IP PBX Adoption Rate Dependent Upon New Services, Software

InStat:With the move to IP, the PBX is no longer a standalone system, but rather just one component of a larger unified corporate communication system that includes e-mail, IM/presence, dual-mode phones, video conferencing, etc.,. Full IP PBX deployments across the entire scope of the enterprise remain relatively rare, and smaller businesses are only now beginning to gain sufficient confidence to deploy IP-based systems. PBX suppliers realize the only way to speed the transition and increase revenues is to advance the obsolescence of traditional systems by changing the way employees communicate in ways that enhance productivity. But to accomplish such lofty goals, IP PBX players must radically change their historical business models in ways that replace hardware revenues with software and services. One leg of such strategies requires IP PBX players to walk the fine line between cooperation and competition with powerful players like Microsoft.

• Most PBX players have some level of relationship with Microsoft, and many of these ties have been strengthened in recent months.

• As dual-mode phones that operate on both cellular and 802.11 frequencies begin to hit the market, mobility is becoming an ever more important part of IP PBX player strategies.

• Line shipments of IP PBX systems will increase from 19.1 million in 2006 to 37.8 million in 2010.

In-Depth Analysis: The Changing Face of IP PBXs: Mobility and Multimedia Publ 20061030

Alcatel for its Triple Play Leadership

Frost: 2006 Market Leadership Award to Alcatel, in recognition of the company’s success in defining the network architecture for the deployment of Triple Play solutions in the fixed telecom market. One of the world’s largest telecommunications equipment vendors, Alcatel has developed a product portfolio and defined a network blueprint known as the Alcatel Triple Play Service Delivery Architecture (TPSDA), which has been widely accepted in the European marketplace and beyond.

Alcatel has emerged as the leader in the telecommunications market for Triple Play architecture, combining high-quality solutions, attention to customer requirements and superb marketing. The company is effectively leading a fundamental transformation in infrastructures needed to support new types of broadband services and television over IP (IPTV).

In 2005, it was clear that Triple Play was the right path for telecom operators to continue a road to recovery and success. Delivering such services, which include video and entertainment over the telecoms network, requires a re-definition of the network architecture. This new architecture needs to be flexible, scalable and resilient, able to carry not only voice and data for enterprises and consumers, but video and IPTV services as well,

Telecom equipment vendors have re-purposed or introduced many solutions in the market, addressing the requirements of this new paradigm. Some of these solutions and network architectures have become prevalent and adopted by a large number of operators in their plans to enter the Triple Play market.

With TPSDA, Alcatel has developed a purpose-built solution and blueprint, moving away from time division multiplexing (TDM) and asynchronous transfer mode (ATM)- based technologies and platforms, to address the access, aggregation and backhaul networks, as well as element, service and subscriber management in a non-legacy manner.

The TPSDA product portfolio effectively meets a comprehensive set of requirements for a new type of deployment. The company’s end-to-end portfolio has enabled it to expand its customer base, as well as increase its product share within the existing one.

The company’s efforts pioneering key deployments with its partners and developing unique Triple Play know-how and expertise have resulted in the definition of the Alcatel TPSDA. In doing so the company has focused on defining a blueprint that will solve the problems and concerns of operators transforming their networks to deliver the right suite of Triple Play services.

Several telecom operators, as well as alternative service providers have deployed Alcatel’s Triple Play solutions. Presently, this blueprint is being implemented, completely or partially, in over 40 service deployments around the world.

Alcatel is continuing to develop critical IPTV expertise and improve its portfolio and solution by introducing key product enhancements including additions to its services assurance and control framework.

Foreseeing a high level of Triple Play deployments in the near future, Alcatel plans to continue investing in, and evolving the blueprint and its components. Alcatel is also expected to expand its Service Assurance and Control Framework, to enable further fixed-mobile integration.

2006 Market Leadership Award to Alcatel Publ 20061027

Metro Ethernet equipment sales to triple to $15B between 2005 and 2009

Infonetics: Led by strong growth in Ethernet over copper and cable products and carrier Ethernet switches and routers, worldwidel sales of metro Ethernet equipment are surging, from just under $5 billion in 2005 to over $15 billion in 2009.

Metro Ethernet equipment sales will accumulate $49.6 billion over the five-year period between 2005 and 2009.

Ethernet has almost universal appeal to carriers and their customers because it helps lower their telecom costs. Service providers increasingly deploy Ethernet solutions for a variety of uses, but mainly to offer new revenue-generating services. The two most popular types of Ethernet equipment are Ethernet over copper and cable and carrier-class Ethernet switches and routers, which together will make up over two-thirds of the overall metro Ethernet market by 2009. Ethernet access devices (EADs) are a particularly fast-growing segment, reaching about $685 million in 2009, as BT, BellSouth, COLT, Verizon, AT&T and other large providers increasingly use them to roll out Ethernet and mobile backhaul services.

