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Fourth generation PBXs
Value added networks in Europe Frost & Sullivan, USA (1985) $1 900, 580 pp A relaxation of state-owned communications monopolies in Europe will open the way for value added networks (VANs) so much that they will grow more than tenfold between 1984 and 1990, to a $5700M annual market. This report says the market will grow from $532M in 1984 to $786M by .1985, and then rise even faster up to 1990 (constant 1984 dollars). VAN services as a sector encapsulates several service categories that are large market sectors in their own right, each of which is expected to show a compound growth rate of about 50% per annum in the period, says the report, citing online database services, radio, text and message, videotex and voice services as the prime areas. Government control of the PTT (communications) companies has kept down the number of VANs to date, but liberalization in the UK has brought a host of licence applications, and a similar rule relaxation is expected in the 1985-88 period in Belgium, France, Spain, Sweden and the FRG. However, the attitudes of the individual PTTs are seen by the report as being of even greater impact than governmental deregulation. The approximate breakdown between PTTs and private VANs services is one-quarter PTT to three-quarters other service providers. This will reach a situation of near parity by 1990, with PTTs holding 43% of the business and other providers representing 57%. The market is analysed along several axes, including 11 service categories, country (the FRG, France, the UK, Italy and Scandinavia broken out) and telecommunications equipment investments by category and country. Online databases will comprise the largest type of service throughout the years discussed in the report, nearly quadrupling by 1990 to $1 300M. (The best known
vol 8 no 3 june 1985
VAN of this type has been Diane, operated by Euronet). Owingto more market growth in other services, however, its share of the total market will fade from two thirds in 1984 to under one-quarter in the 1990s. Text message services will increase to more than 60 times the 1984 value, reaching $1 300M by 1990. This is a rise from 4% of the market to more than one-fifth of it, and the report predicts that it will end the period as the market's second largest segment. Security services are the second largest market area (12% of the 1984 total), but they will be overtaken by other areas. Radio services and videotex will be the third and fourth largest segment by 1990, forming 14% and 13% of all volume, respectively. Video, image and voice services will also be significant areas, with PTTs deriving much
volume from the voice services. The report suggests that VAN services will need to cater to users needs while on the move, pointing out that radio telephones, pagers, microcomputers, miniterminals and miniprinters will be among the VAN service equipment needed. From $519M in 1984, the investment in telecommunications equipment for VANs will grow to $2 900M by 1990. Prime categories then will be: facsimile equipment, representing 18% of all equipment dollars; terminals, 17%; computer equipment, 16%; and data equipment, 13%. By country, the UK, France and the FRG are the largest markets, together accounting for two-thirds of the European total, a level that will shrink only slightly by 1990. The UK is the most developed national segment, with 29% of the 1984 overall. The FRG and France are nearly equal in size, 18% of the market, although the FRG will overtake France by 1990. (Frost & Sullivan, Inc., 106 Fulton Street, New York, tqY lO038. Tel: (272)2337080) []
Fourth generation PBXs IRD, USA (1985) $1 285, 198 pp In the breakup of AT&T, new decisions may have to be made about the regional Bell operating companies (RBOCs). According to this report, some of the RBOCs are already testing the limits of what they can do, particularly in the area of customer premises equipment. While they are allowed to market such equipment, they are forbidden to manufacture it, which has resulted in them supplying PBXsand key systems made by other companies. A few of the RBOCs have not been satisfied with this situation and have announced plans to design and develop such equipment, says the report. This move, led by Ameritech and Bell Atlantic, is bound to generate controversy. It will have to be decided whether or not the design and development functions are
part of the manufacturing process and if they are, whether a separate ruling should be made to prohibit the RBOCs from this type of endeavour. In addition, the involvement of the regionals in more than the marketing of equipment is likely to provoke protests from existing manufacturers claiming unfair competition and other grievances. The study makes an interesting observation -- what if references to the design and development of customer premises equipment were purposely left out of the decree, with the intention of allowing the RBOCs to gradually become more like the independent telecommunications companies? The report goes on to suggest that Judge Greene, the man responsible for overseeing the
149
break-up of AT&T, is probably in favour of letting the RBOCs become involved in the design and development stages and may have deliberately left these issues ambiguous. It is more likely, however, that the omission of any mention of such functions was an oversight that will now cause controversy. The report states that the further involvement of the RBOCs in the customer premises business will complicate the already confused PBX industry, which has been battered in the past year by the entrance of the RBOCs acting as marketers of PBXs. The report observes that the appearance of the RBOCs has caused changing distribution patterns and severe price competition, reducing the margins of existing suppliers and particularly the interconnects. The report suggests that if the regionals are now going to design and
develop new products, the market will probably be faced with the onslaught on new equipment from them in the next couple of years which, while good for customers, could wreak havoc with the number and type of suppliers. One of the markets that could be positively influenced by further involvement by the RBOCs is that of fourth generation PBXs, able to handle data as well as voice transmissions and designed with distributed architectures. While only expected to amount to about $200M in sales in 1985, the report predicts that it will increase to over $1 O00M by 1995, helped by the growth in digital networks. Developments in this area by the RBOCs could result in faster growth in this market. (International Resource Development Inc., 6 Prowitt Street, Norwalk, CT 06855 USA, Tel: (203) 866 7800, Telex: 64 3452) I"1
