It’s no secret that  that both industrial and government R & D spending has substantially decreased in the U.S. Yet that spending is the engine of innovation, purveyor of productivity enhancements and technology competitiveness. R&D for a technology company is its seed corn, the source of its future growth and revenues in the form of products, intellectual property or services that are often years away from being monetized.   

While companies have substantially cut back spending on research, they are collaborating much more with universities in an effort to commercialize academic research projects. There is strong evidence that successful transfer of advanced research form University to Industry requires the faculty member(s) and students to directly engage in the transfer process by becoming entrepreneurs.

Professors Panel Session: Transforming Academic Research into Commercially Successful Products and Intellectual Property (IP)
Thursday, March 3, 2011 at TiE-SV in Santa Clara, CA (6pm-7pm networking dinner, 7pm-9pm program)

In this dynamic and enlightening panel session, four seasoned veterans of BOTH academia and Industry will tell their stories and provide perspective, opinions, do’s and don’ts to successfully transition from academic research into commercially viable technologies.
This panel will zero in on issues and answers in how this type of technology transfer has been successfully done with lessons learned and caveats revealed. 

All four of the panelists are now or were University Professors.   Three of the four panelists have done groundbreaking research in network communications technologies, e.g. congestion avoidance, optical switching, core routing, broadband wireless transport with VPN client, etc.  One of them was also responsible for defining the business model of the fabless semiconductor company. The other distinguished panelist has supervised research projects as Dean of Engineering at UCLA.   To learn more, go to:

http://sv.tie.org/event/professors-panel-session-transforming-academic-research-commercially-successful-products-and-i

If you are an IEEE member and want to attend, please email: [email protected] with your IEEE membership number to get the discount code for $20 (vs $50) on line registration at the TiE-Slicon Valley web site.

For more on the brewing R & D investment crisis and proposed solutions, please read this article:

http://viodi.com/2011/02/27/can-u-s-reverse-the-decline-in-rd-spending-global-competitiveness-at-risk/

For more on IEEE ComSocSCV, including meeting archives pdf’s,  please visit:

http://www.ewh.ieee.org/r6/scv/comsoc/index.php

The Deah of Network Infrastructure Companies- Will Only 3 remain standing?

Most network infrastructure equipment companies, with the exception of Chinese based Huawei and ZTE, seem to be either losing money or exiting the business.This includes the big three of Alcatel-Lucent, Nokia-Siemens and Ericsson, but also a whole lot of niche market players that have been around for a very long time, e.g. Fujitsu, NEC, Hitachi, ADC Telecom, ADTRAN, etc.

The telecom infrastructure market seems to be dominated now by tje Chinese dynamic duo of Huawei and ZTE which are breathing down LM Ericsson’s neck to be the leader in wireless infrastructure gear.  Chinese upstart UT Starcom is not too far behind them.

Many U.S. and European companies that were keen on telecom equipment have quit in the last few years.  After making many acquisitions in the late 1990s, Cisco has pretty much exited the telecom transmission business (they still sell some optical network gear and switches + routers to telcos). Intel spent over $10B on telecom equipment company acquisitions but sold those all off at a loss. Motorola Networks is being sold to NSN, but that’s being contested by Huawei. The smaller players have just disappeared.  It is not clear what the strategy is for NEC and Fujitsu, but we guess they are concentrating on sales in their home market in Japan and also looking to sell equipment in Asia-Pacific region (especially China).

Huawei

Network Computing reports, “Huawei is taking the wraps off of its 2-year-old presence in North America, with the unveiling of its cloud computing strategy and the opening of an R&D facility. The China-based telecommunications equipment vendor has been averaging annual growth in the 30 percent range, says John Roese, who was recently appointed head of R&D in North America for Huawei.

Serving 45 of the top 50 global telecom operators, the company had revenues of $22.8 billion in 2009 and was expecting revenues of $27 billion for 2010. Its mobile device subsidiary was predicting revenues of $4.5 billion, up 21.6 percent year-over-year. North American revenues are expected to exceed $1 billion in 2011.

