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www.pt.com

Today’s speaker: John J. Peters, Executive VP of Engineering

Performance Technologies Inc.

BSEE 81’ Rochester Institute of Technology

Email: jjp@pt.com

IEEE Communications and Aerospace

Engineering Societies08-24-2004

Ethernet Everywhere!Ethernet Everywhere! How IP and Ethernet are driving the converged market

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Ethernet Network

Internet Protocol (IP)

Consumer electronics

Computing

How IP and Ethernet are driving

The Converged Market!!!

What is this lecture about?What is this lecture about?

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Questions that will be examined…..Questions that will be examined…..

What exactly is the converged market?

Is the converged market a so called “inflection point”?

Why are technologies such as Ethernet and IP enablers?

How will the market be reshaped as a result of all this?

How will product design and innovation be influenced?

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What is the “converged market”What is the “converged market”

“The converged market is the merging of consumer electronics and computing. These traditionally independent business segments will be brought together in such a way as to be dependant on each other for vast new waves of products, services and applications.

For the 1st time in history these markets will be linked and have the potential to provide value to customers, far in excess of what they could achieve individually.”

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Is this an Is this an “inflection point”?“inflection point”?

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What is a “Strategic Inflection point”?What is a “Strategic Inflection point”?

Andy Grove former CEO, Intel Corp

Book: “Only the Paranoid Survive” By Andrew S. Grove

“A strategic inflection point is a time in the life of a business when fundamentals are about to change. Strategic inflection points can be caused by technological change but they are more than technological change.”

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“These days you can’t succeed as a company if your consumer led - because in a world so

full of constant change, consumers can’tanticipate the next big thing.

Companies should be idea-led and consumer-informed!”

Doug Atkin, partner, Merkley Newman Harty

Customers do not always drive this!Customers do not always drive this!

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Inflection Points = “Divergent Convergence”Inflection Points = “Divergent Convergence”

The act of creating new markets or products from seemingly divergent technology and/or applications.

In plain English: The whole is far greater that the sum of the parts.

Most found in industries that are ‘fast movers”. Can often be explosive and create whole new sectors. Often, market timing is critical. “Planetary alignment” Can be better visualized using the “Wheel of fortune”

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MPEG

Video

DISK

DRIVELINUX

Network

Interface T i V O

“Wheel of Fortune” Letters = new technologies and/or new applications

Technology and application timing = letter turning

As more letters are turned, new product/market ideas emerge

Successful companies, recognize new product/markets (words) 1st

EXAMPLE:

Invention of the Personal Video Recorder (i.e. TiVO)

Realizing new market opportunities is like… Realizing new market opportunities is like… Playing!

10XM Radio

PCGPS ?Pilot Weather Advisor

Another example:Another example:

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Converged marketConverged market 55 key factors: key factors:

(some of which are divergent)(some of which are divergent)

1. Economic Recovery

2. Content Digitization

3. Broadband Deployment

4. Ethernet in Home

5. Bandwidth Demand

WHY

WHATHOW

WHERE

WHEN

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Factor #1:Factor #1: Economic Recovery = Economic Recovery = whywhy

High Technology limbo, no revenue = no investment

Pent up demand (3 years) by customers for new products

Economic recovery for high tech = new products/services

“Divergent” technology development has continued forward

Time for “convergent” innovation is ripe and necessary

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Factor #2:Factor #2: Content Digitization = Content Digitization = whatwhat

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Music

PhotosVideo

Radio

TV

Consumer industry as it was…..Consumer industry as it is becoming!

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1st time in history ALL entertainment content is digital. Can be shared, copied, transmitted, altered, stored etc. Sharing of content the norm, if not totally legal yet….. Genie not going back into bottle, the rules must change. Change = opportunity but what will be the new market be? Revenue opportunities for both intra- and inter- net apps. Can we move the “content bits” in, about and out of the

home, office and world? Is the infrastructure in place?

Factor #2:Factor #2: Content Digitization (key points)Content Digitization (key points)

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Factor #3:Factor #3: Broadband Growth = Broadband Growth = howhow

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Availability is no longer an impediment Multiple choices: Cable, DSL, Sat, wireless 802.ah (EFM) and 802.16 (metro-WiFi) coming Once tasted, user’s want more and don’t go back Applications catering more and more to broadband “Always On” will be just as important as speed Parallels between broadband and electrical power

Factor #3:Factor #3: Broadband Growth (key points)Broadband Growth (key points)

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Factor #4:Factor #4: Ethernet in the Home = Ethernet in the Home = wherewhere

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A set of protocols at the datalink (OSI L2) and physical layers (OSI L1)

Invented by Bob Metcalfe, May 22, 1973 (see copy of memo above)

Developed by Xerox in the late 1970s

Promoted and used by Dec, IBM and Xerox in 1980s (DIX)

Rapid growth early on due to Novell and Netware in the early 1980s

Became an IEEE standard in 1985 - 802.3

Currently used in about 80-90% of all LANs

11stst, what , what isis Ethernet? Ethernet?

