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Worldwide Network Components ExpendituresProduct Type: Market Research ReportPublished by: BCC Research Published: December 2005 Product Code: R2-1136 Description INTRODUCTION
Increasingly, businesses and consumers communicate in real time and networks have made it possible for companies and individuals to communicate effectively. They have become faster, less expensive, and simpler to deploy. Businesses and individuals have developed new applications to take advantage of high speed, multimedia friendly transmissions. Just about every type of device is being connected to business and consumer networks. Behind these new networking advances is an ever-expanding array of semiconductors. Advances in wafer and silicon technology have enabled chip manufacturers to squeeze complex functions and functionality onto smaller and smaller spaces. As a result, network chips continue to be an area of prime interest for semiconductor suppliers. Because these newest semiconductors offer users a number of benefits, demand from network equipment suppliers has been rising. This report will examine the silicon used to connect an ever-growing array of devices, from complex servers to nextgeneration phones, to networks. After defining the different market segments (10M Ethernet, VoIP), the report analyzes and forecasts market trends in each segment, and delineates technology trends and identifies markets leaders. Long-term economic, business, and other macro issues raised by these trends are also analyzed. SCOPE OF STUDY The report contains:
Preparation of this report involved in-depth study and critical analysis of published data from a wide variety of world economic agency, US government, and private company sources. Industry projections have been made by BCC based on original studies of economic, social, and demographic information, as well as on critical examination of projections by industry analysts and those found in public sources. Information included in the report comes from primary BCC research, input from key suppliers in the various market segments, and reports from organizations, such as the U.S. Department of Commerce, The World Trade Organization, the 10G Ethernet Alliance, the Wi-Fi Alliance, the Institute of Electrical and Electronic Engineers, and the Internet Engineering Task Force. The projections are based on anticipated growth in the current base of network users, the emergence of new market sectors, movement among existing network users from low speed to higher speed options, the availability of new networking options throughout the world, and a push by suppliers to wire more devices in the home as well in business. Another factor is the never ending improvement in silicon design. When new network components are first shipped, they sell at their highest price. Typically, pricing erodes from 5% to 20% per year depending on how long the components have been shipping. The higher price drops are associated with newer