Dealer Perspectives - Networking

Networking also means software - operating systems, management software and security. The internet era has seen the arrival of intranet and extranets - which could easily be described as the Lan and Wan - using IP as the transport mechanism and the browser as the main user interface.

That, in itself, has spurred on e-commerce and the need for much better management and security.

Management of the network, available resources and what users are doing with their machines - licensing control, virus protection, data security - are all issues facing network managers. They stretch beyond the network and now, with email becoming the biggest carrier of viruses and other threats to security, firewalls have become big business in the networking market. As this month's Lab tests reveal, a password is simply not enough anymore (see page 54).

Email is a massive market and there is a growing need to unify voice and data messaging on the network and to manage and control the messaging systems effectively. Messaging is a valuable business resource, but can tax costs and bandwidth if used badly.

Cost is always an issue, so the management of the network and the devices on it is essential. This extends to storage, which is increasingly being recognised as the most vital - and perhaps most expensive - single component of the system. Storage is being more closely monitored and managed on the network and concepts such as storage area networking (SAN) and management have emerged as users demand cost-effective systems.

This is sparking growth in power management, fault-tolerant systems and business contingency. For the networking vendor, distributor and reseller, there is a massive amount of complexity to deal with, as well as many opportunities.

Voice and data has been the flavour of the past 12 months and continues to be a hot topic for vendors. Driven by internet and IP adoption, convergence could become a big earner, but one the market has perhaps become too carried away with too early. At present, the main market is probably in the service provider and ISP areas.

ATM and Frame Relay are providing cost-effective capacity for large-scale systems, while lower-cost Fast and Gigabit Ethernet switching products are opening up the market at the bottom end. The market saturation and massive consolidation that has taken place at the top end - leaving three players: Cisco, 3Com and Nortel (Bay) - has prompted a push into the consumer and SME sectors.

In a market that is polarising and fragmenting, vendors and channel partners are increasingly having to select the markets and technologies they focus upon. More than ever, the networking market is a melting pot of technologies out of which a few players will emerge with true end-to-end, all-encompassing systems - network, internet, voice and data - but many more will come through as specialists in one technology or one market.

Who, how and where these companies will emerge is impossible to say, but it is certain that the market is one that will remain central to all reseller businesses. Dan Merriman, an analyst with IT research specialist Giga, says the influence of the internet on the entire network market is going to be the key trend over the coming year, enabling voice and data convergence and a restructuring of network systems.

He believes the market is entering a period of sustained consolidation of enterprise networks around IP. The result will be a rapid rise in demand and the contention for resources will require an increased focus on policy management and resource prioritisation.

'Voice and data Wans will evolve from switch to shared-based architectures, just as most Lans will continue to evolve from shared to switch-based,' Merriman adds. 'This is due, in the most part, to the ways in which these two environments address the conflicting demands for ever greater bandwidth, economies and control.'

Behind all this, he says, we will see continued and significant growth of technologies and services that enable greater end-to-end bandwidth and capacity within and between enterprise-class networks. No particular technology will win the day - there will be a place for most carrier systems, including ATM, Gigabit Ethernet, DSL and cable-borne data.

'There will be trialling and initial leading-edge implementations of converged voice and data networks using frame relay, ATM and internet protocols,' Merriman explains. 'The use of IP will undoubtedly grow, but the use of the internet as a main conduit will remain limited with corporate users during this period.'

He also predicts continued growth of wireless voice and data as an emerging alternative to traditional networking methods, both in the Wan and Lan environments

The internet is still a growing phenomenon. Analysts say despite falling prices and the emerging lower cost methods of access, the European internet access and related services markets will show continued growth over the next five years. IDC's latest figures reveal a 53 per cent growth in European ISP revenues during last year, with a further 44 per growth expected for 1999.

This is helping to fuel the fastest growth ever seen in the overall European telecoms market, says James Eibisch, research manager of IDC's European ISP markets programme. However, it is still a specialist area, mainly populated by service providers newly freed from regulation and competing like mad. The business market is not happening yet.

'Broadband access is the fastest growing area of the market,' he adds.

'We predict that all European countries will exhibit growth rates near or more than 100 per cent from 1999 to 2003. From 2002, revenue gained from corporate internet access will begin to slow down, although the sector will still outgrow nearly all the other IT markets.'

But increasing market penetration, the falling prices of leased-line services due to competitive pressure, and increased weighting of higher value services, such as hosting and intranet/extranet services, will continue to drive the market along, says Eibisch. And as this sector of the market develops, many more opportunities will grow around it.

'As with many product or service market cycles, any slowdown in growth is going to be tempered by an increase in revenue generated by additional services,' he adds. 'Any long-term slowdown will be more than countered by a high increase in value-added service business such as Web application hosting, e-commerce, security, IP-VPNs, extranets and voice and unified messaging applications.'

But Merriman believes that, sooner rather than later, the internet will emerge as a viable alternative to traditional Wan services for applications that emphasise low cost and high connectivity over performance, predictability and security. With that will come an increase in the role and importance of the channel in the implementation of extranet technology.

'Broad-scale adoption and deployment of extranets will drive companies' key business processes out to their customers, suppliers and partners,' he adds. This could then become a significant area of growth for the network reseller.

With total cost of ownership (TCO) still high on everyone's agenda, there is also going to be a significant increase in the use of managed and outsourced networking services as users offload the implementation and management of network equipment, security, hosting and remote access. These developments present a multiplicity of options for the channel, but resellers will have to take a professional approach. Research conducted by Giga shows that users want to see continued improvements in the comprehensiveness and management of service level agreements (SLAs) at the corporate level in particular.

Security is also an issue of growing concern among users. According to Giga: 'The development, growth and deployment of strong, yet inherently flexible network security architectures that address both internal and external threats to a company's networks and systems' will be a important trend over the next year.

Given the increasingly strategic nature of corporations' internal and external networking and connectivity, Merriman stresses that both IT and business unit managers need to be aware of these trends, while ensuring they are taking steps to deal with them.

'Understanding and leveraging these trends effectively will be a vital characteristic of those suppliers that end up leading the market during this period, and will also be a significant factor in the success of the emerging players that manage to gain substantial market share over the next three or more years,' he says.

But vendors may be in for a tough time, as corporate companies consolidate the vendors and service providers they use on a global basis. Merriman predicts a 'continued frenzy among suppliers as the current leaders and aspiring players jockey for position through mergers, acquisitions and closer alliances'.

We can be sure of some things, however. This time next year, the networking landscape will have changed considerably and the vendors and technologies will still be moving and shaking.

But the market will also be bigger and still growing. Dealing with the changes that take place, to the dynamics and directions of networking will be a constant challenge. But users will probably need more help and guidance than ever before as this market continues to flourish.

It seems that when it comes to making margin in the networking game, companies are spoilt for choice. The dilemma they face is not whether there are enough opportunities, but which ones to focus on.