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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

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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

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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

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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

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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."

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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!

 

NTT Communications Cloud Revenue up 17.9%; Total Group Revenue DOWN 1.5%; SDN Enterprise Cloud Expands

Japan's NTT Communications posted a 12%  jump in profit for the year ending in March, as subsidiary NTT DoCoMo announced  a management shake-up.

NTT Com recorded a full-year net profit of  65.3 billion yen ($643.1 million). But group operating revenues fell 1.5% to  1.19 trillion yen. Total data networks revenue fell 0.7% to  427 billion yen, and group voice revenues slumped 9.1% to 320 billion yen.  

NTT Com posted strong gains in  cloud platform revenue (up 17.9% to 99 billion yen), as well as applications  and content revenue (up 4.9% to 108 billion yen.).  The company made progress with its plan of  leveraging its expertise as a telecom operator to become a one-stop ICT  outsourcing shop. As of the end of the year, NTT Com had  global data centers in 144 locations, and was  offering its Enterprise Cloud services in nine countries.

NTT Data's revenues and operating income went up due to an increase in the number of consolidated subsidiaries. Mobile unit NTT Docomo saw revenues increase on higher handset sales and and new areas of revenues, but operating income decreased. At NTT Communications, operating revenues continued to fall but operating income reose on cost reductions.

NTT group ended the period with 17.30 million customers for its fibre optic service called Flet's Hikari after adding 740,000 new subscribers in the year. The company aims to attract 1 million new subscribers this year. The company also had 15.17 million Hikari Denwa customers after adding 1.27 million new customers for the optical IP telephone service and the ADSL customer base continued to contract to 1.85 million. The company's mobile unit, NTT Docomo, ended the quarter with 61.54 million subscribers, which includes 11.57 million Xi (LTE) customers. NTT also had 4.19 million TV subscribers, comprising 3 million.

Looking ahead to the current financial  year, NTT Com warned that with Japan's economy still struggling and the global  economic slowdown continuing, “the future direction of the domestic economy  remains uncertain.”  But the company is still predicting a 2.5%  increase in group operating revenues for the year to 1.225 trillion yen.

Separately, domestic subsidiary NTT DoCoMo announced significant proposed changes to its management team.

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As the first service provider in the world to embrace SDN and the OpenFlow communications interface, NTT Com launched its SDN-based Enterprise Cloud in June 2012 via data centers in Japan and Hong Kong.  With the addition of data centers in Singapore, England, and Virginia and California in the United States, the Enterprise Cloud became available on a global basis in February 2013.  Within this spring, NTT Com’s Enterprise Cloud will include SDN in eight countries and ten locations.  Clients have used the self-manageable Enterprise Cloud platform to flexibly extend their own data centers, gaining cost-optimized and secure compute capacity as a result.

“NTT Communications’ Enterprise Cloud is gaining traction in several sectors, especially among global manufacturers looking to consolidate systems and assets,” said Mr. Yukio Ito, Senior Vice President of Service Infrastructure at NTT Com. “Global enterprises continue to look to NTT Com as a partner of choice for real-world cloud transformation, relying on our foundation of advisory, migration, operational and management services.”

“Successful enterprise clouds will need to provide flexible connectivity at a speed and price point that mirrors the rapid and low-cost delivery of virtual machines,” said Caroline Chappell, Senior Analyst, Heavy Reading, a division of UBM Tech.  “Current approaches to data center networking don’t scale and are expensive because of the level of manual configuration involved.  NTT Com’s early adoption of SDN gives it the opportunity to transform customer experience of cloud services, as well as the operational costs associated with running them.  NTT Com is therefore in a strong position to lead the global market for cloud services going forward.”

http://www.us.ntt.com/en/newsroom/press-releases/press-releases/article/ntt-communications-shares-expertise-at-open-networking-summit-ons-extends-leadership-in-sdn-resea.html

http://www.telecomasia.net/content/ntt-com-fy-profit-grows-12 and 

http://www.telecompaper.com/news/ntt-sees-fy-2012-profit-grow-12--942826

 

 

TW Telecom Inc 1stQ 2013 Results with Bold Statements by CEO on Earnings Call; Commentary by FBR & Telecom Ramblings

TW Telecom Inc announced first quarter 2013 financial results, including $381.2 million of revenue, $13.1 million of net income, $136.0 million of Modified EBITDA, $81.6 million of net cash provided by operating activities and $23.9 million of levered free cash flow

