Hi Greg....Just starting DD and the business model looks a little like Q or Rambus. Any comments? Dont know if this was posted....but this has a pretty comprehensive overview of DSL estimates.
totaltele.com
Explosive DSL deployment takes analysts by surprise
By Peggy Salz-Trautman
29 November 1999
Industry analysts have been forced to increase drastically their estimates of DSL deployment as U.S. carriers have lit the touch paper on their deployment plans.
Many in the industry had been skeptical of bullish claims by DSL chipset manufacturers, primarily because the published market data generally suggested a deployment of few more than half a million lines by the end of 1999 in the United States. But announcements this month by Analog Devices, which said it had sold its 1 millionth ADSL chipset, and Alcatel, which said it had shipped 2.4 million ADSL chips in 1999, raised eyebrows in the industry and convinced most to readjust their market forecasts upwards.
"The market has grown much faster than we thought it would," said Willem Verbiest, vice president of Alcatel's DSL access business unit.
"There wasn't anything in the marketplace to say this was going to happen the way it did," said Kathie Hackler, a principal analyst at Dataquest Inc., in San Jose, California. The company, like many of its peers, has revised its DSL figures for 1999 as well as its longer term forecast.
In its latest report Dataquest had forecast the delivery of over one million DSL modems this year. It has since raised that figure to 2.3 million in 1999, and some 17 million in 2003, up from its earlier forecast of just over 10 million. Dataquest is doubling the frequency of its own forecasts from twice yearly to quarterly to avoid being wrong-footed again.
Tim Johnson, manager of Access@Ovum, a research service offered by Ovum Ltd., of London, said his own forecasts, which predicted half a million lines in use in the United States by year end, were "a couple of hundred thousand short." "The confusion about numbers and whether [chipmakers] are telling the truth is understandable considering the huge pipeline we [analysts] must track before actual lines are in use, and the service is being sold to customers."
Mike Ziehl, marketing director at Analog Device's Communications Division, agreed that growth had been difficult to estimate. "DSL is growing at such a fast pace that most estimates can't keep up," he said. "If we would have started off the year by saying that volumes would grow by a factor of three, no one would have believed us. But in mid-'99 things just took off and that's exactly what happened."
Alcatel too claims to have been surprised, particularly by a huge DSL ramp up in the United States. "Operators [in the U.S.] are installing more capacity up front than they have users connected, and this is why a lot of wrong figures have been floating around," said Verbiest, whose unit is part of Alcatel's carrier data division, based in Antwerp, Belgium.
Dave Burstein, editor of DSLprime, a specialist research newsletter that tracks DSL deployment worldwide, claimed that "all researchers have been basically wrong" and their data has generally been three to six months out of date. His own forecasts of between 650,000 and 700,000 customers in the United States by the end of 1999 are based on figures gleaned directly from the operators. He further predicts that the United States will see "at least two million and more likely three million" subscribers by the end of 2000. "By then, the installation backlog should be cleared and more than half of the country will be wired," he said.
A company that came closer than most to forecasting the DSL market was Cahner's In-Stat Group, headquartered in Newton, Massachusetts. In a recent report, In-Stat predicts the total of DSL subscribers worldwide to increase over 150% in 1999 and top two million new subscribers in 2000.
"It's not that the market [watchers] missed it," Dataquest's Hackler explained. "It wasn't until the first half of the year that the RBOCs actually weighed in with a serious attempt to market DSL."
As a result, industry analysts questioned whether operators would roll out DSL or hold back on it as they had before, Hackler said. "And there still wouldn't be a market if cable companies hadn't got aggressive in pushing their service at competitive prices."
Where they went wrong
It appears that analysts were wrong-footed by two factors. First some underestimated the time it takes for a chipset to turn into an ADSL customer: So looking at the number of lines being rolled out, they underestimated the number of chipsets that have been built.
"An order for 1 million DSL line cards today will take at least six months to turn into a million DSLAM ports installed at telco premises," noted Tim Johnson, manager of Access@Ovum. "Depending on the telco's planning cycle it will probably take at least a year before these ports are all taken up by actual customers, who will need another one million chipsets for their DSL modems."
Meanwhile the rapid burgeoning of DSL types and applications also seems to have caught some by surprise. One analyst claims that many forecasts have been based on projecting from the old established use of DSL as a way for carriers to provide things like leased lines and broadband links.
"Since DSL has emerged as a mass market service it has created a whole new market and many analysts are still doing their calculations in the old world," he said. |
