The Commercial Market
Business Broadband Competition Will Drive Prices Down
Deregulation and privatization has created unprecedented competition in the worldwide telecommunication market. This climate of increased competition has meant that service providers must introduce new, more sophisticated and user-friendly services at an accelerated pace, while not compromising traditional telecommunications service quality. These needs have prompted many telecommunications service providers to choose Internet Protocol (IP)-based networks as the foundation for many of their value-added services. As a result, they hope to introduce new services at a significantly reduced operating cost while still delivering classic circuit-switched type quality and availability. These ever increasing demands require carriers to continue looking for viable solutions for business customers.
The US business market creates a significant amount of demand and revenue potential. According to Cahners In-Stat/MDR, report #BB101UB on Broadband Ubiquity, there are 11,000 enterprise businesses and 86,000 medium-sized companies. These businesses have a wide-ranging variety of telecommunications and data applications, from simple voice and Internet connections to truly next-generation applications like ASP, e-commerce and Intranets.
Among the traditional applications required by the US business market are the following:
- Internet . Simple Internet access for e-mail and Web surfing applications is usually the bare minimum for businesses, along with support for Web hosting and other basic Internet services.
- Video . Two-way video conferencing (along with related data conferencing) and one-way video for training, distance learning and other applications will certainly promote increased demand for bandwidth.
- Data networking . Broadband access for a host of data communications applications, such as access to ATM/frame relay networks, financial network connectivity, CRM, etc., increase demand.
In addition to these traditional applications, dozens of newly developed applications are beginning to make bandwidth demands on businesses, including:
- VPN/Intranet . Leveraging the economies of IP services, many businesses are beginning to move from legacy private networks toward IP VPN networks, both within the enterprise (Intranets) and externally (Extranets connecting a company with suppliers, customers and other organizations).
- Converged voice (VoIP) . Using voice gateways or IP-enabled PSXs, businesses can increasingly carry their voice and data traffic over a single connection, utilizing dynamic allocation of bandwidth to use their circuits more efficiently.
The T-1, T-3 and Integrated Services Digital Network (IDSN) markets will continue to play an important role in bringing basic high speed access to the business community. The Digital Subscriber Line (DSL) services will begin to provide attractive alternatives to the more expensive high speed facilities, such as T-1 and T-3. A significant gap in carrier service offerings and cost exists between the T-1 facilities providing 1.544 Mbps, and T-3 service that offers a much higher rate of 45 Mbps, and thereby demanding a much higher pricing schedule. Where T-1 may offer a rate of $800 to $1000 per month, T-3 service rates approximate $20,000 to $25,000 per month for an equivalent distance between sites. DSL services will be able to fill the gap between T-1 and T-3 with new services offerings like G.SHDSL (high bit rate DSL), which offers data rates between T-1 and T-3 at a much lower cost.
Cahners In-Stat Group released a report in early July 2002, comparing the major access technologies in the broadband arena. For further information, visit www.instat.com/cls-ntwk.htm.
Hannover Fair Showcases European MEMS Activities
With nearly 7000 exhibitors in 27 buildings clustered on a site the size of 65 football fields, Hannover Fair 2002 offered something for nearly everyone - from factory automation and process technologies, to material handling and energy management.
One of the newest display categories of this year was the Micro-Technology Fair, which made its debut in 2001. Hannover Fair is providing Microsystems (as MEMS is generally referred to in Europe) an incomparable worldwide stage on which to showcase the technology. There is no other venue of its kind in the MEMS industry.
Cahners In-Stat/MDR reports that this year there were more than 300 (mostly European) exhibitors with three joint exhibits from the US, Netherlands and Russia. The majority of displays were equipment manufacturers, research consortiums and foundries. While the hall was a bit light in terms of commercial products, a good cross section of devices, markets and applications were represented.
Most apparent was the difference between European companies and their US counterparts in terms of materials and fabrication processes. Much of the focus in Europe is on the use of polymers, with a heavy emphasis on laser micromachining. This is largely due to the fact that Europe, as a whole, does not have the kind of semiconductor infrastructure as the US does. The use of polymers also explain the prominence of life science applications being pursued by European companies.
Taking into account the unproven "newness" factor of this trade show (for MEMS), coupled with the cost of exhibiting (particularly in terms of personnel logistics), and the fact that most companies in the MEMS industry are start-ups, it is not surprising there were not more commercial products exhibited.
However, given that many of the industrial applications in which MEMS play a role are already being showcased throughout the fairgrounds, there are many potential customers here. As such, Hannover Fair has all the elements to become the "can't miss" event for the MEMS industry.
Wireless Market 2002: Wireless Networking Gets Cheaper
In-Stat/MDR has completed its analysis of the WLAN market's performance during the first quarter. The main themes from the results include the following:
· Embedded WLAN in notebook PCs is finally taking hold in the business space. Notebooks with embedded Wi-Fi (IEEE 802.11b) finally hit the market in noticeable volumes in 1Q 2002, from the likes of IBM, Toshiba, HP and Fujitsu. Agere and Actiontec, two of the main Wi-Fi mini PCI suppliers to PC OEMs, benefited from this uptake in embedded Wi-Fi.
· Asia Pacific and Europe are increasingly taking away geographic share of WLAN shipments from North America. Hot regions include Japan and South Korea, Singapore, Taiwan, Australia, the Nordic European countries and the UK.
· The high end enterprise segment of the WLAN market performed poorly in 1Q 2002, as shipments of enterprise-class AP solutions greatly slacked behind those of lower-end, sub-$200 AP solutions.
· Much of the growth in business WLAN shipments was primarily driven by low cost providers that were also strong in the home market, including Linksys, Buffalo, D-Link and Netgear. In-Stat/MDR believes low cost APs are being deployed in SOHOs, small businesses, in many branch or remote offices of large businesses, as well as in individual departments within large corporations. These APs are widely available in retail and e-tail, at sub-$200 prices.
· The residential Wi-Fi market continued to drive overall WLAN volume growth. The growth was heavily spurred on by the popularity of low cost wireless broadband gateway products (combo AP and router devices often with multiple Ethernet ports and optional print servers), increasingly available from a variety of vendors, at continually falling prices.
For the first quarter, non-trivial shipments of 802.11a NICs and APs were recorded, from the likes of Intel, SMC, Netgear, Proxim, D-Link and Actiontec. Although many of these 802.11a pioneers had announced that they were shipping in 4Q 2001, most did not have product ready to ship until 1Q 2002, needing additional time to refine products. n