• worldwidel sales of carrier Ethernet switches and routers hit $2.1 billion in 2005 and will more than double to $4.6 billion in 2009

• Metro Ethernet port shipments are projected to skyrocket in the next few years, increasing more than 700% between 2005 and 2009; the majority of ports sold will be VDSL copper ports and EPON ports

• Every year Ethernet will account for a larger portion of metro capex

• North America accounted for 34% of all metro Ethernet equipment revenue in 2005; Asia Pacific for 33%, EMEA for 30%, and CALA for 3%; through 2009, Asia Pacific will takes share from other regions due to the stronger concentration of fast-growing VDSL and EPON in the region

Metro Ethernet Equipment worldwidel Market Size and Forecasts, Publ 20061026

Surge in the Asia/Pacific (including Japan) Thin Client Market in 2005 is Only the Tip of the Iceberg

IDC: Total sales of thin client in the Asia/Pacific (including Japan) (APJ) market reached 279,513 units in 2005, representing an increase of 64% over the previous year. Revenue likewise increased 65% over the same period. Although PC replacement cycles across APJ are already largely completed, the stage is being set by several thin client vendors, which recognize that the current PC life cycle ends in about two years and are expanding their presence in the region. These PCs will be due for replacement in 2009/2009, and this is when IT managers across APJ will consider a whole range of options, including thin clients, with which to swap the existing desktop.

• Across the various verticals, the predominant role of thin clients around the region as server-based solutions for individuals leads to the fair share of deployments being used in the government/education, financial services, and healthcare industries in both 2004 and 2005.

• From an operating system (OS) perspective, proprietary OS rollouts see high traction in countries where local thin client vendors employing their own applications have a strong , such as Korea and the PRC. The others OS category (including Sun’s embedded firmware) was the largest, at 34% share of the overall APJ market in 2005. Windows CE was installed in 24% of all APJ thin client deployments, Windows XP Embedded captured 22%, and Linux followed closely with a 21% share.

• There is little correlation between existing thin client penetration and growth rates across countries. Certain countries with lower penetration are not necessarily ready for mass thin client adoption. Australia leads the APJ region’s shipments in 2005, garnering 23% of all sales. This was followed by India, with 19%, and PRC, with 15%.

• Market share-wise, Wyse leads APJ sales with 35% share in 2005, followed by HP with 16%, VXL with 10%, and Changchun Xinyu and HCL both with 8% share - the latter two vendors garner most sales from the PRC and India in 2005 respectively.

Asia/Pacific (Including Japan) Thin Client Unit Shipments by Vendor, 2004 and 2005 Source: IDC, 2006

Future Outlook

The APJ thin client market is expected to perform strongly over the next five years at a CAGR of 34%. This growth in absolute terms will be driven primarily by India and the PRC, with Australia and Korea also showing decent growth despite higher installed bases than other APJ countries.

The government/education, healthcare, and financial services segments, which traditionally have been strong proponents of thin clients, will continue to see expansion over the forecast period.

Competition among thin client vendors will also lead to a variety of technological improvements, not just in the industrial design of the hardware, but also in the software layer, which holds the key to efficient management of a thin client deployment to attain maximum productivity. Once Citrix jumps on the bandwagon and starts to focus its efforts on the APJ region, growth will snowball, and vendors that have their strategies for the region sorted ahead of time will be able to ride on this growth wave.

thin client in the Asia/Pacific (including Japan) (APJ) market Publ 20061026

Demand for New SIMs Soars as Africa’s mobile Telecommunications Market Continues to Grow

Frost: The African telecommunications market will continue to experience significant growth as new subscribers sign up and mobile operators introduce new services. Even as promising growth opportunities emerge, SIM suppliers will need to find ways of making their products more cost effective to register substantial growth in the subscribers markets. Moreover, they will need to work on developing reliable, high quality SIM cards.

Africa’s mobile telecommunications sector is booming as the demand for communications increases. In such a competitive industry, SIM suppliers need to maintain high standards of service and quality to ensure client retention.

The need for effective communication has pushed the African mobile telecommunications sector into high growth rates. A lack of fixed line infrastructure means that mobile telephony is the only alternative and the issuance of low denomination prepaid vouchers has made the service more affordable while also supporting wider accessibility.

Two pervasive problems across Africa – poverty and continuing conflict – are having a profoundly negative effect on overall economic growth in the region. These dual trends are affecting the telecommunications sector as well.

Operating in conflict areas is high risk and can be costly. It is essential to measure the risks of Africa against the potential gains.

African mobile operators have needs that are unique to the market in which they operate. For instance, there is an increased emphasis on the production of low cost handsets.

SIM manufacturers need to ensure that they can meet the requirements of operators and provide them with products that are reliable and cost-effective, advises Mc Donald. These are the two most important factors for African mobile users.

The African GSM End User Survey Publ 20061026

Handset Shipments from Taiwan to Reach 281 Million in 2009, with 79% Composed of ODM handsets