technology and vendors can make up for lower pricing by increasing volume. The lower end of the spectrum occurs with mature products; here vendors need to squeeze out costs by reducing expenses or improving production. Since segments of the market, such as low-speed Ethernet connections are mature and stable, vendors have been examining new ways to leverage their technology. Markets, such as home and industrial automation offer them those opportunities. The need for higher speed network options corresponds to the never ending delivery of faster, more powerful computer systems. As companies and individuals take advantage of these advances, they find that their network connections slow down data transmissions, which reduces productivity. Consequently, they are looking to upgrade to faster networking options. Since vendors have shipped more than 3 billion Ethernet adapters and 450 million wireless connections, the migration from lower speed to higher speed connections provides suppliers with a recurring revenue stream. In addition, lower product pricing stemming from increased competition among suppliers has been expanding the market, so businesses, OEMs, and consumers can now afford additional network solutions. The market for network silicon will be healthy in emerging market segments, such as Voice over IP (VoIP), and some of the potential revenue increases that vendors would like to reap will be offset by declining prices stemming from intense competition. Silicon vendors have been lowering the price of their products by streamlining manufacturing processes, moving facilities to inexpensive labor markets, such as China, and improving the design process. The revenue projections are based on a continued worldwide growth in consumer and business spending of 2%, which translates into expansion of numerous product categories, including the use of networking products. One item of caution, the projections could be lower if the world economy slips into a recession or a depression, events that are possible given the volatility in areas, such as the Middle East. Table of Contents INTRODUCTIONSTUDY GOALS AND OBJECTIVES REASONS FOR DOING THE STUDY CONTRIBUTIONS OF THE STUDY SCOPE AND FORMAT METHODOLOGY AND INFORMATION SOURCES ANALYST CREDENTIALS RELATED BCC REPORTS BCC ONLINE SUMMARY Summary Table: WORLDWIDE NETWORK COMPONENT REVENUES AND SHIPMENTS, THROUGH 2010 (MILLIONS) Summary Figure: WORLDWIDE NETWORK COMPONENT REVENUES AND SHIPMENTS, 2003-2010 (MILLIONS) OVERVIEW BUSINESSES EMBRACE NETWORKING FUNCTIONS DIGITAL HOME MEDIA LOCAL AREA NETWORKS ETHERNET UNTETHERED NETWORKING WEB AT HOME CHALLENGES AT HOME CHANGING CHIP DESIGN NPU VERSUS ASICs Partitioning Remember Memory One Plus One Does Not Equal Two NPU Revenue Ramps Up Table 1 WORLDWIDE NPU NETWORK COMPONENT PURCHASES, THROUGH 2010 ($ MILLIONS) NPU Vendors Battle It Out Figure 1 MARKET SHARES OF TOP FIVE WORLDWIDE NETWORK COMPONENT VENDORS, 2004 (%) AMCC Intel Corp. Agere Systems Inc. Hifn EZchip Technologies SYSTEM ON A CHIP