The electronics industry in 2003 has been like a V6 engine running on only five cylinders, with the PC, wireless communications, consumer electronics, automotive, and industrial markets all recovering and returning to growth while the telecommunications industry continues to contract.
All that is about to change, as the wired communications market will recover starting in 2004, predicts iSuppli Corp. Yet the market won't return to the broad, unbridled growth of the pre-bubble years. So, equipment makers must be careful about which niches to target.
According to the market research firm, equipment makers should concentrate on three segments of the wired communications business: the metro edge, broadband (both customer premises equipment and aggregation), and Gigabit Ethernet blades and switches.
To boost revenues, carriers must offer new enterprise services. This will require a new generation of metro-edge devices that can intelligently process multiple protocols over existing Sonet/SDH infrastructures. The enabling technologies are generic framing procedure (GFP), virtual concatenation, and link capacity-adjustment scheme (LCAS).
Design engineers need to choose the right application-specific standard product (ASSP) for new metro-edge products, which require granularity down to VT1.5 switching capability. Not all ASSPs offer this, while most carriers consider it mandatory.
In broadband, traditional equipment makers face increasing competition from emerging low-cost Chinese manufacturers. Reach, provisioning, and maintainability continue to be the key differentiators for broadband carriers. Thus, the market will reward designers who deliver low-power, high-density products that incorporate all ratified standards while maintaining the lowest cost.
On the enterprise front, Gigabit Ethernet is rapidly becoming the norm. Within the next two years, it will exceed Fast Ethernet in the number of ports shipped. Designers will have to find reliable, low-power 1-Gbit physical-layer (PHY) devices that support multiple ports even though low-power 1-Gbit PHYs today are a promise and not reality.