"We've had a productive start to the year, as we commenced our growth initiatives, delivered ongoing revenue growth and cash flow generation and executed several strategic balance sheet activities," said Larissa Herda, tw telecom's Chairman, CEO and President. "The growth initiatives we announced in February are under way as we focus on delivering additional product innovation, increasing our sales coverage, as well as further automating the business and expanding our market reach.  Everything we're doing is to increase our sales momentum and the trajectory of our revenue growth as we continue with our comprehensive balanced approach to win market share." 

http://newsroom.twtelecom.com/2013-05-06-tw-telecom-Reports-First-Quarter-2013-Results

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David Dixon of FBR Capital Markets wrote in an email:  "tw telecom inc. (TWTC) reported 1Q13 results, with EBITDA and Free Cash Flow below consensus. Capex spending was in line with estimates. Management is aggressively investing in fiber deployments in growth markets and is planning to increase the sales force by 10% in FY2013, anticipating revenue improvement in 2014."

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Author's Note:  Our sources reveal that tw telecom did NOT follow through on their planned fiber network build-out in the San Jose, CA/ Silicon Valley metro area.   Instead, the company was forced to resell AT&T facilities (referred to as Type 2 circuits or facilities). I guess Silicon Valley is NOT considered a growth market.  Key features like "Dynamic Capacity" are not possible using Type 2 telco facilities which are actually provided by a facilities based carrier.  In addition, there is no automated customer problem reporting or fault diagnosis for Type 2 facilities.  Instead there's a hierarchy of phone call escalation procedures the customer must adhere to when an outage or other problem is experienced.

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Mr. Dixon of FBR added, "The trend away from dynamic network provisioning (on its own) to combined dynamic provisioning of the application AND network by major carriers (e.g. network virtualization and/or software defined networking) suggests that medium-term revenue growth will be more challenging over time."

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Bold statements by Larissa Herda, CEO and President, during tw telecom's earnings call:

"We're advancing the development of our Constellation platform. With this unique platform, we're creating a powerful operating paradigm for enterprises to increase the velocity of how they buy our network services, driven by the ability to  more quickly access and consume network and IT services. We're in the process of hiring the right talent, establishing and evolving key data center and vendor relationships and developing and deploying the required technology as
we move forward with these new capabilities."

"We've also continued to gain market awareness with our Intelligent Network services that are within the Constellation platform, with ongoing momentum showing up in our Ethernet revenue. And we've launched several new product
capabilities that enhance and freshen our current portfolio, which reflects the bread and butter of our business, with more production for later this year -- "

"As we head into the second quarter, we're executing on our growth initiatives, optimizing our capital allocation strategy and continuing to differentiate ourselves in the marketplace with capabilities that we believe will change the industry."

[Ms. Herda turned the call over to Mark Peters- see below for his quotes]

"Let me start first with our product initiatives, including how we're addressing our customers' current and future network requirements, as well as some specific progress on this year's product roadmap. We believe that the reason we keep growing is that we continue to invest, innovate and enhance our value to customers because in this business, you have to do so to remain relevant. We also believe that there is a direct correlation between our innovation and development and the fact that we posted 34 consecutive quarters of sequential revenue growth."

"Customers are buying from us, both through our track record to serve their current needs and our integrated vision to solve their future business challenges. For instance, who else in the industry has delivered a Dynamic Capacity solution today? No one. And who else is talking about click and connect, reliable and secured network capabilities for dynamic connections between buildings, data centers and other cloud services, which we're developing through our Constellation platform? No one."

"Our success is driven by constantly leveraging our core strength. For example, our Dynamic Capacity, Enhanced Management and E-Access, our one-to-many Ethernet service, are all very innovative solutions. But the real power is how they enhance our Ethernet portfolio, which is foundational to our growth engine. Collectively, these products make us more differentiated and competitive, helping us to open more doors and close more deals. For example, let me give you some color on how Dynamic Capacity is driving our Ethernet sales. As a reminder, our Dynamic Capacity solution, which is part of our Intelligent Network services, is delivered via E-Line, our most advanced Ethernet offering. Looking
back over the 9 months from the initial Intelligent Network launch through the first quarter of 2013, E-Line revenue has grown by about 2.5x in that time frame. We believe our Intelligent Network capabilities, including our Dynamic
Capacity solution, greatly complement our E-Line sales and has been a factor in this revenue acceleration. And we have seen the adoption rate between E-Line and Intelligent Network steadily increase in concert with our growth."

