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kaps 12/4/2012 | 8:24:49 PM
re: Report Heralds IP Doomsday John -- It's not the same report. The report you're looking at, Backbone, is dated Sept. 2000. No word from McKinsey when the new one will be posted on the web.

-paul kapustka
kaps 12/4/2012 | 8:24:49 PM
re: Report Heralds IP Doomsday John -- It's not the same report. The report you're looking at, Backbone, is dated Sept. 2000. No word from McKinsey when the new one will be posted on the web.

-paul kapustka
broadbandboy 12/4/2012 | 8:24:48 PM
re: Report Heralds IP Doomsday I have the report summary sitting here on my desk.

What do you all want to know?
wimchatta 12/4/2012 | 8:24:45 PM
re: Report Heralds IP Doomsday jr1734,

You are right. The Backbone report was a different one. It was completed in September.

That is further proof of the observation I made earlier - conclusions of an analysis of the industry will be highly dependent on the input to the analysis, especially so when someone like McKinsey is going at it.

There has been a sea change in the outlook of the service providers (and almost everyone else in the industry) between July of last year and February of this year. This is reflected in the difference between the two McKinsey analyses. The McKinsey approach is highly objective, and the difference in the conclusions is primarily driven by the difference in information from the sources at the different times. Some of the sources were probably identical parties.

It is no different from the sea change in the industry views of industry analysts, investment bankers, venture capitalists and financial analysts.

And it will change again if the same study is done six months from now.

wimchatta
gladysnight 12/4/2012 | 8:24:44 PM
re: Report Heralds IP Doomsday "The report is not taking into account technology changes in metro access that are now here and being deployed. High speed "last mile" connections . . . . . 10 meg over ILEC copper for $995/month installed within 14 days) companies restricted to T1's or DSL will be able to afford higher speed connections, and therefore will use more IP services.

This should raise the 40% growth factor significantly."
----------------------

Maybe so. But, if so, it will also likely lower the average revenue per unit of traffic, therefore the overall picture is unlikely to be dramatically changed, UNLESS there is reached one of those unpredictable disruptive events or flexion points, that raises the whole game an order of magnitude or two . . . . .
davidber 12/4/2012 | 8:24:43 PM
re: Report Heralds IP Doomsday Forward me a copy of it :)
[email protected]

I would love to read it. I think, from what little I have heard that the author has his head up his . . .

dave
Paul Roche 12/4/2012 | 8:24:39 PM
re: Report Heralds IP Doomsday First off, thanks for all the responses and the interest. Wanted to chip in to correct a few misunderstandings of our point of view mentioned in both the article and the postings.

1) We believe that IP traffic growth will average 88% over the next 5 years ... however, it is over 100% today and growth will slow to ~60% in 2005. While lots of factors drive this, it is at least partially just driven by the law of large numbers. Total impact of this traffic (even with slow down) will be huge, 22x today's total bits.

2) We believe that total US IP revenue will increase 34% per year for the next 5 years. This revenue growth is lower than the traffic growth due to our belief that IP services will experience sustained pricing pressure due to industry overcapacity/overcompetition.

3) We do not foresee or forecast ANY decline in IP revenue either now or by 2005. In the report we mention that the arrival of hosting and CDNs that aggregate content and provide services will make 2005 revenue less than it otherwise would be for backbone providers (i.e., carriers capture $19B rather than $25B in revenue due to more aggregated purchases, wholesale instead of retail sales, etc.) but this is not a decline in revenue. In fact, the arrival of hosters/CDN companies increases OVERALL industry revenue but, while doing so, shifts some potential revenue away from carriers.

4) A few postings refer to 4% growth. We believe that the total US long-haul revenue growth will be average 4% for the next 5 years but ... that number includes revenue declines in voice and slower growth in switched data (frame, ATM, etc.). IP revenue, as mentioned above, we forecast at 34% average annual growth.

Hope this clarifies any misunderstandings.
sntwk 12/4/2012 | 8:24:37 PM
re: Report Heralds IP Doomsday People tend to view ip network growth primarily to the consumer use of www and so we have seen temendous growth in 98,99,00. And now that lot of e-commernce business models are under failing many are concluding the doomsday for the internet traffic .

I think that is unwise and shortsigted. I think the habbits have changed. consumer is going to use internet , businesses rely on internet and the traffic demand will stay if not grow and the demand is larger than in 98/99.

IP Services, Application services are absolutely required for a new world that might emerge. May be companies working on these technologies with e-commerce driven marketing analysis need to re-focus their energies and discover the future ahead .

New technological revolutions that might alter the landscape is around the corner. May be I should keep it to myself!.

With the genetic engineering advanaces , there will be tremendous amount of data that will be exchanged on the network : when you visit a doctor, go to pharmacy. All most all health related/grocery industry is going to be heavily dependent on genetic data. The applications that will work on the data might be hosted by an application service provider and a clinic or doctor's office might run the apps and get results on a specific problem.

All this require IP services, requires much bigge network than what is there today. Long haul, metro and access and all will see much more demand going forward. OEO, IPService Switches, lambda routers/switches , DWDMs all will be needed in a futuristic information hungry society. All the vendors will reap rewards. Strongs companies with visionary outlook should go and buy struggling companies in those sectors and even if it were to put the technology on the attic , it will come handy in few years.

Prices will have to come down substantially to let users design network use cases for IP based information transfer. Current OC-48 price for coast-to-coast is in millions for 1 year contract. I think that has to substantially come down.

I think some of the IP services vendors and software service providers like Loudcloud are ahead of their time. In couple of years they will see much more cash-rich companies asking for their services and not e-toys.
wildcard 12/4/2012 | 8:24:33 PM
re: Report Heralds IP Doomsday It is also essential if your selling cars, groceries or any other trinket you want the consumer to purchase.
What insight, what vision, will you sleep with me?
IP will die because it has to, its not efficient, nor flexible enough to offer those special features that will flock the masses to the big wonderful network.

At one time you could light a match and all the natives would go ohhh and ahhh, that's notgood enough anymore.

luxPath 12/4/2012 | 8:24:33 PM
re: Report Heralds IP Doomsday this debate is easily resolved..

those service providers that create highly differentiated organizations with distinct offerings for end users--and offerings that users will pay for--will win.

The ILEC's have a dreadful record in this regard--and they have successfully squashed the CLECs.

However, the current networking/telephony sector us undergoing a unique shift in its industry structure--with optical technology being pushed closer to the end user. Those firms left standing that choose to focus on actually creating economic value (for themselves and customers) will thrive.

Who among the ILEC pack has the mettle to lead???
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