Print

Comment

Email

Digg

Del.icio.us

Reddit

The structured cabling industry has been registering excellent growth both in terms of revenue as well as the number of nodes sold. Among the technologies, the 10G over copper or Cat A6 continues to dominate the trends page. However, switches and ports to support 10G over copper were still missing from the market. This made most of the customers wait and watch for 10G over copper or UTP standards to be ratified and components to be out in the market before investing for a higher capacity.

There have been a few early deployments of 10G over copper and Cat 7, which augurs well for the times ahead.

Another new technology that has emerged is the power over Ethernet (PoE) but it is still too early to see some significant deployments. The acceptance of this technology is directly dependant on acceptance of IP equipment and applications the world over and in India too. "This technology is being implemented more and more in switches. For the cabling infrastructure, it is important to have components that support the IEEE 802.3af protocol fully. However, there is a risk factor in the mating of plugs, and connectors under electrical load can cause sparks," says Gaurav Ahluwalia, country manager (India), Reichle De Massari (R&M). Globally the groundwork is already in place for PoE because the vast majority of businesses have Category 5 LAN that can accept PoE with ease.

"Acceptance of technology and applications which need higher bandwidth is fuelling Cat6 market customer prefer it because it is future proof technology and Cat5e would be almost two generations behind 10G when its ratified," says Prasanna Kumar V, sales director (India and Saarc), Systimax Solutions. The good old Cat5, Cat5e and Cat6 cables are also doing good business. Though a transition was seen from Cat5e and Cat6. The general trend is to use Cat5e and Cat6 in the horizontal cabling for Giga to the desktop and use fiber as the backbone to support the entire network with a huge bandwidth. "In a normal desktop kind of environment with not much bandwidth requirement, Cat5e is sufficient. Also Cat6 can deliver 10G up to 40 meters on the current switches, so these two products are selling in good numbers," says KK Shetty, country manager, AMP Netconnect.

The market trend shows that the choice for enterprise-wide backbone is equally distributed between copper and fiber and organizations would use both. However, copper still dominates the market since it is more economical and easy to implement. Also, copper has seen a lot of technological advancements and improvements in the recent past. "As we know Cat5e and Cat6 are mainly used in very dense networks in LAN environments, fiber is used in multi-floor environments and campus networks. Unshielded Twisted-Pair (UTP) copper is most widely used, because it is highly reliable and less expensive. Though expensive, we may see an increased use of fiber in the backbone and campus installations and also where the applications require high speed and high bandwidth," says K Bala Chandran, managing director (India & SAARC), Krone Communications.

Market: Set for New Heights
The market size of the structured cabling industry, according to V&D 100 estimate, stood at around Rs 405 crore in FY 2004-05. The industry grew by almost 25%. Systimax and Tyco together made up for almost 50% of the market size. The market estimation includes the cable cost and the installation charges which is typically 15% of the over cost of the project. "We believe that the market could be growing at a rate of 15-20% in terms of noumber of copper/fiber nodes and about 12-15% in terms of value after taking into account price reductions," says SA Mohan, general manager, Sales and Marketing, Molex India.

In unit terms, industry estimates indicate a 35% growth with almost 20 lakh nodes being installed. "The market is very competitive and though the number of units sold was more, the price rise was not equivalent. This has led to a 10% difference in the two numbers," explains Ashish Chand, country manager (India) & regional manager (SAARC), Belden CDT.

"There has been a 15% to 18% consistent growth in the structured cabling market since 2003, however we saw in 2004-05, there was a 25% growth. This is very encouraging," says Bala Chandran.

For the FY 2005-06, the market is expected to be around Rs 450 crore. It is because of the growing market players like Reichle De Massari (R&M) from Switzerland, who have decided to test the Indian waters on their own. The vendors and distributors are expecting the bull run to continue for another four to five years from now. And with optimistic statements from the government on creating 8 mn jobs in the next five years, the LAN business is expected to go up. "Even if we achieve one third of the said numbers, we would be clocking a minimum of 12% growth rate which can go up to 36% in the coming years. And it must be kept in mind that 40% of our business today is from repeat orders which will always be there due to upgradation of networks," says Shetty.