"In addition, this summer, we plan to expand our Dynamic Capacity from our current offering that can flex up to 1 gig to be able to provide customers the ability to flex all the way up to 10 gigs. This has been driven by interest from our large  enterprise customers. Again, because of our powerful operating platform, this service will be embedded into our infrastructure scalable and available across our footprint."

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Mark Peters, Chief Financial Officer and Executive Vice President:

"Data and Internet revenue continues to be strong, and now represents 53% of our total revenue and grew 14.3% year-over-year. Data and Internet revenue grew 2.2% sequentially, reflecting the impact of the customer settlement last quarter that did not recur."

"Modified EBITDA margin was 35.7%, compared to 36.7% in the same period last year and 36.6% in the prior quarter. The strong margin naturally will be impacted by our growth initiatives, and we expect these initiatives will continue to pressure margins in the near term until they are absorbed by higher top line growth. Additionally, we had a $4.1 million sequential cost increase, due primarily to the annual resetting of payroll taxes."

http://seekingalpha.com/article/1409841-tw-telecom-management-discusses-q1-2013-results-earnings-call-transcript

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Robert Powell wrote in a blog post:  "The biggest surprise here is m-EBITDA margins of 35.7%, which is the lowest they’ve turned in since the first quarter of 2009.  In the fourth quarter they took on an additional 60 headcount (40 in sales), and this quarter they added another 41 (but just 4 in sales).  So it’s no secret where the extra expenses are going.  They’re planning to roll out further managed services as the year goes on, as well as 40/100G (Carrier Ethernet) offerings and their constellation network platform, in the interests of a potentially higher growth rate down the line."

"Last fall, the rumors were that tw telecom was about to be gobbled up by CenturyLink.  The long term investments for growth and the resulting m-EBITDA margin compression don’t really fit with that thesis, and suggest to me that tw does not really see itself as a consolidation target at this time.  But likewise, they don’t seem any more interested in pursuing inorganic growth than they have over the past few years."

http://www.telecomramblings.com/2013/05/more-long-term-investments-for-tw-telecom-in-q1/

 

 

Infonetics: Carrier Ethernet market declined in 2012, but expected to be $39B by 2017

Market research firm Infonetics Research released excerpts from its latest Carrier Ethernet Equipment market size and forecast report, which tracks investment in, penetration of, and use of carrier Ethernet products in service provider networks.
 
  • The global carrier Ethernet equipment market declined 3% to $34 billion in 2012, following a 13% spike in 2011.
  • Spending on IP edge routers totaled $9.4 billion in 2012, the most of any carrier Ethernet equipment segment.
CARRIER ETHERNET EQUIPMENT MARKET HIGHLIGHTS
  • Asia Pacific currently accounts for the greatest portion of carrier Ethernet equipment revenue, followed by EMEA (Europe, the Middle East, and Africa); by 2017, Infonetics expects North America will have passed EMEA to become the 2nd largest carrier Ethernet market
  • Infonetics projects Carrier Ethernet equipment ports will top 95 million worldwide by 2017, with 10 Gigabit Ethernet growing fast to pass 1 Gigabit Ethernet
 
ANALYST NOTE
“Carrier Ethernet is now a permanent, inseparable part of service provider networks, and the market has reached a steady state of investment as a result,” notes Michael Howard, principal analyst for carrier networks and co-founder of Infonetics Research. “Though spending on legacy technologies like SONET/SDH and WDM will decline, investment in IP routers, carrier Ethernet switches, and Ethernet access devices will continue to rise, driven by the move to IP NGN and, of course, growing traffic—particularly video traffic.” 
Howard adds: “We see the carrier Ethernet market growing slow but steady over the next 5 years, reaching about $39 billion in 2017.”
CARRIER ETHERNET REPORT SYNOPSIS

 Infonetics’ annual Carrier Ethernet report provides worldwide and regional market size, forecasts through 2017, analysis, and trends for the Ethernet portion of equipment used in carrier networks, including switches, IP core and edge routers, SONET/SDH, WDM, VDSL, Ethernet access device (EAD), EPON, and microwave equipment, as well as ports by speed. Companies tracked: Actelis, ADTRAN, ADVA, Alcatel-Lucent, Brocade, BTI Systems, Calix, Ceragon, Ciena, Cisco, Cyan, DragonWave, Ericsson, Extreme, Fujitsu, Huawei, Infinera, Juniper, NEC, Nokia Siemens Networks, RAD Data, Telco Systems, Tellabs, Transmode, Zhone, ZTE, and others.
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Ethernet Access Devices (EAD) MARKET Report- released April 18, 2013

“People keep saying that copper’s dead, but it’s not—it has a limited but important role for Ethernet services, as evidenced by the continued growth of EFM (Ethernet in the first mile) bonded copper,” notes Michael Howard, principal analyst for carrier networks and co-founder of Infonetics Research. “EFM’s high capacities and reach make it a useful and effective alternative where fiber isn’t justified.”

