trotz der augenblicklich desolaten Marktverfassung:
more input:
Agere targets telecom turnaround
By Nicolas Mokhoff
EE Times
November 17, 2003 (10:12 a.m. EST)
ALLENTOWN, Pa. — Agere Systems executives are banking on a recovery in the telecommunications infrastructure market and 3G wireless deployment to break out of a lengthy downturn over the next year.
The forecast came during Agere`s first "analyst day" since the company was spun off from Lucent Technologies in June 2002.
"The infrastructure market is relatively stable, but still weak," said John Dickson, Agere`s president and CEO. "We are looking at an infrastructure market recovery by the second half next year, as well as a 3G ramp."
Dixon said focused investments will be made to sustain current growth in 3G cellphones and consumer hard disk drives. Also, the company will continue to leverage IP in new products such as storage area networks and printers. Agere also plans to expand into selected markets such as RF power and Ethernet.
"In FY2003, we have resized the business to return to profitability," said executive vice president and chief financial officer John Gamble. "In FY2004 we will drive toward our business model of near 50-percent gross margins and 15-plus percent in operating margins."
Agere`s focus is to provide integrated circuit solutions for wireless data, high-density storage and multiservice networking applications.
"Leveraging long-standing mixed-signal design expertise is our heritage," said Necip Sayiner, vice president of the Networking ICs division. "Differentiated IP is in our DNA."
Sayiner said there is a $2 billion market in chips for the enterprise and "we aim to take advantage of it." He added that Agere content will be in all blocks in some wireless network systems. Agere is a market leader in DSPs for wireless infrastructure and traffic management, and is number two overall in wireless infrastructure ICs.
As part of its restructuring, Agere has switched to a foundry manufacturing model. "At 130 nm and below all our production will be sourced from commercial fabs," said Andy Micallef, vice president for supply chain management. In addition, statistical models developed at neighboring Lehigh University and used in the company`s Advanced Planning System enables Agere to respond to increases and reductions on a daily basis, according to Micallef. "We restructure our fabs every single day to where inventory turns almost match customer requests."
On the client side, Agere has recently added a Media Connectivity division to its other three units: HDD Storage, Mobile Terminals and PC Connectivity. "The Client Systems Group is positioning itself to leverage the next technology wave, that of `personal broadband` for entertainment applications," said Ron Black, executive vice president.
Agere reported its strongest quarter yet as a public company during its recently concluded. Dickson expressed satisfaction with exceeding 40 percent gross margins for the first time since the initial public offering.
und noch einen:
POWERING A NEW NETWORK EQUIPMENT PLATFORM
Chip maker Agere and its partners change the game for network equipment cards.
By Eric Knorr
Nothing improves efficiency like a reversal of fortune. Network equipment manufacturers, which endured a 60 percent drop in U.S. telecom spending in 2002, have laid off more workers than any other technology sector and drastically consolidated product lines to reduce overlap. Like the IT industry, telecom has shifted from emphasizing speeds and feeds to actually making parts of the existing infrastructure integrate better. But that doesn`t mean the demand for higher performance has evaporated. Even as OEMs, such as Lucent, Cisco, and Nortel, change their tune to meet new demands for improved network management software and services, they must still ask their vastly reduced engineering staffs to pony up routers, switches, and base stations that are ever more powerful.
Network IC maker Agere, of Allentown, Pa., sees opportunity in its OEM customers` stretched resources. Last June, the company announced an alliance with Toronto-based contract manufacturer Celestica and Silicon Valley communications chip developers Exar and Agilent to produce line cards for routers and switches, coupled with complete system software packages that OEMs can buy and use as off-the-shelf solutions. Dubbed the Festino platform, this extensible portfolio of generic line-card designs targets manufacturers of high-end fixed-wire and wireless networking equipment. As OEMs push to differentiate themselves by providing software and services that help customers manage operations, Festino can offload hardware development no longer viewed as strategic.
