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To: Johnny Canuck who wrote (36091)2/5/2002 3:03:32 PM
From: Johnny Canuck  Respond to of 68282
 
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Technology Threat To DVDs - and Broadband
05-Feb-02 11:32 ET

[BRIEFING.COM - Robert V. Green] A new technology has been invented which can render DVDs unreadable within days or weeks after opening the package. Limited-use DVDs could change the entire entertainment sector, and possibly create a new medium. Here on some thoughts on this possibly disruptive technology.

The Technology
Two companies have developed a film coating for DVDs which, when exposed to air, eventually renders the digital information on the disc unreadable. When exposed, the transparent film coating begins to become opaque to lasers, which renders the disc unreadable. The thickness of the film determines how long it takes for the disc to become unreadable, although applications now are in the 2-3 day range.

To make the DVDs "self-destruct" simply involves coating a regular DVD or CD with the film during the manufacturing process, and then packaging the DVD in an anaerobic package. This means that "one-time" use DVDs can be made simply adding another step to the regular

A company called SpectraDisc (www.spectradisc.com) in Rhode Island announced at the end of January that it had been granted a patent for the limited-play DVD technology. SpectraDisc is a spin-out subsidiary of Spectra Science. Neither are public companies.

A second company called FlexPlay (www.flexplay.com) is also developing limited play DVD technology. It is not immediately clear to us how the SpectraDisc patent affects FlexPlay. FlexPlay is also not a public company.

The technology is relatively simple to apply, costs little, works with existing equipment, and requires no special effort from consumers. In short, it is market-friendly, provided that consumers want it.

The Business Effect
The obvious business impact of this technology is the possible destruction of the DVD rental business. The only real player in that space is Blockbuster (BBI). If you could buy a one-time view movie at Costco for $3.00, why would ever want to make a separate trip to Blockbuster to rent a movie? Since the DVD does not degrade until the package is opened, you could even "stock-up" on movies to watch later.

Less obvious, however, is that one-time view digital movies might hinder the development of the broadband internet.

Is There Demand?
All of this speculation is based on the idea that people will actually pay $3.00 for one-time view DVDs. Since there is no existing market for pay-per-view mediums (other than cable and satellite time-fixed movies), it is hard to judge.

Since the previous attempt at one-time rental technologies, DivX, was a complete flop, with Circuit City losing an estimated $130 million on the experiment, some people conclude that there is no demand for one-time view movies. The mechanics of the SpectraDisc technology, however, which is little more than an expiration date, overcomes all of the technical difficulties of the DivX technology.

Another argument against demand is that purchasers would prefer to buy DVDs. According to Adams Media Research, DVD owners purchase 16 DVDs a year, or about three times the number of VHS movies that VCR owners purchase. In addition, Blockbuster sells used DVD movies after they have been rented a few times.

But no one has ever tried selling one-time view DVDs for less than the price of a movie ticket.

Is there a market for one-time view DVDs? Only the market knows for sure.

The Movie Studios
What do movie studios want?

In an extensive article published today, the Wall Street Journal argues that the movie industry, particularly AOL/Time-Warner (AOL), would like to remove Blockbuster from the value chain. Warner Brothers is actively releasing DVDs for the sale and rental market at the same time that VCRs are offered for sale and rental, a practice which hurts Blockbuster. In the past, VCR rentals preceded VCR sales, as the studios attempting to milk one market at a time.

Additionally, the WSJ article hints that AOL would like to develop a broadband pay-per-view service for movies. We believe that this vision is at the core of the AOL/Time-Warner merger - linking the production of movie product with the internet distribution and captive audience that AOL offers.

Both of these strategic directions for AOL could be frustrated by the advent of one-time-rental DVDs.

A Threat to Broadband?
Investors in both Blockbuster and AOL should consider the possibilities of this new technology, as wide-spread acceptance of it would have an impact on the core strategies of each company.

But, other technology investors should also consider the possible impact of the one-time use DVD.

Much of the hope of a revival of the technology sector rests on a belief that the advent of broadband will necessitate a continued build-out of the internet infrastructure, with revived demand for everything from fiber-optic components to network routers to ISP providers and software tools companies. But broadband needs a killer application to make demand large enough to justify the build-out.

We have always felt that on-demand, pay-per-view video would provide the demand that would usher in the broadband era of the internet. But as far back as October 2000, (23-Oct-00 The Broadband Future Gets Fuzzy) it became clear that the broadband era was not right around the corner.

If one-time use DVD technology catches on, it could make the broadband era even further off.

Comments may be emailed to the author, Robert V. Green, at rvgreen@briefing.com



To: Johnny Canuck who wrote (36091)2/5/2002 11:38:57 PM
From: Johnny Canuck  Read Replies (1) | Respond to of 68282
 
Network OEMs stick with Sonet, ATM attack
By Craig Matsumoto and Loring Wirbel, EE Times
Jan 28, 2002 (8:21 AM)
URL: eetimes.com

SANTA CLARA, Calif. — Makers of network equipment are putting new emphasis on tuning products for traditional, old-world architectures, as radical ideas fall out of style in step with the recession.

Most OEMs still expect that networks will move to Internet Protocol, but the shift is now seen as a gradual migration. The focus is on allowing service providers to stick with time-honored, time-division-multiplexed Sonet traffic and asynchronous transfer mode (ATM) switching.

Certainly, dozens of OEMs had that kind of plan in mind from the start. But their attitude has percolated through the industry as the downturn crippled or kayoed the "green field" carriers — those building all-IP networks from scratch. As a result, OEMs are cultivating compatibility with incumbent service providers — the carriers that will represent most of their business in 2002. "The carriers left standing are the incumbents, and they have lots of Sonet traffic and lots of ATM traffic," said William Glynn, product line manager for data products at Unisphere Networks Inc.

