Back in late 1997, many network interface card market watchers said "10/100 to the desktop? No way." The three big issues back then were inadequate cabling to support rates of 100 Mbits/second, lack of 100-Mbit/s network infrastructure and little tangible end-user need. History proved the naysayers wrong as 10/100-Mbit/s NIC shipments blew past 10-Mbit/s NIC shipments and have never looked back.
The Gigabit Ethernet NIC market has evolved in nearly identical fashion to the 10/100 NIC market, albeit at a slightly longer time scale. The same issues that observers were worrying about for the transition from Ethernet to Fast Ethernet have reappeared. Aren't humans supposed to learn from their mistakes?
So, to figure out what it will take for Gigabit Ethernet to come to the desktop, let's look at the Ethernet-to-Fast Ethernet transition. The two most relevant pieces of information: average selling prices of NICs and transceiver ICs.
When Fast Ethernet exploded in 1998, 10/100-Mbit/s cards continued to have a 50 percent premium over Ethernet NICs. This premium has not changed measurably in later years and does not seem to matter. What does seem to matter is that the absolute dollar premium fell below $30 and, more significantly, that Fast Ethernet NIC prices fell below $100.
Meanwhile, transceiver IC prices are a major determinant of NIC average selling prices. At that time 10-Mbit/s Ethernet transceiver ICs were in a terminal $2 to $3 range. However, 10/100-Mbit/s transceivers fell from $15.70 in 1996 to $10 in 1997 to $5 in 1998.
What does all this mean for Gigabit Ethernet to the desktop? First, because solutions are backward compatible, demand is driven by cost rather than explicit need. Second, it is reasonable to expect Gigabit Ethernet to ramp aggressively when NIC prices fall below $100. This is likely to happen at the same time that prices for Gigabit Ethernet-over-copper transceiver ICs, which are $17 today, fall below $10. Given recent price trends for NICs and transceiver ICs, this will likely happen in late 2002. So, with reasonable confidence, we should expect to see mass deployment of Gigabit Ethernet to the desktop through LAN-on-motherboard installation by very early 2003.
This ramp will be incredible since in 2001, fewer than 1 million Gigabit Ethernet-over-copper NICs will ship out of a 100 million-NIC total available market.
Jeremey Donovan (jeremey.donovan@gartner.com") is a Principal Analyst at Gartner Dataquest.
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