ABI: The role of Taiwanese handset makers is becoming increasingly significant in the global handset industry. Cooperation with handset original design manufacturers (ODMs) has become an integral part of the handset strategies of some big original equipment manufacturers (OEMs) such as Motorola and Sony Ericsson, especially in the low-end handset segment. Taiwan's ODMs gain cost advantages through setting up plants in mainland China, and their leading role in supplying handset components is helping them further improve their cost structure and complete their supply chain. Handset shipments from Taiwan will reach 281 million in 2009, 79% of which will be ODM handsets, and these shipments will account for 26% of total handset shipments globally. Currently, Motorola and Sony Ericsson are most active in cooperating with Taiwanese ODMs; Nokia and Samsung are still slow to move in this direction. ODM strategies are also popular in Japan, but shipments are still relatively low. There is also much less cooperation between Chinese mainland handset vendors and Taiwanese ODMs, primarily because of unstable demand and the low profit margins produced by intensive competition in the mainland Chinese market. In the mainland market, Chinese vendors lost market share last year, but their profit margin today is improved compared to 4Q 2005. The handset market structure in mainland China has changed during the past two years. The changes include the erosion of market share by illegally distributed handsets, the reforming of distribution channels by vendors on the mainland, and the further involvement of operators in the sales and supply chains. As a result of these changes, the big vendors will garner greater market share, and the proportion of operator-customized handsets will increase quickly, reaching 77% of total handset shipments on the mainland in 2011. Mainland China's Handset Market and Taiwan's Handset ODMs Publ 20061026

North American Households Rate broadband as Most Important Wireline Service

InStat:New survey of US and Canadian consumers that segments households by demographics, all segments rated broadband the communication service they can least live without. Survey results also give clues about how next-generation consumer applications, such as personal telephone numbers and address books, individual mail boxes, and user profiles, may redefine how we communicate through the personalization of traditional shared services. Clearly, existing behavior plays a significant role in future household buying decisions. But the fact that consumers have embraced broadband in a very short period of time illustrates that consumer attitudes, regardless of age, income, or geography, can change.

• There is significant diversity among BB households regarding lifestyle, interests, activities, and buying behavior.

• 72% of all leading-edge BB households in North America already have a cable service bundle. Me-Too type services will not be enough to win away these consumers.

• 85% of all broadband household segments favor the quadruple play.

In-Depth Analysis: A Study of broadband Households and IMS Consumer Markets Publ 20061025

Japanese and South Korean mobile handsets Leading the World in mobile TV, Digital Imaging, and Display Innovation

ABI: Japanese and South Korean consumers are early adopters of new technologies, and today, nearly 14% of all mobile handsets in South Korea support Digital mobile Broadcast television. This high percentage is just one indicator of the continuing flow of innovation coming from Korean and Japanese handset designers, a trend explored in a new study from ABI Research on the topic of mobile phone R&D initiatives. Camera- and mobile TV-enabled phones are expected to drive new growth momentum over the next few years in both countries' handset markets. In 2006, approximately 75% of all handsets in Japan and 52% in South Korea include cameras. Two megapixel camera phones with autofocus and zoom functions have started to outpace 1.3 megapixel models in Japan and South Korea. Two and three megapixel phones will be mainstream by 2009. Five (and greater) megapixel models will dominate after 2010. Japan and South Korea have launched HSDPA and CDMA 1xEV-DO Rev. A services this year. This technologically advanced environment has spurred mobile vendors to develop premium and high-end handsets to support video call and music track download services. In Japan, the most popular new services are Chaku Uta music downloads to mobile handsets. HSPDA services, with their broadband data rates, provide customers with very satisfactory music download experiences. Accordingly, Japanese vendors have continuously expanded music phones lines with Bluetooth headphones, shuttle controls keys, and key pads. Common to both countries is the popularity of mobile TV-enabled handsets. In South Korea, vendors are focusing on development and marketing of T-DMB versus S-DMB phones, due to T-DMB's brighter future prospects. Displays are evolving as well. Japanese and South Korean manufacturers will incorporate cutting-edge display innovations such as 16:9 ratios, 2.5-inch AM OLED displays using system-on-panel, and LTPS TFT, the efficiency of which can decrease the number of circuits and components, and therefore, power consumption. mobile Phone Innovation in Japan and South Korea Publ 20061025

Wi-Fi in Consumer Electronics Devices: Embraced by Some, Shunned by Others

InStat: With Wi-Fi appearing in mobile PCs, home routers, and phones, there has been much hype around Wi-Fi crossing over into the Consumer Electronics (CE) space. But the CE space is just warming up to Wi-Fi, with some device segments, such as gaming consoles and handheld games, welcoming Wi-Fi with open arms. In other device segments, such as digital video camcorders and standalone Personal Video Recorders (PVRs), the door has been kept shut on Wi-Fi. The beauty of Wi-Fi’s adoption into high-volume CE categories is that even single-digit attach rates can translate into millions of Wi-Fi shipments. For example, even with sub 10% attach rates expected for set top boxes and digital TVs in 2010, Wi-Fi-enabled shipments in these device segments are still expected to number in the millions.

• Digital Rights Management, combined with a lack of consumer understanding around multimedia home networking, may continue to hinder Wi-Fi's uptake into CE devices designed to access and/or distribute online content.

• Although Wi-Fi offers networking capabilities not provided by Wireless Personal Area Network (PAN) technologies, there are some device segments—such as digital video camcorders, digital still cameras and printers—where Wi-Fi faces technology competitors such as the emerging Wireless USB.

• Handheld game shipments with embedded Wi-Fi are expected to reach 28 million units in 2006. gaming consoles with embedded Wi-Fi are expected to ramp up to approximately 5 million by the end of 2006, driven by the fourth quarter release of Sony’s PlayStation 3 and Nintendo’s Wii.

• 802.11n is expected to drive Wi-Fi uptake into core digital living room devices such as digital TVs and set top boxes.

