Structured Cabling: Miles of Success

The look East policy seems to be the underlying theme for all
major players in structured cabling. India is clearly the flavor of the season
for global leaders in structured cabling, with the Indian economy on a roll.

The structured cabling industry has grown by 38% during FY 07
and the market is led by major world leaders like Tyco with a market share of
29%, closely followed by Systimax Solutions with a market share of 23%, and
D-Link with nearly 18% market share.

But, the excitement lies in the middle order with notable
changes in the market positioning. Molex, with an impressive growth of over 80%,
grabs the fourth position. Delivering on its promise of doing above average
business, TVSICS has also improved its ranking coming sixth in the list with
over 50% growth rate. We also find new entrant, Clipsal Datacomm, a brand of
Schneider Electric SAS, entering the list with Rs 15 crore revenue.

The overall industry size is estimated to be worth Rs 817 crore
in FY 07 compared to previous fiscals Rs 594 crore. The impressive growth
can be attributed to the fact that apart from IT/ITeS vertical, verticals like
government, educational institutes, retail, and manufacturing are showing
excellent growth.

All the technology standards were well used in the year gone by.
The break up for the standards Cat6: 60%, Cat5E:30%, and Cat6A: 10%. Fiber has
gained marginal acceptance while copper continues to command 85% of the total
deployment.

With the SME segment gaining momentum, one saw a lot of Cat5E
installations coming up. Ratification of the 10G standard, increased demand for
niche products in data center applications, and greater customer interest in
intelligent cabling systems seems to be the way forward.

Industry Stalwarts

Tyco Electronics AMP NetConnect referred here as Tyco, continues to lead
the market growing by 43% with its revenue estimated to be Rs 234 crore. Tyco
claims to have added 130,000 nodes of Intelligent Infrastructure Management
Solutions (IIMS) in last one year. Among the key orders, Tyco wired up 45,000
nodes for a leading BPO firms multi-location using IIMS; 300 telephone
exchanges were connected on Tyco enabled structured cabling network; 30,000
drops for a leading BPO company based in Bangalore; and Cat6A installation was
done for an ITeS customer in West India for over 15,000 nodes.

Systimax Solutions from CommScope commands the second largest
market share with an estimated revenue of Rs 187 crore, showing a modest growth
of 20% y-o-y. Last year it opened its executive briefing center (EBC) in
Bangalore. The center is the companys fourth such international facility to
cater to customers from the SAARC region.

D-Link scaled up its operations in FY 07 with an impressive
growth of 33% with structured cabling revenue at Rs 146 crore. It concentrated
on the tier-1 and tier-2 cities. It offered a wider choice for specific customer
needs. The company is confident of offering a range of installation-ready
pre-terminated fiber solutions.

Molex has unseated ADC Krone to notch up the fourth ranking in
the market with a market share of around 8%. This dark horse, registered an
impressive revenue of Rs 70 crore, with one of the highest growth rates of over
80%. Molex claims to have implemented over 750,000 nodes. Of these around 10%
constitute intelligent cabling. It has implemented three projects using
intelligent cabling, mostly for manufacturing companies.

ADC Krone grew by over 38% registering revenues of Rs 36 crore
in FY 07. It made a significant number of installations on Cat6 and Cat6A.
Some key orders include installation of CopperTen (Cat6A solution) for leading
IT companies including TCS in Gurgaon and i2 Technologies. Among Cat6
installations key orders came from Shell in Bangalore and IDBI Bank in Mumbai.
Neyveli Lignite Corporation based in Tamil Nadu opted for end-to end fiber
solutions from ADC Krone.

Improving its ranking by two places, TVSICS has notched up 50%
growth rate to clock revenue of Rs 24 crore. It scored a big leap with an order
worth Rs 5 crore from ABN Amro bank to wire up offices in Delhi, Chennai, and
Kolkata catering to over 25,000 nodes. The company is providing cabling solution
in the international airport infrastructure projects in Hyderabad, Bangalore,
Kolkata, and Chennai airports.

Panduit is in the midst of a makeover with its top management
undergoing a major reshuffle early this year. The company has redefined its
strategy in India with a major focus on channel partners. Its revenue is
estimated to have grown by 15% to Rs 23 crore. Fiscal 2006-07 brought key orders
from leading companies like Google and Computer Associates (CA).