Continues Howard, “While fiber EADs represent the majority of the EAD market, we expect operators to spend a cumulative $1.5 billion on EFM bonded copper EADs over the next 5 years (out of a cumulative $5.8 billion total for all EADs) as they increase the capacity and efficiency of mobile backhaul networks and business connections.”
EAD MARKET HIGHLIGHTS
  • For the full year 2012, the global Ethernet access device (EAD) market grew 3.5%, to $860 million, with growth hesitating as a result of economic conditions and a lull in carrier spending in the 2nd half of 2012
  • 10/100M copper and 1G fiber dominate EAD ports today, but 10G fiber is growing fast, forecast by Infonetics to grow at a 117% CAGR through 2017
  • Though in slow decline, Ethernet over TDM (EoTDM) bonded circuits will remain a niche market, providing an inexpensive way to combine several E1s or T1s
  • For the second consecutive year, the top 5 revenue share leaders in the EAD market are (in alphabetical order) Actelis,  ADVA, Ciena, Overture, and RAD


EAD REPORT SYNOPSIS

Infonetics’ biannual Ethernet access devices report provides worldwide and regional market size, vendor market share, forecasts through 2017, analysis, and trends for copper and fiber EADs and ports by speed. Companies tracked: Accedian, Actelis, ADTRAN, ADVA, Canoga Perkins, Ciena, FibroLAN, IPITEK, MRV, Omnitron OMS, Overture, RAD, Tellabs, Telco Systems, Zhone, and others.

 

To buy the report, contact Infonetics: http://www.infonetics.com/contact.asp.

Ethernet Innovation Summit Preview: May 22-23rd @Computer History Museum, Mt View, CA

Introduction:

This Ethernet Summit will be one of the most important gatherings this year of press and analysts from around the world!  Inspired by "40 years of Ethernet Innovation" and looking forward to the next 40 years of networking. Meet key press and analysts in a series of scheduled sessions to discuss the latest hot topics concerning Ethernet innovation, enterprise networking, cloud computing, virtualisation and telecoms, paving the way for increasing your visibility across the globe.

A full day conference and dinner on May 22nd will be followed by a day of round table discussions, hot debates and industry briefings on May 23rd.  Leaders of the Ethernet industry – now a $100 billion a year market – will talk directly to the world’s IT press and industry analysts, including this author.

Thanks to Carrier Ethernet and the pioneering work of the MEF and ITU-T, the sessions will be live streamed on the Internet (details to be provided).  Much more info on this event at:  http://www.netevents.org.uk/portfolio/global-summit

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Early History of Ethernet:

According to Bob Metcalfe: “The first Ethernet was a one-node Ethernet, which isn’t very interesting. It was a node that could transmit to itself for testing and de-bugging purposes. Then we had two nodes – which incidentally we called Michelson and Morley who happened to be the two physicists who disproved the existence of the ether, so we thought that was ironic – then eventually the cable got strung all over the building.”

What was the real innovation, as they saw it then? “In those days our big innovation was putting a computer on every desk – I know that’s hard to believe! We put one on every desk then ran this co-ax down the middle of the corridor and everybody tapped into it from their PCs. So it grew to fill this building.”

The benefits were immediate, and so other departments wanted in on the network. “The labs wanted to be connected so, with an Internet protocol, we built an Internet that spanned the research laboratories of Xerox. It wasn’t until the late seventies that we began leaving Xerox and installing Ethernets elsewhere.”

Bob Metcalfe (shown below) went on to found 3Com, makers of the first Ethernet commercial Ethernet cards. Within 20 years Ethernet saw off competition from token-based networking and came to dominate the LAN space, covering every continent with islands of Ethernet connectivity.

