ADI leads the market in DSL. Here is a section of one of their recent press releases:
<<Because ADSL is complex technology, only a few companies have been able to provide working solutions and ADI's presence in the market since its inception is beginning to pay off. "We are a leader in this market," says Vic Jayasimha, ADI's director of business development for ADSL. "ADI currently has more design wins than any other company currently competing in the ADSL market; more than 50 to date." In fact, according to a recently published report by Dataquest, ADI grabbed 37 percent of the ADSL chipset market in 1998, a share that is more than 15 percent higher than its closest competitor. But, adds Ruch, "the market is changing quickly and new companies are entering the market with low cost solutions."
A Differentiating Strategy
"There are actually two variations of ADSL," explains Jayasimha. "There's full-rate ADSL, which we believe will ultimately have more market potential because of its applicability for emerging video applications that will soon be available, and there is G.lite, which is a lower cost, lower performance ADSL solution. In the full-rate market, we lead our competition. While we are strongly positioned in the full-rate market, we are also carefully watching the G.lite market to see how it develops." Adds Ruch, "Many of our competitors are only producing G.lite solutions, but ADI is able to differentiate itself by providing both full-rate and G.lite ADSL solutions at the right power consumption levels and the right cost."
ADI's closest competitor in the full-rate ADSL market is Alcatel, but as Jayasimha explains, "The problem that Alcatel is facing is that they're vertically integrated. At ADI, our strategy is to support our customers all the way through the sales process, from selling the chipset to helping them win design-ins at the telephone companies. But Alcatel has chosen to sell chipsets to equipment vendors and then turn around and allow their networking division Alcatel Networking to compete with that same vendor to try to win designs at the telephone companies. They have a conflict of interest."
"We also believe that we have an advantage because we are an end-to-end supplier of all the required ICs and software," adds Ruch. "Companies like Alcatel are also only able to provide a piece of the solution, for example, Alcatel actually gets their line drivers from ADI. But at ADI, we can provide all the required technology."
However, even with a solid business strategy, Ruch and Jayasimha acknowledge that the ADSL competition is not over yet. "Alcatel has a marketing lead," says Ruch. "They got the early lead by locking up the joint procurement council put together by the Bell companies to source ADSL equipment. However, we are countering with the fact that our chipsets are designed into industry leading equipment vendors. When you consider the largest vendors for networking equipment- Cisco, Lucent, Nortel, Ascend, 3Com- we are designed into their equipment."
A Growing Market
The ADSL market is growing quickly, with Dataquest predicting that the 2.5 million chipsets shipped this year will grow to 6.5 million chipsets shipped in 2000. But,
says Ruch, there are still impediments that are slowing the widespread adoption of ADSL technology. "Although the ADSL market has clearly moved beyond the experimental stage and is being deployed, it has not yet reached mass deployment,"
explains Ruch. "A number of deployment issues remain. For instance, if you have a bridge tap, a feed that runs from the primary phone line, ADSL doesn't work very well. Old telephone lines also are an impediment to ADSL - the phone companies need to test each existing line before ADSL can be widely deployed."
The incumbent telephone companies have been reluctant to press ahead with making the relatively minor infrastructure modifications that will make ADSL widely available to the public. "There are business reasons that make the telephone
companies reluctant to support the widespread deployment of ADSL technology," says Ruch. "For one thing, ADSL will eat into leased T1 lines, a very lucrative source of revenues. In addition, the Internet explosion has created a huge new
competitive market with which incumbent telephone companies are largely unfamiliar. They would rather concentrate on traditional markets, like local phone service, where there is little or no competition," explains Ruch. "For a while, there was no great incentive for them to do anything to help facilitate ADSL deployment. But now, with the competition from cable modems, the telephone companies have been forced to move more quickly."
A Bright Future
As Internet utilization grows, the public has also begun to learn about new technologies, such as ADSL, that will facilitate faster online connections. As a result, demand has risen and some analysts believe that by 2003, ADSL connections could exceed the combined total of all other broadband access technologies. "Long term, ADSL connections will be as ubiquitous as telephone lines and we're looking at a potential market that will eventually be worth billions of dollars," says Jayasimha.>> |