Roese, who was previously the Nortel CTO, says Huawei is heavily focused on R&D and disruptive technologies. Our culture tells us it is a great thing to do something disruptive, he says: “I tend to seek out places that will have a lot of action … disruptive innovations.”

Almost half of the company’s 100,000-person global staff–47,000–are engineers, including almost 1,000 technical staff in North America. When the company was deciding where to base its disruptive expertise, North America was the choice, Roese said. After setting up operations in Canada in 2008, the company has been tripling its staff every year, hiring expertise from both the telecom and computing fields and looking for people who want to reinvent the industry.

Historically, Huawei has been focused on the carrier infrastructure space, with a strong device component including smart phones and smart cards. Going forward, the company is looking to move up the stack. “

http://www.networkcomputing.com/wireless/huawei-comes-out-of-stealth-mode.php

ZTE

In an article today, Reuters Canada states, “ZTE is gunning to be among the world’s top three telecom equipment makers in the coming years, a wireless executive told Reuters on Monday Feb 13, 2010.  It would be a major move for ZTE, which is smaller than its better-known Chinese counterpart Huawei, and holds roughly 5 percent market share in wireless gear, according to Bernstein Research.

“We want to be in the top three in terms of revenues and market share,” said Xu Ming, vice-president of wireless services in an interview with Reuters-Canada at the Mobile World Congress in Barcelona.

Founded in 1985 in the southeastern Chinese city of Shenzhen, ZTE earned about half of its revenues outside China last year by selling both handsets and fixed and wireless network gear. It benefits from a low-cost base like Huawei, but its margins are lower because of its lack of scale in many business lines, according to analysts.  ZTE’s ambitions could be bad news for other telecom gear makers, notably the smaller European vendors Nokia Siemens Networks and Alcatel-Lucent, which have lost market share to low-cost Chinese rivals in recent years.  ZTE posted 2010 revenues up about 16.7 percent at $10.67 billion last year, while operating profit was up 26 percent at $396.5 million. Analysts called the results positive, given tough conditions in China, where operators cut spending by 20 percent after a binge in wireless buildouts in 2009.

Xu Ming, vice-president of wireless services for ZTE told Reuters, “”We want to be in the top three in terms of revenues and market share. Xu said international expansion was a major priority for the company. “Our strategy for the wireless business in the past 10 years has been to gain critical mass in China, then we expanded into emerging markets like Africa, Asia, and Latin America. Now we are bringing that push into developed markets like Europe.” 

Xu said he was confident ZTE could make its goal of reaching the top three.  “The trend is very clear. If you look at Alcatel Lucent or Nokia Siemens Networks, their growth rate is flat or shrinking, and even market leader Ericsson has a slow growth rate. For ZTE, if we can continue to grow at the very rapid rates that we have seen in recent years, we will soon take over one of the major vendors in terms of revenues.”

http://ca.reuters.com/article/technologyNews/idCATRE71D3U020110214

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LM Ericsson

Ericsson, still the world’s leading telecom infrastructure vendor, must surely be worried about the rapid ascent of Huawei and ZTE.  We believe Ericsson is in a better position than its European- American and Japanese rivals to resist the Chinese led onslaught, as its economies of scale give it higher sales and better profit margins.

Note: LM Ericsson is not to be confused with ST Ericsson, which is a joint venture of STMicroelectronics (NYSE:STM) and Ericsson (NASDAQ:ERIC).  For the latest financial results of the latter company, please visit:

http://www.ericsson.com/thecompany/press/releases/2011/01/1481961?WT.mc_id=hugin_press_rss

Expert Analyst Comment

Tim McElgunn, Chief Analyst, Pike & Fischer had this to say:

“Yes, it has been a hard few years for network equipment vendors and some companies have exited or pulled back, but the trends are looking up somewhat.   Alcatel-Lucent  and NSN both turned in profitable 4Qs; Ericsson reported profits up more than tenfold in the fourth quarter, boosted by a jump in mobile broadband sales.  Adtran had a great year, and Ciena reported very strong revenue: its loss was primarily due to the costs of integrating its chunk of Nortel.

As for the myriad small guys who disappeared, most were acquired and the technology continues on as part of larger NEMs’ portfolios.

