Structured Cabling: India On A Live Wire

India is fast turning into a 'dream destination' for most multinational
companies across a wide gamut of industries: IT services, BPOs, telecom, banking
and finance, manufacturing, automobile and retail verticals. And to help them
spin threads of success are present the vital backbone partners-the structured
cabling vendors.

In FY 2005-06, the structured cabling industry revenues jumped to Rs 574
crore*, a whopping 76% growth in last two fiscals. (Structured cabling market
revenue in India was Rs 325.5 crore  in FY 2003-04 and Rs 416 crore in FY 2004-05*).

As connectivity boom is unleashing in India, the structured cabling vendors
have upped the ante in the fiercely competitive market. The warpath is open for
the vendors where newer technologies are being introduced to woo customers; each
offering unique value proposition, driving forward to consolidate current
position. 

Barring a few glitches owing to international copper price hike, the industry
is keenly tracking the movements of MNC giants in India and the emergence of
plenty money-raking business opportunities.

Striking on Hot Iron

The technology scenario in India has caught the attention of companies and
investors at a time when analysts believe India is ready to leapfrog to the next
stage of technology revolution rather than follow the natural evolution pathway.
The platter of emerging technologies is simmering hot in India. And there are
enough reasons for it.

 

 

 

 

“India has always been an early adopter of technology,” remarks Dr Ispran
Kandaswamy, VP and managing director of Asia Pacific, Systimax Solutions.

 VoIP tops the list of technology
boom waiting in the wings. The evidence is on ground as both PC LAN networking
and VoIP are being installed simultaneously, in most new cabling installations.
Past issues of quality, security, etc. have been resolved. Cable for VoIP
applications is predicted to account for the major UTP cable market in next five
years. Besides this, there is a growing trend towards interoperability and
providing higher security to the user as well.

India is extremely bandwidth hungry. KK Shetty, director, Sales, India &
SAARC, Tyco Electronics feels the time is ripe to introduce emerging
technologies and latest products in India that spur the high bandwidth demand.
“In a matter of 3-4 years, we shall see more of integrated SCS networks where
PoE, intelligent cabling and normal cabling standards will all converge to
provide a real intelligent system,” he states optimistically.

Melting Pot of Opportunities

Here's some food for thought —

• India is the second fastest growing economy in the world
• Over the next five years, more than $150 bn will be invested in
  infrastructure
• The BPO sector has been growing at 60-70% annually and is projected to
  reach $12.3 bn by 2006, and by 2008 it is expected to reach $21-24 bn (NASSCOM
  estimates)

More such statistics are testament of the rising mercury of opportunities in
India. K Surendar, country manager, Dax Networks comments, “As BPO sector in
India is booming, we are seeing the number of nodes in an average network site
going up to 7,000, from just 100-800 nodes last year. This spells good business
for infrastructure providers.”

Milind Tamhane, VP, Manufacturing, D-Link India is excited to see the spurred
infrastructure growth. “We are witnessing the huge expansion of
infrastructure, more correctly so, planned infrastructure growth in commercial
as well as residential domains; both are direct indicatives of SCS Industry
growth,” he adds.

Spelling out the dominating trends seen in India, Peter Karlsson, senior VP,
Enterprise Solutions, CommScope believes there are three main trends affecting
structured cabling business today. “Firstly, the fact that India is the
fastest growing market in the world today for every business vertical. Secondly,
globalization is bringing several MNCs, to India and likewise many Indian
companies are expanding outside. And lastly, it is the consolidation of
businesses that is leading to decentralization. As a result, many data centers
are mushrooming. All this augurs well for structured cabling market in India.”

Data Center At The Epicenter

The industry witnessed stagnation in the historic growth of LAN data
communications market for structured cabling systems. However, one prolific area
where structured cabling is expanding horizontally is the data center. This new
niche market is fast developing and can provide renewed growth for structured
cabling system suppliers.

According to a new study from FTM Consulting, data center cabling is a new
developing growth market for both the fiber and the copper SCS suppliers
worldwide. The global data center cabling market is poised to grow from $680.9
mn in 2006, at an average growth rate of 26.8%, to $2,235.1 mn by 2011.

Banking, financial services and insurance (BFSI) sector, BPOs and telecom
companies are sharply focusing on wiring up all their branches and manage data
centers. Dileep Kumar, enterprise product manager, ADC Krone opines, “Many
data centers driven companies are leaving no shortfalls in getting their
networks up to global standards and implementing the best infrastructure
solutions. As a result, more and more cabling vendors are offering unique
end-to-end solutions tailor made for data centers.”

Cat5e and Cat6 are still the dominating cabling standards in India

Cabling Choices Galore!

Compared to 2003, the portfolio of cabling vendors in India has grown
multifold. Customers are looking beyond Cat5e and replacing traditional choices
with the more mature Cat6 and Cat6A. A few bold customers are going for Cat7 and
fiber solutions especially in the BFSI and ITeS verticals.

Trends show a surge in demand for CAT6 and CAT6A as 10Gigabit Ethernet (10GE)
cabling products swell in demand, slow but steadily. Power over Ethernet (PoE)
and Intelligent Cabling are the 'new kids on the block' that have enthused
the cabling industry in India.

