Internet Data Centers-A New Opportunity For Premises Cabling Systems Suppliers: 2000-2005 Analysis And Forecasts

Additional Information

This is the first report from World Information Technologies, in conjunction with FTM Consulting, to address the emerging Internet data center cabling system marketplace. This is an extension of our studies on the Premises Cabling System Market for Voice & Data that focused on the LAN cabling market within business commercial establishments. Up to this point in time, the major market for cabling systems inside premises used for communications applications was the large, local area networking (LAN) market. When we first addressed this LAN cabling marketplace 15 years ago during its embryonic sage, we considered other cabling inside the premises used for communications purposes such as the mainframe computer cabling to communications controllers (IBM SNA networks). However, this market was extremely small compared to the LAN marketplace and did not appear to present a lucrative future growth market for cabling products. Until now, the LAN cabling market has been the “only game in town” as any other premises usage of cabling was not large and was not a growth situation. Recently, the Internet has changed this situation, as the Web has become the universal data network used by both businesses and consumers as a new form of electronic communications. This has spawned a new entity the industry and we call Internet data centers. These are primarily Web servers that are on the Internet and can be universally accessed. Until recently, the larger enterprises deployed their own on-site Web servers to serve their business applications. The cabling for these Web server sites still did not constitute a large cabling market on its own. However, over the past year, a number of companies, both existing telcos and new start-ups have started to deploy Internet data centers offering application support via Web servers located at these sites. More importantly, these sites offer a high-speed link accessing the Web. These Internet data centers have extended this concept to include hosting applications. By outsourcing business databases or applications onto these Internet Service Providers (ISPs) hosting sites, a large server farm consisting of thousands of individual servers has been deployed at these hosting sites. Therefore, these hosting sites require an extensive amount of cabling inside the data centers to interconnect the large server farms to the Internet. This has led us to develop this study which we believe is the first and only study focusing on the cabling systems within these data centers. This study is focused on providing market information for the cable and cabling system suppliers in order for them to evaluate market entry as an extension of their LAN cabling marketplace.

This is the first of a series of annual studies on this marketplace. We intend to update this study on an annual basis as the market is rapidly changing, requiring up to date information, at least on a yearly basis, if not sooner. If purchasers of this study require updates at more frequent intervals, we would be willing to provide this under a separate consulting arrangement.

In order to analyze this new market for cabling systems, we first developed a model for the cabling architecture within these data centers. This led us to segment the market into three major market segments:

1) Market #1 - Hosting data centers: primarily ISP sites providing the ability to support a business Web server.
2) Market #2 - Internet Access sites: providing access for businesses to the Internet via telco switched or dedicated lines.
3) Market #3 - Corporate Hosting: businesses’ on-site Web servers externally accessing the Internet.

We analyzed each of these three market segments in detail, including the market forecasts for each of these for cables, which includes Cat 5, Cat 5e, Cat 6, POTS multipair cables, T1 multipair STP cables, DS3/4 multipair coax cables among other cables and the apparatus used with these cables. This study provides five-year market forecasts for each of the products including year-to-year shipment forecasts both by value and volume.

Most importantly, these market forecasts are analyzed in detail as to their underlying driving forces and industry growth assumptions regarding new technologies such as Fiber Channel. This analysis is extended to provide a marketing perspective on the forecast’s implications to the cabling suppliers. We also address the hosting Internet data centers in detail, profiling the largest of these by providing data on their number of hosting sites, their future expansion plans and their service offerings including the implications of these services to the cabling system requirements.

METHODOLOGY & SOURCES

Using our 15-year background in the LAN cabling market with an extensive network of contacts at the major cabling suppliers, we polled them for their inputs to this new market. Interviews included their industry knowledge on the existence of this new market and the size and growth trends for cabling systems within this marketplace. In addition, all of the major Internet data center operators were contacted to discuss their cabling system usage and installation practices. Many of these considered their own internal architecture to be proprietary and were reluctant to discuss their own systems. We also contacted a number of cabling installers and contractors specializing in Internet data center cabling to discuss their views on the marketplace regarding key decision makers for purchasing cabling. These discussions included the relationships between the data center owners with the systems integrators and the roles of the general contractors and the cabling installers and consultants.

Secondary research includes an extensive Web search for information on the Internet Service Providers (ISPs) and their interest in the hosting applications. We obtained all relevant public documents on the hosting application provided by the ISPs. In addition, other publicly available documentation such as press release, annual reports, marketing sales brochures, etc pertaining to this industry were obtained and analyzed. In addition, Broadwatch magazine’s Directory of Internet Service Providers, 12 th edition, 2000 was reviewed. Relevant information was extracted, analyzed and combined with other data to derive basic Internet industry statistics including a listings of the major ISPs with hosting sites.

STATISTICAL NOTES

Market figures for cabling products apply only to the U S market. Internet data center cabling system requirements outside of the U S market are not considered and are not part of this study. All values for product shipments are at the manufacturers level as it leaves their loading docks. End user value, which may include a distributor mark-up of 25 to 30% above the manufacturer’s price, is not included in this study. Other value-added supplier’s products such as cable assemblies are not included but the value of the cable without the value added is included.

Cable volumes are all in cable feet. The averages for various multipair cables are explicitly defined in the study. We have attempted to use the industry averages for the number of pairs in a cable. For example, the STP multipair cables used for T1 termination in the data centers are available in variety of cable pairs from 4 to 100 pairs. We used 12 pairs as an average representation of the typical cable found in the data centers.

We used both 1999 and 2000 as base-year figures with the 1999 figures as firm figures with the 2000 figures still being evaluated as the research for this study was conducted in the latter part of 2000.

We have rounded most figures typically to one decimal point. This rounding may cause certain figures not to total to other figures in the report. Most figures may differ by 0.1% with the maximum deviation at 0.5%.