Rapid growth in HD video, wireless broadband, more symmetrical traffic patterns on the up and downstream, etc are all driving bandwidth demand and the resulting demand for infrastructure and integrations services at all points of the network.

No doubt, all need to improve efficiencies and cut costs. Alcatel-Lucent particularly has struggled to find the synergy benefits promised at the time of the merger.

Huawei and ZTE are obviously significant competitors, but I don’t think they are quite ready to take over the world. Like everyone else, they must compete on technology, product quality and innovation. They also face barriers created by national security concerns and other, less open protectionist concerns. Specific to the Moto acquisition, Huawei has raised some objections but is unlikely to have enough political juice in either the U.S. or EU to scuttle the deal.

The total number of broadband subscribers continues to expand, just more slowly.  That said, growth drivers include commercial services, advanced advertising, and content. Additionally, we are seeing valued added services coming to market, such as premium support (see Time Warner Cable Signature Home) or home security and automation, etc. that should help maintain ARPU and margins going forward.

In addition, if they are successful with their emerging strategies, service providers will be among those who benefit from OTT, leveraging their dominance of broadband access, existing content relationships, increasing multi-screen capabilities, and (reportedly) improving interfaces and ease of use to attract and retain users that might otherwise go to more pure play OTT options. Still, companies like Roku and Boxee at the new/small end and Google and Apple at the established/huge end will all benefit from over the top. Other beneficiaries include other tablet makers and consumer electronics companies, who are adding features to take advantage of OTT directly into their gear.  The business models for service providers are evolving incredibly quickly. Nearly all of that evolution translates into increased pressure on infrastructure. Smart companies on both sides of the equation will find ways to turn the resulting disruption to their advantage, those that cannot will lose ground rapidly.”

For a review of P&F 2011 Broadband Outlook report please go to:

http://viodi.com/2011/02/13/pf-2011-broadband-outlook-examines-over-the-top-vs-pay-tv-services/

Bottom Line

In conclusion, we wonder if only three players- Ericsson, Huawei and ZTE- will be the only dominant telecom equipment infrastructure vendors in coming years or if  there’ll be room for more vendors (as Tim McElgunn suggests) .  And what new services/technologies will drive revenues and profits?  What do you think?

Prof. James Won-Ki Hong and his students Yeongrak Choi and Yoonseon Han from POSTECH, developed and provided an iPhone application for ComSoc members with an Apple iOS device such as the iPhone, iPad or iPod Touch.

The App was developed as part of a term project for a graduate course called, “Smartphonomics: Convergence using Smart Phones and Devices” in the Division of IT Convergence Engineering,POSTECH, Korea.  

A beta version of this application was demonstrated at the ComSoc committee meetings atGlOBECOM 2010 in Miami last December. It showed how ComSoc members might soon be able to access ComSoc online content via their smartphones. The ComSoc iPhone App is now available to our members from the Apple App Store for free. 

The team plans to provide similar native smartphone applications for Android-based mobile devices soon.

With the allocation of the last block of IPv4 addresses by the Internet Assigned Numbers Authority (IANA) , the move to IPv6 has become much more urgent. On January 31st, IANA assigned two large blocks of IPv4 addresses to the Asia-Pacific Network Information Centre, activating a rule under which the agency will give out the last of its IPv4 addresses. The rule states that when only five large blocks of IP addresses remain, one will be handed out to each of the world’s five regional Internet registries.

With the latest allocation to APNIC, the number of remaining IP address blocks is down to five. IANA is expected to assign the remaining blocks within a matter of days. After that, the regional bodies will have no higher source of addresses to turn to when they have assigned the addresses they hold. An IANA official said last week that he believes ISPs are accelerating their requests for addresses as the supply nears its end.

IPv4’s 32 bit address space allows for only about 4.3 billion unique Internet addresses, which client and web servers use to connect over the Internet by routing data to the correct destination. The remaining IPv4 addresses have been dwindling over the past few years. While the last block of IPv4 addresses have been allocated to regional registries, they do still have some to distribute. And there are millions of unused IPv4 addresses. But those unused IPv4 addresses will likely be allocated very soon.