Shake It Baby
The Ethernet cabling industry is not very big in terms of revenue, however, the presence of numerous players makes the space crowded with each one struggling to keep its market share intact. Though the potential in India is huge, still the value is not big enough for everyone to survive in the long run. And with more Chinese and European companies coming to India, the price war is expected to go up further.

Today, the market is not mature enough, and therefore multiple vendors can afford to battle it out. But signs of consolidation are already there and this is expected to intensify in the coming days. Like other infrastructure equipment markets, customers are weighing their options on cost versus quality.

If market conditions are taken on face value, the vendors with end-to-end networking solutions and services are going to survive. Customers would be ready to pay for quality and better services, making it difficult for marginal and low cost players to survive.

Where the Money Is?
The Bangalore region continues to be the star market for structured cabling vendors owning to the IT and ITeS companies. However, things are changing rapidly with Chennai and Kolkata catching up fast. The fact remains that wherever software development centers are being built, and data center and disaster recovery sites are coming up, it becomes attractive for the cabling industry.

Places like Hyderabad, Gurgaon, Noida, Chandigarh, Jaipur, Pune, Mumbai, and even Lucknow and Ahmedabad are gaining importance. "Generally, every sector is upgrading the network. But specifically wherever companies like TCS, Infosys or Wipro or the BPO companies are setting up their offices they need cables. In addition to this, many ancillary industries come up in these areas completing the ecosystem. All this has shifted the focus from metros to small or class B and C towns as well," adds Bala Chandran.

Who Is Buying?
The IT and software companies along with the IT enabled services (ITeS) companies like call centers and BPOs are the main buyers of the structured cabling products. Along with the public sector or the government driven contracts, they form almost 60-65 % of the total market.

The rest of the market is divided between banking and financial sector with almost 15-20 % share followed by the institutional sector. This includes education institutes, the NGOs and campuses. Telecom and the defence services are also investing in Ethernet cables in a big way.

Manufacturing constitutes very little of the Ethernet cabling market but is a potentially high growth market. Though they are buying industrial cables in a big way, it is estimated that this sector would experience almost a threefold growth in the coming years. Similarly Biotech is another segment on which the vendors are banking on.

To Wire or Not to Wire
The long drawn debate on whether Ethernet connectivity would be replaced by wireless has been put to rest as everyone has understood that both the technologies are complementary to each other. While growth in wireless has been high, this has not reduced the need for wireline installations. With network speeds increasing by the day and applications like VoIP demanding high network bandwidth, wireline would always be in demand.

"Both the technologies do not match each others advantages and on the contrary complement each other. Both the industries are growing at a good pace and not hampering each others prospects," says Vikas Pinjarkar, general manager - SCS (business developement), D-Link India.

Also the gray area of security, speed/bandwidth limitations and poor quality of service of the wireless infrastructure in an enterprise environment tilts the balance in favor of cables. However, the mobility considerations have kept wireless on the last mile of the access. In fact, the ideal network would be a combination of cables in the backhaul with wireless access nodes on the last mile. "Wireless technologies are complementary to wired networks, rather than contradictory and we see both the technologies converging. The potentials of copper has not yet been harnessed completely and in the near future, the combination of both will exist," says Bala Chandran.

What About Installation Practices?
In the cabling industry, the quality of the products and lay out plans are as important as the quality of installation. A world-class product can never give the desired performance levels unless the installation is also world class. Unlike electrical wiring, not everyone can do structured cabling installations. The skill sets are different and it requires good extensive training before any one can take up the job. Moreover, with cabling having almost a 15-year cycle, no one would like to rip off the existing cable just because the installation was not done properly.

Further, with 10G standards having not ratified yet and companies offering warranties up to five or six years after ratification is done, this comes in the form of 'warranty subject to installations as per company standards'. Normally, every structured cabling vendor has it own training programme and they work very closely with system and network integrators along with the customers on the installation, design and maintenance of the cables. For the Indian market, this works fine. The problem arises when multinational companies or when vendors look for markets abroad and they ask for certified cable installers. The concept of certified installers does not occupy mindshare in India, so the bar or level of installation often does not match the world standards.

