2.2. Motive techno forces shaping evolution processes in ICT

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2.2. Motive techno forces shaping evolution


processes in ICT


-

Microprocessors


-

Photonics




A. Moore’s Law


Gordon E. Moore, 1965. "Cramming more components onto integrated
circuits,"
Electronics,

volume 38, number 8 (19 April), at
http://www.intel.com/research/silicon/moorespaper.pdf


Exponential increase in the number of components on a chip



Doubling of number of transistors on a chip every 18 months (1980s)



Doubling of microprocessor power every 18 months (1990s)



Computing power at fixed cost is doubling every 18 months

(1990s)



Throughput of integrated circuits, in MIPS, will doubled every

18 months with cost of decrease by 50%, and this regularity

will remain correct for several decades.


(MIPS
-
millions of instructions per second)




Reliability


Power consumption


Miniaturization (number of transistors per chip)


Terminal devices in the single chips

A. Moore‘s Law (Cntd)


10
8

10
7

10
6

10
5

10
11

10
10

10
3

10
4

10
9

1990

1980

1970

2000

2010

Transistors per Chip


Intel


Motorola

DRAMs

Processors

64M

256M

1G

4G

16G

64G

1M

4M

16M

64k

256k

1k

4k

16k

4004

8086

80286

80386

i486

Pentium

Pentium Pro

PPC 620

Pentium II

Pentium III

Source: Siemens ICN

6 days music

4 h video

2.000.000 pages

1947: 1000 MW

Pentium IV

2020

10
12

We can store and process all information.

30 min.

music

256G

1T

McKinley

Itanium (Merced)

A. Moore‘s Law (Cntd)



1988
-

275,000 transistors on the Intel 80386 chips in to


1992
-

1.4 million transistors on the 80486 SL chips

Pentium, Pentium Pro and Pentium II processor families


1999
-

28 million transistors (Intel Pentium III Xeon and Mobile Pentium III
processors)


2001
-

42 million transistors (Pentium 4)



Evolution of Computer Power/Cost


Brainpower Equivalent (
computing
power of the human brain)

per $
1000 (around 2030)

1900

1920

1940

1960

1980

2000

2020

Year

1

Bio

1


Mio

1


1000


1

1000

MIPS per $1000

(1997 Dollars)

Monroe Calculator

IBM Tabulator

Burroughs Class 16

Zuse
-
1

ASCC
(Mark 1)

IBM 650

IBM 1620

Colossus

ENIAC

UNIVAC I

Burroughs 5000

IBM 7040

IBM 350/75

SDS 920

DG Nova

DEC
-
KL
-
10

DEC VAX 11/780

VAX 11/750

Sun
-
3

IBM
PS/290

AT&T
Globalyst 600

Power Tower 150e

IBM 704

Whirlwind

IBM 7090

IBM 1130

DEC PDP
-
10

CDC 7600

DG Eclipse

Apple II

Sun
-
2

IBM PC

Commodore
64

Macintosh
-
128K

Mac II

Gateway
-
485DX2/55

PowerMac 8100/80

Gateway G6
-
200

2040

150 000 DM

1973

1977

1981

1984

1987

1991

1995

10 000 DM

800 DM

240 DM

10 DM

60 DM

1 DM

1999

2005

2009

2017

2013

3 Cent

1 Cent

O,5 Cent

0,1 Cent

26 Pfennig

History

Forecast

1
gummi bear

1 sheet of paper

1 post it

1
paperclip

Prices of 1 Mbit DRAM

Expensive functions and applications today will be cheap tomorrow.

Source: acc. to Weick, Manfred, ZT IK MK

2002

5 Cent

1
chewing gum

B. Photonic technologies


Fiber optic cables for long
-
haul networks


beginning of

70
-
th



Main directions of FOC development:



The transition from multimode to single mode fiber



Wavelength changing of the applied spectral windows with

=0,85 mkm to

=1,33/1,55 mkm



The decrease of attenuation in the fiber from figures of several
dozens of dB/km to 0,2 dB/km




Photonic technologies
(Cntd)


# Main requirements


grows of network capacity


#
Boom growth of traffic, especially data



# Number of factors:



Accelerated development of the Internet



Commercial applications of graphic and video information
exchange



The growth of worldwide business, which leads to the growth of
worldwide traffic

# New technologies for photonic networks

SDHD/WDM

Tbits/s

Performance improvements in photonics

Year

1975

1985

1995

2005

2015


+70 % p.a.

40
´
10 G

Theoretical limit of glass fiber

10
2

10
4

10
6

10
8

10
10

16
´
2.5 G

10 G

2.5 G

565 M

140 M

34 M

Experiment:

7 Tbit/s, 50 km

Product

160x10G; 80 km


+100 % p.a.

