Analyst Takeaways from June 6th AT&T Management Meeting + 3 AT&T Talks @June 12 ComSocSCV Meeting!
http://online.wsj.com/article/BT-CO-20130606-712991.html
http://www.att.com/gen/press-room?pid=24340&cdvn=news&newsarticleid=36572&mapcode=financial
“AT&T’s management reiterated top-line revenue guidance of above 2% for FY13, but we believe a key strategic challenge for AT&T (and other network operators) is how to drive wireless ARPU up from today’s levels (across the business and consumer segments), leveraging the high quality network in an environment where the market is mature, competition is intensifying, and further wireless consolidation is now unlikely in the near term, based on our latest regulatory checks.”
■ Zealous versus pragmatic DOJ stance is cause for concern. As approval approaches for SoftBank’s investment in Sprint, and following recent shareholder approval of T-Mobile and MetroPCS, we see a new zealous stance by the DOJ and now see less potential for a merger between Sprint and T-Mobile USA. The DOJ appears excited by the fact that wireless network operators have no choice but to invest, even if incremental returns are poor. This is coupled with the DOJ looking to limit access to spectrum in upcoming auctions.
■ Too soon for a change in capex intensity, but do not discount the potential for a “hard pivot” away from incumbent vendors. AT&T is deploying SDN (Software Defined Networking) outside the datacenter, including Central Offices, to best serve U Verse and LTE-based features and applications (such as cached video) at low latency. We see a laser-sharp focus on open and flexible white box switches, with Broadcom cited as a company in focus. The era of simply driving lower costs from incumbent vendors appears to be over.
3. Jefferies’ analysts Thomas Seitz, Kunal Madhukar and Ankit Sharma:
http://www.ewh.ieee.org/r6/scv/comsoc/index.php#current
Forbes Article at:
http://www.forbes.com/sites/connieguglielmo/2013/01/04/att-makes-foundry-a-verb-asks-employees-for-tips/
100G is real: Alibaba selects ZTE for 100G in China; Global 100G market growing; Ciena’s Perspective
Introduction
While there’s been a lot of buzz about 100G fiber optic deployments, it’s been the smaller network operators that to date have acutally built out such fiber optic networks. Those include: XO Communications, DukeNet Communications, ARSAT, Kansas City Fiber Network, ORION in Canada, Intercontinental Transmission Links for Research and Education Community (Internet2, NORDUnet, ESnet, SURFnet, CANARIE, and GÉANT) and others.
But many industry analysts and vendors believe the time for 100G is now here. That is, for telcos, cableco’s, governement agencies, and e-commerce companies to move to 100G OTN and/or 100G Optical Ethernet networks. Note that SONET/SDH topped out at 40G so is not an option for 100G PHY layer.
1. Alibaba Group has just announced a 100G network for China
ZTE’s ZXONE 8700 100G OTN series will be deployed to build Alibaba’s 100G transmission network. The first phase of the project will cover four MANs in Hangzhou, Tianjin and Beijing respectively. The ultra-large bandwidth, high capacity, and robust reliability of ZTE’s solutions, and the ability to provision a comprehensive range of services will serve the enormous networking needs of Alibaba, and support the continued high-speed growth of Alibaba’s operations. Alibaba is one of the world’s largest e-commerce companies, operating more than 10 platforms including Alibaba.com, Taobao Marketplace, Tmall.com, eTao, Alipay, Juhuasuan, Alibaba Cloud Computing and China Yahoo! When the construction of the broadband network is completed, it will carry most of Alibaba’s data traffic.
2. Market Research firms Ovum and Frost & Sullivan say 100G is growing rapidly
“Growth in 100G remains a bright spot in the optical networking industry, as annualized revenues exceeded $1bn for the first time ever. 100G port shipments in 1Q13 grew 41% and revenues grew 24% versus 4Q12, with annualized revenues surpassing $1bn for the first time. Twenty vendors shipped 100G for revenue in 1Q13 and more are slated to enter the market throughout the year. Even with the growth of 100G, 40G shipments were holding; however, 1Q13 was the first time the market declined versus the year-ago quarter and the rolling 4Q average declined 2%, indicating perhaps the 40G market is starting to slow.”
http://ovum.com/research/market-share-1q13-global-on/
Frost & Sullivan Estimates Global 100G Market to Continue to Grow, Reaching $4.8 Billion by 2016
Enterprises and data centers are fueling the global 100G optical network market, which is predicted to increase at a 52.2 percent compound annual growth rate (CAGR), reaching $4.8 billion by 2016, according to market research firm Frost & Sullivan. Since its inception in 2010, the market has growth by 210 percent in 2011 and 387 percent in 2012, according to the research firm.
Alcatel-Lucent, Huawei, Infinera, Ciena and ZTE are the top five 100G vendors, accounting for over 76.2 percent of the market share by unit shipments. The research firm expects these firms to continue to dominate the market because of high barriers to market entry.
3. Ciena – a leading vendor of 100G optical networking equipment (selected quotes related to 100G)
During Ciena’s June 6th earnings call, CEO Gary Smith said, “the 100G (network) scale and beyond (is needed) to handle the sheer volume of connections and software-defined networking to make those connections as flexible and as valuable as possible.”
