The ATCA Chain Reaction
Only a handful of suppliers, such as Hewlett-Packard Co. (NYSE: HPQ), Motorola ECCG (NYSE: MOT), and Sun Microsystems Inc. (Nasdaq: SUNW), are now in position to deliver the benefits for supply-chain management that ATCA now promises, according to this month's Light Reading Insider report, entitled AdvancedTCA: Tomorrow's Telecom Hardware.
Developed by the PCI Industrial Computer Manufacturers Group (PICMG), the ATCA specifications cover hardware components such as the chassis, shelf manager, computer boards, and backplane interconnects. The pitch is that by adopting standardized, off-the-shelf component hardware, vendors can reduce costs, speed time to market, and focus R&D resources on the application-layer and system-level software that differentiates their products.
ATCA is clearly more about money than technology. Paul Nikfarjam, wireless switched platforms product manager for Motorola's Embedded Communications Computing Group (ECCG), explains that the initial pitch to manufacturers considering ATCA is always financial. "When we approach customers, we go to the general managers, not the engineers," he says. "The problem is, they simply don't have the people to do this [hardware] anymore."
The argument is persuasive. In the 3G wireless space, several major vendors have already moved to port applications to ATCA, while in the wireline world, VOIP is expected to lead the way, with higher-throughput applications expected to emerge in line with the development of high-speed fabrics, such as RapidIO. (See ATCA: 3G Cost Cutter, ATCA Finds More Friends, and ATCA's at a Fork in the Road).
But ATCA has ramifications beyond offering systems manufacturers more options about which CPU board maker to buy from, or letting them cut their ranks of hardware engineers; it also presents an opportunity for vendors to develop more sophisticated supply-chain processes. This is where the real drivers behind ATCA lie.
"The reason we went to standards-based [ATCA hardware] is primarily due to supply-chain and cost-of-ownership issues," says Chuck Byers, a Bell Labs Fellow at Lucent Technologies Inc. (NYSE: LU). "There are literally dozens of primary and second-order effects on the supply chain."
John Fryer, director of ATCA marketing at Motorola ECCG, also points to the economic benefits of ATCA, both upstream and downstream of the equipment vendor, suggesting that these could extend as far as having the ATCA vendor drop-ship boxes at end-customer sites. "Traditionally this business has been driven by a technical decision," he says. "With ATCA, it's as much a business decision. We shouldn't overlook the value from re-engineering the value chain."
To deliver these far-reaching cost savings, however, requires scale on the part of the ATCA supplier. This manifests itself in the ability of the vendor to integrate and test platforms derived from a large number of board and shelf suppliers; the power to wring competitive prices from those suppliers; and the geographic reach to play an international role in product support and fulfillment.
"Testing in a blades environment is massively complex, and customers are looking for something we [the ATCA vendor] can stand behind," says Doug Small, HP's manager of ATCA blade server platforms. "Common platform decisions by telecom equipment manufacturers mean they want one or two suppliers," he says. "The economics are what forces these things."
Kirk Mosher, senior product manager for Sun's Netra systems and networking group, makes the point that ATCA vendors can offer benefits to telecom equipment companies by delivering more highly integrated products, perhaps including high-availability middleware on top of the hardware platform. According to Mosher, equipment providers have already achieved six-nines reliability "in actual deployment" using Sun's high-availability middleware on compactPCI hardware. "We're bringing the same system environment to ATCA," he says.
The idea that major telecom equipment vendors will turn over hardware development to computer manufacturers may sound like marketing guff – and to some extent, it is a bit of a fake prospectus: Nobody expects ATCA to deliver us to the promised land overnight, and nobody seriously thinks every telecom application will be ported to ATCA.
But the alternative to buying pre-integrated, tested, "off-the-shelf" platforms is for the equipment manufacturer to take on these low-level (let's call them "foundation-level") chores itself – which is something many telecom vendors interviewed for the Light Reading Insider report say they don't want to do. "I've instructed my engineers to buy from the market whenever it makes financial sense to do so," says one general manager at a major European Tier 1 OEM.
Like it or not, the telecom equipment business is now as much about supply-chain management, cost optimization, and business processes as it is about smart technology. And it is the large, powerful ATCA system vendors that will soon be capable of delivering the best price/performance hardware to many parts of the telecom industry.
— Gabriel Brown, Chief Analyst, Light Reading Insider
AdvancedTCA: Tomorrow's Telecom Hardware, a 26-page report in PDF format, is available as part of an annual subscription (12 monthly issues) to Light Reading Insider, priced at $1,350. Individual reports are available for $900.