DESIGN STARTS TO TAKE HOLD SOC It to Me Intellectual Property Problems Programmable Logic Devices Additional Solutions Software Functions SOC Sales Grow at a Healthy Rate Table 2 WORLDWIDE SYSTEM ON CHIP NETWORK COMPONENT PURCHASES, THROUGH 2010 ($ MILLIONS) SOC Vendors Vie for More of Market Pie Figure 2 MARKET SHARES OF TOP FIVE SOC VENDORS, 2004 (%) Freescale Semiconductor Broadcom Vitesse Semiconductor Corp. Agere Systems Inc. Mysticom Semiconductor ACTA Migrating to Advanced Telecom Computing Architecture The Need for Speed Compliance More Standards Work to Come NETWORK COMPONENTS: SUMMARY OF MARKET SIZE Table 3 WORLDWIDE NETWORK COMPONENT REVENUE BY CATEGORY, THROUGH 2010 ($ MILLIONS) Table 4 WORLDWIDE NETWORK COMPONENT PRODUCT PURCHASES BY CATEGORY, THROUGH 2010 (MILLIONS OF UNITS) FUELED BY 10-GIGABIT ACCEPTANCE, ETHERNET SALES CONTINUE TO RISE OVERVIEW AND MARKET SIZE Table 5 WORLDWIDE ETHERNET SEMICONDUCTOR COMPONENT REVENUES BY TYPE, THROUGH 2010 ($ MILLIONS) Table 6 WORLDWIDE ETHERNET SEMICONDUCTOR COMPONENT SHIPMENTS BY TYPE, THROUGH 2010 (MILLIONS OF UNITS) ETHERNET: THE EARLY DAYS CSMA/CD CHARACTERIZES ETHERNET THE DESIGN Current Design 10Base2 5-4-3- Rule MODULATION ENABLES GIGABITS PER SECOND TRANSMISSIONS OVER COPPER 10-GIGABIT ETHERNET TAKES SHAPE EMERGING ETHERNET INITIATIVES GAIN MOMENTUM Table 7 WORLDWIDE NETWORK SEMICONDUCTOR PRODUCT PURCHASE BY SELECT FUNCTIONS, THROUGH 2010 ($ MILLIONS) ETHERNET AND STORAGE AREA NETWORKS Table 8 WORLDWIDE NETWORK SAN SEMICONDUCTOR REVENUE, THROUGH 2010 ($ MILLIONS) Storage Needs Continue to Grow Network Attached Storage and Storage Area Networks Start-ups Enter Storage Arena Figure 3 MARKET SHARES OF TOP FIVE ETHERNET SAN COMPONENT SUPPLIERS, 2004 (%) Agilent LSI Alacritech iStor iVivity PUSHING ETHERNET INTO THE WAN Table 9 WORLDWIDE WAN ETHERNET SEMICONDUCTOR PRODUCT REVENUES, THROUGH 2010 ($ MILLIONS) What is Driving Growth in WAN Ethernet? OFFLOAD FUNCTIONS TAKE ROOT Table 10 WORLDWIDE ETHERNET OFFLOAD PRODUCT REVENUES, THROUGH 2010 ($ MILLIONS) Specialization Pays Off for Offloading Suppliers Figure 4 MARKET SHARES OF TOP FIVE ETHERNET OFFLOADING VENDORS, 2004 (%) Agilent Alacritech AMCC Agere PMC Sierra 10M ETHERNET: FIRMLY SETTLED IN COMMODITY STATUS Table 11 WORLDWIDE 10-MEGABIT-PER-SECOND ETHERNET SEMICONDUCTOR PRODUCT PURCHASES BY PORT, THROUGH 2010 (MILLIONS OF UNITS) LOW-SPEED ETHERNET NETWORK COMPONENT LEADERS ARE WELL ESTABLISHED Figure 5 MARKET SHARES OF TOP FIVE 10-MEGABIT ETHERNET SEMICONDUCTOR PRODUCERS, 2004 (%) Agere Broadcom Freescale Intel PMC THE MOVE TO INDUSTRIAL APPLICATION Table 12 PERCENTAGE OF INDUSTRIAL APPLICATIONS USING ETHERNET CONNECTIONS, THROUGH 2010 (%) New Microcontrollers Industrial Networks Vendors Divvy Up Industrial Automation Revenue Figure 6 MARKET SHARES OF TOP FIVE 10-MEGABIT ETHERNET INDUSTRIAL AUTOMATION NETWORK COMPONENT PRODUCERS, 2004 (%) Rockwell Freescale Netsilicon National Semiconductor Siemens 100-MEGABIT ETHERNET VEERS INTO SPECIALIZED APPLICATIONS Table 