This year technology firms are looking for golden nuggets of opportunity. These nuggets hold the promise of aiding economic recovery. Firms who embrace these new technologies and markets will sustain their own revenue growth and marketability.

Power-over-Ethernet is one emerging technology that has spurred new opportunity across a variety of vendors and OEMs.

On June 12, 2003, the IEEE ratified a new standard, 802.3af, supporting the development of power-over-Ethernet (PoE) solutions. Power-over-Ethernet is defined as a set of technologies for sending power signals over standard LAN infrastructure. Power-over-Ethernet works by providing dc power over the same wires that carry Ethernet data or digitized voice signals. Once the power reaches a PoE-compatible device, it separates to power that device. As such, PoE-enabled switches can deliver power over Ethernet cabling to such remote PoE-enabled devices as IP phones, WLAN access points and security systems.

Power-over-Ethernet simplifies the installation and deployment of powered devices. Traditionally, separate power cabling, ac outlets and wall warts were necessary to power each communication terminal. But the power-over-Ethernet convergence of power and LAN cabling eliminates the need for additional ac outlet installation.

Separate power and data connections require data and voice devices to be installed near an ac outlet. Such restrictions limit the device's range and usefulness. PoE-enabled devices are free to roam throughout the enterprise, requiring only single connection to the network.

Power-over-Ethernet offers significant savings in power backup. Traditionally, each communication device requires a dedicated UPS. Power-over-Ethernet uses a centralized backup system requiring only a single UPS at the network's core.

Power-over-Ethernet works with existing cable, including category 3, 5, 5e or 6. Similarly, users can freely and safely mix legacy and PoE-compatible devices on a network. Power will be delivered only to devices that are PoE-enabled through network power controllers. Power is blocked to legacy devices that are not compatible.

Users can monitor power usage of each device on the network via SNMP Web-based control. In the event of network corruption by hackers, management can locate the corrupted device via a central workstation and can cut the device's power when necessary.

Just as Ethernet is a reliable medium for transmitting data and voice streams, Power-over-Ethernet will not cause data degradation or loss of data integrity.

Voice over IP phones and WLAN access points are now driving the demand for Power over Ethernet sourcing equipment. Voice over IP phone shipments are expected to increase 33 percent per year through 2007 (see figure).

Power-over-Ethernet market penetration forecasts are based on estimates of the percentage of products that are technologically able to power or be powered through Ethernet. This does not necessarily imply that the end user will actually power the device over Ethernet. In some cases powered devices will include the option of ac/dc powering or Ethernet.

The promise of increased reliability coupled with flexibility for mission critical phones has been a primary factor in demand. Just about all new voice-over-IP phones on the market will include power-over-Ethernet enablement. This is in part because of the effective push strategy used by the leading vendors of PoE-enabled switches and midspans, coupled with the end-user's preference to incorporate current and future capabilities.

Thus far, power-over-Ethernet technology has fundamentally changed the way wireless networks and voice-over-IP telephones are implemented. Companies like PowerDsine simultaneously pushed ratification of the IEEE triple standard while promoting Midspan solutions. The midspan allows the legacy equipment to reap the benefits from power-over-Ethernet. Ethernet Switch manufacturers promoted their PoE-enabled switches which eliminate the need for a Midspan.

This has created opportunity for power supply and UPS manufacturers to sell larger and longer backup power solutions. In fact, these solutions have been an extension of their existing products and may not even be packaged as PoE-specific.

In addition, semiconductor manufacturers have sought opportunity by providing a variety of power-over Ethernet solutions on both sides of the cable.

The immediate future will bring forth additional powered devices that will benefit from PoE. These new devices may not reap the same full benefits as the existing market drivers, but will ultimately provide some potential opportunity in the market.

The current market leaders will inevitably face competition on all levels as new and existing companies compete on price, integration, features service etc. Over the next few years the power-over-Ethernet identity may shift from "new and emerging" to one of commodity and standardization. This will complicate differentiation and will result in shrinking margins.

The opportunities are here and now for power-over-Ethernet, still climbing out of infancy and soon to advance through adolescence and into maturity. Companies who strategically position themselves today with regard to the technology fundamentals, partnerships and application segment needs, stand to benefit the most.

Marianne D'Aquila is senior analyst/Strategist at Venture Development Corp. (Natick, MA)