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CompactPCI seeks life beyond telecom

Posted: 22 Jan 2003 ?? ?Print Version ?Bookmark and Share

Keywords:compactpci technology? bus & board/2003 conference? telecom? bandwidth? picmg 2.16?

As telecom companies wrestle with the repercussions of a disastrous economic slump, engineers at the Bus & Board/2003 Conference will look for ways to undo the downturn's crippling damage to the computer board market.

Engineers are particularly concerned about the future of CompactPCI technology, which two years ago was the rising star of the industrial-board business. They fear that CompactPCI faces an uncertain future at best, and extinction at worst, if the telecom industry does not solve its problems.

"CompactPCI is in trouble," said Eric Gulliksen, project director for the Embedded Development Group at Venture Development Corp. "And if the companies that have focused heavily on telecom do not change their focus, they are in for some very bad times."

Continued reliance on telecom could sound the death knell for some board makers if the more recent prognostications come to pass, experts fear. Already, the telecom industry slump is said to have wiped out jobs and market value in the board business. In October, Intel sold the former Ziatech unit to Performance Technologies Inc. for $3.8 million, a whisper of its 2000 acquisition price of $222 million. Companies like APW Ltd., a maker of backplanes and other components, filed for Chapter 11 bankruptcy protection in 2002 and board makers such as Force Computers struggled through layoffs.

Worse, even the most optimistic forecasts predict the slump in telecom will continue through most of 2003; some say it could last through 2006 or longer. "We have heard some experts predicting that the rebound could be as late as 2010," Gulliksen said.

This is bad news for CompactPCI, analysts said, since it relied too heavily on telecom for business and is now paying dearly. According to Venture Development's statistics, about two-thirds of the $695 million CompactPCI market came from telecom in 2001. While final results are not in yet, that total yearly figure is believed to have dropped by about 50 percent, to about $350 million, in 2002. If telecom continues to struggle, observers said, that figure will fall sharply again in 2003, possibly taking down some board vendors.

"Whenever you go through a recession like this one, there tends to be a new cast of players after you come out of it," said Joe Pavlat, president and chairman of PCI Industrial Computer Manufacturers Group (PICMG), a body that develops open specs for high-performance telecom and industrial computing apps. "That is what's going to happen here."

Taken by telecom

CompactPCI, developed in 1994 as a spec for industrial computers, initially interested telecom engineers because it offered features like high bandwidth, hot swapability and high pin counts. Later, it was seen as an on-ramp to higher bandwidth switch fabrics, thus increasing its appeal.

"CompactPCI was perceived to a large degree as a telecom architecture," said Gulliksen. "A lot of folks in other industries said, 'I'm not going to use that. It's telecom stuff.'"

That approach worked well for CompactPCI in the boom years, when it rolled up 50 percent compounded growth rates. But telecom began a precipitous drop in 2001. The result has been nothing short of a depression for those in telecom: Giants in the industry have lost nearly a half-million jobs and a reported $2 trillion in market value.

PICMG estimates that only about 35 percent of CompactPCI's business comes from non-communications areas, such as medical, industrial, military, and scientific. The trade organization said the majority of CompactPCI's business comes from telephony, voice messaging, voice recognition, and general communications hardware, such as central-office phone equipment. Because the percentage of "noncomms" was so low, CompactPCI now faces hard times, PICMG executives said.

"Everyone knows that the telecom situation hit CompactPCI harder than it hit other technologies," Pavlat said. "When telecom crashed, the growth of CompactPCI went to near zero."

Industry engineers and observers now wonder how a continued slump will affect CompactPCI's future.

Some industry observers said legacy products will be the key to CompactPCI's survival, mainly because struggling telecom companies lack the wherewithal to try out new technologies.

"Any company that has dropped its legacy products is dead," said Ray Alderman, executive director of the VMEBus International Trade Association (VITA). Alderman, whose organization goes head to head with CompactPCI, sees no end to the telecom downturn. "Telecom will not come back and start buying again until providers create new services with socially redeeming value," he said.

To illustrate his point, he mentioned television commercials in which a wife sends photos of a spaghetti dinner to her poker-playing husband via their cellphone connection. Such features, he said, will not breathe life into the industry. "Give me a break," Alderman said. "People are not going to pay a hundred dollars a month to send pictures to each other."

Alderman even said telecom cannot serve as a solid foundation for future board business. "Telecom is not a viable market for any board-level companies," he said. "When you've got almost all of your applications tied up in telecom, how can you expect to survive?"

But CompactPCI's proponents contend that new switch fabric specs like PICMG 2.16 and 2.17 give CompactPCI the edge over such older technologies as the venerable VersaModule Eurocard (VME) bus. They also said CompactPCI will expand into other markets and come back strong when telecom returns.

'Not dead yet'

"CompactPCI is not dead yet," noted Justin Moll, marketing manager for Bustronic Corp., a board maker. "A lot of CompactPCI applications will transition to switch fabrics over time." Moll said that the point-to-point nature of switch fabrics creates a high-bandwidth, high-reliability environment that appeals to engineers who need high availability.

Further, CompactPCI proponents insist that some applications will ultimately migrate away from VME and toward CompactPCI.

"Even though CompactPCI has slowed in its growth, it still has a brighter outlook than VME," said Ted Brewster, vice president of sales and marketing at CG Mupac, a maker of CompactPCI and VME boards. "Even the military, which has traditionally used VME, is recognizing the handwriting on the wall and is switching to CompactPCI."

Military engineers are taking a second look at CompactPCI because of the potential speed of switch fabrics, Brewster said.

The military wants technologies that will be out there for 10 years or more, and VME is starting to look outdated," he added.

Brewster and others said the post-Sept. 11 military buildup has opened the market for both VME and CompactPCI boards.

Proponents of CompactPCI warn against panic, rationalizing that no matter how far the telecom market drops, it will come back - eventually. When that happens, CompactPCI will resume its growth, they said.

"Telecom's roots have been in CompactPCI for the last 10 years, and you are not going to see it move toward VME," said Jeff Rhodes, business manager for the High-Availability Platforms Group at Motorola Computer Group

- Charles J. Murray

EE Times

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