IPv4 address exhaustion will likely impact Asia first. With 24 million IP addresses used by APNIC in January 2011, and only around 50 million addresses left in its pool, exhaustion is expected to occur in the next few months. Europe will be next (probably towards the end of 2011), and North America will follow (in 2012).

Hence, it’s now more important than ever for ISPs to transition from IPv4 to IPv6 addresses. IPv6 has a 128-bit address space, which could be used to assign an almost unlimited number of addresses. To help make the IPv6 migration easier, many major technology companies – including Facebook, Google, Microsoft and Yahoo – will be participating in World IPv6 Day later this year, a test to make sure their systems are ready to make the switch.

Many pundits say that making the switch won’t be easy for ISPs. Even though IPv6 was standardized more than a decade ago, there has been no real incentive to upgrade networks’ addressing compatibility. But with the proliferation of mobile devices, M2M communication endpoints, and other “connected” gadgets, there is a real need now for more IP addresses. Dave Thaler, software architect at Microsoft and Internet Engineer Task Force (IETF) co-chair, said, “The IETF has actually been preparing for this day for a long time. … [W]e’ve developed transition technologies to ease the transition to IPv6, while also looking at the impact of carrier-grade NATs [network address translations]. In short, the depletion of the IANA IPv4 address pool is not a crisis, and will not have any notable short-term effects.”

For an in depth presentation and panel session on this important topic, please attend the February 15, 2011 ComSocSCV meeting in Santa Clara, CA: The meeting is free, but we do request a small donation for food and drinks served from 6pm- 6:30pm.

IPv6 Migration, Business Continuity, Implementation Gaps

http://www.ewh.ieee.org/r6/scv/comsoc/index.php

Global mobile data traffic will grow 26 times between 2010 and 2015, to 6.3 exabytes–a billion gigabytes–per month, according to the latest update report from Cisco’s Visual Networking Index Global Mobile Data Traffic Forecast. Additionally, fully two-thirds of all mobile data traffic will be video by 2015, the report predicted. The figures again underscore the challenges operators face as they try to manage the tidal wave of mobile data that may saturated their wireless networks.  According to the report, mobile data traffic grew 159 percent in 2010, roughly 3.3 times faster than fixed Internet traffic.  That was higher than the 149 percent growth rate Cisco had predicted.

This annual forecast is seen as a key benchmark for measuring and predicting data traffic., Doug Webster, Cisco’s senior director of worldwide service provider marketing, said four main factors will drive mobile data traffic in 2015. First, there will simply be more mobile devices; Cisco predicts that by 2015 there will be 5.6 billion mobile devices and 1.5 billion separate machine-to-machine nodes–roughly one mobile connection for every person in the world. Additionally, he said, devices will have better computing capabilities and the ability to access high-bandwidth content; average bandwidth speeds are expected to increase 10-fold by 2015; and more people will consume rich content like video.  “The lines between fixed and mobile will converge, and the trends we’re seeing on the fixed will be seen on mobile,” Webster told FierceWireless.

Thomas Barnett, the senior manager for service provider marketing at Cisco, said carriers are investing billions of dollars in research and development to try to get ahead of the traffic. Barnett said carriers likely will rely on tiered pricing models and femtocells as methods to slow data use and offload it from the wireless network.

AT&T Mobility became the first U.S. carrier to move to usage-based pricing last year, and Verizon Wireless has indicated it may follow in the not-too-distant future. “This is business for the providers,” Webster said. “They want to have more subscribers. They’re not trying to minimize the amount of traffic, but they want to make sure they are compensated appropriately for the cost of delivering it.” 

http://www.cisco.com/en/US/solutions/collateral/ns341/ns525/ns537/ns705/ns827/white_paper_c11-520862.html

http://www.fiercemobilecontent.com/press-releases/cisco-visual-networking-index-forecast-projects-26-fold-growth-global-mobil

But tiered pricing and metered data transfers won’t be enough to prevent wireless network saturation.  The WSJ reported this week that AT&T and other carriers are looking to offload mobile data traffic to “city wide” WiFi hotspots in the not too distant future.  This past May, AT&T launched a so-called “Wi-Fi hotzone” —an industry term for a large, outdoor Wi-Fi hotspot—in New York City’s Times Square, in order to test the technology as a supplement to its cellular coverage.