CDT Belden grew by 44% with revenue of Rs 22 crore. It installed
over 160,000 nodes as of March 2007. Major clients in the fiscal include Cisco
(cat5e), Yahoo, 3G, CGI, HTMT, SPI, Sutherland, etc. It also carried out
intelligent cabling for Yahoo and Reuters. It introduced wireless solution,
racks, and cable management, enclosures, etc.

New entrant, Clipsal Datacomms that started its operations in
April 2005 in India, has grown by 400% to register impressive revenue of Rs 15
crore. It deployed over 10,000 nodes of Cat6 for Satyam Computers along with
fiber backbone. Among education sector, some of the notable clients include
VVIET College for campus networking of 1000 nodes; Madras Institute of
Technology where it deployed 3.5 km of fiber and 350 nodes; and NIMHANS where it
deployed 4,500 meter of single mode fiber. Some of its other clients include
BBC, Wipro Technologies, Bangalore International airport, and Neilsoft to name a
few.

Dax Networks grew by 11% clocking revenue of over Rs 10 crore.
It bagged a key order from Tamil Nadu State Wide Area Network (TNSWAN) worth Rs
95 lakh, for over 18,000 nodes. The other major order was also from an
e-Governance project, Jharkhand State Wide Area Network (SWAN), worth Rs 20 lakh
for 2,500 nodes.

Driven by R&D

Innovation is the key for the cabling vendors. From merely delivering core
products to its customers in India, they have progressed to developing unique
products or solutions to suit the Indian market.

Tyco has been focusing on developing high bandwidth, high speed,
and high performance systems and solutions. So, right from plug and play modular
systems, in both fiber and twisted pair, to high-density connectivity management
and cable management systems, and intelligent infrastructure management systems
that allow real time tracking of several parameters, have been some key
developments.

The R&D labs at Systimax Solutions brought forth unique
reverse patching technology to improve cord management. The VisiPatch 360 System
can support both 10 Gbps and 1 Gbps applications. The companys R&D labs
also developed an entirely new approach for its product design process, the
"360-degree" approach. This approach looks at performance from every
anglebandwidth, speed, product reliability, and product usability, among
other things.

D-Link complemented its strong pack of solutions with R&D
related to Power over Ethernet (PoE) and mid-span patch panels. D-Links
R&D is working on spectrum of PoE products. Efforts are on for introducing
superior jacks with built-in collapsible dust covers.

Molex invests 6% of its overall revenue in its R&D. The
company has set up its R&D Lab for SCS products in Bangalore. Some of the
solutions developed at the R&D center are rack and cable management product
solutions, I/Os and jacks, voice patch panel, range of angled loaded and
unloaded panels for hi-density patching, and enhancements for intelligent
cabling solutions. Panduit R&D is focused on bringing a range of localized
products for the Indian market. It is planning to introduce India specific cable
connectivity solutions by mid-year.

For Belden, the first major new product that came in 2006 was
the 4^th generation wireless solution for triple play networks (data,
voice, and video), with seamless mobility and extended bullet-proof security.
Belden also introduced a very high-density wire management solution in January
that enables IT managers to maintain their network in a more organized and
professional manner. Siemon invests 7.5% of its gross sales back into R&D
every year.

Plm Makes Heads Turn

In terms of technology, the Indian cabling market trends are at par with the
global market and may, in some cases, even surpass international trends. With
more and more ITeS installations, knowledge centers, BPOs with high number of
MACs, and their need for tracking IT in real time, justified huge deployment of
intelligent cabling or physical layer management (PLM), leading to a sizeable
growth in adoption of this technology last year. Although it is still small in
terms of number of deployments, intelligent cabling is finding wider acceptance.

The intelligent infrastructure management solutions allow IT
managers to track MACs in real time while offering security, better asset
management and RoI; high density connectivity management systems. Such solutions
include factory terminated plug and play connectivity products, high-density
cable management racks and accessories.

Intelligent cabling is attractive as it promises to reduce the
cost of network ownership by solving issues like unplanned downtime, inefficient
manual moves, adds and changes, redundant ports, inaccurate records etc. It
increases network management efficiency and network security considerably.

The Power over Ethernet (PoE) technology, though nascent at
present, is set to take off in a big way, especially in areas where traditional
cabling is difficult to deploy. These find applications in wireless environments
for powering WAPs, remote surveillance cameras, etc. Currently, leading vendors
including Tyco, Systimax, ADC Krone, and Molex are offering PoE over mid-span
that is largely preferred for existing installations and few end-span solutions
for new installations.

