly make subscribers pay for more and more for data.