In subsequent months, AT&T, which uses gear from BelAir and others, added hotzones in downtown Charlotte, N.C., and the neighborhood surrounding Chicago’s Wrigley Field. In December, the carrier said it would add more Wi-Fi networks in New York City—including a hotzone launched last week in Rockefeller Center—as well as in San Francisco’s Embarcadero Center.

 http://online.wsj.com/article/SB10001424052748704124504576118353354099780.html#ixzz1D1sdd1Gk

Meanwhile, Ruckus Wireless, a pioneer in the development of smart WiFi for enterprise and service provider markets, has announced that Chongqing Telecom will be launching a new innovative service, Tianyi Broadband, with the support of Ruckus’ smart WiFi. Chongqing Telecom, a division of China Telecom, aims at a large-scale, citywide deployment of WiFi hotspots with Tianyi Broadband.

http://voice-quality.tmcnet.com/topics/voice-quality/articles/141184-ruckus-wireless-chongqing-telecom-launch-tianyi-broadband.htm

Comment:  What we find surprising, is that Cisco is only benefiting indirectly from the surge in mobile data/ video traffic.  You won’t find Cisco gear in any cell tower.  Having shut down their WiMAX RAN operations last year, the company has no presence in mobile broadband = either in wireless access or backhaul.  Today, Cisco’s participation in mobile data networks seems to be limited to selling Ethernet switches, IP routers and IP NGN back end network management systems/OSS’s (mostly to developing country network operators).

The company does sell some wireless gear- enterprise WiFi solutions for campuses as well as home WiFi routers.  But those markets have nothing to do with the cellular networks that carry mobile data or video traffic.  For several years, we’ve wondered if the Cisco has any intentions to participate in the Radio side of mobile data networks. 

Other References:  articles by this author on network operators ability to cope with the mobile data traffic explosion

http://viodi.com/2010/08/01/conundrum-continues-mobile-video-drives-mobile-traffic-but-for-how-long/

http://www.wimax360.com/profiles/blogs/how-will-wireless-network

http://viodi.com/2010/10/07/exponential-growth-in-m2m-market-dependent-on-important-network-enhancements/

http://viodi.com/2010/10/15/ethernet-mobile-backhaul-equipment-predicted-to-spike-in-2010-and-continue-growing-infonetics-and-abi-research/

The IEEE 1901,standardi was finalized in December 2010 and published this week.  It is of keen interest to manufacturers and service providers rolling out home networking services such as smart energy, transportation and Local Area Networks (LANs).  The BoPL standard can be purchased at the IEEE’s website (www.ieee.org) or accessed from the  IEEE Xplore Digital Library by IEEE Xplore subscribers.

IEEE 1901 compliant networking products will deliver 500 Mbps data rates in LAN applications, according to the IEEE.  In a last mile network it will be able to run over distances of up to 1500 meters.  That latter distance would support last mile transmission to and from Fiber to the Node or to the Neighborhood (with GPON likely used as the fiber point to multipoint transmission system)

The new IEEE 1901,standard leverages two different PHY layers: one based on OFDM modulation and another based on Wavelet modulation (as developed by HomePlug Powerline Alliance to transmit data over standard AC power lines of any voltage at transmission frequencies of less than 100 MHz).  One or both of these PHY layers can be included in standard compliant BoPL implementations.

Home Network Applications:  A service provider rolling out home networking services to consumers could use the BPL technology to complement wireless LAN coverage to overcome wireless LAN distance limitations and obstructions in a home or even to complement a hotel chain’s network WiFi coverage.   However, in that application BoPL will compete with MOCA- the cable based home networking distribution system  In the future, it will be one of the modes of ITU G.hn the all encompasing home networking standard that has yet to be deployed.

Vehicular Applications:  Using the data rates and range prescribed within the IEEE 1901 standard, leading edge developers can deliver audio visual entertainment to the seats of airplanes, trains and other mass transit vehicles, and enable electric vehicles to download a new entertainment playlist to the A/V system while the car is charging overnight.