10GE, Yet to Grow

With the recent ratification of IEEE 802.3an 10 Gigabit Ethernet standards,
Category6A started gaining market acceptance. Cat6A can support 10GE for the
full channel distance. Initial deployments for Cat6A were in data centers but
now it is being considered for horizontal cabling as well.

Apart from supporting bandwidth intensive applications, these
systems have been successfully deployed for 10G applications where bandwidth is
not a constraint. In India these are used more widely for backbone applications.
However, the 10GE market is still in its infancy and is likely to mature in
another 3-4 years.

India is predominantly a UTP market with 98% of the market
preferring UTP solutions, especially on the horizontal side. The absorption of
shielded products is low by volume. UTP products are preferred for business
solutions and command over 90% of the market. Shielded products have so far been
used mostly in noisy environments (high EMI, RFI, etc).

However, there may be an increase in demand for shielded
products for the 10G system. Shielded systems are standards complaint that
ensure 10G performance, reduced alien cross-talk, have higher data rate
capability and bandwidth of 625 MHz to cover all encoding schemes proposed by
IEEE.

Copper Shining On

Today, both fiber and copper have major advances in bandwidth capability to
support the next generation of LANs at 10G. Steep copper prices have not spoilt
the party as it continues to be the popular choice for cabling. On the other
hand choosing between copper and fiber-optic solutions is sometimes difficult,
as distance, cost, required bandwidth, and specialized expertise need to be
considered.

Although copper cable is currently more popular and much more
predominant in structured cabling systems and networks, fiber is quickly gaining
momentum. Fiber-optic cable is favored for applications that need high
bandwidth, long distances, and complete immunity to electrical interference.

Fiber is ideal for high data-rate systems such as Gigabit
Ethernet, FDDI, multimedia, ATM, SONET, fiber channel, or any other network that
requires the transfer of large, bandwidth-consuming data files, particularly
over long distances. A common application for fiber optic cable is as a network
backbone, where huge amounts of data are transmitted.

Cat7 is the only cabling standard in copper that supports
high-speed data transfers. But there is one limitation in Cat 7 over fiber. With
fiber you can connect two end-points within a distance of 45 km, but while using
copper you can go only up to 100 meters. So, if you are planning to build a MAN,
then there is no option other than going for fiber.

Multimode fiber has advanced to new levels to support
laser-based systems where as the industry is developing twisted pair cabling
that will provide at least a three-fold increase in bandwidth, but with
limitation on distance.

Fiber-optic is the dominant type of cable for connecting
separate buildings on campuses and connecting floor distributors to building
distributors. Because of its high cost on the LAN equipment side it has been
limited to the backbones. If we compare the cost of a fiber port on the active
equipment and that of Gigabit Copper port on the active equipment, the fiber is
almost 6 times higher.

Going Wireless

The emergence of wireless technologies into the mainstream is having a
positive impact on the cabling industry. Structured cabling and connectivity
vendors see wireless as a logical adjunct to the wired network, and many have
expanded their product offerings with end-to-end wireless systems.

A significant market trend in India is that providers of wiring
infrastructure have expanded their offerings as widespread wireless LAN
deployment appears inevitable. Many are starting out with distributed wireless
systems that are likely to evolve as technology continues to evolve.

For instance, the Systimax AirSPEED solution includes the AP541
and AP542 APs, antennas, and rack-mounted midspan PoE devices. ADC Krone
introduced their Digivance WFX Wi-Fi WLAN Array Solutions last year. Each
Digivance WLAN array includes an embedded controller (WLAN switch) and 4, 8, or
16 integrated access points, providing simultaneous non-overlapping channels.
D-Link also offers a range of enterprise wireless products under the brands Air
Spot and Air Premiere that conform to the IEEE 802.11a/g standards.

Some cable and connectivity vendors have taken a different
approach with their wireless systems. Panduit teamed up with wireless networking
provider Cisco Systems to deliver the PACT Wireless Connection Solution that
includes Cisco distributed and centralized wireless APs, WLAN controllers, and
antennas, and Panduit wireless AP enclosures, PoE patch panels, and
connectivity.

