PARK RIDGE, ILL. Questions about the future of AdvancedTCA mounted this week as a new study predicted strong demand for the highly-touted telecom architecture. However, only a relative handful of vendor products were as yet available to equipment builders.
The study, released by industry consultant RHK, Inc. (San Francisco, CA), foresees a potential annual AdvancedTCA (advanced telecom computing architecture) market of about $3.7 billion by 2007, but inadvertently casts a spotlight on vendors' apprehensions regarding rollout of such products.
"There's a real chicken-or-egg problem right now," acknowledged Joe Pavlat, president of the PCI Industrial Manufacturers Group (PICMG), which spearheaded creation of the AdvancedTCA standard last year. "Embedded boards makers are reluctant to spend on speculative research and development. Their attitude is, 'Give me an order and I'll go design it.' But short of that, not much is happening."
The resulting business atmosphere is one that defies the normal laws of supply and demand, industry analysts say. Instead of racing into production with new single-board computer designs to meet the projected demand, suppliers are keeping an arm's length from the situation, waiting for their competitors to test the water first. Major boards manufacturers, such as Motorola Computer Group, Kontron America, Radisys Corp., and others are said to be working on prototypes, but not rolling out products. A few, most notably Intel and Force Computers, have confronted the challenge and have unveiled new boards, but large quantities of products remain unavailable for the most part.
"I've held and evaluated beta-level boards from a lot of vendors," said Charles Byers, chair of the PICMG 3.2 standards effort, as well as a Bell Labs Fellow at Lucent Technologies (Naperville, Ill.). "But most of those exist only in 'proto-product' form."
Looking to standards
Still, analysts at RHK believe that AdvancedTCA has a bright future, and many telecommunications equipment makers are inclined to agree. The technology, they say, holds promise because it can handle up to 2.5 terabits of data per second in a single shelf, a major advantage in dealing with the explosion of wireless technologies. Engineers also like the technology's 48-volt redundant power, its system management, and its cooling capabilities. That combination of technologies could potentially appeal to such companies as Nortel Networks, Lucent, Alcatel, and NEC, which are said to be evaluating it for their next-generation of telecom equipment.
Moreover, industry analysts say that if equipment makers adopt a standard architecture such as AdvancedTCA, they stand to cut their development costs. RHK identified material cost savings, speed to market, and development cost savings as the primary advantages to tier-one systems vendors that employ the new architecture.
"The surprise is that the tier-one companies, which have always liked proprietary designs, are backing away from their old position," noted Karen Liu, managing director of telecom advisory services and author of the RHK study. "They're now saying that they don't want to spend all their resources on hardware development."
Indeed, makers of telecom equipment may already be leaning toward AdvancedTCA. In September, NEC Corp. announced that it developed the first AdvancedTCA telecom product platform. Liu of RHK said that she also talked with "more than half a dozen" telecom equipment makers that have AdvancedTCA designs in the works.
Byers of Lucent believes the financial benefits of employing a commercial off-the-shelf solution will be a powerful incentive for equipment makers. "Because of the various pressures on developers today, they're going to inevitably drawn to this," he said.
Byers estimates that standards-based solutions will account for approximately 5% of the combined worldwide telecom and data networking market, which is estimated at between $200 billion and $250 billion annually. AdvancedTCA, he said, could absorb about half of that 5%, ultimately accounting for about $5 billion per year.
Still, the equipment makers' interest is far from a guarantee of success for AdvancedTCA, said Liu. "We did find that there was concern on the part of equipment builders that the boards wouldn't be there when they need them," she said.
Observers say that the economy has played a large part in the reticence of suppliers to introduce new AdvancedTCA boards. The electronics industry, they say, has just begun to pull out of one of the worst depressions in its history. Bottom lines have been racked at the major vendor companies, and by some accounts, more than $2 trillion in U.S. market value has already been wiped out. Given such gloom, some boards makers are privately saying that they're hesitant to roll out products for customers who may yet be struggling.
Still, suppliers that have already rolled out AdvancedTCA products argue that it's important for the future of the technology to obtain greater support from the supplier community.
"It's too late to start working on it when the economy begins bouncing back," said Ram Rajan, VP of engineering for Elma Electronic Inc. (Fremont, CA), which recently introduced an interface board and development chassis for AdvancedTCA. "By the time you do that, the telco providers will already be working on their own proprietary solutions."
Some boards makers, however, say there are good reasons for not taking the leap of faith and rolling out AdvancedTCA products.
"For vendors, being an early adopter of this technology could be very costly, in the sense that you could be investing a lot in a product that you won't sell," noted Benoit Robert, executive director of product marketing management at Kontron Canada Inc. (Boisbriand QC, Canada). "The fear is that you have to go through a long development, and by the time you're finished, the standards may have already changed."
To be sure, not all analysts agree with RHK's multi-billion-dollar projections for 2007. In January, Venture Development Corp. (Natick, MA) predicted that AdvancedTCA would reach $800 million annually by 2007, rather than the $3.7 billion predicted by RHK.
"By 2007, AdvancedTCA could be very significant," noted Eric Gulliksen. "But we don't expect see any major uptake until 2005, and we don't expect it to get traction that quickly."
Gulliksen argued that the vendors who are waiting are merely applying good, conservative logic in the face of an economy that is still moving slowly.
"Why should they roll out products now if no one cares yet?" he asked.
Many industry insiders say they are encouraged, however, by Intel's announcement last week that it is unveiling a suite of Intel NetStructure products based on AdvancedTCA. They believe that Intel will benefit by developing earlier relationships with customers and by drawing higher profit margins before the AdvancedTCA boards evolve into commodity products.
Most observers are betting, however, that the real rush toward AdvancedTCA will occur when big equipment builders go to suppliers with so-called "RFQs" (requests for quote).
"Most of the suppliers are just treading water right now," said Pavlat of PICMG. "But all it takes is one good RFQ from a Lucent or Siemens, and the market will start to open up."