• Major vendor moves in the CE space include Apple’s planned launch of a Wi-Fi media adapter in 2009, and Microsoft’s release of its Wi-Fi-enabled Zune portable digital music player in late 2006. Innovative Wi-Fi-enabled CE devices are available from a variety of vendors—musicGremlin, Slim Devices, Sonos, Sony, Nintendo, Sharp, Philips, Free, Sirius, Buffalo, D-Link, Linksys and many others. But, to really push Wi-Fi into specific CE segments, vendors will have to devote significant marketing resources, and, most importantly, provide a skillful implementation of Wi-Fi that really demonstrates the technology’s value-add.

In-Depth Analysis: Consumer Electronics Devices Warming Up to Wi-Fi Publ 20061024

MoCA, HPNA 3.0, and HomePlug Will Compete with Wi-Fi for Distribution of Triple-Play Services in the Home

ABI: Triple-play service providers today are faced with choices when it comes to distributing content around the customer's premises. While Wi-Fi will play a large role in domestic triple-play distribution scenarios, it is not the whole story: Multimedia over Coax (MoCA), Home Phone Networking Alliance (HPNA 3.0), and HomePlug will collectively see 45 million total connections on STB and residential gateways shipped in 2011. Most large video service providers are evaluating one of these no-new-wires technologies to enable video distribution around the home, . The slow road towards finalization of 802.11n and the lack of comfort among many video service providers about Wireless have opened the doors for these alternatives. Verizon's choice of MoCA and AT&T's adoption of HPNA 3.0 show a market today split between various technologies. Each technology has perceived strengths and weaknesses, depending on who is delivering the services and where. While MoCA has the highest actual throughput for home networking, today the technology can operate only over coax. Many see HPNA 3.0's ability to run over either coax or copper phone wiring as its biggest advantage, but point to HPNA's frequency overlap with VDSL as a concern. HomePlug AV's selling point is that it uses the dwelling's existing powerline wiring to distribute high speed data, but the technology has yet to see a major rollout by a large video service provider for video services. Our research into this topic suggests that among the three technologies (MoCA, HPNA 3.0, and HomePlug AV), MoCA will lead in overall connections due to strong uptake in North America among IPTV and cable providers. HPNA 3.0 will see some adoption among IPTV providers and possibly cable providers, as some take advantage of the dual-medium capability (coax and phone line) of HPNA. HomePlug will see more limited deployment, but will have greater traction overall in Europe. Home Networking Triple Play Publ 20061024

Wireless Connectivity to Be the Future for Portable Navigation Devices

ABI: Today's generation of navigation devices is the first to be connected to real-time information, but the services they offer provide little more than road incidents to be avoided. That won't suffice for long, however and soon motorists can expect to see a wide variety of useful data flowing into their cars in what is being termed connected navigation. This will open up a multitude of opportunities for service providers and data aggregators to exploit travelers' desires for contextual information about local services and points of interest. To differentiate themselves, navigation vendors will have to find other and better data to incorporate into their navigation schemes. That will involve a connection to the Internet. Companies such as TomTom and Dash Navigation are already blazing the trail here: TomTom uses Bluetooth to establish the pipeline to the extra data, while Dash is using a cellular modem and Wi-Fi. Next-generation devices, set to appear in the next few months, will offer traffic flow data, weather information, or instant messaging. Within two years, we may see navigation systems providing contextual answers to highly specific queries about local products and services. Navigation vendors should be partnering with various data suppliers in order to differentiate their offerings and incorporate the new data into their routing algorithms and applications. There are also many opportunities for data aggregators in niche areas. But it's not quite that simple. Not only are business models still poorly defined in this sector, but to realize this potential, providers must work to standardize the data so it is digestible by a wide variety of navigation devices. Paradoxically, handset-based devices, which have been inferior with regard to the navigation experience due to their small form-factor, will have an advantage in the era of connected navigation because they already have cellular connections. Make them work outside the vehicle, and they open up a whole new market: the urban pedestrian. Consumer Navigation Systems and Devices Publ 20061023

3Q 2006 mobile Device Shipments Top 245 Million, On Target for 1 Billion by Year End

ABI: The second quarter of 2006 was a bit softer than expected in terms of handset shipments and prices, that 4Q 2006 will prove a bumper quarter for mobile operators and handset vendors. The market topped 245 million mobile devices shipped in 3Q 2006 and the global mobile devices marketplace is on target to reach one billion devices by the year's end. The handset vendors are pulling out all the stops to get their slickest, flattest, largest music memory, biggest mega-pixel camera phones onto the shelves in time for the 4Q-2006 holiday jamborees. The Gang of Five — Nokia (36%), Motorola (23.3%), Samsung (12.5%), Sony Ericsson (8.1%), and LG (6.7%) — all increased market share at the expense of the smaller handset vendors. Economies of scale, and marketing, it seems, are everything. Initiatives such as super thin phones have helped manufacturers such as Samsung and Motorola gain market share, but Nokia's ability to pump out phones for the emerging markets, cut handset average selling prices (ASPs), and exploit its brand image have served to maintain, and even boost, Nokia's market-share. The net result of this scramble for market share has been lower ASPs. The global weighted ASP dropped a steep -7.8% in 3Q 2006 compared to a 1.6% rise in 2Q 2006, 4Q 2006 is unlikely to fare any better. The competition is cut-throat. 3G handset shipment volumes proved to be a bit soft in 3Q 2006. 2.75G EDGE, which has been rolled out by a number of operators, has made the perceived performance gain of owning a 3G phone over a 2G GSM phone less distinct. Also, a number of vendors and operators are planning a big overhaul of their 3G phone line up for 4Q 2006. Recently Vodafone announced that it will be unveiling ten new phones for the festive season, six of which are 3.5G HSDPA-capable. HSDPA effectively turbo-charges the 3G experience. HSPDA will dramatically change the download experience for end users wishing to download music, games, etc. The question is, will the turbo-charge kick in quickly enough?

