During the next 18 months, Cisco Systems will look to its Gigabit Ethernet solutions to wring out increased revenues, according to company officials.
The company is eyeing Gigabit connectivity at the desktop as an enabling technology that could spark the adoption of high-end applications, such as IP telephony and broadcast video, at the user level.
"As bandwidth opens up, more and more applications will figure out how to use it," Kathy Hill, vice president of Cisco's desktop switching and Ethernet access group, said Thursday.
Cisco expects the migration to Gigabit Ethernet to be driven by price cuts of PCs with Ethernet NICs (network interface cards) that can distinguish between 10Mbps, 100Mbps, and 1000Mbps (1Gbps) speeds, Hill said.
"It's happening because vendors are making it happen," Hill said, predicting that the shift from Fast Ethernet to Gigabit Ethernet will happen within a year. The same trend will be seen in the switch market in another year, Hill said, because switching technology is more complex.
"We'll be ready with the right [Gigabit Ethernet] products in a 12-month to-18-month cycle," added Maciej Kranz, marketing director of Cisco's desktop switching and Ethernet access unit.
In May, Cisco and Intel announced a joint marketing agreement to accelerate the deployment of Gigabit Ethernet. The two companies have also worked on ensuring interoperability between Cisco's Catalyst switches and Intel's PRO/1000 line of adapters.
Cisco also has high hopes for Gigabit Ethernet in the metro.
"The deployment of broadband Ethernet is happening, and it's happening worldwide," Hill said. "It's favoured in places that didn't jump on the DSL bandwagon," such as Europe and Asia.
In April, Cisco launched the general availability of its LRE (Long-Reach Ethernet) solution, which lets ISPs extend Ethernet speeds over legacy copper telephone wires. But the company has adjusted its initial focus on the hospitality industry, largely as a result of the dropoff in the hotel business following the September 11 terrorist attacks.
"The hotel business has taken a real dive," said Hill. "They're more worried about populating their rooms, rather than competing for rooms. LRE was a great way for hotel chains to differentiate themselves, and that's become less of a focus."
Still, corporate campuses and educational institutions are deploying LRE to widen their LANs, Kranz said.
Among the key services expected to drive Gigabit Ethernet adoption is VoIP (voice over IP). Earlier this week, Cisco continued its aggressive IP telephony campaign with 12 hardware and software products, aimed at security, management, and fault tolerance.
"We're absolutely bullish on VoIP," Hill said, adding that VoIP technology fits well with Cisco's attempts to push routing intelligence to the network edge. "VoIP is one of the things that requires intelligence, because you want to make sure voice traffic goes through," she said.
Hill added that Cisco is seeing VoIP deployments with LRE as well as more enterprises moving toward converged voice and data networks to simplify administration.
Overall, the combination of network upgrades and new applications is expected to drive sales for equipment vendors, according to Hill.
"People always wonder if there's still growth in the [network equipment] business," Hill said. "We think that over the next three years or so, the total switching business is going to grow to $US25 billion and over 200 million ports will be sold. People want to take advantage of new advances in networking. We're not to the point where businesses have ceased to make investments."