In answer to questions on 100G market and the competition, Mr Smith replied:
“I describe the 100G as one of the essential components for this next-generation architecture, along with OTN, converged packets and very tightly aligned software architectures as well, so I think it’s one of the key components. We clearly have market leadership in that space in terms of revenues and Tier 1 (carrier) wins and overall capacity that we’re now deploying on a global basis. We’re seeing a strong uptick in 100G. We expect to see that continue and also spread into other areas of the architecture. We’ve got WaveLogic 3, which is our third-generation platform. Many of our competitors are struggling to get their (frankly) first generation fully operational in the marketplace. We’ve got a lot of features and functionality and in fact, software intelligence that is part of WaveLogic 3, so increasingly more smart photonics there that we’re able to leverage, so we feel very positive from a competitive position around 100G, particularly when you encompass it with the complete solutions you’re putting together around OTN, control plane, converged packets and then the software architecture approach that we have.”
“We’re now seeing finally the Ethernet business services, and it’s the fastest-growing part of the enterprise data services market. And we expect the percentage of revenue coming from this business, Ethernet services, to increase. Our position is pretty strong in the marketplace, certainly, with the — even with wireless backhaul. And I think we support about 50% of the fiber-fed U.S. towers for backhaul actually, which we’ve been able to deploy over the last couple of years.”
In response to a question on what constitutes the non-telco portion of Ciena’s customers: “It’s cable operators, government, research and education. Some very large research and education networks around the globe, clearly a big requirement to move very, very large amounts of capacity around the enterprise space. There’s a lot of very high-end enterprises who want carrier-class interconnectivity lodged in between their data centers. We’re increasingly seeing opportunities in that space and also the content delivery network folks as well. So all of that together is about 25%.”
Thomas Mock – Former Ciena Senior Vice President of Corporate Marketing & Communications- added, “We’re now seeing 100G across all domains in the (optical) networks. And one of the ways you can get to those other domains in the network is to have the bigger architectural components. So that’s really what’s let us move from the core into the metro and also into the ultra long haul and undersea markets.”
Long time Ciena Network Architecture Executive Joe Berthold (PhD-Physics) wrote this author, ” Many network operators are making the transition to 100G. Many of our customers were waiting for our WaveLogic3 cards, which went GA at the end of last year. These cards support longer distances for 100G, are denser and more power efficient, and have the new ASICs capable of supporting multiple modulation formats.”
4. Analyst Opinion on the 100G Upgrade Cycle and Ciena
FBR’s Scott Thompson wrote in an email, “Ciena management made clear that it believes that the company is in the early stages of what is likely to be much more than a 100G upgrade cycle. On the earnings call, management emphasized that it thinks the industry is in the beginning stages of a significant shift in network architectures that will propel Ciena’s business into a much larger opportunity. We believe that the industry analyst community has not fully realized the scope of this opportunity.”
“Ciena will likely prove more strategically positioned than most in the communications space for what is likely to be one of the most significant transitions in the networking sector in more than two decades.”
5. Another Analyst Opinion on Competition in 100G Network Gear
Note: Huawei, ZTE, Alcatel-Lucent, Ciena, Fujitsu, Cisco, Infinera, Xtera, NSN Optical (owned by Marlin Equity Partners), and other network equipment vendors are all competing in this space.
Raymond James Financial analyst Simon Leopold notes that Ciena is strong in the 100Gbit/s equipment and carrier Ethernet markets but he believes there is “evidence of 100G price competition and maybe discounts for larger Ethernet projects.”
Closing Comment:
According to Frost & Sullivan, the 100G market is mainly driven by the demand for high quality broadband network services, especially by the growing IP traffic and number of broadband subscription during recent years and in the future. Implementing a 100G optical network results in high network efficiency and reduced per byte transmission costs for data, the research firm noted.
Future 100G applications include: interconnection of cloud resident data centers, 4G LTE wireless backhaul, metro optical networks, submarine and ultra-long haul optical networks.
References:
Infonetics & IDC: Worldwide Carrier Ethernet Switch & Router Results and Market Forecasts
Infonetics: Carrier Ethernet S/Rs down in last Quarter, but expected to grow 8.8% CAGR through 2017
Market research firm Infonetics Research released excerpts from its 1st quarter 2013 (1Q13) Service Provider Routers and Switches market share and forecasts report, which tracks IP edge and core routers and carrier Ethernet switches (CES).
SERVICE PROVIDER ROUTER AND SWITCH MARKET HIGHLIGHTS:
Pushed lower by weakness in Europe, global service provider router and switch revenues declined 17% in 1Q13 from 4Q12, and is down 6% from the year-ago quarter (1Q12). North America was the only geographic region to buck the usually down Q1, posting a 7% sequential gain. EMEA (Europe, the Middle East, and Africa), Asia Pacific, and CALA (Caribbean and Latin America) all declined by double digits in 1Q13.
