NEXTGENERATIONNETWORKS:THEVISIONANDREALITYCONFIDENTIALThisreportissolelyfortheuseofclientpersonnel.Nopartofitmaybecirculated,quoted,orreproducedfordistributionoutsidetheclientorganizationwithoutpriorwrittenapprovalfromMcKinsey&Company.ThismaterialwasusedbyMcKinsey&Companyduringanoralpresentation;itisnotacompleterecordofthediscussion.NewTechnologyandtheRiseofIPNecessitateNewArchitectures!WillIncumbentsorAttackersWin?TelecomITPMontrealStaggNewmanFebruary27,2001ST-ZXH899/010105SmchiHR12NetworkArchitecture-TheVisionCirca2010Today’snetworkswillbeobsolete.•FiberwithWirelessTails–Ifitmovesit’sawirelesscommunicator–Ifitdoesnotmove(buildings),getafibertoit–UsefiberpluswirelessforLANS•IP(InternetProtocol)UnterAlles–AllapplicationsrunoverIP–Controlplane(MPLS)controlspacketflowsovermediaandprovidesnecessaryQOS–IPdatacenterssupplantcircuitorientedwirecentersandtraditionalcableheadendsVisionST-ZXH899/010105SmchiHR13MIPSistotheComputerIndustryMIPSistotheComputerIndustryasasManagedIPbandwidthwillbeManagedIPbandwidthwillbetotheCommunicationsIndustrytotheCommunicationsIndustryImplications:Implications:•WinnerswillhavetocontinuallyprovidemoreandmorebandwidthforWinnerswillhavetocontinuallyprovidemoreandmorebandwidthforthesameprice,i.e.avirtuouspricingcycle.thesameprice,i.e.avirtuouspricingcycle.•Conventionalarchitectures(ATM/SONET)areobsolete.Conventionalarchitectures(ATM/SONET)areobsolete.•ManagedIPBandwidthnetwillabsorbthegrowthANDsubsumeManagedIPBandwidthnetwillabsorbthegrowthANDsubsumecircuitswitchedandprivateline,whichiswherethemoneyistodaycircuitswitchedandprivateline,whichiswherethemoneyistodayWillaBandwidthVirtuousCycleenabletheVision?AHypothesisWillaBandwidthVirtuousCycleenabletheVision?AHypothesisVisionST-ZXH899/010105SmchiHR14GrowthofInternetUsersdrivesdemand.199019921994199619982000200220042006200820102012NumberofNumberofmoleculesinmoleculesintheuniversetheuniverseNumberofNumberofhumansonthehumansontheplanetplanet55million55millionuserstodayuserstoday9million9millionusersinusersin19951995VisionST-ZXH899/010105SmchiHR15NETWORKDEMANDTheExplosioninTrafficDemandisreal!!!NetworkTrafficinTerabits0100200300400500600700199596979899012342005800Today’sToday’sTrafficTrafficTomorrow’sTomorrow’sTrafficTrafficTheproductofmoresubscribers/serviceXmoreservicesXmoreTheproductofmoresubscribers/serviceXmoreservicesXmoreB/WperservicewilldriveexponentialB/Wgrowth.B/WperservicewilldriveexponentialB/Wgrowth.Additivetothismoreandmoree-commerceiscomputersAdditivetothismoreandmoree-commerceiscomputerscommunicatingwithcomputers.communicatingwithcomputers.Lucentstudiesshoweddemandelasticity>1.5Allglobaldemandestimatesallshowhugegrowth!!VisionST-ZXH899/010105SmchiHR16VirtuousCyclefortheCommunicationsIndusrtyApplicationsApplicationsGrowingGrowingOptoelectronics,Optoelectronics,Radio,ProcessingRadio,ProcessingCostsDroppingCostsDroppingIncreasingIncreasingAffordableAffordableBandwidthBandwidth•OpticalTechnologybandwidthperformancemorethandoublingeveryyear•Wireless-10xto100ximprovementin2-5yrs•ProcessorTechnology-Moore’sLaw(2Xin18months)Togetherthesetechnologiesmayenablea100-FoldIncreaseinnetworkcapacitywithin5yearsVisionST-ZXH899/010105SmchiHR17DisruptiveTechnologiesDrivingtheCommunicationsIndustryCellularPhone10B1B100M10MTransistorsperChip19952000200520100.25µ0.18µ0.13µ0.10µ0.07µProb...