So, as long as companies continue to add more cabling to support
wireless access points (APs) in their offices, its good news for cable and
connectivity vendors.

Vertical Growth

Data center cabling has emerged as another niche area for structured cabling
solutions vendors. There are promising business opportunities for both fiber and
cable solution providers.

The industry expects retail and manufacturing to be the booming
segments for cabling business. With new technologies paving way for converged
systems that include secure access to homes, cable television and broadband
Internet, RFID, etc there is huge scope for expansion of the structured cabling
market. Residential cabling is also likely to pick up.

Among the emerging potential segments, residential cabling is a
significant one. The market drivers for this is broadband subscribers, VoIP,
IPTV, multimedia networks (Windows XP Media Center-digital streaming audio/video
and live recorded TV, photos, etc), online gaming (X-BOX 360), and
fiber-to-premise (FTTP).

Residential cabling is intended to support existing and emerging
services including voice, data, video, multimedia, home automation systems,
environmental control, security, audio, television, sensors, alarms, and
intercom.

Getting Bigger, Better

Reorganization is the order of the day as we see many vendors looking to
strengthen their processes and customer support extensions. Customer
satisfactions, indelible sales support along with a good channel partnership
program, are key drivers in achieving an edge over the closest competitor.

In order to retain, sustain, as well as capture new
opportunities, Tyco is increasing its presence in tier-3 and tier-4 cities
through its national and regional distributor network with sales offices across
all major metros, and also adding offices in Pune and Cochin. New offices are
expected to open in Ahmedabad and Chandigarh.

In the enterprise market ADC Krone continues to aggressively
focus on IT/ITeS, BFSI, BPO, and government verticals. It is eyeing immense
potential in India as an important market for its telecom and enterprise
solutions.

D-Link expects the coming year to be action-packed as it eyes
emerging markets in tier-2 and tier-3 cities where new IT infrastructure is on
the upswing. The company is confident of growing beyond 40% in the current
fiscal.

Deepening its footholds in tier-2 and tier-3 cities with channel
partners, Molex has also increased its direct presence in Ahmedabad, Kolkata,
Hyderabad, Mumbai, and Pune. It also anticipates the market will further hot up
with SEZ infrastructure boom, and it is already gearing up for it ahead of the
pack. With such fierce segment growth in verticals Molex has set its growth
target of 100% in the current fiscal.

As it looks to consolidate its position, Panduit is
strengthening its focus on the 3Ps: processes, partners, and properties.
Acknowledging the high potential of India as a hot destination, Panduit is
opening two customer-briefing centers (CBCs) in Bangalore and Mumbai. This is
aimed at improving eye-ball contact with customers and strengthening its channel
partner program nationwide. The CBCs will also be a training ground for channel
partners.

Belden expects to improve its revenue for FY 08 to touch Rs
38 crore. It has started a data center practice, focused on providing
consultancy to customers. This revolutionary practice was launched in October
2006 and already has a few customers. Head quartered in India this practice will
offer consulting, project management, audit support of the entire physical
infrastructure (including power, cooling, cabling, enclosures, fire suppression,
security etc) that goes into a data center.

Siemon is looking to strengthen its channel distribution
network. At the same time, it has been working on cabling solutions beyond 10G,
such as 40G or 100G. Dax is aggressively focusing on the SMB segment. Currently,
Dax has on board over 150 Authorized Dax Service Providers (ADSPs) across India.
The company is aiming to appoint another 100 by April 2008. It is optimistic of
revenues of Rs 20 crore for 2007-08.

Staying Ahead

There is a new way of thinking emerging for smaller players. Its no
longer about boxes but about ports and software. Players are looking more and
more at providing customized end-to-end cabling solutions. With 10G over UTP,
PoE and Intelligent cabling technologies gaining acceptance, cabling
installations are becoming more skill-based than before. Following the right
installation practices and adherence to standards is very important when it
comes to new applications that require higher data rate transfers.

In order to stay ahead in the race the industry has given
priority to staff retention and training. With numerous orders on hand, the
installers are gearing up for training personnel and technicians.
Understandably, they would love to see better supply and adequate staff to
strike a balance.

The year ahead is optimistic and full of greater business
opportunity. So, as India is tipped to be the 14^th highest IT spender
by 2008, its business as usual for the structured cabling market.

Malovika Rao

malovikar@cybermedia.co.in