mobile Devices Research Service Publ 20061020

Wi-Fi and Active RFID Vying for Healthcare Asset Management Markets

ABI: Wi-Fi and active radio frequency identification (RFID) technologies are locked in a long battle to capture the burgeoning market in health care asset tracking. With less than 5% of North American health care facilities currently equipped with asset-management systems, this market is up for grabs. Hospitals own lots of expensive equipment, from basic items such as wheelchairs to the most sophisticated medical machinery. At any given time, much of it is hard to find: either in use, or in storage. The result: over-inventory and under-utilization of assets. Both Wi-Fi and active RFID systems allow hospitals to know where their equipment is, nearly in real time. Wi-Fi location system vendors are focusing on healthcare because most hospitals have Wi-Fi networks in place and many medical devices are Wi-Fi-equipped for patient monitoring. The value proposition is that they can keep their existing infrastructure and add new elements. Wi-Fi location system vendors such as Aeroscout, Ekahau, and PanGo will also argue that their technology is standards-based and non-proprietary. On the other hand, RFID vendors such as RF Code and Radianse point to the wide application of RFID for asset tracking, and their longevity in the industry. Wi-Fi is a viable solution for hospitals but most hospitals will need to install extra access points because their networks weren't designed for this purpose. The integration process can also be more difficult than many seem to believe and requires extensive system configuration in order to determine accurate location. Active RFID and Wi-Fi in the RTLS Market Publ 2006102

mobile Messaging: Not Sexy, But Profitable

eMarketer: Messaging is the least sexy but the most profitable part of the mobile data universe. Multimedia messaging is gaining in popularity, but short text messaging continues to bring home the mobile data revenues for the vast majority of the world's mobile carriers. This year, revenues for short messaging service (SMS) will hit $20 billion in Western Europe, $9 billion in the Asia-Pacific region and $7 billion in the US.

The continued, dogged and ubiquitous success of SMS in spite of every attempt to replace it with something more 'sexy' gives credence to the idea that mobility's primary value lies in the user's ability to get things done. Consumers like the convenience and speed of SMS.

Although not yet as popular in the US as in Europe and Asia, SMS grew 98.8% during the first half of 2006 (64.8 billion messages) compared to the same period in 2005 (32.6 billion messages).

SMS is particularly popular among young people. Nearly 70% of consumers between the ages of 18 and 30 polled by Harris Interactive stated that they used SMS. Focusing on teens only, the poll showed that 46% have a mobile phone and use text messaging. Hispanic Americans and African Americans are also more likely to be heavy users of text messaging.

Marketers are appealing to SMS users through television programs such as American Idol, in which viewers vote whether an Idol singer deserves to pass to the next round.

mobile Message Marketing: Cash Not Flash Publ 20061018

Cable TV Infrastructure Market Driven by Three-Screen Quest and Fixed mobile Convergence

Cable TV Infrastructure Market Driven by Three-Screen Quest and Fixed mobile Convergence

InStat: The worldwidel cable TV industry is in a race to provision a three-screen service that starts with HDTV sets, maps over to broadband-connected PCs, and follows subscribers around during the day on cell phones or other portable devices. As a result, the high-tech market research firm expects strong, continued growth in cable TV infrastructure equipment with sales rising from about US$925.4 million during 2006 to more than US$2.1 billion in 2010. The cable TV industry is working diligently to connect all the infrastructure dots in the race to provision a three-screen telecommunications service. System operators are building out Super Headends and upgrading Local Headends to provide the economies of scale needed to provide the greatest number of services, over the greatest geographical reach, at the lowest possible cost. Fixed mobile Convergence, or FMC, will become a fast-growing market for cable operators, and they will disrupt the cell phone industry.

• High Definition TV services and Video-on-Demand are expanding, driving plant upgrades for improved Gigabit Ethernet video switches, Switched Digital Video (SDV), more QAM channels, and widening deployments of 1 GHz Final Mile equipment.

• Modular Cable Modem Termination Systems (Modular CMTS) and wide band cable modems are being brought into play to upgrade High Speed Data services to compete against telephone companies’ ADSL, VDSL, and Fiber-to-the-Home.

• Comcast, Cox, Time-Warner and Advance/Newhouse have a joint venture with Sprint Nextel that will begin offering cable-branded cellular phone services later this year in the US. Later on, Fixed mobile Convergence will add innovative video services and Wireless extensions to the Cable TV infrastructure, and disrupt the cell phone market.

• The cable TV industry is rapidly deploying Voice-over-IP services.

