As I have reported over the past several years, the structured cabling system market, after growing at substantial double-digit annual growth in the 1990s with the initial deployment of primarily Category 5-cabled LANs, ran into a brick wall starting in 1999 because of the onset of market saturation.
Market saturation meant that all of the initial LANs, and hence the cabling, was installed at the larger enterprises pre-1999. As a result, the market slowed considerably in the early part of this decade, with the cabling market suffering its first declines since the onset of the growth period.
The market slightly rebounded in 2004, but still is off its historic highs of the 1990s.
Currently, the key issue facing the cabling industry is when, or if, the cabling market will renew its growth in the future. Our recent research and assessment of the market is that there will be a revival in the cabling market's growth, but it will be in new applications requiring upgrading of the existing base of cabling systems.
Other factors, such as the addition of workstations or changes in network configuration-the area known as moves/adds/changes, or MACs, for short-require minimal additional new cabling and will do little to stimulate the growth of the market.
New commercial office building construction, which is nil and not expected to improve with office vacancy rates still at high levels, will do little to improve the cabling market's condition. Rather, the need to support newer broadband applications requiring high-bandwidth cabling-applications that cannot be supported by the currently installed base of cabling-will stimulate this market's growth.
Gigabit Ethernet stimulus
Our analysis indicates that the movement to Gigabit Ethernet networks will provide a stimulus for future market growth. We do not foresee any other market driver for the cabling industry in the future. In fact, we believe Gigabit Ethernet cabling will be the only stimulus for cabling-industry growth in the future.
My firm's newest study, entitled "Gigabit Ethernet Fiber and Copper Cabling Systems," projects double-digit growth for the cabling industry over the next five years, reminiscent of the growth in the 1990s. This time, however, the double-digit growth will be due primarily to fiber-cabling growth, not unshielded twisted-pair (UTP) copper-cabling growth.
We believe that the majority of the Gigabit Ethernet networking market will need fiber cabling to support the broadband requirements at speeds above 1 Gbit/sec. UTP copper cabling will retain its prime position as the horizontal core network cabling until speeds in excess of 1 Gbit/sec are required. But fiber-to-the-desk will not be the major driver for future growth in fiber cabling. Rather, the driver will be a combination of legacy large applications, such as campus and backbone-riser cabling in conjunction with newer high-growth fiber cabling applications, such as data centers and fiber-to-the-zone/fiber-to-the-telecommunication-enclosure cabling.
New technology fosters growth
One factor stimulating fiber-cabling growth for Gigabit Ethernet applications is the emergence of new fiber technologies. Newer-technology fiber cabling products, such as laser-optimized 50-micron (
The Gigabit Ethernet cabling market is projected to grow from this year's $782.4 million at an annual growth rate of 25.7%-to $2.5 billion by 2010. I expect Gigabit Ethernet infrastructure to be one of the highest-growing cabling market segments, and one of the largest individual market niches for structured cabling systems over the next five years.
The largest and highest-growth segment is projected to be fiber cabling. By 2010, the fiber-cabling segment, projected to be $2.1 billion, will account for 83.8% of the total market. By comparison, the UTP copper-cabling segment is expected to be $397.1 million, accounting for 16.2% of the market in 2010. The fiber-cabling segment is expected to grow at a 31.3% rate over the five-year period, compared to the UTP copper segment growth of only 8.4% over the same period.
The highest-growth Gigabit Ethernet application is projected to be campus cabling, growing at an average annual rate of 52.1% over the five-year forecast period. The next-highest-growth application is data-center cabling, with a projected growth rate of 50.9%.
FRANK MURAWSKIis president of FTM Consulting INc. (www.ftmconsultinginc.com)