The Future of Technology: Communications is the millennial tornado!
from nextgenerationnetworks.com
A really big tornado is forming on the horizon. Bigger than the world's telephone network, more revolutionary than the
Internet, and with the potential to create more wealth than the PC industry. In our opinion, the next tornado will be
the deployment of a broadband, packet-based public network. We expect that this new network will be similar to
today's Internet, eventually will be as ubiquitous as the traditional telephone circuit-switched network, and will have
performance that far exceeds that of today's fastest enterprise networks. However, it will not be simply an extension
to today's Internet; we expect it to be completely new, much bigger, and to have a far greater impact on our lives.
A quick tour of the history of the technology industry lends insight into what the future will bring. In technology, the
1960s were about mainframe computers. The 1970s were about minicomputers-making smaller, cheaper mainframes.
The 1980s, microcomputers-distributed processing for the masses. And, the 1990s were about enterprise
networks-connecting all that processing back together. Following these powerful technology waves, in our view, will
be the beginning of another tornado-broadband, packet-based public networks-connecting everything to
everything.
The transistor was invented in 1949, the integrated circuit in 1958. Moore's Law predicted that IC density, and
similarly, IC price/performance would approximately double every 18 months. Compounding this rate produces a
10-fold increase in performance every 5 years and a 100-fold increase every 10 years. This 100-fold improvement in
performance produces such a flood of raw functionality that it creates a complete technology discontinuity
approximately every ten years. Because of the timing of the original two inventions, the transistor and the integrated
circuit, these discontinuities tend to fall on new decades. If this fanciful discussion has any merit, then with the new
millenium, a new tornado is looming, and behind that lies a new technology industry.
Each new tornado has generated incredible amounts of wealth. But fascinatingly, each tornado has always been
driven by a new set of companies-the established players from prior tornadoes have rarely had much impact on the
newly formed industry. The historical record is conclusive in this regard, in our view. Although IBM dominated the
mainframe industry, it was only a second-tier player in minicomputers. IBM practically defined the PC market, but was
ultimately only a second-tier PC vendor, and the company was essentially a no-show in enterprise networking.
DEC was the dominant vendor in minicomputers, an also-ran in PCs and not much of a presence in enterprise
networking. Microsoft, Intel and Compaq have been wildly successful companies in their own right, having completely
dominated the PC industry, but none of them has had any meaningful play in the market for enterprise networks. The
newest tornado-conquering gorilla to emerge has been Cisco. There is no debate as to whether Cisco is the dominant
vendor in the market for enterprise networks.
However, in light of the fractal structure of each past tornado, history strongly suggests that the next tornado will
produce new vendors and at least one of these vendors will eventually join the ranks of the mature technology
gorillas-IBM, DEC, Microsoft and Intel, and Cisco. Although hard to envision in 1999, we believe there is a new gorilla
in the midst.
If this essay had been written in 1969, it would have been hard to believe there would be a challenger in computers
to IBM, but then along came DEC. In 1979, it was hard to believe anyone would challenge DEC and IBM as leaders in
technology, then along came Intel and Microsoft. In 1989, the general feeling would be that we would never see
another company with the wealth creation potential of Microsoft, and yet today we all watch Cisco with great
respect. It likely will happen again, as history is our guide.
Most people believe that the Internet is here to stay and packet-based networks are the wave of the future. But
what most people do not fully appreciate is that the Internet is dead, and that what is coming next will make the
current 'net look like child's play. In 1989, an enterprise could build a respectable enterprise network using DEC NET.
However, those networks were simplistic compared with the enterprise networks built today. We believe the same
comparison will be made in 10 years when comparing the future public networks with today's Internet.
The current Internet was never designed to handle the traffic needs of the applications that are being planned or
deployed, and the circuit-switched network will not scale despite its ubiquitous access. We expect that the new
networks will look like the Internet, but will offer much greater scalability while at the same time offering the
robustness and ubiquity of the current circuit-switched network.
So who are the IBMs, DECs, Microsofts, and Cisco's of the new network wave? In other words who are the next
Gorilla-candidates? It is definitely too early in the market development to crown the gorilla in this market, but there
are several rather impressive start-ups that have a real shot in our mind, and most interestingly, all of them are still
private companies.
These entrepreneurs are combining the best from the data world with the best from the traditional
telecommunications world. Internally we expect that these systems will benefit from Moore's Law, modular software,
and standards based interfaces and protocols, and externally we expect that they will be fully redundant, carrier
class, and NEBS compliant. Think of this as Moore's Law meets the Telecosm. These devices already offer 50-100
times the performance of existing equipment from traditional equipment vendors and have Moore's Law designed into
their futures.
Two general aspects distinguish these companies, and this tornado, in our mind. First, these start-ups are packed
with experienced management and engineers. Many of the managers are on their second and third start-up, with 20
plus years of business experience, and the senior engineers have produced several generations of successful system
designs. Second, these companies have business plans that account for the dominance of Cisco, Lucent, Tellabs and
Nortel Networks.
Guess what, for them the existence of the established vendors does not matter… it's not their tornado.
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