Communications Market Update

Telecom and Communications Infrastructure has seen lower volatility, compared to other markets, given the economic downturn. Applications such as wireless, media and security are growing at phenomenal rates. Infrastructure is one place where major investments are being made, and we are addressing this market.

In addition, the economic downturn has made customers take a hard look at their solution providers. They want to make sure that the solution provider is financially stable and will support them in the years to come. In times like these, it’s an advantage to work with a strong stable company like GE. On the flip side, GE is managing its own vendors very carefully. We are spending a great deal of time analyzing the financial health of the companies we rely on.

We tend to think of our communications products as falling into two main categories: Transport and Processing. Transport products are responsible for moving the data, so that would be things like Ethernet Switching and I/O. Processing products are responsible for manipulating, directing, and controlling the flow of data, which is a lot more complex, and includes both general and special purpose processors such as packet processors.

This question is really interesting to me, and I think separates us from other companies in the communications business. We have two distinct, and yet closely related customer sets because we are a key player in commercial markets such as Telecom, and the Defense and Aerospace markets. On the surface you might not expect it, but there is a lot of synergy here, both for us and for our customers.

AdvancedTCA has become a trusted standard architecture and it’s an important platform for us. We’re continuing to design and introduce products, both ATCA boards and also AdvancedMC cards, which are the modular, add-on cards that make ATCA far more flexible, scalable and upgradeable. I think the A10200 ATCA blade that we are introducing this week is tangible evidence of our commitment to the architecture, but a glance at our product listing on the web makes the point.

As I mentioned, we have three key "pillars" of Switching, General Purpose Computing and Packet Processing, and we have a very strong engineering team focused on a full range of communications applications based on these pillars. In terms of actually designing products, we have a center of excellence located in Foxboro, MA that designs Ethernet Switches and Packet Processor products. Our team in Edinburgh, Scotland focuses on Protocols and Switch management. We have a large team of engineers located in the US and Europe that designs high-end Single Board Computers.

Our entire product definition process is very customer focused. Our customers heavily influence our product development plans. In some cases, we work with their internal engineering staff on a specific board, which is essentially a custom design. In some cases, we are able to take an existing design and make a few modifications required by the customer. However, there is a growing trend in the market with customers shying away from custom products or products consumed solely by one customer. Many customers are looking for standard products that are sold to a large customer base. This allows them to take advantage of economies of scale, higher reliability (due to a larger user base) and less risk in supply.  "Less Risk" has become a top customer concern in these economic times. 

A commitment to open standards is one of our primary risk reduction strategies, but it's not the only strategy. GE is famous for an almost obsessive focus on process and quality. New products must clear numerous hurdles before they can move from engineering to manufacturing. Once a new design enters the manufacturing phase, it is again subjected to rigorous processes to ensure a quality product that can be distributed and supported globally.

In addition, we have developed a strong capability in Product Lifecycle Management. Our customers in the military and aerospace industries have applications that they need to support for decades. As a result, we have learned how to help them incorporate new technology and defend against obsolescence. This is another one of those areas where our telecom customers benefit from the synergies with our military and defense businesses.

I remember, not too long ago, people were saying that we don’t need or can’t use 10GigE fabrics and interfaces. "Processors cannot keep up with those data rates." This was proven wrong, and we now have multi-core processors and specialized many-core processors like those from Cavium Networks.

People are streaming High Def Video from Hulu to Internet connected TVs, set top boxes and mobile devices. All sorts of devices are becoming network-enabled. The demand for bandwidth seems insatiable. So we are now talking about 40GigE interconnects and interfaces. The world's first 100GigE networks are being deployed. All this traffic is moving at faster and faster rates in a world that is increasingly concerned about security. Security is key – how do intrusion detection systems perform Deep Packet Inspection at 100GigE rates!