The long slump in capital spending by the networking industry is over, with technologies and applications driving an upswing, according to industry leaders.
"The telecom meltdown of 2001 to 2003 has bottomed out," Bob Bailey, CEO of PMC-Sierra, told the recent Globalpress Summit Conference. "There has been a modest growth in capex from $116.6 billion in 2003, to $129.4 billion in 2004, and to an estimated $138.6 billion in 2005," said Bailey.
The challenge for the network operators was spelt out by Henry Samueli, co-founder, chairman and CTO of Broadcom.
"Voice revenue is declining. It's $220 per user per year and falling, while data is $50 per user per year and rising," Samueli said. He expects data revenues to rise to around $65 to $70 per user per year by 2008.
Samueli listed the big volume drivers in the networking market: Wi-Fi will hit 100 million units this year; Bluetooth will pass 200 million units rising to 800 million units in 2008; RFID will sell five billion units in 2007 rising to 25 billion by 2009; Blackberry had two million users last year; there were 200 million broadband subscribers last year and 150 million digital TV subscribers.
Another telecoms driver is the move to public access Wi-Fi. "After electricity and water, the third public utility will be Wi-Fi," said Craig Barratt, president and CEO of Atheros Communications. "Cities are funding public access Wi-Fi."
Barratt pointed out that, while 2.4GHz Wi-Fi has only three channels, allowing 10 users per channel, 5GHz Wi-Fi would allow up to 24 channels.
"It will become very good for voice," said Barratt, "Wi-Fi phones will gain popularity and drive convergence with cellular. One phone working seamlessly in home, office and on the road is compelling."
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