Rather than wasting engineering resources on developing line cards, OEMs can simply buy Festino cards and, with some minimal modification in software and interface hardware, plug them into networking equipment sold to telecom customers as a total package of hardware and software.
Mark Wilson, director of system applications for Agere`s infrastructure systems group, claims that OEM interest in Festino has been high, although as of this writing, no deals have been signed yet. "A few years back, we wouldn`t have gotten very far with this, because all this expertise and function was in-house" with the OEMs, says Wilson. Today, he sees a trend much like what occurred in the automobile industry, of "increasing focus on outsourcing for some of the less-differentiating features," such as line-card performance. Alluding to Agere`s parentage (the company completed its spin-off from Lucent in 2002), Wilson asserts, "We believe that with our systems expertise, we can drive this trend and really lead the market with it."
"Reference platforms are nothing unique," says Rob Liszt, vice president of sales for Agere. But, he explains, creating a turnkey platform that includes all the necessary technology from multiple vendors-plus testing and validation-has never been done before in the network equipment space. "It results in, what I call a `known good start`," says Liszt. "Customers can significantly reduce their risk and their time to market. Now, they`ve got a system they can demonstrate."
Inflection Point
The Festino platform represents an inflection point for the telecom equipment industry, says iSuppli senior analyst Steve Rago. Until recently, OEMs competed fiercely on all fronts, including line-card performance-even though this depended primarily on the power of the network processor. But, in an era of diminishing resources, says Rago, OEMs must pick their battles-and spending resources where there`s little internal IP involved makes little sense. At the end of the day, however, Rago rates the chances of Festino`s success at only slightly better than 50 percent. "It makes logical sense, but the devil is in the details. It`s going to take a lot of resources to put a few of these products in place so OEMs can see what they can do. Agere and its partners are providing all the software, all of the reliability design work, and everything else that goes into making a carrier-class piece of equipment. But do they have enough resources to build a sufficient number of these products to gain traction in the marketplace?"
The jury is still out on that question, says Rago. Joe Mixsell, Celestica`s vice president of global design, admits that the platform will face resistance from OEMs whose culture shuns "not-invented-here" designs. In short, Festino is not a sure bet. What is certain, however, is that this initiative starkly illustrates how the network equipment market has turned upside down in such a short time: Arguably the hottest area of technology just three years ago, high-end network hardware is now ripe for commoditization. The details of the Festino blueprint may or may not be exactly right-although new ICs from Agere for Festino work in a broad range of equipment, which gives the effort a fighting chance. When resources take a nosedive, new divisions of labor such as those proposed by Agere and its partners may be the best way for everyone to make the most of what they`ve got.
From PC motherboards to diesel engines, there`s plenty of precedent for commoditizing components that provide minimal differentiation. Rago compares it to the modem market of yore. "In the original modem model, you just threw the silicon out there. Eventually Rockwell actually provided software and turnkey design to OEMs and ODMs in Taiwan, so they had virtually no development effort. If you think of that model, that is essentially what Agere sees as the ultimate goal: to provide major OEMs with a complete solution they can actually get into production without expending a lot of their internal resources."
The market transformation, which may make network equipment manufacturers receptive to a similar proposition, has been dramatic. Strapped carriers need to reduce not only capital expenditures but, even more desperately, operating expenses as well. "You get effective network management through point-and-click provisioning, single-seat management, and so on. And what makes that real is having software capabilities on the network elements," says Agere`s Wilson. That software is where OEMs need to focus their efforts, rather than in pushing the envelope in line-card design.
By investing in software and development to meet customer needs, says Rago, "OEMs can concentrate where they can add value. Where they cannot add value is in taking a four-port T1 [telecommunications] board and making it a 16-port T1 board. The end customer demands that [flexibility], whether he buys the board from a Nortel, or a Lucent, or an Alcatel, or a Siemens. It doesn`t make any difference."