Cisco maintains its strong hold on the #1 spot in the overall carrier router and switch market with 39% revenue share in 1Q13. The competition for the next 3 positions in the carrier router and switch market remains tight, with less than 1 percentage point separating Alcatel-Lucent, Huawei, and Juniper Networks. Alcatel-Lucent edged ahead of Huawei for 2nd place in 1Q13. Private router company Compass-EOS recently announced NTT as a customer for its new core router that provides terabit-per-second connectivity to facilitate software-defined networking (SDN) and network function virtualization (NFV).
“The 1st quarter is normally down for routers and carrier Ethernet switches, so it’s better to look at the longer-term trends,” explains Michael Howard, principal analyst for carrier networks and co-founder of Infonetics Research. “The main growth drivers – the transition from TDM to packet and rising video traffic – are still in effect, the U.S. economy is slowly improving, and a number of large operators in the Euro zone intend to spend.” “Given these factors,” Howard adds, “We expect the router and Carrier Ethernet Switch market to grow at an 8.8% CAGR through 2017.”
REPORT SYNOPSIS:
Infonetics’ quarterly router and switch report provides worldwide, regional, China and Japan market share, market size, forecasts and trends for IP edge and core routers, carrier Ethernet switches and the IP edge market by application. Vendors: Alaxala, Alcatel-Lucent, Brocade, Ciena, Cisco, Compass-EOS, Ericsson, Fujitsu, Hitachi Cable, Huawei, Juniper, NEC, Tellabs, ZTE, others.
Here’s a chart of the leading Carrier Ethernet switch/router vendors (Cisco, Alcatel-Lucent, Huawei, Juniper, ZTE):
To buy report, contact Infonetics at: http://www.infonetics.com/contact.asp
Meanwhile, IDC reported that the worldwide Ethernet switch/router market (Layer 2/3) grew 2.1% year over year in 1Q13, while the worldwide router market decreased 7.9% year over year.
From a geographic perspective, the first quarter results found the Ethernet switch market was particularly strong in China where it increased 10.6% year over year, followed by Central and Eastern Europe, which was up 10.3% year over year. As a region, Asia/Pacific (excluding Japan) came in with a 6.6% increase, while the United States also performed relatively well in 1Q13 with an increase of 3.5% year over year. Western Europe remained an area of weakness, declining 6.2% year over year. On a positive note for Western Europe, this was an improvement over the double-digit year-over-year declines experienced in 3Q12 and 4Q12.
“While 10GbE continues to drive the worldwide Ethernet switch market, it is interesting to note the increasing divergence in the performance of the overall market across the various regions, and in some cases, specific countries,” said Rohit Mehra, Vice President, Network Infrastructure at IDC. “While GbE is still expected to hold its own for the foreseeable future, we expect 10GbE and 40GbE to drive the wired infrastructure market forward in the coming years, both in the datacenter as well as campus core deployments. But as the market evolves, we should expect there will be pronounced market differences across the various theatres.”
10Gb Ethernet switch (Layer 2/3) revenue increased 12.9% year over year to $1.87 billion while 10Gb Ethernet switch port shipments grew 37.6% year over year to 3.9 million ports in 1Q13. 10GbE continues to be the primary driver of the overall Ethernet switch market.
The worldwide Layer 4-7 switching market lost some momentum in 1Q13 and decreased 4.3% year over year. This was the first annual decline in more than three years.
The worldwide enterprise and service provider Router market declined 7.9% year over year and 13.0% sequentially in 1Q13. As with the Ethernet switch market, IDC saw very uneven performance across major geographies and countries this quarter. Asia/Pacific (excluding Japan) actually grew 4.2% year over year in 1Q13 while North America and the Middle East and Africa (MEA) regions were down only low single digits on an annual basis. Elsewhere, Japan, Latin America, and Western Europe all declined by more than 20% year over year. Specifically, Japan fell by 24.8%, Latin America by 22.5%, and Western Europe by 20.5% year over year, each a significant market move by any standard.
From a vendor perspective, Cisco’s Ethernet switch (Layer 2/3) market share in 1Q13 came in at 62.7% reflecting a year-over-year decrease from 64.1% in 1Q12, but a solid increase from 61.4% Cisco held in the previous quarter. Cisco’s market share in the fast growing 10GbE market segment was 66.7% in 1Q13.
An interactive graphic showing the relative market shares of the top 5 vendors in the worldwide Layer 2/3 Ethernet switch market over the previous five quarters is available here. The chart is intended for public use in online news articles and social media. Instructions on how to embed this graphic can be found by viewing this press release on IDC.com.
“While enterprise mobility is no doubt an area of focus for IT and network managers, the underlying wired infrastructure is also continuing to get mindshare, both in the enterprise campus as well as the datacenter, especially as IT looks to improving the application experience for enterprise users,” said Petr Jirovský, Senior Research Analyst in IDC’s Networking Trackers Group. “That said, the need to support a growing and diverse set of wired and wireless devices at the network edge will continue to keep the enterprise networking market relevant over the longer term.”