Many OEMs are touting a modular model, in which a small system can be expanded little by little, by adding line cards or boxes. "Last year everybody was about the biggest, baddest switch," said Rick Thompson, director of product marketing at Sycamore Networks Inc. A huge switch is still "the key to getting into [carrier] labs," but smaller, transitional switches are "the key to get from the labs into their network," Thompson said.

The shift in market dynamics was evident at the Supernet trade show last week. The show, sponsored by the Supercomm group at the Telecommunications Industry Association, was intended as a "Comnet killer," referring to the carrier-oriented show opening in Washington this week. Comnet is predicted to be slow this year, and Supernet was no mob scene either. Often only a few hundred people showed up to mill about on the show floor or listen to keynote speeches.

Meanwhile, attendees agreed that carriers were keeping capital expenditures limited to only those choke points where new equipment was essential. Gary Law, vice president of marketing at Pluris Inc., said spending in transport cores may show a slight uptick in the third quarter, as carriers pony up for necessities that they've postponed all year — but that the rise will represent a small plateau until legitimate carrier spending recovers in mid-2003.

"What we're seeing is a major shutdown on capex [capital expenditures] for new services, but there's still a willingness to spend" on enhancing existing services, said Nigel Cole, vice president of business development for Corrigent Systems Inc. Corrigent is among the startups building systems for resilient packet rings (RPRs), but claims to be the only one aiming at Sonet traffic rather than Ethernet.

Many Supernet panelists see Sonet keeping its hold in the metropolitan network. RPR might also have a chance thanks to its fault-recovery features, panelists said, but most believed that Ethernet would remain relegated to carrier specialists like Yipes! and Telseon. Many incumbent local carriers have pledged eventual fealty to Ethernet, but not in the next few years.

Incumbent accent

The accent on incumbents was especially telling among the crop of emerging startups. Companies like Corrigent and Turin Networks Inc. are targeting these carriers with products that promise improvements in Sonet.

"The economics will bear out in the next couple of years that nobody's going to revamp their networks," said Philip Yim, vice president of product development at Turin. "Density and stepping up on rates are still very important, especially in Tier 2 and Tier 3 cities, because services are still geographically located."

Though Turin has advertised its ability to perform packetized-voice soft-switch functions, Yim said "we put that functionality on the back burner, at least for marketing emphasis. Customers are most interested in Sonet aggregation flexibility, at least for now."

Turin's selling point is the ability to use fewer boxes for transport. Its Traverse Multiservice Optical Transport Platform can do functions of an add-drop mux and a digital cross-connect system (DCS). "People have been piling box on box, and the management of all those boxes has become a problem," Yim said.

The Traverse can switch Ethernet but is primarily aimed at Sonet/SDH transport for the metro edge. The largest switch of the family, the Traverse 2000, can switch 2,688 VT1.5s per slot.

That density will be matched by Metro-Optix Inc., whose CityScape multiservice provisioning platform is designed to natively switch multiple protocols, with Sonet STS-1 switching as its first target. Metro-Optix will go truly multiservice with the release of an ATM switch fabric, due at the end of the month. That will be followed by a 2,688-port fabric for Sonet VT1.5s, which should be available at the end of February, said Dana Hartgraves, Metro-Optix's vice president of product marketing.

Other contenders in the high-density VT1.5 space include Ocular Networks Inc., which launched its OSX-6000 in late 2000. Ocular was recently acquired by core-switch vendor Tellabs Inc. and the OSX was renamed the Tellabs 6400 Transport Switch.

Routers for ATM world

Unisphere, for its part, claims that its MRX router architecture fits perfectly with the plans of incumbents. The company's ERX family has become a de facto label-switched router for edge networks employing multiprotocol label switching (MPLS). The new MRX line, which company officials term the first edge system to natively switch IP routing, ATM switching and packet-over-Sonet traffic, represents a melding of technology from two acquisitions — Redstone Communications and Argon Networks — into one common architecture.

The idea is to build products that can directly contribute to carrier revenues, said Unisphere's Glynn. In theory, competition to the MRX should come from a range of companies such as Alcatel, Cisco, Equipe, Gotham Networks and Marconi. But in practice, Glynn said, only those with some background in ATM, such as the former Fore Systems group at Marconi, are prepared to support ATM Adaptation Layers 1, 2 and 5.

A future competitor may be Laurel Networks Inc., a Pittsburgh-area company founded by several veterans of Fore Systems. Like Unisphere, Laurel will offer routers with configurable ports for ATM or packet-over-Sonet services.

Meanwhile, the ERX routers can serve as general-purpose MPLS gateways. Glynn said that Unisphere speaks every "flavor" of MPLS, including CR-LDP and RSVP-TE, making ERX a universal gateway to a carrier's regional traffic aggregator. "There's a reason we're doing better in this part of the market," Glynn said. "If you're a Cisco or a Juniper coming in largely from the IP world, you have to come up with a better architecture for interfacing ATM and IP."

Elsewhere, many OEMs are targeting DCS replacement in the form of a box that can behave as a combined DCS and add-drop mux, allowing carriers to get by with using less equipment. Metro-Optix, for example, was emphasizing a migration from native Sonet interfaces to Generalized MPLS.

Also at Supernet, Sycamore introduced the SN 16000 SC, a system for the metro core to bridge the SN 16000 core switch with the access network. The box could be used as a core switch in cities too small to justify an SN 16000, Thompson said.