Role of XEROX PARC:

Heir to this great tradition is Steve Hoover, the current CEO of PARC. He points out the importance of an open spirit of enquiry to balance the intense commercial pressure to deliver results: “One of the key things is recognising that innovation is going to require failure. So you can’t start something and not believe that it’s possible to fail…. Of course it’s not about failing, failing’s not good, but it’s about learning.”

Steve compares this innovative culture to a class of five-year olds: “It’s all the questioning … It’s why, why, why! That leads to really good innovation because people are getting to the fundamental ideas, they’re questioning the status quo, they’re willing to change it and break it. Fail on the way and then pick yourself up, dust yourself off and move on to the next.”

Vital Contributions of Government and Academia:

A key element of the 40th birthday celebrations will be discussion around the need to foster and maintain this dynamic spirit of innovation in today’s globally competitive environment. This goes beyond a purely business concern, innovation is vital to national pride and prosperity – even to survival. It is, therefore a concern for governments too.

Steve Hoover points out that the business world sometimes forgets the contribution made by past governments: “If you look back at the history of the Internet, Arpanet was government-initiated. The tremendous commercial

“If you look back at the history of the Internet, Arpanet was government-initiated. The tremendous commercial impact I don’t believe would have occurred without their foresight in investing in those fundamental capabilities.”

“Today at PARC we are working to repeat that model over and over and over again.” Steve is very keen to enroll government support for this work, pointing out the need to recognize that: “The government does identify fundamental research areas to work in and is willing to invest. That partnership – of government investing in core capabilities, in new areas, taking some of the higher risk, plus industry’s ability to capitalise and leverage it – that partnership is really important.”

Metro Ethernet Forum (MEF) and Carrier Ethernet:

Over the last 10 or 11 years, IEEE 802.3 Ethernet First Mile, the MEF and the ITU-T developed solid standards for Carrier Ethernet.  These specs were developed to enable "islands of data" to be connected via Ethernet, rather than more complex and costly WAN technologies such as Frame Relay and ATM.  Last year marked a turning point: for the first time Carrier Ethernet sales exceeded that of all other WAN technologies combined.

As MEF President Nan Chen once predicted: “In future there will be a single language linking business worldwide. It won’t be English. It won’t be Mandarin. It will be Ethernet”.

The Future of Ethernet:

Bob Metcalfe says that networking and the Internet has given this generation “collective intelligence” and so much more to play with in terms of access to all that has already been achieved, both the successes and the failures of the past and present. So who knows what form Ethernet’s 50th anniversary will take in ten years time?

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For full details of the events on May 22/23rd visit: http://www.netevents.org.uk/portfolio/global-summit

Watch the video about the events including interviews with Bob Metcalfe and Steve Hoover: http://www.youtube.com/embed/wplYUcWwRww

Here's the link for the live streaming starting May 22nd:

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References:

http://viodi.com/2013/04/16/2013-ethernet-tech-summit-market-research-panel-carrier-ethernet/

http://community.comsoc.org/blogs/alanweissberger/quicktake-ethernet-tech-summit-ethernets-changing-role-data-center

http://community.comsoc.org/blogs/alanweissberger/infonetics-carrier-ethernet-market-booming-mef-announces-ce-20

 

Post Event Addendum:

Day 1 videos can be viewed at:  http://www.netevents.org.uk/global-netevents-summit-live

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Innovation Award winners are at:http://www.netevents.org.uk/portfolio/innovation-awards-2013

 

 

 

Service Providers Reveal their Data Center plans in Infonetics Survey on Deployment Strategies

Market research firm Infonetics Research released excerpts from its latest Data Center Deployment Strategies: Global Service Provider Survey, which delves into operator plans for data center expansion, interconnection, capacity, physical servers, virtualization, and SAN and storage technologies. 

DATA CENTER SURVEY HIGHLIGHTS:
.    More operators than anticipated plan to continue investing in Fibre Channel for their data centers, even in the face of growing usage of the newer Fibre Channel over Ethernet (FCoE)
.    The number of data center server LAN connections is growing quickly, with 10 Gigabit Ethernet connections growing the most
.    The average capacity of a data center WAN connection is expected to increase more than twofold from 2012 to 2014
.    While the use of virtual machines in data centers continues to grow, many servers are not yet virtualized

DATA CENTER SURVEY SYNOPSIS:
For its 23-page data center survey, Infonetics interviewed incumbent and competitive service providers and cloud specialists that have data centers with at least 100 servers. The survey provides insights into data center interconnection strategies; storage network investments; data network technologies deployed; WAN/internet connection capacities; and number of physical servers, virtual machines, Ethernet and SAN interfaces in use at medium, large, and super data centers.