Making the Relationship Work
The challenge for the Festino alliance, and for Agere in particular, is to create products that will meet the needs of multiple vendors. As the first link in the Festino design chain, Agere does the board layout, which it hands off to Celestica, which takes that design and creates a generic card. "We validate that vanilla flavor," says Wilson. "And, of course, what Celestica does is use these vanilla cards as the foundation upon which they add unique `flavors` to create differentiation. So, if they go to a Nortel or a Cisco and they want to add this or that piece of it, Celestica will effectively become Agere`s customer for that model and handle the interactive design collaboration as well as postsales support."
Logistically, each of the participating companies has an executive Festino sponsor that acts as a single point of contact for high-level decisions on new collaborative projects. "As the executive champion for Agere with the Celestica/Agere relationship," says Liszt, "I work with the executive champion at Celestica to zero in on which customers we think could most benefit from Festino. Ultimately, we establish account plans. We are working collaboratively to bring Festino and all of its advantages to them-plus the strength of Celestica, which can do any customization that might be required."
"We`re not marketing it to everyone. We just can`t be everything to everybody." Mark Wilson, Agere
When a project gets a green light, application engineers collaborate to do the actual work. "For any given customer project that comes in, we have our engineers working closely with their engineers," says Celestica`s Mixsell. The groups use several kinds of tools, including Web-based conferencing software, product development software, and a common database for project management. "They share the documentation, providing a historical record of the decisions made during the program," says Mixsell, adding, "We use WebEx conferencing quite a bit in terms of coordinating our efforts. So, it`s typical in the context of relationships we normally set up: a single point of contact on both sides, and, as the projects come and go, the teams form around those projects for completion."
Doing More with Less
With software`s new ascendancy and with fewer carrier dollars chasing hardware, OEMs have cut the variety of boxes they offer in half, says Agere`s Wilson. Meanwhile, new ICs are stepping up to the plate to expand what a single box or line card can do. "That`s why the term multiservice platform has become very popular," Wilson says. "If you go to Lucent`s or Nortel`s Web site, you may still see a lot of product names, but they are all basically derivatives of the same platform. Typically it`s the same line cards, the same form factor in terms of the chassis, and the same basic software building blocks."
The Festino platform is explicitly intended to support this one-size-fits-all approach. Adam Carter, metro components marketing manager for Agilent`s fiber optics division, says that both Agilent and Agere are achieving new levels of integration that facilitate highly versatile line cards. "The issue with multiservice provisioning platforms is that you have various data rates, as well as various storage protocols. Agere has a very integrated solution, so all the customer needs to do is buy this one chip, which can provision anything from OC3 up to OC48," says Carter, referring to the typical range of optical carrier transmission speeds.
Agilent`s optical transceivers offer parallel versatility, says Carter. "Our chip can take a variety of optical transmission speeds. What it does depends on your configuration. This IC does the equivalent of what three ICs were needed for five or six years ago."
Reducing chip count while raising functionality helps drive down that all-important metric, cost per port, but Carter notes that higher levels of IC integration help cut operating costs, too. "You also reduce power consumption and the heat it generates," says Carter. "That gets more efficient as well."
You expect cutting-edge ICs from the likes of Agere and Agilent, big players that grossed $2.2 and $6 billion last year, respectively, and continue to maintain large R&D budgets. A less-obvious potential benefit of Festino is that it may also shorten OEMs` time to market. "In the old model, Agere would develop these chips, and it might be a couple of years down the road before a Lucent or a Cisco or a Nortel would design them into a new product," says Celestica`s Mixsell. "Our role in this is to collaborate, develop reference designs, and take them to our customers. If there is a need to customize, we can do that quickly, because we`ve already completed a lot of good design work. Customers benefit by getting new technology into their product sooner."
"This has more than a minor impact on our customers in terms of what they`re looking for," says Agere`s Liszt. He estimates that customers will typically be able to reduce their development costs by 50 percent.
