15 March 2002
MARKET REVIVAL
A SLOW RETURN TO HEALTH
But recovery is unlikely to match the heights of the mid-Nineties
Organisations upgrading their networks to cater for new bandwidth-hungry applications and boost the performance of their existing infrastructure could fuel a recovery in SA's depressed networking market.
Mark Rotter, senior analyst at research firm BMI-TechKnowledge, says the country's networking equipment market showed single-digit year-on-year growth in rand terms last year, and declined in dollar value. He believes, however, the market will improve from the third quarter of this year.
He says many companies rushed to replace legacy networks in 1999 to avoid Y2K-related problems and these organisations should be ready for new infrastructure.
Growing interest in voice over Internet Protocol, e-learning and other multimedia applications should also spur on the market since technologies demand high-speed networks that include features such as quality of service (QoS).
Gigabit/second Ethernet is set to be the technology of choice for most local companies in their corporate network backbones. Rotter says that over the next two years many SA organisations are expected to replace hub-based networks and 10 Mbit/s to 100 Mbit/s Ethernet with the newer technology.
Rotter says Gigabit Ethernet nonetheless remains a niche technology and will only experience mass adoption once prices come down. Only companies > that will see a strong return on investment from Gigabit Ethernet will implement it in the short term; others will spend their communications rands on improving their existing networks or on replacing hubs with 100 Mbps > switches.
However, most industry observers agree that spending on networking infrastructure is unlikely to reach the giddy heights of the late-Nineties boom, even when the market eventually starts to show an upturn.
"Most companies are looking at ways of improving, rather than replacing their networks. When they're moving into new offices or extending their branch networks, they have to spend on infrastructure, but they're not replacing old technology for the sake of it," says Chris van Niekerk, the country manager at 3Com SA.
"The days of automatically replacing networks every three to five years are over. Companies are looking for quantifiable returns in the form of operational or capital cost savings before they invest in new networking technology," says Tony Wilson, enterprise director at Nortel Networks SA.
Peter Dixon
Tools that help end-users to squeeze more value and performance out of existing infrastructure are likely to become a strong growth market in the coming months. Peter Dixon, technology executive at Comparex Africa's Network Division, one of SA's largest network integrators, says software that helps companies to maximise the efficiency of two scarce and expensive resources - skilled networking staff and bandwidth - is likely to become popular with some corporate users.
Tony Wilson ... the days of replacing networks every three to five years are over
Networking management software helps companies to cut down on network administration staff and improve network reliability by allowing companies to manage network infrastructure from a central point and simplify or even automate tasks such as network configuration and fault diagnosis.
Dixon says many local companies are likely to consider caching, compression and bandwidth management solutions to get more from their wide area network (Wan) links without having to buy more bandwidth, an expensive commodity in SA and one that carries recurring monthly fees.
Bandwidth managers prioritise network traffic to ensure that the most important users and applications use more of the available bandwidth than less important applications.
Caching technologies complement bandwidth management tools and the QoS features built into newer switches and routers by limiting the amount of traffic that needs to travel across the Wan.
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