Barcode systems and equipment IRD, USA (1985) $1 850, 232 pp More than 50 000 US manufacturers will be directly affected by the Department of Defense's requirement for application of barcode markings to material procured by the military. This is the finding of this research report, which describes the Logistics Applications of Automated Marking and Reading Systems (LOGMARS) project for barcoding, which is expected to save the Government more than $100M per year in inventory costs (because parts can be immediately and automatically identified and counted). Besides requiring manufacturers to acquire barcoding equipment, the LOGMARS program is likely to provide a 'strong stimulus' to internal use of barcodes for inventory control by these same manufacturers, says the report. Although barcode techniques arejust now reaching widescale use in military inventory-control activities, other segments of the barcode
150
market are more mature, and the barcode equipment industry will exceed $500M in 1984 US shipments, according to the report. Today, there are some 9 700 barcode systems installed in American supermarkets; conversions occur at an average rate of 150 per month. More than 30% of all items bought at supermarkets in the US are now checked out through barcode systems. These purchases, however, are made at less than 5% of all American grocery stores. A similar market, nongrocery retail stores, is now beginning to show some activity. A few department store chains implemented (or at least experimented with) OCR systems at an early stage. Indeed, the Retail Merchants Association endorsed an OCR standard in 1976. A paucity of precoded items, however, and unacceptable error rates in early systems gave the technology a bad name. The report estimates that, currently, only
about 10% of all department store items are barcoded as a matter of course. The industrial potential for online barcoding systems was recognized early in the history of barcoding. A few systems were even operating in the mid1970s. Moreover, after the development of the UPC grocery code, companies, such as IBM, Spectraphysics, NCR and Sweda had introduced laser-based barcode POS systems for use in retail outlets. These grocery store slot scanners were not well suited to industrial applications, however, The typical slot scanner was a fixedposition unit that required considerable power (about 100 W). It used a fragile, expensive glass laser tube that had to be replaced frequently. Later, handheld wands became available, but for industrial installations there were still problems of reading codes printed on unusual surfaces such as cellophane and vinyl. The original handheld wands were not laser units and thus brought a problem of fucusing: they required direct contact with the barcode being read and therefore could not scan through clear (shrink) wrappings. Since highspeed multiple passes were not feasible, misreads were a common occurrence. According to the report, one of the most far-reaching events for the industrial segment of the barcode industry occurred in 1976, when General Motors began to require the use of barcodes on emission control components built for GM cars and trucks. Eventually, the Automotive Industry Action Group, made up of representatives of GM, Ford, Chrysler, American Motors and Volkswagen of America, released barcoding standards for the industry and its suppliers. These standards allow companies to track components such as engine blocks --from casting to postsale repairs. The recommendations of the Action Group will affect more than 28 000 suppliers of parts to the industry. According to the IRD study, barcoding can be used in countless applications outside retail stores
computer communications
vol 8 no 3 june 1985
VAN of this type has been Diane, operated by Euronet). Owingto more market growth in other services, however, its share of the total market will fade from two thirds in 1984 to under one-quarter in the 1990s. Text message services will increase to more than 60 times the 1984 value, reaching $1 300M by 1990. This is a rise from 4% of the market to more than one-fifth of it, and the report predicts that it will end the period as the market's second largest segment. Security services are the second largest market area (12% of the 1984 total), but they will be overtaken by other areas. Radio services and videotex will be the third and fourth largest segment by 1990, forming 14% and 13% of all volume, respectively. Video, image and voice services will also be significant areas, with PTTs deriving much
volume from the voice services. The report suggests that VAN services will need to cater to users needs while on the move, pointing out that radio telephones, pagers, microcomputers, miniterminals and miniprinters will be among the VAN service equipment needed. From $519M in 1984, the investment in telecommunications equipment for VANs will grow to $2 900M by 1990. Prime categories then will be: facsimile equipment, representing 18% of all equipment dollars; terminals, 17%; computer equipment, 16%; and data equipment, 13%. By country, the UK, France and the FRG are the largest markets, together accounting for two-thirds of the European total, a level that will shrink only slightly by 1990. The UK is the most developed national segment, with 29% of the 1984 overall. The FRG and France are nearly equal in size, 18% of the market, although the FRG will overtake France by 1990. (Frost & Sullivan, Inc., 106 Fulton Street, New York, tqY lO038. Tel: (272)2337080) []
Fourth generation PBXs IRD, USA (1985) $1 285, 198 pp In the breakup of AT&T, new decisions may have to be made about the regional Bell operating companies (RBOCs). According to this report, some of the RBOCs are already testing the limits of what they can do, particularly in the area of customer premises equipment. While they are allowed to market such equipment, they are forbidden to manufacture it, which has resulted in them supplying PBXsand key systems made by other companies. A few of the RBOCs have not been satisfied with this situation and have announced plans to design and develop such equipment, says the report. This move, led by Ameritech and Bell Atlantic, is bound to generate controversy. It will have to be decided whether or not the design and development functions are