Other Applications:   Multimedia data will be carried over longer distances in hotels and other multistory buildings to complement wireless networks.  For many years it was thought that would be the “killer app” for VDSL, but it still hasn’t happened yet.  Instead, it seems like hotels, multi-tenant buildings, and high rise office buildings may be able to use BoPL for high speed communication

This new IEEE 1901 standard has the potential to also help utilities, service providers, consumer electronics companies, smart-meter providers and home appliance manufacturers.

Light Reading’s Opinion:

Light Reading’s Cable Site Editor, Jeff Baumgartner, believes that this standard will be in competition with ITU G.hn. He states,  “IEEE P1905.1, is being dressed up as a potential G.hn competitor because it would create an abstraction layer to manage those home networks that use a blend of physical layers. Because that IEEE work doesn’t necessarily involve new chips that might, for example, integrate Wi-Fi, HomePlug and MoCA on the same piece of silicon (though we’d never put it past Broadcom Corp. (Nasdaq: BRCM) to tackle such an effort), G.hn backers view 1905 as complementary to what they’re doing. (See IEEE to Blend MoCA, Powerline & Wi-Fi .)

Ensuring that this coming abstraction layer works on top of G.hn was the “number-one topic” discussed at the 1905 kickoff meeting in December, claims Chano Gomez, the co-chair of the HomeGrid Forum committee (the marketing group behind G.hn) and the business development director for Lantiq Deutschland GmbH . Lantiq makes Wi-Fi and G.hn chips, so it’s got an incentive to draft off any initiative that looks to ease the management of heterogeneous home networks.

He adds that “literally half the group was pushing for this idea,” including people representing the interests of Intel Corp. (Nasdaq: INTC), Sigma Designs Inc. (Nasdaq: SIGM) and Marvell Technology Group Ltd. (Nasdaq: MRVL) (which all happen to be in the G.hn camp). He also acknowledges that, unsurprisingly, the concept met with resistance from folks that aren’t developing G.hn products

Gomez says G.hn, a standard under the auspices of the International Telecommunication Union, Standardization Sector (ITU-T) , is solving a different problem from IEEE’s 1905 project, so they should be viewed as harmonic helpers.

While G.hn uses a unified MAC and PHY to support coax, phoneline and powerline on the same chipset, 1905 looks to help manage myriad physical layers. In those instances, it may be managing a mix of home network devices that use Wi-Fi, Multimedia over Coax Alliance (MoCA) and Ethernet.

The IEEE standard will also look to create a meshing fabric that aggregates wireless and wired streams on the home network, and can switch automatically to another type of connection when one type starts to degrade in performance.

IEEE was not immediately available to discuss whether it’s already considering adding G.hn in 1905 at this stage of the project. But it’s early. Having a “stable draft” emerge within a year would be “an ambitious target,” 1905 Project Chair Paul Houze told Light Reading Cable last month. The 1905 working group has four meetings scheduled for this year, the next set for April 5 through 7 in Vienna.

Information posted by the working group expressly references technologies such as IEEE 1901 (Broadband over Power Line), 802.11, Ethernet and MoCA 1.1, with the caveat that the standard will be “extendable to work with other home networking technologies.”

That would suggest the window is open not just to G.hn but to technologies such as Home Phoneline Networking Alliance (HomePNA) .”

 http://www.lightreading.com/document.asp?doc_id=203961&site=lr_cable&f_src=lightreading_gnews

Other References:

Here’s the press release announcing the new IEEE 1901 standard:

Final IEEE 1901TM Broadband over Power Line Standard Now Published

http://www.businesswire.com/news/home/20110131005721/en/Final-IEEE-1901TM-Broadband-Power-Line-Standard

For more information see:  

IEEE P1901 Standards Group web page

http://grouper.ieee.org/groups/1901/

IEEE sets foundation for global powerline network standard, by FierceTelecom

http://www.fiercetelecom.com/story/ieee-sets-foundation-global-powerline-network-standard/2010-04-21?utm_medium=nl&utm_source=internal#ixzz1CpEEdpNP