Greater Data Needs of Users Spur Big Growth.
A new study from Cleveland-based Predicasts shows that US sales of voice and data communications equipment, which stood at $3.2 billion in 1972, reached $14.2 billion in 1982--rising an average of 16 percent per year. With its crystal ball in hand, the research firm sees total sales of voice and data equipment topping $48 billion by the mid-1990s.
It sees data communications equipment accounting for the majority of the sales, whereas it accounted for just over half of total voice and data sales in 1982. It predicts this figure will increase to more than 57 percent of the total market by 1987.
Video display terminals, says Predicasts, will continue to dominate the data-comm segment, with sales of VDTs expanding from about $4.3 billion in 1982 to $12 billion in 1987, and to over $21.5 billion by 1995. The study also sees solid gains for facsimile terminals, modems and statistical multiplexes. Teleprinters, the most widely used terminals during the 1960s and early 1970s, says Predicasts, "will continue to fall victim to advancing technology and produce only $200 million in sales by 1995 (all for replacement)--down from a peak of $310 million in 1982."
During the last half-dozen years or so there's been talk about all-digital networks reducing soaring modem sales before long. Well, the years have come and gone, and the demand is as strong as ever--actually stronger, thanks in large part to the proliferation of desktop/personal computers, and also to the generally high growth of data communications in all segments of business.
Ed Botwinick, chairman and president of Timeplex, a Woodcliff, New Jersey-based supplier of data communications equipment, points out that "There is little doubt that by the end of the century, virtually all electronic communications will be digital, using integrated communications networks. Today, however, we are very far from that objective, and the pathway to its achievement is unclear. Digital transmission services are not yet universally available, and high-speed digital service has barely begun. The sheer magnitude of converting or duplicating the entire nationwide--not to speak of worldwide--telephone system to provide wideband digital terminations to a large number of subscribers, is totally mind-boggling. Yet the completion of that task is the key to the future of telecommunications."
Venture Development Corporation (VDC) of Wellesley, Massachusetts sees 1983 voice-grade modem sales of 866,000 units valued at $799 million soaring to 3.5 million units worth $1.7 billion in 1987--along with some changes in the way modem industry participants presently do business.
According to VDC research, existing users consider modems to be "a commodity product necessary for building data communications networks, but not particularly differentiated from one manufacturer to the next by function or capability." A survey of users, it says, indicates that service and price were the two most-important factors users considered when making their purchase decision. It finds that product features were of lesser importance to modem purchasers. "Nevertheless, users would give serious consideration to changing modem suppliers for better half-diagnostic capabilities, particularly remote diagnostics."
VDC feels that modem manufacturers will also need to adopt a design philosophy that treats the modem "as part of a system, rather than as an individual project. Modems will have to have features that aid in network management, such as digital and analog lookback, and performance-enhancing features such as automatic and adaptive equalization. Over the next five years, additional features, including network reporting and remote loading of modem options, will become required as users grow in sophistication and desire more comprehensive monitoring and control of their networks."
According to VDC, modem development during the mid-1980s will be "strongly influenced by the incorporation of microprocessors" (as will just about everything else, it seems). The increased use of VLSI circuits, it points out, will bring with them reductions in both size and cost of modems.
VDC's figures show that the growth of the voice-grade modem market, "which will be in excess of 20 percent per year, will be fueled by the continued growth in data communications networking, time-sharing and data-base applications, and the accelerating growth in communications requirements for automating the factory and the office." Surge in Low-Speed Modems
Medium-speed voice-grade modems (2400 to 4800 b/s), says VDC, account for the largest of four product segments. "They will remain the largest through 1987, when they will account for 43.1 percent of industry shipments." Low-speed modems (2400 b/s and under), however, are in first place for number of units shipped. VDC says that "more than twice as many low-speed modems are shipped than medium-speed modems." The firm predicts that almost two million low-speed modems will be shipped in 1987, compared with approximately one million medium-speed modems in the same year.
Moving upward, VDC figures show that high-speed modems (4800 b/s and higher), while representing "less than 250,000" units shipped in 1987, have a higher average selling price, so they will account for the second-largest share of voice-grade modem revenues.
Short-haul modems, "due to the limited distances over which they operate, were a $35 million business in 1983," and will not have dramatic percentage gains, says VDC.