R Cable TV Head-Ends: Fixed mobile Convergence (FMC) Powers Cable TV Counterpunch to IPTV Publ 20061018

Ethernet displacing SONET/SDH in customer access networks

Infonetics: A new study of 25 top tier service providers in North America, Europe, and Asia Pacific provides further evidence that Ethernet continues to go mainstream and will eventually dominate the metro space, as SONET/SDH slowly but surely declines over the next 10 to 20 years.

Service Provider Plans for Metro Optical and Ethernet, the percentage of access or collector rings/mesh that are Ethernet jumps from 32% (among respondents that have adopted Ethernet adapter rings) in 2005 or earlier to 60% in 2009 and beyond.

The trend is clear: Ethernet is growing in the access space to the detriment and displacement of SONET/SDH, as service providers continue to look for ways to reduce operating expenditures and enable new revenue streams. And now that the number-one technical issue that was plaguing service providers rolling out metro Ethernet networks last year—QoS—is being addressed by manufacturers, the Ethernet adoption curve is speeding up. Manufacturers have added many new QoS features based on OAM standards, dramatically improving end-to-end QoS with carrier-class Ethernet products. As a result, QoS dropped from the top of the list of technical challenges last year to number seven this year.

• All respondent service providers offer Ethernet services already, and most plan to offer Ethernet over a variety of technologies, including fiber, copper, WiFi, and Wimax

• Ethernet over WDM increases from 80% in 2006 to 92% after 2009, while the number offering Ethernet over SONET/SDH decreases from 88% to 60%

• 48% of providers plan to deploy next gen hybrid Ethernet-WDM-SONET/SDH equipment

• Incumbent providers are currently ahead of competitives in displacing SONET/SDH with Ethernet services; Europe is moving the fastest in displacing SONET/SDH, Asia Pacific the slowest

• Respondents offer a variety of network-based services over Ethernet in 2006, led by packetized voice, private line over Ethernet, and a number of video, storage related, and security related services

• By 2009, 52% of respondents have a strategy to deploy an all-Ethernet and/or an Ethernet/MPLS network that combines residential/Triple Play and business traffic

• Most respondents use VPNs to offer Ethernet services, and all VPN service types grow in usage by 2009, with layer-2 point-to-point MPLS VPNs (pseudowire) and VPLS growing the most

Service Provider Plans for Metro Optical and Ethernet, Publ 20061017

Google Expected to Pocket 25% of Online Ad Revenue in 2006

eMarketer: As Yahoo! and Google report their third-quarter earnings this week, US full-year advertising revenue, growth and market share for the two companies can help put their earnings in perspective.

Google's US ad revenue growth rate in 2006 will soar almost 65% over last year's. Yahoo! still shows a respectable 17.5% growth rate, an increase that would satisfy most companies. But not one competing against Google. Just a year ago, Google and Yahoo! both posted US ad revenues of more than $2.4 billion. For the full year 2006, though, Google at $4 billion in ad revenue will eclipse Yahoo!'s ad revenue of $2.9 billion.

These numbers are particularly dramatic when considering market share of total US ad revenues. In 2006, for the first time, Google is expected to pocket one-quarter of US Internet ad revenue, while Yahoo!'s share drops to 18%.

These growth numbers establish Google as the unrivaled king of the online advertising universe, and leave Yahoo!, with its greater advertising diversity and years of media experience, struggling in second place.

By gobbling up YouTube last week, Google acknowledged that even though paid search gives it a robust revenue stream, that alone won't be enough to compete against Yahoo!, MSN and other major players in the years to come. Google and Yahoo oct 2006 Publ 20061017

VOIP Market Shift Presents New Opportunities Around Support Service Spending

IDC:

An evolutionary shift in the worldwidel VOIP equipment market will push network support services spending to $1.27 billion in 2010. The walls between telephony and IT will continue to erode as network equipment vendors move from proprietary hardware and software solutions and toward software running over dedicated servers. Traditionally, networking vendors have experienced very little competition for support services due to the proprietary nature of their products. But, as the market shifts toward software solutions running on general purpose servers, a slew of third-party support services providers and systems vendors have an opportunity to provide support services for the hardware.

As the IP PBX market shifts from proprietary systems to software applications running on a general purpose servers, the model for support services will begin to look more like the model for other mission-critical software applications. In this model, the VOIP vendors will be responsible for supporting the software in partnership with a systems vendor or a third party will be responsible for supporting the hardware.

• To capitalize on emerging opportunities, server vendors should look to partner with network equipment vendors

• As this market shift advances, VOIP equipment vendors will need to evolve from a hardware-centric support model to a software support model.

worldwidel VOIP Support Services 2006–2010 Forecast and Analysis Publ 20061017

Asia/Pacific mobile music Revenues Soaring

InStat:From almost nothing five years ago, the mobile music market in Asia/Pacific grew to US$3.3 billion in 2005, and will reach US$9.3 billion by 2010. The breakthrough years for mobile music in Asia/Pacific will be 2009 and 2009. Growth drivers include large markets like China and India reaching a critical mass of mobile subscribers and 3G services becoming prevalent regionwide. Ringtones have been the primary driver for mobile music growth in the past, but this will change as new mobile phones equipped with digital music file playback capability create a new market. As consumer preferences change, the future growth of the mobile music industry rests on ringback tones and full music tracks.