13 WORLDWIDE 100-MEGABITS PER SECOND ETHERNET SEMICONDUCTOR PRODUCT PURCHASES BY PORT, THROUGH 2010 (MILLIONS OF UNITS) THE BIG COMPANIES DOMINATE THE 100-MEGABIT ETHERNET MARKET Figure 7 MARKET SHARES OF TOP FIVE 100-MEGABIT ETHERNET SEMICONDUCTOR PRODUCERS, 2004 (%) Freescale Broadcom Intel Agere Systems Netsilicon GIGABIT ETHERNET TAKES MARKET LEAD Figure 8 SHARE OF ETHERNET SEMICONDUCTOR PRODUCERS BY SPEED, 2004 (%) Table 14 WORLDWIDE 1-GIGABIT ETHERNET SEMICONDUCTOR REVENUE, THROUGH 2010 ($ MILLIONS) MOVING TO SINGLE SYSTEM ON-A-CHIP Table 15 WORLDWIDE SEMICONDUCTOR 1-GIGABIT ETHERNET PRICING TRENDS BY UNIT, THROUGH 2010 ADVANCES IN LAN SWITCH COMPONENTS Table 16 WORLDWIDE SEMICONDUCTOR 1-GIGABIT ETHERNET SEMICONDUCTOR SHIPMENTS, THROUGH 2010 (MILLIONS OF UNITS) GIGABIT ETHERNET'S TECHNICAL EVOLUTION Gigabit Ethernet's Grand Design Table 17 GIGABIT ETHERNET CABLING TYPES AND DISTANCES Gigabit Ethernet's MAC Layer Packet Bursting No Vendor Dominates Gigabit Ethernet Sales Figure 9 MARKET SHARES OF TOP FIVE GIGABIT ETHERNET SEMICONDUCTOR PRODUCERS, 2004 (%) Broadcom Marvel Technology Group Ltd. Vitesse Inc. Agere Intel 10G TECHNOLOGY ARRIVES DURING NETWORKING SLOWDOWN THE 10-GIGABIT ETHERNET PROJECT Table 18 WORLDWIDE 10-GIGABIT ETHERNET SEMICONDUCTOR SHIPMENTS, THROUGH 2010 (MILLIONS OF UNITS) THE NEED FOR 10-GIGABIT ETHERNET IN THE MARKETPLACE POTENTIAL APPLICATIONS FOR 10 GIGABIT ETHERNET 10 Gigabit Ethernet in Local Area Networks 10 Gigabit Ethernet and Storage Area Networks 10 Gigabit Ethernet in Wide Area Networks Table 19 WORLDWIDE 10 GIGABIT ETHERNET NETWORK SEMICONDUCTOR REVENUE, THROUGH 2010 ($ MILLIONS) TEN GIGABIT ETHERNET STARTS OFF SLOWLY Problems with 10G NICs VENDORS IMPROVE 10G ETHERNET GEAR AND SALES TAKE OFF Table 20 WORLDWIDE SEMICONDUCTOR 10G ETHERNET PRICING TRENDS BY UNIT, THROUGH 2010 Table 21 10G ETHERNET PRICING TRENDS PER PORT, THROUGH 2010 Table 22 10G WORLDWIDE NETWORK SEMICONDUCTOR PRODUCT PURCHASES AS A PERCENTAGE OF ALL ETHERNET REVENUE, THROUGH 2010 (%) LEADING 10G ETHERNET SUPPLIERS Figure 10 MARKET SHARES OF TOP FIVE 10G ETHERNET SEMICONDUCTOR SUPPLIERS, 2004 (%) Broadcom Marvel Vitesse Agere EZchip Technologies VENDORS TACKLE 10G OVER COPPER CHALLENGE THE 10-GIGABIT NIC UPTICK Table 23 10-GIGABIT NETWORK INTERFACE CARD SEMICONDUCTOR PRICING TRENDS, THROUGH 2010 ($) 10-GIGABIT NIC VENDORS EYE EMERGING MARKET Figure 11 MARKET SHARES OF TOP FIVE 10G ETHERNET NETWORK COMPONENT PRODUCERS, 2004 (%) Intel Solarflare S210 Technologies Mysticom Chelsio WIRELESS LAN TAKES OFF Table 24 WORLDWIDE WLAN NETWORK COMPONENT REVENUES AND SHIPMENTS, THROUGH 2010 (MILLIONS) VENDORS USE DIFFERENT MEANS TO ROUND OUT PRODUCT LINES Figure 12 TOP FIVE WLAN SEMICONDUCTOR SUPPLIERS BY REVENUE IN 2004 (%) BROADCOM CONEXANT INTEL TEXAS INSTRUMENTS ATHEROS WLAN OPTIONS CONTINUE TO GROW Table 25 WORLDWIDE WLAN NETWORK COMPONENT REVENUES BY DEVICE TYPE, THROUGH 2010 ($ MILLIONS) Table 26 WORLDWIDE WLAN NETWORK COMPONENT REVENUES BY DEVICE TYPE, THROUGH 2010 (MILLIONS OF UNITS) HOW WIRELESS LANS WORK COPING WITH INTERFERENCE PROBLEMS WLAN ARCHITECTURE ACCESS POINT FREQUENCY REUSE HANDOFF HOW WLANS FIT INTO ENTERPRISE NETWORKS THE ACCESS POINT CORE SWITCH TELECOMMUNICATIONS NETWORK WLAN INTEREST GROWS: MARKET BY END-USER SEGMENTS Table 27 WORLDWIDE WLAN NETWORK COMPONENT REVENUES BY END-USER SEGMENT, THROUGH 2010 ($ MILLIONS) Figure 13 SHARE OF TOP THREE USES OF WLANS, 2004 (%) WLANS TAKE ROOT AT HOME Table 28 WORLDWIDE HOME NETWORKING WLAN SEMICONDUCTOR REVENUES, THROUGH 2010 ($ MILLIONS) The Digital Home Explosion Digital Revolution Interoperability Issues Digital Rights Management Automated Device Connections Standards as Market Drivers ENTERPRISES LARGE AND SMALL EMBRACE WLANS Table 29 WORLDWIDE ENTERPRISE WLAN NETWORK COMPONENT REVENUE, THROUGH 2010 ($ MILLIONS) Interoffice Connectivity Reduced IT Costs Contingency Planning WLANS and VoIP HOT SPOTS CATCH FIRE Table 30 WORLDWIDE HOTSPOT WLAN SEMICONDUCTOR REVENUES, THROUGH 2010 ($ MILLIONS) Table 31 NUMBER OF WORLDWIDE HOTSPOT LOCATIONS, THROUGH 2010 IEEE 802.11 WIRELESS LAN STANDARD EMERGES 802.11B Figure 14 SHARE OF THE MOST POPULAR WIRELESS WAN NETWORK STANDARDS, 2004 (%) AD HOC AND CLIENT/SERVER NETWORK PROTOCOLS 802.11A Table 32 WORLDWIDE REVENUE FROM 802.11A SEMICONDUCTOR SALES, THROUGH 2010 ($ MILLIONS) Table 33 WORLDWIDE SHIPMENTS OF 802.11A SEMICONDUCTORS, THROUGH 2010 (MILLIONS OF UNITS) Challenges 802.11B MARKET Table 34 WORLDWIDE REVENUE AND SHIPMENTS OF 802.11B SEMICONDUCTORS, THROUGH 2010 (MILLIONS) A SECOND STANDARD TAKES SHAPE Architecture Issues Compatibility and Strict Modes Table 35 WORLDWIDE 802.11G NETWORK COMPONENT REVENUE AND SHIPMENTS, THROUGH 2010 (MILLIONS) The 802.11g Market Leaders Figure 15 MARKET SHARES OF LEADING VENDORS OF 802.11G PRODUCTS, 2004 (%) Broadcom Conexant Intel Texas Instruments Atheros WLAN PURCHASES SHIFT TO COMBINATION UNITS Table 36 WORLDWIDE REVENUE AND SHIPMENTS OF COMBINATION WLAN 802.11 COMPONENTS, THROUGH 2010 (MILLIONS) WLAN LIMITATIONS SECURITY PERFORMANCE APPLICATION PERSISTENCE ROAMING CENTRALIZED MANAGEMENT AND EFFICIENT USE OF IT RESOURCES DEPLOYMENT CHALLENGES Access Points Site Surveys Software Control Systems Solution Implementation WLAN SECURITY HOLES Encryption Issues War Driving Proprietary Extensions and Security Standards Steps to Improve Network Security 802.11X WIRELESS CHIP CHALLENGES Tightening RF Design Four Design Considerations RF Effects Design Simulation Technology Issues Spice Circuit Simulators Mentor ADMS RF Simulator The RF/MS IC Alliance Performance Issues in RFIC Design Easing Development of Wireless Embedded Devices WI-FI MULTIMEDIA RESIDENTIAL ENTERPRISE MARKET PUBLIC MARKET THE NEED FOR QOS ARISES Wi-Fi for Multimedia Table 37 WORLDWIDE WLAN MULTIMEDIA SEMICONDUCTOR REVENUE, THROUGH 2010 ($ MILLIONS) Scheduled Access REASONS FOR WMM GROWTH Figure 16 MARKET SHARES OF TOP WLAN MULTIMEDIA SEMICONDUCTOR PRODUCT SUPPLIERS, 2005 (%) VENDORS ENTER NASCENT MARKET Atheros Broadcom Conexant Intel