part of the manufacturing process and if they are, whether a separate ruling should be made to prohibit the RBOCs from this type of endeavour. In addition, the involvement of the regionals in more than the marketing of equipment is likely to provoke protests from existing manufacturers claiming unfair competition and other grievances. The study makes an interesting observation -- what if references to the design and development of customer premises equipment were purposely left out of the decree, with the intention of allowing the RBOCs to gradually become more like the independent telecommunications companies? The report goes on to suggest that Judge Greene, the man responsible for overseeing the
149
break-up of AT&T, is probably in favour of letting the RBOCs become involved in the design and development stages and may have deliberately left these issues ambiguous. It is more likely, however, that the omission of any mention of such functions was an oversight that will now cause controversy. The report states that the further involvement of the RBOCs in the customer premises business will complicate the already confused PBX industry, which has been battered in the past year by the entrance of the RBOCs acting as marketers of PBXs. The report observes that the appearance of the RBOCs has caused changing distribution patterns and severe price competition, reducing the margins of existing suppliers and particularly the interconnects. The report suggests that if the regionals are now going to design and
develop new products, the market will probably be faced with the onslaught on new equipment from them in the next couple of years which, while good for customers, could wreak havoc with the number and type of suppliers. One of the markets that could be positively influenced by further involvement by the RBOCs is that of fourth generation PBXs, able to handle data as well as voice transmissions and designed with distributed architectures. While only expected to amount to about $200M in sales in 1985, the report predicts that it will increase to over $1 O00M by 1995, helped by the growth in digital networks. Developments in this area by the RBOCs could result in faster growth in this market. (International Resource Development Inc., 6 Prowitt Street, Norwalk, CT 06855 USA, Tel: (203) 866 7800, Telex: 64 3452) I"1
Barcode systems and equipment IRD, USA (1985) $1 850, 232 pp More than 50 000 US manufacturers will be directly affected by the Department of Defense's requirement for application of barcode markings to material procured by the military. This is the finding of this research report, which describes the Logistics Applications of Automated Marking and Reading Systems (LOGMARS) project for barcoding, which is expected to save the Government more than $100M per year in inventory costs (because parts can be immediately and automatically identified and counted). Besides requiring manufacturers to acquire barcoding equipment, the LOGMARS program is likely to provide a 'strong stimulus' to internal use of barcodes for inventory control by these same manufacturers, says the report. Although barcode techniques arejust now reaching widescale use in military inventory-control activities, other segments of the barcode
150
market are more mature, and the barcode equipment industry will exceed $500M in 1984 US shipments, according to the report. Today, there are some 9 700 barcode systems installed in American supermarkets; conversions occur at an average rate of 150 per month. More than 30% of all items bought at supermarkets in the US are now checked out through barcode systems. These purchases, however, are made at less than 5% of all American grocery stores. A similar market, nongrocery retail stores, is now beginning to show some activity. A few department store chains implemented (or at least experimented with) OCR systems at an early stage. Indeed, the Retail Merchants Association endorsed an OCR standard in 1976. A paucity of precoded items, however, and unacceptable error rates in early systems gave the technology a bad name. The report estimates that, currently, only
about 10% of all department store items are barcoded as a matter of course. The industrial potential for online barcoding systems was recognized early in the history of barcoding. A few systems were even operating in the mid1970s. Moreover, after the development of the UPC grocery code, companies, such as IBM, Spectraphysics, NCR and Sweda had introduced laser-based barcode POS systems for use in retail outlets. These grocery store slot scanners were not well suited to industrial applications, however, The typical slot scanner was a fixedposition unit that required considerable power (about 100 W). It used a fragile, expensive glass laser tube that had to be replaced frequently. Later, handheld wands became available, but for industrial installations there were still problems of reading codes printed on unusual surfaces such as cellophane and vinyl. The original handheld wands were not laser units and thus brought a problem of fucusing: they required direct contact with the barcode being read and therefore could not scan through clear (shrink) wrappings. Since highspeed multiple passes were not feasible, misreads were a common occurrence. According to the report, one of the most far-reaching events for the industrial segment of the barcode industry occurred in 1976, when General Motors began to require the use of barcodes on emission control components built for GM cars and trucks. Eventually, the Automotive Industry Action Group, made up of representatives of GM, Ford, Chrysler, American Motors and Volkswagen of America, released barcoding standards for the industry and its suppliers. These standards allow companies to track components such as engine blocks --from casting to postsale repairs. The recommendations of the Action Group will affect more than 28 000 suppliers of parts to the industry. According to the IRD study, barcoding can be used in countless applications outside retail stores
computer communications