Fiber

Capacity

Mbit/s*km

Source: ICN M TA: Photonics

2.3. Mega trends on ICT




-

Digitalization


-

Mobile communications


-

Internet


-

Convergence of services/networks/devices


-

Main shifts on ICT

Telephony

IP Apps

Circuit based


Packet based



TODAY TOMORROW

Mobile

Wireline

Connectionless


Connections

Mobile

Packet based


Connectionless


IP Apps

Telephony

Connections

Circuit based



Wireline


Analog Digital Fixed Mobile Voice Data


CONVERGENCE

Main shifts on ICT

Grows of subscribers

2002: Fixed = Mobile 1,15 Billion

Grows: Fixed

2%, Mobile


10% (ITU)

A. Digitalization


Digitalization of:




Information




Information processing tools




Transportation systems


Transition from analog to digital format




Analog networks
-

separate




Integrated networks
-

digital




Convergence in ICT

B. Mobile communications


Grows of fixed and mobile

and distribution by technology

Grows of fixed and mobile subscribers

Ovum

Limitations of 2G systems

Evolution of mobile communications


Brief History of the Internet


1957


Launch of Sputnik is impetus for U.S. to form ARPA
(DoD)


1965



ARPA sponsors a study “Cooperative network for


time
-
sharing”; Innovation of packet switching


(
D. Devis
, UK,
P. Baran
, US)



1969



September 2, launch of first computer network


ARPANET



1972



Beginning of E
-
mail (
Tomlinson
, US)



1974



First article about TCP/IP (
Cerf/Kahn
)


1979



Establishing first research computer network (NSF,

Univ. Wisc., DARPA)

C. Internet




Brief History of the Internet (Cntd)




1982



Internet defined as TCP/IP
-
connected network


1986



56 kb/s NSFNET created for 5 supercomputing


centers



1989



Number of Internet nodes breaks 100 000; IETF


comes into existence



1992



WWW released; Number of nodes breaks 1M



1995



Internet Society was founded VoIP comes to the
market



2001



Number of hosts breaks 300M



2002



VoIP has taken away 13% of long
-
haul telephone
traffic


The Internet timeline

1965 1970 1975 1980 1985 1990

1995 2000 2005

Military/Academic Apps

Commercial

Apps

Number of hosts

Number of users

Reasons for grows:


Windows


Modems


Searching tools


HTL

Internet grows without any signs of recession


Forecast of the global voice/data traffic’s growth



1


2


3


4


5


6

Total telephone traffic


International telephone traffic


Data traffic


Tbps

Source: Arthur D. Little, 1999

24

2

0.1

0

5

10

15

20

25

Fixed

Data

Fixed

telephony

Mobile

Traffic Volume (Tbps)

European carriers’ revenues

Source: IDATE, Mar 2000

2004, Total USD $295 billion

Fixed Data

10%

European carrier’s traffic

Other

13%

Fixed

telephony

39%

Mobile

services

38%

Source: Blended from IDC, ECTA, & Operators

Where traffic comes from in 2004

Today
´
s realities

Fixed Data Services Comprise a Smaller Proportion of Income

but Represent the Largest Proportion of Traffic

Total U.S. Internet traffic

1970

1975

1980

1985

1990

1995

2000

2005

2010

Voice Crossover: August 2000

4/Year

2.8/Year

1Gbps

1Tbps

10Tbps

100Gbps

10Gbps

100Tbps

100Mbps

1Kbps

1Mbps

10Mbps

100Kbps

10Kbps

100 bps

1 Pbps

100 Pbps

10 Pbps

10 bps

10 bps

ARPA & NSF Data to 1996

New Measurements

Projected at 4/Year

Source: Roberts et al., 2001

Some issues of Internet traffic


Most traffic is from corporations (80% estimated)


Main growth is from corporations


“Last mile” has been improving rapidly (100

1000 Mbps)


Corporate traffic is anti
-
recessionary


Move from private networks to Internet for cost reduction
(VPN)

-

Corporate Internet use hit critical mass in 2000


Now
need

to use the Internet for all business


Inter
-
corporate traffic is now mainly over the Internet


Intra
-
corporate traffic is growing in size (E
-
mail
documents)

-

Personal traffic is growing but broadband deployment is
slow

-

Internationally, traffic is still at the pre
-
2000 growth rate
of 2.8/year

Some issues of Internet traffic

(Cntd)

Time to reach 50 mio customers


120

100

80

60

40

20

0

1922

1950

1980

1995

Radio

(40
Years)

TV

(15 Years)

Cable

(10 Years)

Computer

Internet

(<5
Years)

Mobile Phone

Telephone

(90 Years)

millions of customers

Products have an accelerated market penetration.

