The year of consolidation

With a buoyant networking market, 2005 marked a period of consolidation, and there was a shift of focus towards the SMB segment. Shivani Shinde reports

The networking industry continued on the growth path it set upon in 2004. With value-added features on routers and switches, the trend in 2005 among enterprises and SMBs was to look for end-to-end solutions.

According to Gartner, one of the principal trends has been an increase in spending on networking and telecommunications. Financial services, transportation, retail and wholesale are the leading verticals (across the APAC region including India) in terms of outlay. Mobile and networking technologies are considered critical infrastructure by many organisations across the Asia Pacific. As the region becomes more competitive, the need for them gets sharper leading to higher investments.

Keeping with the trend of the previous year, features such as security and VPN load balancing remained the major areas in routing technology. According to IDC’s ‘Asia Pacific Predictions 2005’ report, the concept of converged networks is expected to penetrate deeper into the carrier, enterprise and consumer markets.

Gigabit Ethernet, wireless, VoIP and IP Telephony are the forthcoming trends in networking. Cisco stayed on top with almost 84 percent of the routing market and 70 percent of switching. There was intensified competition from Juniper, Nortel Networks, D-Link and Dax. In terms of vendor focus, the players are increasingly looking at SMBs.

Many are of the opinion that the uptick in PC and notebook sales has had a cumulative effect on the segment. “Networking is connected to PC and notebook sales, thus the corresponding increase in their sales has benefitted the market,” says Anand Mehta, Exports and New Products, D-Link India.

Enterprises are looking for vendors to provide end-to-end solutions and be partners in their growth. Thus, managed services are growing in the networking segment.

Time for a triple play

According to Gartner, network service providers are working towards convergence as exemplified by a triple play of voice, video and data on a single network. Offshoots of the technology such as IP TV or video over DSL seem to be the future. Deployments will take at least three to five years before these technologies enter the mainstream.

“Gartner identifies the use of technologies based on its concept of the hype cycle, so they may be more talked about but have a rather low business value, or they may be generally hyped before being actually used for productive purposes. According to the 2005 cycle, unified communications and video telephony are among the prospects that will peak in terms of productivity over the next five years,” adds Girish Trivedi, Analyst, Telecom, Gartner.

Routers and switches continue to be the focus areas. Vendors are pushing for technologies such as VoIP, wireless and WiMAX over and above the bread-and-butter technologies. With most enterprises having their basic infrastructure in place, they are looking for value-additions or improving their basic infrastructure to provide better services to their users.

Ranajoy Punja, Vice-president, Marketing, Cisco Systems, India & SAARC says, “After the basic infrastructural requirement of routers and switches, organisations are looking for adding advanced technology.” He believes that as deployments get strategic to an organisation’s performance, it’s just not about connecting but integrating IT infrastructure into business.

According to K Surendar, Country Manager, Dax, from the application perspective delivery of triple play services is gaining momentum. “Telecom equipment vendors are coming up with head-end equipment and are building the last-mile segment which should enable efficient delivery of triple play services.”

Trivedi agrees: “We have seen better uptake and penetration of IP technology in large enterprises in India. More companies are upgrading their enterprise telephony system from traditional TDM to IP-enabled or pure IP systems.”

Securing access

Security remains an area of concern for vendors as well as customers. There is a constant need for beefed-up security measures that are preferably integrated into networking products and platforms.

Irrespective of size, security is a rising concern among companies. It is being demanded at all access points and layers of the networking infrastructure, hence it is now a main feature of routers. Manageability, security and the ability to provide voice, video and data on a single platform are the functions that are desired on a router. Other than security, features like VoIP have appeared on routers.

Cisco’s ISR 1800, 2800 and 3800 series aimed at the SMB segment come with features such as security, voice and wireless in a single box. Its CSR-1 carrier routing system is specially aimed at the telecom segment. “We have invested a significant amount [half-a-billion dollars] in the development of these routers. We have had successful deployment worldwide; trials are going on in India,” says Punja.

Similarly, Juniper recently introduced its J-Series routers with integrated security. Java Giridhar, Country Manager, India and SAARC, Juniper says, “Enterprises are examining if investments made today will help them scale in the future. They are looking for value, expansion with time and revenue-generating services.” The integrated services are important with many wanting multiple services on a single platform.

The same is the case with D-Link whose products target both SMBs and enterprises. The DFW-100i, targeted at the SMBs, is an integrated VPN firewall solution. The DSL-502T, an ADSL router intended to cash on the broadband wave, has been a winner for the company.

Switch in time

Switches continued to maintain the edge they had in speed over routers while gaining features. The trend is to have gigabit switches, both managed and unmanaged. SMBs tend to go in for unmanaged gigabit switches whereas enterprises prefer managed ones. Mehta says that his company accounts for almost 50 percent of the marketshare in the unmanaged segment and 10 percent in the managed section.

“There is a big shift from Layer 2 to Layer 3 in switches, which indicates deployment of large networks. In the core there appears to be 100 percent migration to Gigabit. On the aggregation and edge space, the concept of POE (Power-Over-Ethernet) enabled switches is becoming popular. This reflects the increase in adoption of wireless access points. To address the broadband market, carrier class and edge switches are getting ETTH or B (Ethernet To The Home or Business) ready,” remarks Surendar. He feels that for cost-effective last-mile deployment of Internet in the MAN (Metropolitan Area Network), a series of new generation routers and switches are available with support for new technologies like RPR (Resilient Packet Ring) and VPLS (Virtual Private LAN Services).

However, with many switches incorporating features that are traditionally found on routers, there seems to be a need for a common platform. One more trend that has been keenly taken up by corporates has been Multi-Protocol Label Switching (MPLS).

