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10/31/2003
01:44 PM

TechGuide: Every Little Gigabit Helps

Cost trends, more than application needs such as voice over IP, will help drive mainstream and enterprise acceptance of Gigabit Ethernet.



Tech GuideMoore's Law is seen as the performance driver of the IT industry, but the rise in desktop performance has actually been bypassed by the sonic boom of bandwidth. So while IT managers already scratch their heads over multigigahertz desktops and notebooks, they can at least pretend that someday soon they might start using speech interfaces or some other chip-clogging application. The idea of an app that will force them to upgrade their entire enterprise to Gigabit Ethernet boggles the mind.

That doesn't mean that a shift to gigabit networks won't happen. Indeed, it's already coming, particularly on LAN backbones.

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PCs can't take full advantage of 1-Gbit speeds, Estrin says.
"I don't even think of 1 gig as a future technology anymore," says Judy Estrin, an Ethernet pioneer and serial entrepreneur who now runs Packet Design, parent company of several networking startups. Estrin notes that network technologies evolve in a series of stages, some of which can happen in parallel, but all of which must be in place before companies can take full advantage of what they have. High-speed optical devices need to be developed, along with semiconductors to support them and interface with systems, and then someone needs to figure out how to extend the technology from expensive fiber-optics to standard copper wiring. Ethernet networks need broad connectivity throughout an enterprise, from the desktop (which usually starts with network interface cards and moves to networking chips built onto a PC motherboard) to routers and high-end switches in the company's backbone. For Gigabit Ethernet, PCs will optimally have a PCI Express bus interface, once PCs with that bus begin appearing in 2004.

Gigabit Ethernet, then, has just one remaining roadblock between it and the mainstream: the market. Fast Ethernet came of age when the Internet and telephony bubbles were expanding. Gigabit Ethernet as a standard was released in 1999 and products started appearing just in time for the Internet bubble to burst. It should come as little surprise that the networking market has remained relatively flat from a revenue perspective, as businesses hunker down and avoid all but necessary upgrades. That's been easy to do, since few companies can directly point to a need for gigabit bandwidth. Medical facilities that shunt radiological images or movie studios with their glitzy graphics come to mind, but those are niche high-end environments. Voice over IP may change some of that, but most enterprises are installing the technology only when they add new facilities, if then.

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Even at Cisco Systems, an aggressive booster of voice over IP and other bandwidth-hungry services, officials are resigned to a piecemeal upgrade cycle.

"There is no single killer app for Gigabit Ethernet," says Steven Shalita, Cisco's senior manager of worldwide product marketing for LAN systems. "I don't think I could make the suggestion [to an enterprise] that you've got to scrap what you have and go buy Gigabit Ethernet." Shalita does believe that software trends such as automatic updates and backup, as well as the increasing push for more services, will eat up ever more bandwidth, prompting the need for companies to go to Gigabit Ethernet and ultimately 10 Gigabit Ethernet. He cites a Salomon Smith Barney study projecting that the amount of data generated by applications will increase between a 30% and 40% compounded annual growth rate, driven by everything from E-mail to data warehousing.

Regardless of whether it's needed, Gigabit Ethernet is spreading, particularly for backbone uses. Meta Group estimates that Gigabit Ethernet comprises about 10% of corporate network environments, a number that will steadily--then perhaps sharply--rise this decade.

The spread isn't happening for bandwidth reasons, though, Meta Group analyst Chris Kozup says. Large companies already have "more bandwidth than is needed for the average corporate application," he says. But he notes that in some respects, this has been true since the original 10Base-T Ethernet shifted from shared to switched, which didn't stop Fast Ethernet from grabbing 50% of the typical enterprise connectivity environment. Even so, Meta Group says that more than a quarter of installed LAN equipment continues to be some variety of the hoary 10 Mbps standard, while token ring and asynchronous transfer mode make up another 8%. All of that equipment, when upgraded, will likely move to Gigabit Ethernet, not because of bandwidth needs, but because of cost trends.

Companies will also make the move to get more types of services built into their switches. Large companies increasingly expect to see switches come with services such as wireless networking, security (particularly firewalls and intrusion-detection systems), distributed storage, and high-level network management (for more on wireless, see sidebar: Not Quite A Wi-Fi Ethernet World). Those services will drive upgrades to new networking equipment, particularly on the backbone. The switch of choice will shift to Gigabit Ethernet in the next few years, particularly as costs continue to come down. In fact, the market is already shifting away from an emphasis on speed.

"Speed only gets you so far," says Zeus Kerravala, a Yankee Group analyst. "There's not a lot that differentiates a Foundry [Networks] switch from a fast Foundry switch from a fast Extreme [Networks] switch." Kerravala says growth in the gigabit Ethernet market, and the market overall, will come from built-in features.

A look, then, at the future of the corporate network:

Fast Ethernet
Fast Ethernet, or 100Base-T, is a mature standard, but it certainly isn't going to disappear. While revenue for Fast Ethernet equipment will drop from $6.2 billion in 2002 to $5 billion in 2005, port shipments will zoom up to 155 million in 2005, according to Yankee Group. Much of that volume will come from developing nations, and also from new arenas for the technology as it gets ever cheaper. Fast Ethernet sales in the United States and other industrialized nations will begin to decline in the 2004-2005 timeframe, as the cost of Gigabit Ethernet becomes comparable. Some worldwide usage trends will help push Gigabit Ethernet volumes higher; in Japan and South Korea, for instance, consumer PCs often come with Gigabit Ethernet built in (that's nosebleed territory in the United States, which has a relatively constrained consumer market for increased bandwidth).

