Well, if I haven't addressed your particular issues, it is not for lack of trying. Perhaps now that you have actually articulated them in an organized way, I will be more successful.
1. FACT: The definity product is an enterprise PBX, is not sold to carriers and has very little in common architecture-wise with the 5ESS or with any of the other products that make up LU's telephony architecture. It is telling that a Cisco view point makes no distinction between the requirements of a public carrier and an enterprise. That distiction aside, your description of "front ending" the 5ESS for packet traffic is inaccurate, as has been pointed out repeatedly. A) The modular nature of the 5ESS is such that the 7R/E packet driver does not make use of the TDM backplane for packet based communications. If and when, POTS needs to be decommissioned (an extremely long period of time by my estimation, but perhaps only 3-5 years by yours) the investment in 7R/E hardware will be compatible with the next generation CO switching technology, based on ATM, due in 2-3 years. B) For those service providers disinterested in local voice revenues, the PathStar product will do just nicely - for the fourth time, look it up and learn about LU's actual products and plans rather than trying to set up a strawman that can be easily knocked down.
2) FACT: The edge service that will provide access to internet resources such as SI will be and is IP. Beyond that, I have several bones of contention. A) Even the most aggressive estimates of cable modem and xDSL put US penetration at no more than 10% of households by 2002. I am assuming that the rest of the population will stop using their telephones (adopting your strawman debating technique). B) Once again you forget about wireless - no benefit at all to coding voice as IP over an air interface. C) Many large enterprises are and will use ATM as their primary edge connectivity - indeed it is a big piece of Cisco's strategy and its success with its 3600Access Router. Granted, IP will be one of the services to ride on top, but not the only one D) Outside of the US, the longevity of non-IP edge services will be even longer than in the US.
3) I said the primary benefit for LAN based PBX was lower cost moves and changes, not of IP telephony as a whole. This whole stream of your argument flops back and forth between the enterprise and service provider, but I'll take a crack at it. There are actually four very separate markets for converged IP/telephony - On campus/LAN, Premises to POP Access,CO switching and Trunking. Each of these markets have different issues and will evolve differently. A) Of the four, the benefits for converged access for large enterprises is the most compelling, although it may take different forms. No need to pay for 3 highcap access lines when one will do. B) As I discussed in my last post, LAN telephony will face a continuum of enterprise customers - some will dive in, due to high levels of moves/changes and low value of reliability - others will be very conservative. C) POP switching has shown little convergence and there are substantial obstacles, as has been discussed above. IP will continue to increase in importance but will not emerge as a single, unified switching technology in our lifetime, D) Gary has already acceeded to the idea that protocols other than IP will continue to exist in long-haul trunking.
4) My perspective on voice over IP is rooted in a strong belief that by the time VoIP can match quality and reliability expectations of extremely conservative telephone companies, fiber bandwidth will have increased 50 fold due to DWDM driving service costs down dramatically, real-time video will be a strong consideration, and carriers will make use of the flexibility of multiple lamda's to segregate traffic on a per application and/or per customer basis. Fixing IP networks to support real-time applications make the economics for traditional IP services deteriorate. Best-efforts performance seriously degrades if priority traffic gets to be more than a small fraction of total traffic. Furthermore, the techniques of TASI that make IP voice more bandwidth efficient than circuit voice are also inherent in ATM and can be applied to other connection oriented protocols. Sure there will be a movement toward VoIP networks, but I am projecting that they will coexist with voice over ATM, voice over circuit for a long, long time. 10 years from now, we will all be debating the evolution to a converged, all-optical photon switched network, while the 5ESS's continue to deliver POTS.
5) A point to consider: there is a world-wide shortage of talented IP network engineers. Running an IP-based CO would be a job for the clueful, not the clueless. How do you propose retraining the world's service provider employee base on the new technology? It is a leap of faith to assume that if Cisco's IOS, VoIP application feature loads, and hardware upgrades had to be made as idiot proof as the typical LU 5ESS generic upgrade, that it would be significantly cheaper. Look what happened with the AT&T frame relay upgrade.
So, what happens to LU? Well, eventually 5ESS switch sales will slow, but it will take alot longer than you think, with outside of US growth there for the taking. In the meantime, LU will make considerable hay from its optical business, as WDM pervades metro and campus networks. It is kicking serious butt in wireless, with the most modular, most scalable, lowest cost solution in the business. LU will sell alot of integrated software solutions, as carriers continue to add new technologies and services without decommissioning the old - billing, network managment, provisioning, you name it, LU will be selling it ($1.5 billion in 1998, growing 25% a year). LU will also be selling tons of optical fiber at 75% gross margins, as Europe and the ROW pursue US style competition. LU will be enjoying a $3 billion semiconductor business that is growing at better than 20% a year, the fastest growing chip business of the top 25 competitors. BTW LU's optoelectronics biz is shaping up as the only real competitor to JDS/Uniphase - check out that P/E. Add Ascend's ATM and remote access businesses - each growing more than 50% a year and thrashing the competition. So I don't think there is a shortage of growth opportunities to fill in for slowing 5E growth.
I think the point of frustration for me with this whole discussion, is the underlying assumption that LU's business is crumbling (it isn't) and that it will just lie there and take it (in fact they are extremely aggressive in cannibalizing their own products when necessary). LU will take care of migrating their existing customers AND it will provide next generation solutions. It is not an either/or. |