Another of the big growth areas in data will be statistical multiplexes, says VDC--with almost four times as many being shipped in 1987 than in 1982. "As a result of the rapid growth of this business, 25 percent more statistical multiplexers will be shipped in 1987 than were installed in all the years since they were first developed in the late 1970s."
VDC's recent stat mux study shows that US manufacturers shipped 52,400 stat muxes valued at $170 million in 1982, by 1987, shipments are projected to be 202,100 units--representing a growth rate of 30.97 percent per year.
What's a data communications story todat without local-area networks? The hot interest in LANs will only get hotter, although it seems that most of the revenues for LANs until now have come from reports and studies cheer-leading their applications. Facts are now starting to catch up with some of the early prognostications. One of the most recent studies, published by Strategic Incorporated of San Jose, California, sees broadband LANs accounting for 85 percent of the systems shipped in 1988, compared with only 15 percent last year.
According to Strategic, broadband systems' 1983 revenues already exceed those derived from the shipments of baseband systems because of much-higher system prices primarily arising from the greater number of connections provided." Its study looks at the use of LANs in three geographical environments--work area, intra-building and inter-building in campus-type sites. "Hardwiring, such as has been done for years," says Strategic, "is feasible in all three but becomes cumbersome and somewhat inflexible as geographical dispersion of connected equipment increases. LANs offer an attractive alternative with certain inherent advantages such as ease of device connection and accessibility to multiple hosts."
Strategic says there will be a "drastic decline in the average unit price per connection" for each of three technologies used--baseband, broadband and fiber optics. For baseband, it says, "the projected connectivity pattern is flat with an average of 13 connections per system across the 1983-1988 timeframe." Broadband LANs, it says, "will experience a decline in the average number of connections per installed system from the 1983 level of 100 to 60 from 1986 onward. This pattern results from the gradual shift away from using a broadband LAN as an all-purpose vehicle and toward greater work-area and intra-building backbone approaches with gateway connecting baseband LANs to the broadband spine."
Looking at fiber-optic LANs, Strategic sees such connections remaining "relatively flat until 1986, because of the exceptionally high cost of these systems." In that year, however, it sees an average of 60 connections per system (up from five in 1985), and then accelerate to an average of 120 by 1988, "primarily among very large sites that will be rewiring for optical fiber to consolidate their LANs and provide a base for future growth. Who Uses LANs?
As part of its figures in the multi-client study on local communications systems, Strategic sees the greatest percentage of LANs installed in "office-automation" sites, with "roughly 62 percent of all LAN systems (9,800) in 1983 growing to 64 percent by 1988. Schools and universities account for about 12 percent of installed systems (1,900), as do factories in 1983. By 1988, education will have grown to 14 percent (5,500) and factory will be at 16 percent (6,280). Research and engineering sites, which comprise about 11 percent of the existing LAN installations (1,700) in 1983, will become fairly saturated and represent only five percent (2,000) sites by 1988. Government/military sites, which account for the remaining three persent (500) in 1983 also become saturated by 1988 and account for only one percent (400)".
One of the more extensive fiber-optic-based LANs being planned is the one AT&T Information Systems will install for the University of Pittsburgh. The "campus-of-the-future" project will be a university-wide system for voice, data and video transmission. According to the university's chancellor, Wesley Posvar, "Although the cost of the university for the project as now planned will be less than the university currently incurs for its telephone system alone, its value over the next few years in terms of cost reductions, productivity increases, improved services and academic opportunities could be worth as much as $20 million."
Massachusetts Institute of Technology is working on an even more-ambitious project, one expected to cost $70 million. Project Athena's goal is to maximize the potential of computer and network technology to enhance the educational environment for both students and faculty in all five of MIT's schools. The 135-acre campus contains more than 100 buildings, with many of them to be integrated into the network over the next few years.
Codex was the most recent supplier to joint the project, with the task of building a campus-wide network that will be used to integrate some 2600 computers and workstations. Digital Equipment and IBM are providing some $50 million in computer equipment and support.
The following pages of this huge special report will zero-in on some specific applications of data communications today, as well as on some broader issues, and then conclude with a roundup of some 350 product and literature items describing datacomm hardware and services.
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|Date:||May 1, 1984|
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