(COMTEX) VENDORS ARE BULLISH ON ATM'S PROSPECTS FOR 1998
VENDORS ARE BULLISH ON ATM'S PROSPECTS FOR 1998
Jan 20, 1998 (BROADBAND NETWORKING NEWS, Vol. 8, No. 2) -- ATM
equipment vendors tend to be an optimistic bunch. In a way they need
to be, choosing as they do to ignore ATM's oft-published obituaries in
the trade press and at trade shows. The ATM equipment vendors
interviewed by the editors of BROADBAND NETWORKING NEWS proved
positively upbeat. Many are predicting that ATM will not only flourish
in 1998, but it will finally "turn the curve" towards widespread
adoption.
ATM vendors are not the only ones bearing good news. Vertical
Systems ratcheted its projections upward in the recent ATM And Frame
Relay Industry Update. For example, one year ago Vertical Systems
predicted a worldwide market of $1.6 billion for combined ATM equipment
and services. Today, it reports 1997 was in fact a $2.2 billion year,
or about 41 percent better than expectations. And, most of this
improvement fell in the equipment sales column, perhaps explaining the
confident attitude of ATM equipment vendors.
ATM still has far to go. Revenue from ATM services remain at a
fraction of revenue from equipment sales, an exact opposite of the
booming frame relay services market where services are a majority of
revenue. The total worldwide combined market for ATM will be $7.2
billion in 2000, or about one-half that of the projected frame relay
market, according to Vertical Systems.
It is certainly well-known that ATM has been accepted as a scaleable
network backbone, and it has benefited from the explosive growth of the
World Wide Web and increased use of Internet Protocol (IP). "ATM is
alive and well in backbone," says Roger Krall, director of ATM
marketing at General DataCom [GDC]. "With the adoption of IP as a
predominant LAN protocol, we see a large requirement for ATM equipment
to provide transport for IP protocol. This is certainly an area of
significant growth," he adds.
Cruising slightly below the radar screens of many industry watchers,
however, is a big surprise - the increased use of ATM in local-area
networks, albeit, very large local-area networks.
"ATM is going mainstream. ATM is now a safe, proven choice for the
enterprise backbone," claims Dave Nelsen, senior director for business
planning at FORE Systems [FORE]. A number of companies have migrated
their large Ethernet-based LANs to ATM backbones in the past year, he
says.
"The names of companies installing ATM backbones are names you know
well: Shell Oil or Hewlett-Packard [HWP]. These are mainstream
companies. One of the most impressive is Microsoft Corp. [MSFT]. It
has moved its entire corporate backbone to ATM. If anyone knows what's
coming down pike in terms of applications the network will need to
support, it's Microsoft," he says.
Nelsen explains that FORE's customers are looking at ATM as a
technology that will scale and remain viable for a long period of time.
"The standards are solid and stable. I can now go to ATM and count on
it to be a strategic advantage to my company," he adds.
One factor that is helping the acceptance of ATM is the emergence of
real applications where ATM is arguably the best, or even only, choice
for transport. "I'd say the educational vertical market continues to
be an excellent area of growth in ATM," says Houman Modarres, director
of ATM product management at Newbridge Networks [NN] and the vice
chairman of the ATM Forum's market awareness committee.
Modarres explains that education is a good area for ATM services
"because it allows for capabilities of not only video , but
also tying together the networks of schools. In other words, tying the
PBXs together, and libraries, including the local community libraries,
[into] a civic network."
Computer/telephony integration (CTI) is an emerging application that
promises to push ATM all the way to the user desktop, says FORE's
Nelsen. "Computer telephony allows a company to use one single ATM
infrastructure as a data network and get a voice network for free,
because it is integrated with the computers and servers," he says.
Unlike the trend of ATM backbones for corporate LANs, which is mainly
an activity within mammoth corporations, CTI-inspired ATM is taking
place in the smalls. "The companies leading the charge here tend to be
operations, or branch offices, that are perhaps 100 people or less,"
Nelsen adds.
Ironically, however, the best salesman for ATM equipment is the rapid
growth of frame relay services. "Frame relay will continue to be
biggest driver for ATM. More and more the frame relay networks are
looking to ATM for the higher speed backbone trunking," says Mark
Kaplan, senior product marketing manager for frame relay at Newbridge
Networks.
"I'm not sure what the time frame is, but maybe five years from now
we'll see technologies like frame relay and X.25 exist to a great
degree as access technologies and pricing points onto an ATM backbone,"
he predicts.
"The customer doesn't really care. It wants traffic going from point
A to point B cheaper and faster than ever before. If you choose to
call that service frame relay to price differ-entiate it from your ATM
service, then fine," adds Kaplan.
"Frame relay and ATM are becoming less distinct, and in fact very
much a continuum," agrees Tony Rybczynski, director strategic
technologies at Nortel [NT]. "To a large extent the carriers are
deploying frame relay as a [user network interface] into an ATM
backbone."
...Back to the Beginning
"What we are seeing is that ATM has gone almost full circle," says
Jeff Kiel, manager, product marketing for Ascend Communications' [ASND]
core systems division. "ATM was originally developed as an internal
network tool, and a single network infrastructure. There was a time
when there was a lot of excitement about applications for ATM - ATM to
the home, ATM to the desktop. But, it has come back full circle to a
high-speed multiservice, multiuser core for networks."
"The concept of [ATM] originally was to create a common transport
that has telco-like capabilities, in that it was deterministic and able
to set up different types of services," says Craig Johnson, principal
analyst at Dataquest. "Conceptually, ATM was a major shift. It's just
been a long time from conception to quasi reality." (Contact: Ascend,
508/692-2600; Dataquest, 503/287-7542; FORE, 412/742-4444; GDC,
203/574-1118; Newbridge, 703/736-5791; Nortel, 613/723-49200)
ATM Revenue Forecast - Worldwide
($ Millions) 1996 1997 1998 1999 2000
Services 103.3 242.4 478.9 914.7 1,604.6
Equipment 1,096.0 1,962.6 2,994.2 4,252.6 5,663.1
Totals 1,199.3 2,205.0 3,473.1 5,167.3 7,267.7
Source: Vertical Systems Group
ATM Revenue Forecast - U.S. Market
($ Millions) 1996 1997 1998 1999 2000
Services 79.8 183.5 349.0 623.9 964.9
Equipment 585.4 986.6 1,422.9 1,920.7 2,435.4
Totals 665.2 1,170.1 1,771.9 2,544.6 3,400.3
Source: Vertical Systems Group
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