For now Cat5e and Cat6 are still selling like hot cakes, and it will take 3-4
years before Cat6A and intelligent cabling will rub the sheen off Cat5e in
India. Kumar Natarajan, regional director, India, Panduit notes that the
dominance of Cat5e will not fade away soon. “Most of the market requirements
will be met by CAT5e and CAT6 in India. Very few customers face the demand for
high-speed bandwidths and so the volume for CAT6A will be very low to start with
this year,” he says.

Initial deployments of 10GE over UTP were seen in data centers especially in
IT/ITeS, BFSI; storage area networks and for building robust backbones. Dileep
notes a change in that trend with the standards ratification. “Now one can
expect 10G Base-T UTP cabling system finding a place in emerging areas like
enterprise campuses, health, manufacturing and government institutions where
width and depth of the network is crucial and have to be future-proof ready,”
he notes.

"SCS consumption within a network is 7-8% of the outlay. So the effective impact of copper price hike is minimal" -Milind Tamhane, VP, Manufacturing, D-Link India

   Over the next five years, the key growth drivers for data centers, and for cabling, will be increased centralization of databases and computing resources

"In a matter of 3-4 years, we shall have more integrated SCS networks where PoE, intelligent cabling and normal cabling standards will all converge" -K K Shetty, director, Sales, India & SAARC, Tyco Electronics

“Power-over-Ethernet (PoE) is gaining momentum, as there is an increase in
wireless access points and deployment of VoIP in the country,” notes Rajesh
Kumar, country manager, Siemon. Small vendors like BNA Technology Consulting
have also made headway in implementing installations with PoE readiness. Kashi
Vishweshran, director, BNA Technology Consulting adds, “The demand is likely
to pick up significantly in the near future, especially with expected
introduction of IP based premises services by some large ISPs.”

But with so many choices to make, how would the customers make a prudent
choice? Rajesh Shenoy, key account manager, India, Belden CDT offers this
advice, “A lot of time vendors go blindly by the TIA standard. They must
understand that a standard is only a minimum acceptable criterion. It only gives
direction. One must go for solutions with higher headroom.”

Money Not a Factor

Traditionally, the customers for cabling solutions had been approaching the
vendors on price point. But this has changed in recent past. Customers are
realizing the importance of investment in infrastructure.

Dr Kandaswamy of Systimax notes, “Businesses don't usually appreciate how
important infrastructure is although it is the backbone of your establishment.
But now new global customers have set the trend of choosing infrastructure over
IT investment.”

The Indian customers are prudent while choosing technology and vendor for a
long-term investment on infrastructure. Dileep Kumar of ADC Krone says,
“Typically a networking gear consisting of computers, switches etc., will have
a maximum useful life of 3-5 years whereas structured cabling has a maximum
useful life of 10-15 years (3 X networking gear). That means the cabling you
install today should support three generations of networking gear.”

Although the market faced an onslaught of high price rise in international
copper prices, the vendors fared well for themselves. “Customers need not
worry too much about copper price hike as SCS consumption within an average
network is 7-8% of the outlay, so the effective impact on total cost will be
minimal,” notes Milind Tamhane of D-Link.

R&M, a new entrant in India, studied the market in India for the last one
year and concludes that the customers here are looking for quality. Gaurav
Ahluwalia, country manager, R&M says, “We see a huge potential in India
and glad to note that customers are keen on quality and not necessarily going
for cheaper products. This is a good sign of the mindset of Indian customers for
structured cabling.”

Expansion Mode

The cabling vendors are literally tracking the technology footprint across
India. As IT/ITeS companies are penetrating the tier-2 and -3 cities, the
cabling companies are also making their way. As a result, all cabling vendors
have chalked out elaborate strategies to push distributors and channel partners
in emerging markets.

Traditionally, the tier-1 cities have been the high-revenue earners for the
vendors, but now newer opportunities are being offered in the mid-market segment
from cities like Coimbatore, Cochin, Kolkata, Chandigarh, Bhopal, Pondicherry
and Mysore, to name a few.

Kumar Natarajan, regional director, India, Panduit affirms, ” We sense
growing opportunity in the mid-size market as the Indian corporate segment, PSUs,
government and Indian banks are pushing the IT button although this is a bit
more price sensitive segment.”

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Data centers demanding 10GE need to be future-proof

KK Shetty of Tyco says, he has enough reason to be upbeat for next 20 years.
“Telecom players are growing five times every year. BPOs and KPOs are touted
to create over 8 mn jobs in next 2-5 years. This means over 24 mn nodes,” he
says. Shetty is also eyeing a new potential market-the retail industry. “We
are all aware of the plans by Reliance Industries to open pan-India network of
retail outlets. This is going to open the floodgates for cabling market and we
expect it to impact our business remarkably.”

Kumar Natarajan of Panduit sees real estate as another potential market.
“The builder market will be a very big segment for the cabling vendors.
Bangalore has set the trend for the same and other cities will follow suit very
soon. Leading corporates and residential markets are keen on building
ready-to-use infrastructure buildings. However, the challenge in this market is
to be price competitive,” he adds.

There is a new way of thinking emerging for smaller players. It is no longer
about boxes but about ports and software. Players are looking more and more at
providing customized end-to-end cabling solution. 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 transfer.

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 contest is on to drive emerging markets with zeal and perfection. So as
India is tipped to be the 14th highest IT spender by 2008, its business as usual
for the structured cabling market.

Malovika Rao

malovikar@cybermedia.co.in