Last year, India became BiCSi district with 100 stakeholders from the cabling industry joining hands to create and increase awareness about the best practices in structured cabling design and installations. "The vendors are leaving no stone unturned in terms of creating awareness for everyone knows and believes that educating customers is the first step to marketing," said Rajesh Kumar, country manager, The Siemon Company.

Today, there are over 130 members of BiCSi in India. BiCSi offers a number of courses for the design and installation of low voltage systems. It offers registration programs for Registered Communication Distribution Designer (RCDD), LAN specialist and multiple training and education courses for the installer/designer/consultant/builder communities.

"BICSI of course is playing a huge role in getting all the vendors under single roof and allowing them in putting up the joint effort in educating the Indian Industry. It conducts various educational programs and conference keeping in mind the overall growth of the industry," says Pinjarkar.

There is no doubt that Indian customers are very aware of structured cabling as even the smallest offices have 4-5 PCs on a LAN. However, BiCSi brings structured third party knowledge to India. "Right now propagation of BiCSi is happening and we are encouraging people to take various exams and tests to make them certified," says Mohan.

The companies affiliated to BiCSi do not have any brand interest and it is purely a training and education effort. "BICSI is playing a major role in educating the industry about standards and good installation practices," says K Bala Chandran. The tests and training programmes conducted by the group is not easy to clear and there are only two RCDD designer installers in India. This has helped the group to maintain its high standards.

However, there are vendors like Tyco who are not part of BiCSi and conduct their own training programmes. "We have invested heavily on our training programmes and have almost 1200 certified installers in India. We maintain the world-class quality in our products and the training programmes. I am not very sure what additional value BiCSi would add. However, it is a good effort," says Shetty.

So the differences remain towards creating standard certified installation and design programmes. Perhaps the changes would happen when enterprises and customers start demanding for certified installers at the time of their tenders itself. All this would take the SLA based deals to new heights.

To the CIO
The various cable standards and number of players in the market is most likely to leave the network manager or the chief information officer confused. Add to this, the pressure to reduce the capex while optimizing opex in the long run.

It is said 70% of the network related problems come due to erroneous selection of cabling components, which hardly contribute 15% to 18% of total networking budget, this is good indication for network managers not to judge their investments on cable pricing and suffer in the long run.

Before evaluating a structured cabling solution for deployment, the CIO or the CTO should know his network well enough. Besides, he should have a fair idea of the requirements that are going to emerge in the future. Having understood the load that his network may have to face, say 10 years from now, he should decide on a solution that best meets his requirements.

At the same time, this futuristic solution (supposed to be the latest in terms of structured cabling standards/categories available) that he chooses should not cost him a bomb in terms of purchase, installation and maintenance. It is important to use all the latest approved and ratified standard based technologies in their solutions and allocate a good budget for the cabling infrastructure rather than under evaluating the importance of having good cabling infrastructure.

The TCO, which is sum of the cost of acquisition and recurring costs, should be low at all times. There is no harm in having bandwidth that is more than required for a couple of years before the network starts experiencing the real load it is scaled for. Secondly, the solutions offered by different vendors should be compared feature-by-feature. This will help understand what fits the required scenario the best and where all the existing investments can be protected.

A close look at the track record of the system integrators empanelled with the structured cabling vendor is also important for the solution which may be good in terms of features but the way it has been deployed also matters.

The products should meet international standards and large installations like data centers, which run the critical business functions, intelligent cabling solutions, should be used. Single vendor solutions from reliable and leading vendors are best as these eliminate errors that may develop while using multi-vendor products.

One should keep in mind that the network installer is a vendor-certified/trained engineer and offers an effective network solution that is easy to implement and support. It should also be evaluated if the portfolio of solutions offers future-proofing its network and complementary solutions such as cable management etc.

Anurag Prasad