Rewards and Risks
That economic benefit goes both ways. If successful, Festino (which means hasten in Latin) will help its founding members accelerate their return on investment. "The phrase I use is time to money," says Mixsell. "If I look at the parties to this relationship, the Agere team spends a lot of money doing research into next-generation chip sets and how to improve cost structure and into developing new functionality and technology. It wants these chips in the customer`s hands not just for doing new designs, but in a way that allows them to start seeing revenue sooner."
And what will Celestica, a relatively unknown company that pulled in a whopping $8.3 billion in total revenue last year, get out of it? For one thing, says Mixsell, Celestica can join Agere in sales calls to OEMs at the front end rather than the back end of the design cycle. "The benefit for us is clearly to expand our design presence and our manufacturing presence with these customers," says Mixsell. "The learning we`ll experience in our co-marketing and co-sales activities is something that will be valuable for us to explore with other technology partners."
The main near-term attraction for the other partners, Agilent and Exar, is simply the prospect of selling more chips. Hugh Wright, director of tactical marketing for Exar (by far, the smallest of the four players, with $63 million in 2002 revenues), sees Festino as an exciting new sales channel, forged by its larger partners, for its T1 and E1 telecommunications ICs. Agilent`s Carter, on the other hand, seems most energized by Festino`s potential to provide a template for future collaborations. "This isn`t a one-stop deal," he says. "What we`re doing with Festino is just the first stage."
But first, Festino must prove itself. Agere`s Wilson brushes off those who doubt that Agere has sufficient resources to make it work. "We always have had to build boards to test our ICs and to do the final validation. We`re taking what we`ve done and formalizing that as an offering to our customer. It`s not really a cost burden, because it`s the same kind of work we had to do anyway."
Rago of iSuppli raises significant concerns about this strategy. "There`s a lot more to making a carrier-grade line card with all the software support than the average ODM knows about," he says. Although Agere has its systems heritage to draw on and Celestica has been manufacturing network equipment for years, OEMs must be convinced. "You can`t sell vaporware. OEMs need to see a running product with all the documentation, software, and testing completed." Any way you slice it, contends Rago, creating that product will cost more than building an ordinary reference design.
Exar`s Wright agrees that Agere is bearing substantial risk. "It`s doing a lot of the software development. Its applications people are actually doing a lot of the card design. So if it doesn`t pay off, it`s lost the opportunity cost on those resources."
If Festino succeeds, it may be because the partners have selected the targets for these designs carefully. "We`re not offering it or marketing it to every customer we sell ICs into, because we just can`t be everything to everybody," says Wilson. "We want to make sure we do this well, so we`re being very strategic about whom we`re going after."
In another strategic move, all Festino participants have avoided any hint of exclusivity. Celestica`s Mixsell, in particular, seems open to the idea of other alliances. "We`re seeing lots of discussions with companies providing IP through chip sets wanting to work with a company, such as Celestica, to do the reference design," he says. "Other companies are coming to Celestica and saying they`d like to partner with us to develop a family of products or cards, or whatever we can, then take the market together."
As a semiconductor analyst, Rago ultimately sees Festino, and other such collaborations that may be percolating in the background, as just another tool that can help suppliers win design-ins. "That`s where the rubber hits the road," says Rago. "The very first step in any semiconductor sales effort is to get your part designed into the customer`s product. The next step is to help the customer get into production. I think Festino can find a sweet spot where it will be able to supply a certain level of product to multiple OEMs and get design-ins done."
"Intel did exactly what Agere is trying to do," says Celestica`s Mixsell. "When it introduced a new chip set, it introduced a reference design at the same time, so it could really capture time to money with that new chip set. And whether it`s the Ageres, the Broadcoms, the Mellinexes, the Nvidias, or whoever, I have to believe they have a similar kind of desire in the back of their mind. This could very well change the dynamic of how products are designed."
ABOUT THE AUTHOR
Eric Knorr (eknorr@designchain.com) is a freelance technology writer and consultant who wrote the profile of TSMC in the Summer 2003 issue. A former editor of PC World, he writes regularly on semiconductors and electronics.