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What What isis Ethernet Ethernet becomingbecoming??

“That’s what this thing is that they call Ethernet - a business model. Buy some today.”

Bob Metcalfe

Electronic Design, December 9, 2002

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Enterprise

(802.3ab/u)

“Ethernet”

Metro-wireless

(802.16)

“fixed wireless”

ESAN

(PICMG 2.16)

“Backplane”

Ethernet-in-the

First-Mile (EFM)

(802.3ah) Metro-wired

(802.3ae)

“10 Gig”

So….why Ethernet in the Home?So….why Ethernet in the Home?

Factory Floor

(Industrial)

Home Network

(802.11a/b/g)

“wireless”

FUTURE?Storage Area

Networks (SAN)

(iSCSI)

FUTURE?Embedded Market

(chassis)

cPSB/aTCA

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Resistance is Futile!

Ethernet Everywhere!Ethernet Everywhere!

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To many, IP and Ethernet are To many, IP and Ethernet are synonymous.synonymous. 95% of the world’s data

travels on a form of Ethernet at some point

87% of all networks worldwide are Ethernet

154 million switched Ethernet ports sold in 2002 alone

22 million home networks today, 65 million by 2007

6.8 million 802.11 units shipped to home in 2002, 33 million by 2006

11.6 million 802.11 units shipped to enterprise in 2002, 99 million by 2008

95% of all notebooks will have wi-fi in 2004.

IP is the Internet and is becoming the Intranet in the home.

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Mom and Dad

Son

Daughter

Ethernet in the Home (wired/wireless)Ethernet in the Home (wired/wireless)

The 3 PC family!

Printer

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Son’s PCDaughter’s PC

How Ethernet (WiFi) will change the home?How Ethernet (WiFi) will change the home?

Mom and Dad’s home SERVER

Printer

Dad’s work Notebook

Mom’s PocketPC

Family TV

Kitchen TV

Family AV system

Security

Camera

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Next great “land claim” for the networking industry Ethernet firmly entrenched both in home and enterprise Wireless promotes easy adoption and provides mobility Significance lies in standardization, cost and availability Today: Home PCs are networked and on the Internet Tomorrow: The home is an extension of the Internet

Factor #4:Factor #4: Ethernet in the Home (key points)Ethernet in the Home (key points)

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50100 120 130

200 300 400 500 600

2000

6000

20000

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100

1000

10000

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today

near future Future

applications

will demand

far more

bandwidth

Factor #5:Factor #5: Bandwidth Appetite = Bandwidth Appetite = whenwhen

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Factor #5:Factor #5: Bandwidth Appetite (Key points)Bandwidth Appetite (Key points)

e-mail > web > music > photos > video > gaming > TV And….of course the largest consumer of all….SPAM The home server will provide vast amounts of content The ability to store fosters a natural desire to share Current broadband not sufficient for the types of content Technologies like EFM are natural to provide bandwidth Think of bandwidth as a service: 110 vs. 220 etc.

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ReviewReview of of 55 key factors: key factors:

1. (WHY) Economic Recovery

2. (WHAT) Content Digitization

3. (HOW) Broadband Deployment

4. (WHERE) Ethernet in Home

5. (WHEN) Bandwidth Demand

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Let’s tie this all together….Let’s tie this all together….

“The economic recovery is dependant on the industry's ability to deliver both to, throughout and beyond the home, vast amounts of bandwidth intensive Digital Content. This “Converged Market” represents the next Strategic Inflection Point for the collective consumer and commercial electronics industries.”

J. Peters

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Let’s think out of the box……Let’s think out of the box……

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““Near” real time content deliveryNear” real time content delivery

• Daily music uploads

• Morning newspaper

• “To do” list review

• e-mail listening

• Audio books

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What if?What if?

IP = EP? Metering vs. bulk? Everywhere! Content was pay per use vs. pay to own? Routing was based on “time alive” (GPS)? The home = the enterprise (client/server) Homes supply as much content as they take?

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Thank You!