The IDC’s Worldwide Quarterly Ethernet Switch and Router Tracker provides total market size and vendor shares for the Ethernet switch and router technologies in an easy-to-use Excel pivot table format. The geographic coverage for both the Ethernet switch market and the router market includes eight major regions (USA, Canada, Latin America, Asia/Pacific (excluding Japan), Japan, Western Europe, Central and Eastern Europe, and Middle East and Africa) and 58 countries. The Ethernet switch market is further segmented by speed (100Mb, 1000Mb, 10Gb, 40Gb), form factor (fixed managed, fixed unmanaged, modular), and layer (L2, L3, L4-7). Measurement for the Ethernet switch market is provided in factory revenue, customer revenue, and port shipments. The router market is further split by product class (high-end, mid-range, low-end, SOHO) and deployment (service provider, enterprise) and the measurements are in factory revenue, customer revenue, and unit shipments.
http://www.idc.com/tracker/showproductinfo.jsp?prod_id=93
For more information about IDC’s Worldwide Quarterly Ethernet Switch and Router Tracker, please contact Kathy Nagamine ([email protected]).
IEEE Tour to Sprint’s M2M Collaboration Center & Fiber Optic POP in Burlingame, CA
- Offer new tools and capabilities
- Enable development through a universal framework and via partners
- Embrace, advocate and leverage open operating systems
- Accelerate speed to market
- Support and manage the ecosystem
- Ensure enabled services work in the most efficient manner
- Develop polices to guarantee “best in class” customer experience
- Accelerate time to market to realize potential revenue quicker (e.g. from 9 months to 4 months)
- Enablement and choice of 2G/3G/4G networks and related features
- Working with Sprint on the proper data plan for M2M communications (it’s not at all based on commercial cellular network data plans. Instead, it is a custom plan for each M2M partner company, depending on their bandwith and and latency/priority traffic requirements
- Sprint provides it’s lab resources and applications engineers (at the Center) free of charge to partner companies. They hope that will establish sufficient trust, so that the company developing and/or testing their M2M products/proto-types will use Sprint as their wireless carrier of choice.
Bob Metcalfe’s Closing Keynote at Ethernet Innovation Summit – May 23, 2013, CHM in Mt View, CA
Bob Metcalfe’s keynote wrapped up the 2 day, information packed Ethernet Innovation Summit, organized by NetEvents.org. It can be viewed at:
http://www.netevents.org.uk/celebrating-40-years-of-ethernet-innovation-closing-keynote
Here are Professor Metcalfe’s main points, which summarized this excellent event:
-A key lesson learned from the early development of Ethernet (at XEROX PARC) was how to innovate.
-In 2012, Carrier Ethernet (CE) data traffic eclipsed the sum of ALL legacy wire-line traffic, including T1 private lines! And CE traffic continues to increase rapidly.
-$70B CE equipment and services is estimated to be $70B in 2013; growing to over $100B by 2017 (Source: Vertical Systems Group)
-Verizon just announced it will be extending its fiber optic network to 120K new office buildings. That will facilitate a lot more fiber based Carrier Ethernet services to business customers.
-The MEF Services Operations committee was announced. It will seek to provide guidelines to manage operations for mutli-carrier Ethernet networks. The results will hopefully be more consistent contracts and clarification of different CE providers’ capabilities and a standardized ordering process that takes into account national regulatory factors as well as the greater diversity of CE services.
-Formation of the Cloud Ethernet Forum was announced as well as its relationship with the MEF. The new Forum will address the specific issues of scaling and applying suitable Ethernet services to meet the stringent demands of delivering cloud services. http://online.wsj.com/article/PR-CO-20130523-912875.html
NOTE: This new Cloud Ethernet Forum should NOT be confused with the MEF’s spec on CE Delivery of Private Cloud Services.
-“Our goal (at Xerox and 3Com) was to make Ethernet a commodity. And it’s been happening- in both silicon and boxes,” Metcalfe said.
-Interoperability ethic of Ethernet brand helped make it successful. It’s possible to conform to a standard, but not interoperate, because of different vendor equipment implementing different options in the standard. Interoperability “plug fests” for all versions of Ethernet went a long way to establish this ethic and thereby increase Ethernet’s market size.
-Rapid evolution of the Ethernet standard (IEEE 802.3), while maintaining backward compatibility was very important to Ethernet’s success. Different speed versions of Ethernet could be sorted out and determined by an auto-negotiation capability used at start-up time (before the information transfer phase).
-The reason Ethernet first ran at 2.94M b/sec (i.e. the version developed in 1973-74) was because there wasn’t room on the network interface card for a clock circuit, so he and co-inventor Dave Boggs derived the Ethernet clock signal from the system clock on the backplane (used to connect printed circuit boards). It turned out to be 2.94M b/sec.
-The next version of Ethernet (designed in 1978-79 by Ron Crane), ran at 10M b/sec and was the basis for the so called DIX (DEC, Intel, Xerox) specification published on September 30, 1980: “The Ethernet, A Local Area Network. Data Link Layer and Physical Layer Specifications.” Later that year, the spec was submitted to IEEE 802* as the proposed single standard for LANs.
