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New technology may speed corporate networks

A new wrinkle in high-speed networking may finally fuel the growth of a technology that was expected to rake in billions of dollars a year in revenue for equipment firms.

A new wrinkle in high-speed networking may finally fuel the growth of a technology that was expected to rake in billions of dollars a year in revenue for equipment firms.

Many companies have long hoped that gigabit-speed Ethernet, a high-speed version of standard Ethernet technology that allows PCs to communicate across a network within companies, would cure their network bandwidth problems. Company layouts have increasingly become congested as firms shove huge files, email, and other data over networks.

New gigabit-speed Ethernet technology that works with older corporate networks may finally give firms a chance to reap the benefits of a faster network. Moreover, as more companies adopt Ethernet technology, network equipment providers like Cisco Systems, Extreme Networks, 3Com, and Nortel Networks are sure to see their own profits soar at Internet speeds.

Gigabit Ethernet, which runs at 1,000 megabits per second (mbps), is ten times faster than current Fast Ethernet technology. Industry observers say its adoption, however, has been slow due to its relative high cost and compatibility problems with existing technology.

That's about to change, analysts say.

After a two-year effort, an industry standards group this summer approved a new standard for Gigabit Ethernet over traditional copper phone wires, a move analysts say will drive Gigabit Ethernet's growth because 70 to 80 percent of businesses use copper wires in their networks.

Before, Gigabit Ethernet technology was only available for a fiber-based network infrastructure--a difficult and expensive technology to install. To make the switch to Gigabit Ethernet technology previously, most businesses would need to spend a fortune to rip out copper wiring and install fiber-optic lines--not something many companies could afford.

"This is big," said analyst Mike Wolf of Cahners In-Stat Group, in reference to the new copper standard. "It opens up the doors for people who have limited budgets, who are running on Fast Ethernet and didn't want to rewire their companies with fiber to use Gigabit Ethernet."

Sales of all Gigabit Ethernet equipment are expected to reach $878.6 million this year, climbing to $2.5 billion by 2002, according to analyst firm Dataquest.

Networking firms like 3Com, Extreme Networks, and Foundry Networks expect to ship switches, networking interface cards, and other networking equipment that support the copper standard later this year or in early 2000.

Speed, not cost
Bill Rossi, marketing director for Cisco's desktop switching business unit, said the Gigabit Ethernet-over-copper technology will eventually be two- to four-times cheaper than fiber--but the first generation copper products will cost about the same.

But as the copper technology becomes more popular and chipmakers increase production of processors for Gigabit Ethernet products, the prices will fall, said Rossi. He predicts prices will drop by half within six months.

Companies using Fast Ethernet speeds will find it easy to migrate to Gigabit Ethernet--all they have to do is swap out the network's interface card with one that runs at gigabit speeds, said Tim Dunn, director of marketing for Intel's network interface division.

Mike Bennett, network administrator for Lawrence Berkeley National Lab, said he is looking forward to using the copper technology to satiate the lab's appetite for more network bandwidth.

"[Scientists are] starting to push the limits of Fast Ethernet and are starting to clamor for Gigabit Ethernet," said Bennett, who estimates 10 percent of the lab's 12,000 users are heavy-duty bandwidth users. "We're a research institution. We have to stay on the cutting edge for network technologies."

Yet the new technology faces several hurdles before companies widely deploy it, said Cahners In-Stat's Wolf.

One problem is that PCs currently cannot support Gigabit Ethernet speeds, so it will take a while before network interface cards with gigabit speeds will be used on desktop machines, he said. The PCI Bus, a piece of hardware that is used to transfer data in and out of a PC, can't yet handle gigabit speeds. But a forthcoming PCI standard that will support Gigabit Ethernet is expected by the end of year 2000, he said.

"Until they get this ironed out, you won't see it on the desktop," he said.

Another potential problem is that if the copper wiring is not correctly installed on a local area network, businesses won't be able to transfer data at Gigabit Ethernet speeds, Wolf said.

Chipmakers and networking firms that have run some field tests said they've seen some copper wiring that wasn't up to snuff, Wolf said. "They weren't installed to specification. [If] the installers don't cut the wire and plug it in the ports correctly, they're not going to truly run at full gigabit speeds."