• The size of South Korea’s mobile music industry has already surpassed the country’s conventional music industry.

• China will soon assume prominence in the mobile music market, recording US$2.8 billion in mobile music revenues by 2010, trailing only market leader Japan, which will have US$3.4 billion in revenues in 2010.

• 60% of respondents to an In-Stat consumer survey indicated that they had a phone capable of some form of music playback.

In-Depth Analysis: mobile music in Asia/Pacific: From a Ring to a Roar Publ 20061016

Booming Camera Phone Sales Drive Image Sensor Market

InStat: In 2005, the image sensor market continued its strong growth, spurred by the booming camera phone market. Camera phones comprised over 70% of all digital cameras that shipped in 2005, and the vast majority of these devices used Complimentary Metal Oxide semiconductor (CMOS) sensors, with the remainder using Charge-Coupled Devices (CCDs). Because of the strength of the camera phone market, overall area CMOS image sensor shipments exceeded area CCD shipments by nearly a factor of three in 2005. This gap will continue to widen through 2010. CMOS will continue to flourish, due to its popularity in camera phones, web cameras, and toy cameras. CCDs will continue to thrive in markets such as digital still cameras, camcorders, and security cameras.

• Digital still cameras continued as the second-largest market for image sensors, with over 70 million units shipped in 2005.

• In 2005, embedded cameras in PCs hit the market, especially in notebook PCs.

• Automotive rear view cameras continued to show strong growth in higher-end sedans, sport utility vehicles and minivans.

In-Depth Analysis: Image Sensors 2006: CMOS Sensors Outship CCDs Publ 20061017

Femtocell Shipments Will Reach 19 Million Per Annum in 2011, Thanks to Evolving Features

ABI: By 2011 the worldwide market for femtocell products is expected to reach nearly 19 million units per annum. An interesting factor that is often overlooked when considering the femtocell market is that of functionality. Initial offerings are likely to be simple affairs that rely on Ethernet connections to existing ADSL gateways. The real challenge today is balancing price with functionality. In order to get an affordable product on the market as early as possible, it is likely that most designers will opt for a basic feature set. However manufacturers and carriers alike will need to evolve this feature-set rapidly to take advantage of the femtocell offering's full potential. The holy grail of implementations is likely to incorporate a Wi-Fi access point, an integrated ADSL gateway and an IPTV set-top box. One of the major determinants of this migration in feature sets will be the nature of a carrier's business. In order to maximize the femtocell's potential, the carrier must have its own broadband capability: incumbent DSL providers are likely to view the carrying of other companies' traffic over their broadband connections in a very poor light. Moves towards this capability are already visible in many markets; one example is Vodafone in the UK.

Femtocell Access Points: Fixed-mobile Convergence for Residential, SMB, and Enterprise Markets Publ 20061017

PON equipment sales surging to $3 billion by 2009

Infonetics: worldwidel EPON, GPON, and BPON equipment sales are expected to surge to $3 billion in 2009, up 432% from $565 million in 2005.

After more than doubling between 2004 and 2005, the number of worldwidel PON subscribers is expected to continue to swell as well, from 4.1 million in 2005 to 38.0 million in 2009.

The big trend we’re seeing with PON is that service providers are really committed to FTTH (fiber-to-the-home), as reflected by the recent increase in longer-term contracts being initiated by larger RBOCs and PTT. Video via RF overlay and IPTV, gaming, and other high bandwidth applications continue to drive demand for PON and Ethernet FTTH equipment all over the world.

• Mitsubishi, with their bulk shipments of EPON ONTs to Japan-based service provider NTT, takes over from Hitachi as the leader in 2005 worldwidel PON revenue and port market share; Tellabs is second in worldwidel revenue; Suminet is second in ports shipped and third in revenue

• Tellabs leads PON revenue in North America, Mitsubishi in Asia Pacific, Motorola in EMEA, and Alcatel in CALA

• 2.2 million PON ports shipped worldwidel in 2005; that number is forecast to jump to 13.4 million by 2009

• The burgeoning Ethernet Access Device (EAD) segment more than quadrupled between 2004 and 2005, and is forecast to jump from $91 million in 2005 to almost $685 million in 2009

• PON and Ethernet FTTH subscribers topped 4 million worldwidel in 2005, and will grow to over 38 million in 2009, 85% of which will be PON-based, 15% Ethernet-based

• 58% of worldwidel PON revenue comes from Asia Pacific in 2005, but by 2009, EMEA and CALA will gain share, while Asia Pacific’s share drops to 46% and North America loses 1%

PON, FTTH, and EAD Equipment Publ 20061005

$3.4B mobile backhaul market begins migration to IP,

Infonetics:There’s good news in store for mobile operators feeling the pain of expensive mobile backhaul costs.

IP, Ethernet, and next gen microwave technologies are allowing carriers to provide new mobile backhaul solutions to mobile operators that will help them reduce capex and opex and keep costs in line with subscriber ARPU and revenue—a problem that has been vexing mobile operators ever since e-mail, text messaging, calendar synching, video clips, Internet surfing, and other data-rich features hit the cellular airwaves.