*Note: From 1980-1982, the IEEE 802 committee had not yet been divided into working groups. The first IEEE 802.3 Ethernet standard – 10BASE5 (10 Mb/sec, Baseband transmission, 500m without repeaters) – was published in 1983.
-Panelists and Metcalfe observed that U.S. government and Corporate research is not what it used to be (it’s greatly decreased in the past few years). That’s not good for the innovation process.
During the Q & A part of this closing session, the audience was captivated by Bob’s war stories – like being told the commoditization of Ethernet would doom 3Com. In fact, the higher volumes of Ethernet products sold by 3Com enabled the company to survive and thrive. “3Com is most successful acquisition HP ever made,” Metcalfe said to applause from the audience.
Metcalfe told the now famous Ron Crane “ceiling tile” story -at least his version of it. (The author has heard Crane’s version). He then acknowledged Crane’s foresight by telling the “lightniing strikes” story. Crane insisted on designing lightning protection into 3Com’s Ethernet NIC for the IBM PC, which was neither in the IEEE 802.3 Ethernet standard, 3Com’s design spec, nor was it requested by 3COM’s customers. 3Com then sold 1,000 cards to a New York City bank which hedged its bets by buying 1,000 cards from a different Ethernet NIC vendor. Lightning struck the NYC building, the 3Com cards continued to work, while the competitor cards were fried by the power surge. 3Com sold another 1,000 cards to the bank immediately thereafter, as a result of the built-in lightning surge protection.
Note: There is also a 1993 “kite flying” story that measured RF interference from nearby radio stations for the version of 100 M b/sec Ethernet that used telephone grade unshielded twisted pairs (UTP-3). Ron insisted that such interference was an issue, even though “IEEE 802.3 Fast Ethernet” was not intended for outdoor deployments. But that is a story for another time, or maybe never.
“Why did 3Com win in the LAN wars of the mid to late 1980s?” this author asked. Metcalfe responded, “We had a time machine. Our Ethernet team at Xerox PARC went into the future and then came back. As a result, we knew what the future would look like. Others, like as Ralph Ungermann (co-founder of Ungermann-Bass) worked on Ethernet concentrators for dumb (ASYNC ASCII) terminals but at 3COM we designed Ethernet cards for PCs cause we knew there would soon be PCs on everyone’s desks.”
And why would Ethernet keep getting faster and used more widely in so many different ways? Metcalfe’s philosophy was: “Build it, and they [the network configurations and applications] will come.” Today, we have Ethernet dominating the: workgroup (wired) LAN, campus LAN, Data Center switching, enterprise networks, access to IP-VPNs, Carrier Ethernet and other market segments. You can’t argue with success and ubiquity!
References:
http://www.netevents.org.uk/ethernet-innovation-summit
http://www.netevents.org.uk/celebrating-40-years-of-ethernet-innovation-closing-keynote
http://www.eweek.com/innovation/ethernet-invention-revealed-the-origins-of-innovation/
http://www.theregister.co.uk/2013/05/22/metcalfe_on_moocs/
http://scriptpirates.com/topic/1024-as-ethernet-turns-40-some-seek-to-take-it-to-the-cloud-ethernet/
Videos of the 2 day event: All video content can be found at the following URL’s :
http://www.netevents.org.uk/celebrating-40-years-of-ethernet-innovation-day-2-introduction
http://www.netevents.org.uk/celebrating-40-years-of-ethernet-innovation-session-5
http://www.netevents.org.uk/celebrating-40-years-of-ethernet-innovation-session-6
http://www.netevents.org.uk/celebrating-40-years-of-ethernet-innovation-session-7
http://www.netevents.org.uk/celebrating-40-years-of-ethernet-innovation-session-8
http://www.netevents.org.uk/celebrating-40-years-of-ethernet-innovation-session-9
http://www.netevents.org.uk/celebrating-40-years-of-ethernet-innovation-closing-keynote
NetEvents announces 2013 Innovation Award Winners at Ethernet Innovation Summit
These prestigious awards recognise the very best in the Technology industry and reward the leading individuals and organisations for innovation and performance in the networking and telecommunications sector.
An independent panel of highly respected judges (including this author) voted for 1st, 2nd and 3rd place nominees in each category.
Innovation 2013 Award Winners by Category:
- Carrier Ethernet Business Services- Verizon – Transparent LAN service
- Telecoms Product- RAD Data Communications – MiNiD
- Enterprise Wireless Solutions – Xirrus – Enterprise Wireless
- Cloud/Datacenter Solution-Arista Networks – 7500 ‘E’ Series Data Center Switch
- Security Solution- Click Security – Realtime Security Analysis
- SDN Solution- HP – Sentinel Security Application
- Hottest ‘NEW’ Networking Company – Gigamon
- ‘Ethernet Idol’-Andy Bechtolsheim of Arista Networks
References:
Pics of Innovation Award Winners: http://www.netevents.org.uk/portfolio/innovation-awards-2013
Ethernet Innovation Summit Program at:
http://www.netevents.org.uk/portfolio/global-press-analyst-summit
Day 1 videos can be viewed at: http://www.netevents.org.uk/global-netevents-summit-live
Related articles at:
Infonetics and Frost & Sullivan on Optical Network Hardware and 100G WAN Market
1. Infonetics Research released vendor market share and preliminary analysis from its 1st quarter 2013 (1Q13) Optical Network Hardware report. (Full report published May 24). This new report provides worldwide and regional market size, market share, forecasts through 2017, analysis, and trends for metro and long haul SONET/SDH and WDM equipment, Ethernet optical ports, SONET/SDH/POS ports, and WDM ports. Companies tracked: ADVA, Alcatel-Lucent, Ciena, Cisco, Cyan, ECI Telecom, Fujitsu, Huawei, Infinera, NEC, Coriant (Nokia Siemens Networks), Tellabs, Transmode, Tyco Telecom, ZTE, and others.