 

"Server virtualization has been the focus of the data center industry for several years now, and the largest data center owners and internet content providers like Google are ubiquitously exploiting virtual machines," notes Michael Howard , principal analyst for carrier networks and co-founder of Infonetics Research. "Yet the reality is the bulk of data center owners are more pedestrian in their deployments, finding it more operationally convenient to leave many areas of their data centers alone, using server virtualization for only select applications." 

Howard continues: "But to be sure, data center owners want to increase the value of their existing data center assets - no matter the extent of server virtualization - as a means to increase revenue via cloud services, both to keep their current customers satisfied and to attract new customers."

To buy the report, contact Infonetics: http://www.infonetics.com/contact.asp

RELATED DATA CENTER & CLOUD RESEARCH http://www.infonetics.com/market-research-report-highlights.asp

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Commenting on the new interest in network virualization and Software Defined Networking (SDN), Howard said at the April 3rd Ethernet Technology Summit:

"Network operator driver for NFV is quick revenue (via faster provisioning of new services and telecom facilities).” He later stated, "Carriers will implement SDN in ‘contained domains."

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References:  

http://community.comsoc.org/blogs/alanweissberger/2013-open-network-summit-ons-announcements-take-aways-conclusions

http://viodi.com/2013/04/23/service-provider-sdn-network-virtualization-and-the-etsi-nfv-wg/

http://community.comsoc.org/blogs/alanweissberger/fbr-sdn-result-40-drop-switchrouter-ports-deployed-service-providerslarge-en-0

Highlights of GSA Silicon Summit- April 18th @CHM, Mt View, CA

The Global Semiconductor Alliance (GSA), whom many consider to be the voice of the global semiconductor industry, held its annual Silicon Summit on April 18, 2013 at the Computer History Museum in Mt View, CA.  We report on the first two sessions (see below).  They were related to new silicon solutions that address the exponential growth of mobile data and the myriad issues/challenges involved in massive scaling for the Internet of Things (IoT).
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GSA Silicon Mission Statement:
“Moore’s Law has transcended computing expectations; however, its promise will eventually reach scalability limitations due to extraordinary consumer demands. Future technology encompasses breakthroughs capable of interaction with the outside world, which the "More than Moore" movement achieves. Through integrating functionalities that do not scale to deliver cost-optimized and value-added system solutions, this trend holds significant potential for the industry. This event will explore the business and technical factors defining the More than Moore movement, and address how it will yield revolutionary electronic devices.”
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“The ‘More-than-Moore’ approach typically allows for the non-digital functionalities (e.g., RF communication, power control, passive components, sensors, actuators) to migrate from the system board level into a particular package-level (SiP) or chip-level (SoC) implementation. … The objective of ‘More-than-Moore’ is to extend the use of the silicon-based technology developed in the microelectronics industry to provide new, non-digital functionalities. It often leverages the scaling capabilities derived from the ‘More Moore’ developments to incorporate digital and non-digital functionality into compact systems.” And what might the viable commercial prospects be for deploying ‘More than Moore’ technology? If you’re someone who likes to follow the money (and not just the technology), then, according to the ITRS paper, the MtM money flows from here: “Underlying the evolution of markets and applications, and therefore their economic potential, is their potential in addressing societal trends and challenges for the next decades. Societal trends can be grouped as health and wellness, transport and mobility, security and safety, energy and environment, communication and e-society (this latter term including infotainment).”
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Session One:     Disruptive Innovation  – Enabling Technology for the Connected World of Tomorrow
With the industry’s long-term focus on scaling now joined by functional diversification, this session explored how "More than Moore's Law" is enabling the connected landscape of today and shaping the (mobile data) future of tomorrow.
Moderator: Dan Rabinovitsj, Senior  VP & General Manager, Wired/Wireless Infrastructure Networking Business Unit, Qualcomm Atheros
Panelists:
■Jaga Jagannathan, Director, Semiconductor Technology Marketing & Strategy, IBM Systems & Technology Group
■Kaivan Karimi, Executive Director, Global Strategy & Business Development, Microcontroller Group, Freescale
■Mark Miscione, VP, RF Technology Solutions, Peregrine
■Dr. Naveed Sherwani, Co-Founder, President & CEO, Open-Silicon
■Dr. Ely Tsern, VP & Chief Technologist, Memory and Interfaces Division, Rambus
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Session Two: How More than Moore Impacts the Internet of Things
Furthering the advancement of  More than Moore involves unifying silicon technologies with novel integration  concepts; application software convergence; and new supply chain business  models. This session will open with an overview identifying the key industry  trends, challenges and opportunities to realize higher density, greater  functional performance and boosted power for ICs.
 