Faster Ethernet (The Shift To Gigabit)
Indeed, prices for Gigabit Ethernet will keep falling. A Gigabit Ethernet switch still sells for about 50% more than its Fast Ethernet counterpart, but by mid- to late 2004, the gap will be around 25%, and that makes Gigabit Ethernet worth a hard look when businesses finish the depreciation cycle for older switching equipment and are looking to upgrade. In some cases, the cost of a switch with Gigabit Ethernet ports is only 10% to 20% higher than the cost of one with Fast Ethernet. But again, companies aren't moving to Gigabit Ethernet for the speed, at least not on the desktop.

Customers are moving because cards are cheap, for starters. Sure, even ordinary desktop users in a corporate environment occasionally see spikes where they're pumping 150 Mbps through the network, which is faster than Fast Ethernet can support. But even power users in the average company rarely exceed 250 Mbps. So while Gigabit Ethernet can boost performance for heavy-duty users, it isn't going to speed up PDFs and PowerPoint presentations all that much.

Still, on the desktop, we're already seeing dramatic drops in price. A 10/100/1000 internal adapter can run as low as $50. That's a huge percentage premium over Fast Ethernet NICs, which can sell for less than $10. But it's still only $50, and that's almost a throwaway expense. Plus, more and more PC vendors have Gigabit Ethernet chips built onto the motherboard of the PCs they aim at corporations. These PCs often cost less than $1,000. Meanwhile, the technology is becoming a staple on notebook computers, which are typically less price-sensitive than the commodity desktop market. Corporate users in particular expect their notebooks to give them robust communications technology, and Gigabit Ethernet is part of that.

But remember that this switchover is just happening. It will accelerate greatly in the next year and then keep going, as Gigabit Ethernet prices continue to drop and the technology migrates into higher-volume price points of the desktop and notebook markets.

One thing to look for here: a slowdown in the turnover for networking technology. The shift from 10Base-T Ethernet to Fast Ethernet on the desktop took three to four years, and it will probably be three to four years for Gigabit Ethernet to displace Fast Ethernet. But analysts like Yankee Group's Kerravala say Gigabit Ethernet will remain the staple for desktop connectivity for five to eight years. In part, that will be because it might take that long to figure out how to get the next level of Ethernet technology, 10 Gigabit Ethernet, to run over copper. That shift also will have to answer a currently unanswerable question: can computers cope with such speeds?

"What good is it to put a 10-gigabit spigot into your server if the absolute maximum it can consume is 1 gig?" Estrin asks. She notes that the basic PC input/output system hasn't really changed in decades. So today's PCs can't take full advantage of 1 Gbit speeds, though even 500 Mbit is a vast jump over Fast Ethernet. Basic elements of the PC architecture likely must change before 10 Gbit reaches the desktop.

The Gigabit Backbone
This is where Gigabit Ethernet is most prevalent. Gigabit switches in the backbone and on servers helps with all sorts of high-end applications, such as clustering and distributed storage networks.

"Gigabit Ethernet is highly deployed in the backbone," says Meta Group's Chris Kozup. Companies will use Gigabit Ethernet to create more robust networks, Kozup says, and that in turn will spur the use of technologies that have little tolerance for latency (the gap between when a packet is sent and when it arrives at its destination). One such technology is voice over IP. But Kozup says safe failover, hot swapping, and other such "high availability" services will become increasingly important, driving demand for bandwidth.

That will be particularly true as costs come down. The premium for Gigabit Ethernet over Fast Ethernet can be as little as 10% to 20% per port, though the chassis for the faster switches costs more. Those prices will continue to come down throughout 2004.

The other factor that must be figured in to backbone switches is the addition of services.

Integrated services now or will include:

--Voice over IP;
--Firewalls, intrusion detection systems and other security features, such as virtual private networking;
--Distributed storage management;
--Wireless overlays, including Wi-Fi and cellular integration;
--Better management.

Demand for such services will drive the market for gigabit Ethernet, even if bandwidth does not. For more on the economics of the move, check out "Ready When You Are" (InformationWeek, October 13, 2003).

The Future
There are already switches pumping 10 Gbit data through the backbone. There aren't many of them--Dell'Oro Group estimates that just 1,000 10 Gigabit Ethernet ports were shipped last year. But they're needed at phone companies and large companies, particularly those with heavy-duty server loads and large storage area networks.

Those switches are primarily being used to suck up Gigabit Ethernet transmissions and pump them through more efficiently. "They're used for aggregation," says Bob Felderman, chief technology officer at Precision I/O Inc., a startup developing hardware and software to help companies better use bandwidth. "Those thousand ports shipped are for switch to switch communications, or even metro area networks."

Network RealityThese systems are expensive, but they're experiencing rapid price drops. Timon Sloane, director of product management at Extreme Networks, says 10-Gbit systems are coming down dramatically in price, despite the low volumes, from $60,000 a port to $25,000 a port currently, and $8,000 a port by year's end. They're also experiencing rapid growth--Cisco's Shalita says the company shipped more 10 Gbit ports in its most recent quarter than it did in the previous 12 months.

By the way, 10 Gigabit Ethernet on the desktop is, if you'll excuse the pun, a pipe dream. For instance, Intel's 10 Gigabit Ethernet card runs only on fiber-optics and the retail price is a stiff $7,000 to $10,000. "You can't really put that on a PC," notes Tom Swinford, general manager of Intel's LAN unit. He says they're primarily being used in scientific applications.

10 Gigabit Ethernet thus represents the beginning of the slowdown in Ethernet speed increases. We may all someday have 10 Gbits of bandwidth at our desktop, but it will be a long while, unless something completely unforeseen comes along to dramatically tax systems. Of course, it isn't hard to think of bandwidth-clogging ideas, such as video phones, the challenge is justifying them from a business standpoint.

Illustration by Doug Ross

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