Philips 100-MEGABIT WLANS BEGIN TO EMERGE Table 38 WORLDWIDE 100-MEGABIT WLAN NETWORK COMPONENT PRODUCT PURCHASES BY REVENUE, THROUGH 2010 ($ MILLIONS) Table 39 WORLDWIDE 100-MEGABIT WLAN NETWORK SEMICONDUCTOR PRODUCT PURCHASES THROUGH 2010 (MILLIONS OF UNITS) MARKET DRIVERS MARKET CHALLENGES 802.11N Standard VENDORS BACK TWO HIGH SPEED WLAN OPTIONS Figure 17 MARKET SHARES OF TOP FIVE 100-MEGABIT-PER-SECOND WLAN SEMICONDUCTOR SUPPLIERS, 2004 (%) The Early Marker Leaders Airgo Networks Broadcom Atheros Agere Texas Instruments THE ULTRAWIDE BAND OPTION ARISES Table 40 WORLDWIDE UWB NETWORK COMPONENT PURCHASES BY REVENUE, THROUGH 2010 ($ MILLIONS) UWB Limitations Mixing and Matching Standards A Standards Split Figure 18 MARKET SHARE OF TOP FIVE UWB SEMICONDUCTOR SUPPLIERS, 2004 (%) Freescale Dominates UWB Market Agere Time Domain Intel Multispectral Solutions Inc VOICE OVER IP TAKES ROOT Table 41 WORLDWIDE NETWORK SEMICONDUCTOR VOIP PRODUCT SHIPMENTS AND REVENUES, THROUGH 2010 (MILLIONS) WHAT IS DRIVING INTEREST IN VOIP? VENDORS TRY TO BE HEARD Figure 19 MARKET SHARE OF TOP FIVE NETWORK VOIP SEMICONDUCTOR VENDORS, 2004 (%) TEXAS INSTRUMENTS FREESCALE MINDSPEED TECHNOLOGIES CONEXANT SYSTEMS INC. HOW VOIP WORKS H.323 AND SIP H.323 VS. SIP H.323 PROTOCOL STACK CHALLENGES TO DEPLOYING VOIP VOICE QUALITY THE LATENCY ISSUE Table 42 AN EXAMINATION OF POSSIBLE NETWORK DELAYS MEASURING LATENCY UNDERSTANDING JITTER MEASURING JITTER PACKET LOSS JITTER BUFFER SETTINGS PACKET SIZE SILENCE SUPPRESSION OTHER PERFORMANCE ISSUES Measuring Voice Quality Network Simulations THREE WAYS TO DELIVER VOIP SERVICES Table 43 WORLDWIDE VOIP SHIPMENTS BY DELIVERY METHOD, THROUGH 2010 ($ MILLIONS) Table 44 WORLDWIDE VOIP SHIPMENTS BY DELIVERY METHOD, THROUGH 2010 (MILLIONS OF UNITS) Table 45 WORLDWIDE VOICE-OVER-IP NETWORK END POINTS PENETRATION BY PERCENTAGE, THROUGH 2010 (%) VOICE OVER CABLE MODEMS Overview and Market Size Table 46 WORLDWIDE CABLE MODEM SEMICONDUCTOR REVENUE AND SHIPMENTS, THROUGH 2010 (MILLIONS) Vendors Focus on Cable Modem VoIP Opportunity Figure 20 MARKET SHARE OF TOP FIVE CABLE MODEM VOIP SEMICONDUCTOR VENDORS, 2004 (%) Mindspeed Freescale Broadcom Wintegra Texas Instruments VOICE OVER DSL Overview and Market Size Up and Down Market New Markets Improved Technology Market Challenges for Telecoms Cable Television Suppliers Market Corrections Table 47 WORLDWIDE DSL VOIP SEMICONDUCTOR REVENUE AND SHIPMENTS, THROUGH 2010 (MILLIONS) Network Component Vendors Deliver on DSL Figure 21 MARKET SHARE OF TOP FIVE DSL VOIP SEMICONDUCTOR VENDORS, 2004 (%) Conexant Texas Instruments Agere Infineon Centillium VOICE OVER PBX Overview and Market Size Table 48 WORLDWIDE PBX VOIP NETWORK COMPONENT REVENUES AND SHIPMENTS, THROUGH 2010 (MILLIONS) VoIP PBX Network Silicon Suppliers Figure 22 MARKET SHARE OF TOP FIVE NETWORK VOIP SEMICONDUCTOR VENDORS, 2004 (%) Texas Instruments Freescale Mindspeed Centillium Conexant APPENDIX - LIST OF ABBREVIATIONS |
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