OPTICAL MARKET HIGHLIGHTS:
. Worldwide, the overall optical network hardware market, including SONET/SDH and WDM equipment, totaled $2.6 billion in 1Q13
. North America was the only region to post growth in overall optical hardware revenue on a quarterly basis in 1Q13, up 7.5% from 4Q12
. Topping the optical market share leaderboard in 1Q13 are, in alphabetical order, Alcatel-Lucent, Ciena, Fujitsu, Huawei and ZTE
. Ciena is now a larger supplier of WDM gear than Alcatel-Lucent and is 2nd only to Huawei
. Cyan, now publicly traded, grew revenue 86% year-over-year (and is now tracked in Infonetics’ Optical Network Hardware report)
. Nokia-Siemens completed its divestiture of its optical division, now called Coriant (also tracked in Infonetics’ optical report)
“The 4-quarter rolling average for global optical WDM equipment revenue notched a third consecutive quarter of growth in 1Q13, and we believe the market will continue trending in a positive direction this year,” notes Andrew Schmitt, principal analyst for optical at Infonetics Research.
Schmitt adds: “On a year-over-year basis (1Q12 vs. 1Q13), total optical spending is down 5%, but this is only a result of massive cuts in legacy (SONET/SDH) spending over the past 12 months (down 30%). The WDM segment is up 10% year-over year, a welcome sign that spending in this more relevant segment is returning to long-term trend levels. I won’t call it a recovery until WDM revenue is up by double-digit percents for several quarters on a year-over-year basis, but 2013 is looking good, especially in North America and China, where 100G rollouts are picking up speed.”
To buy the report, contact Infonetics: http://www.infonetics.com/contact.asp
INFONETICS WEBINARS
Visit https://www.infonetics.com/infonetics-events to attend, view on demand, or sponsor Infonetics webinars. Topics available for sponsorship include 100G, OTN, P-OTS, and ROADMs. See http://www.infonetics.com/downloads/Infonetics-Webinars-Available-for-Sponsorship.pdf.
. 100G Optics: Why Operators Are Upgrading Now (Available on demand)
. Leveraging Next-Gen Policy Management Solutions (June 11)
. Integrating SDNs Into the Service Provider Network (June 26)
RELATED OPTICAL RESEARCH from Infonetics:
. Latest Infonetics Optical research brief: http://bit.ly/14JNNRg
. OTN switching reaching mainstream status with service providers
. 100G optical transceiver shipments more than doubling in 2013 and 2014
. Optical transport network (OTN) market to top $13 billion by 2017
. Breakout growth ahead for OTN switching
. Optical transceiver market bolstered as 100G arrives in force
2. Frost & Sullivan Estimates Global 100G Market to Continue to Grow, Reaching $4.8 Billion by 2016
Enterprises and data centers are fueling the global 100G optical network market, which is predicted to increase at a 52.2 percent compound annual growth rate (CAGR), reaching $4.8 billion by 2016, according to market research firm Frost & Sullivan. Since its inception in 2010, the market has growth by 210 percent in 2011 and 387 percent in 2012, according to the research firm.
Alcatel-Lucent, Huawei, Infinera, Ciena and ZTE are the top five 100G vendors, accounting for over 76.2 percent of the market share by unit shipments. The research firm expects these firms to continue to dominate the market because of high barriers to market entry.
According to Frost & Sullivan, the market is mainly driven by the demand for high quality broadband network services, especially by the growing IP traffic and number of broadband subscription during recent years and in the future.
Implementing a 100G optical network results in high network efficiency and reduced per byte transmission costs for data, the research firm noted. Future 100G applications include 4G LTE broadband wireless, metro optical networks and ultra-long reach networks.
Read more: http://www.frost.com/prod/servlet/press-release.pag?docid=278508117
Last week, DukeNet Communications, a regional fiber network provider in the southeastern United States, announced the deployment of 100G across its service area.
http://www.lightwaveonline.com/articles/2013/05/dukenet-communications-touts-100g-capabilities.html
MoCA driving growth in home networking market. Why not ITU G.hn or any version of WiFi?
Introduction:
Market research firm Infonetics Research released excerpts from its latest Home Networking Devices vendor market share and forecast report, which tracks residential gateways; broadband routers; HomePlug Powerline adapters; multimedia over coax (MoCA) set-top boxes (STBs), optical network terminals (ONTs), and coax-Ethernet adapters; and HPNA/G.hn adapters.