Penetration rates of services (US market)

Napster

18 months

Penetration (in %%) of different technologies and
devices

Mobile

penetration

Internet

penetration

PC

penetration

Broadband


Penetration

USA


Europe



Asia



36 50
-
60 40 5
-
10



20 40 70 << 5



17 <5 <30 <<<5




Source: Cisco, 2002

Mobile vs. fixed Internet penetration in Europe

Source: Siemens

Mobile and Internet penetration

in Western European countries (YE 2000)

(Fixed) Internet penetration (in %)

Mobile penetration (in %)

0%

10%

20%

30%

40%

CH

FIN

SWE

GRE

POR

ITA

AUT

NOR

LUX

NL

SPA

IRL

FRA

BEL

GER

UK

DK

50%

50%

60%

70%

80%

40%

D. Convergence of networks/services/devices

United

Network

Telephony

IP Apps

Circuit based


Packet based



TODAY TOMORROW

Mobile

Wireline

Connectionless


Connections

Mobile

Packet based


Connectionless


IP Apps

Telephony

Connections

Circuit based



Wireline


Analog Digital Fixed Mobile Voice Data


CONVERGENCE

Main shifts on ICT

Main shifts on ICT
(Cntd)

Telephones, PCs, TVs

Flat networks with distance
-

independent tariffs




Voice/data on networks

Data, then MM dominates on
networks

Proprietary and specialized
networking

Totally open and interoperable
networks

Global network of networks

Dedicated applications

High tariffs for long
-
distance
service

TODAY

TOMMOROW

Multifunctional devices with
network interfaces

Apps designed for universal and
independent using

PSTN and Internet are separated

# Market downturn in 2001
-

Manufacturers‘ sales

CSFB

-
15%

-
25%

Deutsche

Bank and

2.4. Crisis in IC sector

A. Manufacturers

Revenue Manufacturers

in 2000 and 2001

Turnover (Billion Euro)

2000

2001

40

35

30

25

20

15

10

5

0

Siemens I and C

Nokia

Alcatel

Ericsson

Nortel

Lucent

Cisco

Change compared

to previous year

+ 8%

+ 3%


-

19%

-

15%

-

42%

-

22%

-

24%

Marconi

-

12%

0

5

10

15

20

25

30

35

40

Source: CD S C

Manufacturers EBITA in 2000 and 2001

EBITA (Billion Euro)

Nokia

Alcatel

Ericsson

Nortel

Lucent

Cisco

Marconi

Siemens I and C

-
30

-
25

-
20

-
15

-
10

-
5

0

5

-
20

-
25

-
30

-
15

-
10

-

5

0

5

2000

2001

1st tier

2nd tier

3rd tier

Market downturn in 2001
-

Carrier spending

CSFB

-
15%

-
25%

-

6%

-

23%

16%

Source: JPMorgan

Note: Source for 2001
-
2003 capex spending estimates is JPMorgan

Carrier Spending, Actual Versus Normalized

0.0

1995

1996

1997

1998

1999

2000

2001E

2002E

2003E

20.0

40.0

60.0

80.0

100.0

120.0

$ Billion

CapEx, Top 15 Carriers

Normalized Spending

B. Operators

Excessive growth slowed and dropped in
following three areas:




Internet



E
-
business



Mobile phone euphoria




The Internet boom hadn’t to pass the reality checking





E
-
business didn’t gain speed as quickly as anticipated.




The mobile phone euphoria came to naught

Operators‘ net debt

Year

$bn

Source: GS II/01

Total

Europe

USA

Asia

Pacific

Operators’ debts increase and reduce free
cash flow

Projection

C. Basis for huge losses
-

manias

Growth
-
mania

Acquisition
-
mania

1. Growth mania

Over a number of years, growth was the exclusive criterion for
measuring success in the so
-
called New
-
Economy.

2. Acquisition mania

Companies in particular paid outrageously overvalued prices for
acquisitions. This resulted in wildly overvalued companies and
share prices.

dot.com
-
mania

Financing
-
mania

3. Dot.com mania

Till March 2000 we have seen a wholly irrational run
-
up in share
prices, particularly for I and C start
-
ups. The successful guideline
was: “Earn revenues from banners and from clicks.”


4. Financing mania

The fourth major factor was that growth wasn’t earned, but
bought. Many companies delivered products and systems to
customers according to the motto “volume is everything”
-

without
reasonably checking if they were viable or credible.

Basis for huge losses


manias

(Cntd)

Global MM
-
MS

network

After 2010 all information will be digitally stored and sent via the global network.

Concluding remarks