Broadband plans of service providers and creation of metro Ethernet networks are driving the growth of gigabit switches.

According to Nitin Machhar, Product Manager, Device Networking, Dynalog, “All industrial Ethernet products are now available with advanced network switching technologies such as QoS, Internet Group Management Protocol (IGMP) snooping and the use of fibre.” For industrial automation applications, redundancy is always an important issue to help increase the reliability of the system. “Moxa’s Managed EtherDevice Redundant Switches are equipped with a network redundant protocol—called Turbo Ring—that can help achieve it. With its ultra high-speed recovery time, once any segment of your network is disconnected, your automation system will be back to normal in under 300 ms,” adds Machhar.

Looking beyond

Many are of the view that 2006 will see growth in corporate connectivity, and that convergence will be the focus area. As per IDC’s insight into the 10 major telecommunication trends impacting the Asia Pacific region in 2005, converged networks will enter deeper into the carrier, enterprise and consumer markets. It expects a healthy 16.4 percent growth in VoIP and 16.7 percent growth in wireless access technologies due to continued take-up in China and India.

The report suggests that IT spending in APEJ will remain robust in 2005 by reaching the $97 billion mark, including the contribution from about 22 percent growth in India. The hardware market will continue to rise although at a slower rate due to dropping prices. The IT services and packaged software market in the APEJ will remain strong and will grow by 13 percent in 2005 in areas such as wireless, broadband and IP services.

Punja endorses the finding when he says, “IP telephony saw good traction in ITES, manufacturing and BFSI. Features such as meeting place, hand phones and soft phones proved popular. We feel that SMBs are keenly looking at the option for connectivity.”

The hardware market has seen steady growth. As Mehta says, “In terms of value the growth of switches was about 30 to 40 percent, and routers continued to grow at 20 percent.”

According to IDC, the switching market for the first nine months of 2004 stood at $163.3 million compared to $109.28 million for the same period in 2003. That translates to 49.43 percent growth. Broadband plans of service providers and creation of metro Ethernet networks are driving the deployment of gigabit switches.

Wi-Fi gets attention

Giridhar believes that in terms of trends, last-mile connectivity seems to be the area of concern. This is where technologies like Wi-Fi and WiMAX come into play. “Wi-Fi coupled with inter- operability and carrier networks has finally caught up. Enterprises are increasingly realising the ease of connectivity that the technology provides.”

All of this requires a robust broadband infrastructure, and WiMAX could provide the required impetus for faster deployment of the last-mile, especially in villages. For cost-effective last-mile deployment of Internet in the MAN, a series of new generation routers and switches are available with support for new technologies like RPR and VPLS.

Surendar informs, “Significant growth was witnessed in the wireless space as products are maturing and offering greater bandwidth. While 802.11g is the most popular version now, adoption of 802.11n standards will be seen soon.” Experts feel that one of the reasons for the growth of Wi-Fi is mobility. With enterprises realising its potential, they are shedding the earlier reluctance that they had in adopting it. The other reason was the sale of notebooks triggered by the slashing of prices. Mehta says that in 2004-05 two lakh notebooks were sold, and for 2005-06 the number might touch four lakh.

With Wi-Fi picking up, almost all the major vendors are banking on it. Cisco, through Linksys, is looking at growth opportunities in the service provider space as the company believes that wireless will help service providers drive broadband in the home and small office segment.

The next frontier is WiMAX. IDC reports that in 2005 and 2006, service providers will introduce new services aimed at differentiation and taking them one step ahead of the competition not only through WiMAX but also through other technologies with a similar end-goal of seamless access.

Cat 6 rules the roost

The structured cabling market stood at Rs 326 crore in 2004 compared to Rs 300 crore in 2003, and is expected to grow at 12 percent to reach Rs 360 crore in the current year.

10 G Ethernet on Copper stands firm. Most of the companies are adopting either Cat 5 or 6 with 10 G. With Cat 5 becoming a basic system, the shift to Cat 6 is evident. “In this year, both Cat 5e and Cat 6 had an even marketshare. Now the market is moving towards 10 G with either Cat 6a or Cat 7. The current marketshare is only 2 percent for 10 G...it is expected to grow considerably in the coming years,” says Surendar.

Though there has been talk of a shift to Cat 7, many feel that the technology isn’t suitable for the Indian market. “It is based on STP, is hard to manage and requires strong shielding. Hence, shifting to fibre or Cat 6 is a better option,” opines Mehta.

Machhar is of the view that for industrial Ethernet switch-based applications, fibre cables are important as most of them require connectivity across locations, devices and plants spread across a huge area. Thus, fibre seems to be the right option as it works over long distances for industrial applications with higher bandwidth and a secure wiring system.

Focussing on SMB

There is a growing focus on the SMB segment with most vendors introducing the latest in technology with competitive prices. Mehta says that earlier this segment did not have many options, but with broadband prices going down and the option to combine technologies, demand has been good. He adds that SMBs are the biggest buyers of unmanaged gigabit switches from D-Link.

Punja says that the needs of an SMB are similar to a large enterprise “as they are also looking for connectivity. Further, they are deploying wireless and IP telephony in a big way, the only difference being that they are looking for easy manageability, a simple graphical interface, and easy support as they have fewer people handling their IT infrastructure.”

Cisco’s Business Communication Solutions, which include technologies like voice, routing, switching, security and wireless, is aimed at SMBs. The Cisco Catalyst Express 500 series switching family and a new version of its IP communications portfolio that includes new IPC communication applications and an expanded line of XML-enabled IP phones are SMB-oriented.

shivani@expresscomputeronline.com