HOME NETWORKING MARKET HIGHLIGHTS:
. The global home networking device market totaled $4.9 billion in the second half of 2012 (2H12)- a 5% increase over the first half of 2012 (1H12)
. Sales of set-top boxes with embedded MoCA technology grew 23% in 2H12, while MoCA adapters, though
still shipping in small amounts, soared 129%
. Broadband router revenue grew 6% in 2H12, thanks to shipments of higher-end 802.11ac and 802.11n WiFi routers in North America and EMEA (Europe, the Middle East, and Africa )
. In the race for broadband router revenue market share, Actiontec saw the biggest jump, up 30% from 1H12
. North America is the home networking device revenue share leader, capturing 45% of global 2H12 revenue
. Infonetics expects MoCA STBs to account for 46% of home networking device sales by 2017
“MoCA (multimedia over coax) is again driving growth in the home networking device market, particularly shipments of video gateways in North America,” notes Jeff Heynen, directing analyst for broadband access and pay TV at Infonetics
Research.
“Deployments of cable and satellite STBs with integrated MoCA are slowly reaching a boil, and we expect DirecTV’s Genie, Dish’s Hopper, and Comcast’s XG1 set tops to see increased shipments throughout 2013 and beyond.”
Infonetics believes the home networking market is shifting from broadband routers to residential gateways. Temporarily, the broadband router market will get propped up as consumers upgrade to IEEE 802.11n and 802.11ac broadband routers as per the graph below. “However, with the market shifting to residential gateways, the lift will not last,” according to Infonetics Marketing Director Kimberly Peinado.
AW Comment: AT&T has integrated WiFi into its U-Verse residential gateway, which connects home PC/gadgets and the U-Verse TV set top box to/from the U-Verse access network.
Alan W comment:
Note that G.hn is now 3 years old, but hasn’t picked up market traction. http://en.wikipedia.org/wiki/G.hn
Neither has IEEE 802.11n which was expected to be used for video distribution in home networks. http://www.ieee.org/about/news/2009/11september.html
REPORT SYNOPSIS:
Infonetics’ biannual home networking report provides worldwide and regional market size, vendor market share, forecasts through 2017, analysis, and trends for residential gateways; MoCA STBs, ONTs, and coax-Ethernet adapters; wired and WiFi broadband routers (HomePlug Powerline, MoCA, and HPNA/G.hn); HomePlug Powerline adapters; and HPNA/G.hn adapters. Companies tracked: Actiontec, Alcatel Lucent, ARRIS, AVM, Belkin, Cisco, Comtrend, D-Link, Huawei, Motorola, NETGEAR, Pace, Sagemcom, SMC Networks, Technicolor, TP-LINK, TrendNet, Ubee Interactive, ZTE, ZyXEL, and others.
To buy the report, contact Infonetics:
http://www.infonetics.com/contact.asp
INFONETICS WEBINARS:
Visit https://www.infonetics.com/infonetics-events to register for upcoming webinars, to view recent webinars on demand, or to learn about sponsoring a webinar.
. Securing and Managing Mobile Devices in a BYOD World (View on demand)
. Preparing Enterprise Networks for a Wireless Multi-Device World (View on demand)
. Leveraging Hotspot 2.0 for Carrier WiFi Networks (May 16: View live or on demand)
. The Transcoder Boom in a Multiscreen World (Sponsorships available)
RELATED RESEARCH: Infonetics May Broadband Access research brief: http://bit.ly/ZYr9kC
Smart Cities
Smart Cities
Mischa Dohler , Carlo Ratti, Jurij Paraszczak, Gordon Falconer
It is through Information and Communications Technologies (ICT) that Smart Cities are truly turning “smart”. This is facilitated by means of services that use, among others, networked sensors and actuators deployed in the city, allowing the monitoring of the urban environment in real-time, to react just in time if needed and to establish automated control processes with less or even without human intervention.
Given the importance of ICT, we are currently witnessing a shift of industries in the urban space: an arena prior dominated by heavy infrastructure providers, is now increasingly occupied by operators and service providers. This is being facilitated by an important transition within the ICT sector from simply providing data pipes towards designs which exploit the actual content of the gathered data. Said “Big Data”, collected from the crowd or sensors, provides unprecedented opportunities to optimize operations in a city and thus improve urban living.
This special issue, the first of its kind, focuses on ICT technologies, allowing for Smart City rollouts, deployments and growth. Part of the gamut of technologies have been researched and developed for years already, others are new. However, their composition and application in the area of smart cities is unparalleled and accounts for the tremendous upsurge of work in this area, which is mainly attributed to the unique timing between the undeniable need for making cities more efficient, and an enormous set of ICT technologies having become available and affordable.
From the large number of submissions, we have assembled nine papers which yield a fairly complementary and complete picture of the technology landscape in smart city developments: 1) smart city business models; 2) architectural implications due to business models; 3) wireless access of smart city traffic through M2M; 4) wired backbone offload of aggregated smart city traffic; 5) management of these heterogeneous technologies; 6) crowd-sourced data from/for smarter cities; 7) Big Data mining approaches; 8) Big Data exploitation through API-stores; and 9) privacy issues.