Moderator: Edward Sperling, Editor in Chief, System-Level Design and Editorial Director, Low-Power Engineering
Panelists:
■Jack Guedj, President & CEO, Tensilica
■Dr. John Heinlein, VP, Marketing, Physical IP Division, ARM
■Kamran Izadi, Director, Advanced Semiconductor Sourcing, Cisco
■Oleg Logvinov, Director of Market Development, Industrial and Power Conversion Division, STMicroelectronics
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Key Takeaways for future silicon designs related to mobile devices and IoTs:
  • Many of the functions that have to be integrated into devices are analog/RF where Moore's Law does NOT apply! 
  • Mixed signal technologies (combining analog and digital circuits in a single chip/module) need to continue to advance to include those functions along with typical baseband and DSP on the same chip/module. 
  •  Packaging technology will be critically important- both at the component/module and systems level. Innovation and "out of the box thinking" here are very much needed.
  •  Testing at the package and system level will also be important.
  •  For the IoTs, the following I/O improvements are needed for devices/networked sensors: short reach, very low power, variable bit rate (low to high), support of multiple wireless standards (e.g. Blue Tooth, Zigbee, Low Power WiFi, etc)
  •  A new way of designing analog ICs needs to be considered for the IoT to be a mass market. 
  • A key question here is "how much further can the industry convert (inherently) analog functions to digital and then use DSPs to implement them?"
  •  Many of the mobile computing functions will be implemented by servers in a cloud resident Data Center. For those servers, interconnects on the circuit board could be the limiting factor in reducing cost and power.
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Participant Quotes from Paul Werbaneth:
“It’s natural for MEMS and mixed-signal devices, or MEMS and logic devices, to live in a side-by-side (2.5D) world.”
“Organic substrates for 2.5D interposers show great promise for reducing 2.5D interposer costs – look particularly to the work being done by Georgia Tech.”
“If you don’t follow scientific change then what you practice reverts to witchcraft.” (The Rabinovitsi Paradigm.)
“Innovation in packaging may be more relevant than Moore’s Law moving forward.”
“3D packaging is becoming a very exciting technology, with as much relevance as a process node shift.”
“The IoT needs packaging innovations – not Moore’s Law technology progression.”
“FinFET or packaging – where’s the smart money playing? The problem is one of die / device performance versus system performance – and packaging drives system performance.”
“That being said, 3D packaging is not a panacea – basic economics still rule.”
“Seven years from now it will be IoT applications driving the industry – and Moore’s Law progress doesn’t apply to the analog world, hence the need to work on heterogeneous integration / 2.5D / 3D IC."
“New generations of network-side IC products are only 15% innovation – the other 85% is composed of standard I/O and memory IP. Moving some of that 85% from the board to the interposer or to a 3D stack will be a huge performance improvement - 3D memory integration, for example, is positively disruptive.”
“But doesn’t CMOS integration always win? Monolithic integration, or heterogeneous integration using 2.5D / 3D IC; either way it comes together, no one size fits all.”
“The 28nm process node has a lot to like about it: speed, cost, High Volume Manufacturing (HVM) capability, and IP portability all look good compared to 14nm FinFET.”
“Challenges that need addressing in 2.5D / 3D IC are supply chain related. The current cost structure for 2.5D / 3D is leveraged by materials and processing equipment.”
“Do we currently even have a functioning 3D IC ecosystem?” 
“Thermal challenges have kept 3D IC from coming to the mainstream. 2.5D is much better than 3D from a thermal perspective.”
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Experts At The Table: The Internet Of Everything, by Ed Sperling (Session 2 Moderator)
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Addendum:  Recovery in 2013 Semiconductor Capex:
Semiconductor manufacturing equipment has been on an upswing for the last few months. Combined data from Semiconductor Equipment and Materials International (SEMI) and Semiconductor Equipment Association of Japan (SEAJ) shows three-month-average bookings have increased for five consecutive months through March 2013. Billings have increased for the last two months.