Real Estate Trends, BYOD, and the Millennials Effect on Enterprise Cabling and Connectors

By Thomas Debiec

The Urban Land Institute's "Emerging Trends in Real Estate" outlines some interesting trends in the real estate market.  Businesses are shifting their requirements from offices that place a premium on quality and size to more compact spaces.  These spaces encourage productivity, efficiency and collaboration.  They may disregard cubicles in favor of workbenches and rely on cloud computing to take the place of file cabinets.

Driven by the more than 85.4 million Millennials, these young workers desire the benefits of mobility and interconnectedness using the most up-to-date communications devices allowing them to operate anywhere.  Companies are embracing this concept.  In December, Gartner reported that 70% of survey respondents are planning to implement “Bring Your Own Device” (BYOD) policies in the next 12 months.  Companies like Electronic Arts (EA) are moving away from windows-based laptops in favor of iPads, MacBooks and smartphones.  Approximately 10,000 phones currently fall under their BYOD policy.  EA is also replacing offices and cubicles with open office space.

From the structured cabling standpoint, these trends could have a profound impact, not only on the volumes of cable and connectors, but also require rethinking the cabling-systems design.  There will be less focus on tethering every workspace back to the telecommunications room (TR) and more focus on wireless and wireless performance. While we don’t expect TRs to disappear, we do see the number of physical connections to the traditional work-area-outlet (WAO) decreasing over time. The new version of the WAO will be the wireless access point (WAP). 

Colocation Data Centers Structured Cabling Trends

By Tom Debiec and Lisa Huff

As companies look to embrace cloud computing or backup their existing data centers, many are evaluating colocation as an option.  With this increased demand, colocation data centers are popping up all over the world and becoming a larger part of the overall data center market.  In 2013, the colocation sector is expected to account for about 25-percent of the structured-cabling data center market. During the work to develop the structured cabling forecast for the soon to be released Bishop & Associates report, "Structured Cabling Technology and Market Assessment," we had the chance to talk to project managers that are responsible for implementing 10,000 - 20,000 sqft build-outs in colocation facilities. It was clear to us that a few key trends have emerged:

• Whenever possible contractors recommend the use of pre-terminated copper and fiber cabling.  The benefits of utilizing these components include cost reduction, on-time delivery and the project is easier to manage.
• Although they are installing MPO cassettes on some jobs the cost premium often scares customers away.
• More OM3 fiber is being installed than OM4.  The up-sell to OM4 is difficult since OM3 covers the distances that are typically seen in these facilities (300m at 10G).
• A majority of the copper cabling is being installed is Category 6. 

A typical colocation lease averages about eight years.  Since the clients don't know what their requirements will be in this timeframe, they are less likely to make decisions that "future-proof" the installation for reuse with upgraded active equipment.  Tight budgets further preclude the addition of higher performing cabling products.  They would prefer to re-cable in the future than to pay for it now.  Since many of these installations are based on Top-of-Rack (ToR) architecture, re-cabling is viewed as a much simpler thing to do than to install new equipment when the cabinets are stuffed full of cabling. In view of this, we project that Category 6A and Category 7 cabling will only see very slow growth and that OM3 will be the mainstay over the next few years.

Optical Interconnection Players Strengthening Their Businesses

Molex just purchased Luxtera’s AOC business completing the circle that all the other optical interconnect players started. During the telecom bust in the early 2000’s, Amphenol, FCI, Molex and Tyco Electronics all either de-emphasized their optical interconnect businesses or exited them all together. Now, they have all re-entered. Why?

While they are all working on more high-speed copper solutions like the one Tyco showed for 25G and beyond at SC10, I beleive they also see the writing on the wall. While they won’t admit it, I think they know that beyond 100G copper cable interconnects may have FINALLY reached the end of their useful life. At 40G and 100G, for example, there is still no twisted-pair solution and the direct-attach copper can only reach about 7m reliably.

It has been interesting watching the choices these traditional connector companies have made:

• Amphenol: It never exited the optical interconnect business, but left the transceiver products to Avago, Finisar, JDSU and others until recently. It has a stronghold on the short-reach copper direct-attach market so has inroads at customers for its AOCs and modules.
• FCI: Exited the optics business entirely for a few years but then started again from scratch and subsequently purchased MergeOptics in February 2010. MergeOptics is what was left of Infineon Technologies and still has strong technical abilities in short-reach products. It also has the building blocks to provide all-optical interconnects all the way from the chip (see my previous posts on MergeOptics). They can provide both AOCs and transceiver modules so have the ability to cover all high-speed markets in InfiniBand, Ethernet and Fibre Channel.
• Molex: Purchased Luxtera’s AOC business recently. So while FCI and Tyco are stressing short-wavelength technologies, Molex has turned to custom long-wavelength ones. Luxtera’s technology is based on 1490nm devices, which really doesn’t matter if you’re purchasing an AOC, but will matter if you want transceiver modules. According to company representatives, they will eventually get back into supplying transceiver modules, but there has been no evidence of this as of yet. Perhaps the possession of Luxtera AOCs will prompt this.
• Tyco Electronics: Tyco exited the transceiver business in the early 2000’s, but still had a very active fiber-optic interconnect business – especially for premise wiring (AMP NETCONNECT). It acquired Zarlink Semiconductor’s optical products group in May 2010. Zarlink is on the forefront of parallel-optics technology and was one of the first to introduce AOCs. It does not appear that Tyco intends to supply optical transceiver modules again.

I would never bet against copper re-inventing itself in order to meet the demands of future high-speed networks, but with optical 10G dominating the market currently and 40/100G optical products starting to emerge, it will be an uphill battle for copper solutions to gain traction. And beyond 100G, all bets are off. I’m thinking that these companies are reaching the same conclusions and that if they don’t add optical capabilities soon, they may render themselves obsolete within the next ten years or so. That's not to say that there won't be a vibrant businesses in both copper structured cabling and interconnects over the next ten years - there will be. But I think that R&D dollars will be better spent on optical interconnect technologies rather than trying to figure out how to run 25G signals using copper interconnects (including backplanes.) Or how to convince end-user customers in the US that a shielded structured cabling solution for 40G is better than a short-reach optical one because it will be cheaper - but at what cost to power, cooling and space?

What do you think? I'd love to hear your thoughts.