We hope that this feature issue appeals to both the academic and industrial readership, and inspires future work in the emerging area of Smart Cities.
Cisco Transitions from Network Equipment to an IT Company: Will SDN Overlays Help?
Cisco Systems, the world’s largest supplier of Internet routers and switches, has struggled over the past year as slowing product sales and sliding data-center equipment prices hurt performance in its core business. The company has responded by diversifying its revenue base with more profitable software and services—yet tight corporate budgets and government cutbacks have made the transition harder to accomplish.
“A lot of the challenge stems from weak public-sector spending, in particular U.S. federal, along with softness in financial services,” Juniper Chief Executive Kevin Johnson said last month after delivering a weaker-than-expected view of
future revenue. “We have communicated steadily over the last several quarters about expected weakness in federal. We do not expect this pattern to improve in the near term.”
“When the economy fluctuates, one of the first things people cut back on is Cisco boxes,” J.P. Morgan analyst Rod Hall said, because a large part of Cisco’s sales aren’t subject to a recurring contract. “That’s why it’s such a good bellwether.”
The slowdown in sales of routing and switching gear reflects many companies’ decisions to hold onto equipment longer, according to ISI Group analyst Brian Marshall. “Cisco is making the best of a difficult situation,” Mr. Marshall said.
“They’ve got a big chunk of their business coming from an area that’s a single-digit growth market.”
Cisco has taken steps to shuffle its product portfolio. It recently sold the Linksys home-router business to Belkin International Inc., soon after acquiring wireless-carrier software developer Intucell Ltd. for $475 million and Meraki
Inc., a provider of Enterprise WiFi equipment for midsize businesses, for $1.2 billion.
The acquisitions fit with Chief Executive John Chambers‘s effort to recast Cisco as more of an IT company than just a
seller of network equipment. The company has pledged to double its software revenue over the next few years as it diversifies its customer base beyond machines that shuttle data between computers. For example, Cisco’s data-center servers are typically less profitable than high-end routers, yet they helped support its revenue over the past year when router sales sputtered.
http://online.wsj.com/article/SB10001424127887324244304578474904040636278.html
Cisco’s Open Network Environment is the company’s response to SDN. It’s based on “Virtual Network Overlays” and is differentiated from SDN as follows (i.e. according to Cisco):
• First, network programmability and many of the use cases that benefit from it require APIs or interfaces at multiple layers of the network (not just at the control and forwarding planes). There are deeper internals in our operating systems, and even hardware and ASICs, that can be accessed to extend and enhance the network. Similarly, further up this network stack are higher level services, such as the management and orchestration APIs, for example, our Network Services Manager (NSM) API that supports orchestration and cloud portal applications such as Cisco® Intelligent Automation for Cloud (CIAC). In the Cisco environment, we imagine an application development environment that can access APIs at all levels of this stack.
• Second, many of the use cases for which organizations are looking not only require programming the network to the desired or optimal behavior, but also are seeking to extract the enormous amount of information and intelligence contained in the network infrastructure. Deeper and more insightful network intelligence can be pulled into a new class of analytical applications that can promote more sophisticated network policies and support business logic that impels the network. This ultimately makes the network more valuable and can support more innovative and revenue-generating services.
http://www.cisco.com/en/US/prod/collateral/iosswrel/content/white_paper_c11-707978.html
http://www.cs.virginia.edu/~cs757/slidespdf/757-09-overlay.pdf
http://tools.ietf.org/html/draft-drao-bgp-l3vpn-virtual-network-overlays-00
FBR’s Scott Thompson wrote in an email that “SDN Overlay solutions are gaining more traction than expected, which lessens the near term pressure on Cisco’s switch/router revenues.”
“SDN overlays provide opex savings and rapid service deployment, diminishes need for service providers to aggressively reach for cost parity with hyperscale competitors. Our discussions at Interop revealed that hybrid/overlay SDN networks are beginning to gain momentum among the service provider and large enterprises.
Overlay SDN solutions provide network-wide provisioning across both traditional and full SDN-based architectures. While we expect hybrid/overlay SDN solutions will allow large-scale networks to drive significant opex savings, they also appear to slow the transition to new architectures that could significantly affect traditional revenue streams. This is likely to allow traditional networking vendors additional time to shift to more software-based business models. For Cisco, we expect this development could drive two to four quarters of respectable returns before commodity and silicon-based network architectures begin to affect Cisco’s financials.”
“Checks indicate that both service provider and large enterprise channels have found the implementation of Network Function Virtualization (NFV) and SDN solutions more time consuming and costly than initially expected. Initial setbacks with carrier implementation of NFV and SDN technologies are likely to provide Cisco additional time to develop product that will help to transition its customer base to more software- and service-based revenue.”
Closing Comment: We are quite surprised by Thompson’s last statement regarding ” implementation of Network Function Virtualization (NFV) and SDN solutions more time consuming and costly than initially expected.” How can something be implemented if it is not fully standardized? Especially NFV where ETSI NFV ISG is NOT producing any standards!