In tracking the cabling for the Ethernet market, more commonly referred to as the structured cabling systems (SCS) market for over 25 years, the market has been influenced by many factors and until recently has not been impacted to any degree by market or technology developments. The SCS market grew at high double digit rates through the 1990s when PCs were cabled into local area networks. This initially included inter-department networks which later included intra-department networks and then the ability to connect these networks to the outside world via wide area network connectivity with routers. By the late 1990s the market saturated with most of the networks installed causing a slowdown. More recently, the economic downturn caused the market to slip and incur negative year-to-year decreases. Currently, renewed SCS market growth is due to new usages such as in data centers or new applications being added such as Web applications or cabling network upgrades for the increased traffic on the networks.
New Technology Impact
Within the past five years, several new network technologies have emerged. This included notably virtualization, cloud computing and universal communications. All of these have fostered growth in the SCS market as these newer technologies increased the network traffic requiring cabling upgrades to handle the higher bandwidth needs. Therefore, in recent years we have seen market growths in the 15 to 20 percent range.
Until recently wireless technologies had no effect on the SCS market as performance levels were below the Gigabit Ethernet requirements of today’s networks. Recently with the adoption of IEEE 802.11n wireless technology performance is now on a par with the cabled hard-wired networks. In addition future wireless technologies such as IEEE 802ac will provide even higher performance levels.
Newer smart phones and tablets are being increasingly used by enterprise employees as their primary network access device. Tablets provide an ideal solution between smart phones and PCs.
Apple iPad A Game Change
We believe the Apple iPad to be a game changer for enterprises. The IPad’s functionality and widespread acceptance have pushed it to the forefront. In addition, most importantly, there is a move to develop enterprise apps on the iPad even though the millions of apps currently are for personal usage. The main hurdle currently for acceptance within the enterprise networks for these devices is the enterprise IT departments need to control and secure these devices on the enterprise’s network. This is expected to happen in the future. In any event, these are slowly replacing the hard wired PCs as the main device for e mail and Internet access. We believe that in the future PCs will be relegated to niche applications or used as a collaborative device for multiple employees.
As a result, a new view has emerged on the impact of wireless on the SCS market and there is concern that it can become a SCS market killer.
One of the most important criteria in answering the question posed by this research report has to take into account the sunken investment in the current cabled networks. Most enterprises will not upend their current cabled networks and replace them with an all wireless network. Wireless is currently starting to impact the SCS market at the network access layer. At the access level, wireless is being used to provide network connectivity via wireless local area networks being placed in building areas that require coverage. This requires additional cabling to be run from the telecommunications closets to the wireless access points which contain the wireless antennas. If these areas were hard wired, much more cable would be needed to connect each device back to the telecommunications closets but the net effect on the SCS market is minimal at the current time. In addition, the network core and the layer between the core and access levels do appear to be immune to wireless. Another factor is that most high bandwidth applications such as data centers and video transport are expected to continue to use hard wired cabled systems.
Wireless – a Killer?
So will wireless cause the demise of the SCS market? The short answer is it will not but will start impacting the market growths in stages. We see in the early stages that newly opened small remote offices will start implementing wireless networks in place of deploying a cabled network. Later on, major enterprise network upgrades will start considering a new wireless network to replace an aging cabled network that has been written off. The SCS market will struggle in the future (beyond 5 years) but will survive especially for the higher bandwidths provided by the fiber cabling suppliers.