In addition to mobile phone bandwidth usage skyrocketing, the number of subscribers is also skyrocketing. There were more than 2 billion mobile subscribers worldwidel in 2005, and that num

• P mobile backhaul equipment will be Pseudowire enabled by 2009

• worldwidel mobile bac

  er will jump to over 3 billion by 2009.

And mobile operators are paying through the nose to handle all the voice, video, and data traffic created by those billions of subscribers.

mobile operators spent $16 billion on mobile backhaul link services in 2005, and will spend double that in 2009, . Although that’s a significant increase in charges, the good news is they’ll be getting a lot more for their money in coming years, because the average annual charge per connection goes up only 18% between 2005 and 2009—from $8,004 to $9,455—while the capacities grow from one to two T1/E1s per connection to 10s of megabits/sec to even 100Mbps.

The reason for this is that new technology and product options are becoming available now, especially in next gen microwave and IP/Ethernet products, where single products can efficiently handle 2G/3G voice simultaneously with 2.5G/3G/3.5G data and video traffic streams, Howard continued. These improvements will allow mobile operators to slowly increase their capital investment while rapidly adding more subscribers and higher capacity services.

Infonetics’ report shows that while the migration to IP-based backhaul is clearly underway, it will be a gradual process, because T1/T3 mobile backhaul provisioning is a multi-billion dollar business that carriers won’t give up readily. Carriers also need time to gain trust with the new IP/Ethernet equipment. But the pressure to offer affordable mobile backhaul service links to mobile operators will eventually force carriers to make the shift, likely ramping between 2009 and 2010.

• worldwidel sales of mobile cell site backhaul equipment hit $3.4 billion in 2005, and will decline 39% to $2.4 billion in 2009; the decline in revenue is due mainly to microwave equipment becoming significantly cheaper with much higher capacities

• Microwave radio made up 81% of total mobile backhaul equipment sales and 56% of total connections in 2005

• IP mobile backhaul equipment comprised less than 1% of total mobile backhaul equipment sales in 2005; by 2009, it will comprise 45% of the total, or $1.1 billion

• 99% of all Ikhaul installed connections (base stations) reached just under 2 million in 2005 and will grow 69% to 3.3 million by 2009 due to growing numbers of subscribers, new 2.5G/3G/3.5G/4G base stations, and more dense coverage including micro base stations inside buildings

mobile Backhaul Equipment, Installed Base, & Services Market Outlook Publ 20061016

$3.4B mobile backhaul market begins migration to IP,

Infonetics:There’s good news in store for mobile operators feeling the pain of expensive mobile backhaul costs.

IP, Ethernet, and next gen microwave technologies are allowing carriers to provide new mobile backhaul solutions to mobile operators that will help them reduce capex and opex and keep costs in line with subscriber ARPU and revenue—a problem that has been vexing mobile operators ever since e-mail, text messaging, calendar synching, video clips, Internet surfing, and other data-rich features hit the cellular airwaves.

In addition to mobile phone bandwidth usage skyrocketing, the number of subscribers is also skyrocketing. There were more than 2 billion mobile subscribers worldwidel in 2005, and that num

• P mobile backhaul equipment will be Pseudowire enabled by 2009

• worldwidel mobile bac

  er will jump to over 3 billion by 2009.

And mobile operators are paying through the nose to handle all the voice, video, and data traffic created by those billions of subscribers.

mobile operators spent $16 billion on mobile backhaul link services in 2005, and will spend double that in 2009, . Although that’s a significant increase in charges, the good news is they’ll be getting a lot more for their money in coming years, because the average annual charge per connection goes up only 18% between 2005 and 2009—from $8,004 to $9,455—while the capacities grow from one to two T1/E1s per connection to 10s of megabits/sec to even 100Mbps.

The reason for this is that new technology and product options are becoming available now, especially in next gen microwave and IP/Ethernet products, where single products can efficiently handle 2G/3G voice simultaneously with 2.5G/3G/3.5G data and video traffic streams, Howard continued. These improvements will allow mobile operators to slowly increase their capital investment while rapidly adding more subscribers and higher capacity services.

Infonetics’ report shows that while the migration to IP-based backhaul is clearly underway, it will be a gradual process, because T1/T3 mobile backhaul provisioning is a multi-billion dollar business that carriers won’t give up readily. Carriers also need time to gain trust with the new IP/Ethernet equipment. But the pressure to offer affordable mobile backhaul service links to mobile operators will eventually force carriers to make the shift, likely ramping between 2009 and 2010.

• worldwidel sales of mobile cell site backhaul equipment hit $3.4 billion in 2005, and will decline 39% to $2.4 billion in 2009; the decline in revenue is due mainly to microwave equipment becoming significantly cheaper with much higher capacities

• Microwave radio made up 81% of total mobile backhaul equipment sales and 56% of total connections in 2005

• IP mobile backhaul equipment comprised less than 1% of total mobile backhaul equipment sales in 2005; by 2009, it will comprise 45% of the total, or $1.1 billion

• 99% of all Ikhaul installed connections (base stations) reached just under 2 million in 2005 and will grow 69% to 3.3 million by 2009 due to growing numbers of subscribers, new 2.5G/3G/3.5G/4G base stations, and more dense coverage including micro base stations inside buildings

mobile Backhaul Equipment, Installed Base, & Services Market Outlook Publ 20061016