Communications Roadmapping

Roadmapping the Communications Value Chain 1 One View of the Communications Value Chain MATERIALS & PROCESS EQUIP •Silicon •Gaas •InP •Polymers •Steppers •Etchers •MEMS •Insertion •Etc.. COMP- EQUIPMENT MAKERS NETWORK ONENTS OWNERS •Lasers •Amplifiers •Transceiver •Filters •Processors •Memories •Fiber •ASICS •MEMS •DSP’s •Etc.. •Routers •Switches •Hubs •Base Stations •Satellites •Servers •Software •O/S •Etc.. •Wireless •Backbone •Metro •Access •Substations •Satellites •Broadcast Spectrum •Communic Spectrum •Etc.. SERVICE PROVIDERS •Long distance •Local Phone •Cellular •ISP •Broadcast •Hot Spots •Cable TV •Satellite TV •VPN’s •MVNO’s •Etc.. CONTENT & APPLICS •Music •Movies •Email •VoIP •POTS •Shopping •ERP •SCM, CRM •Surveillance •eBusiness •Etc.. DEVICES •Computers •Phones •Media Players • Cameras •PDA’s •Weapons •Etc.. 2 END USERS •Business •Consumer •Gov’t •Military •Education •Medical •Etc.. CROSS-INDUSTRY CHALLENGES Digital Rights ( “To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries;” U.S. Constitution, Article 1, Section 8, Clause 8 ) Access Architecture Proposed MIT Communications Roadmap Consortium MPC, MTL MATERIALS & PROCESS EQUIP •Silicon •Gaas •InP •Polymers •Steppers •Etchers •MEMS •Insertion •Etc.. LIDS, RLE •Lasers •Amplifiers •Transceiver •Filters •Processors •Memories •Fiber •ASICS •MEMS •DSP’s •Etc.. •Routers •Switches •Hubs •Base Stations •Satellites •Servers •Software •O/S •Etc.. eBusiness, Oxygen, Media Lab LCS ITC COMP- EQUIPMENT MAKERS NETWORK ONENTS OWNERS •Wireless •Backbone •Metro •Access •Substations •Satellites •Broadcast Spectrum •Communic Spectrum •Etc.. SERVICE PROVIDERS •Long distance •Local Phone •Cellular •ISP •Broadcast •Hot Spots •Cable TV •Satellite TV •VPN’s •MVNO’s •Etc.. 3 CONTENT & APPLICS •Music •Movies •Email •VoIP •POTS •Shopping •ERP •SCM, CRM •Surveillance •eBusiness •Etc.. DEVICES •Computers •Phones •Media Players • Cameras •PDA’s •Weapons •Etc.. END USERS •Business •Consumer •Gov’t •Military •Education •Medical •Etc.. CROSS-INDUSTRY CHALLENGES Digital Rights ( “To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries;” U.S. Constitution, Article 1, Section 8, Clause 8 ) Access Architecture Roadmap Components: Dynamic Analyses 1. Business cycle dynamics (e.g., systems dynamics-like models of the bullwhip effect) 2. Industry structure dynamics (e.g., double helix in Clockspeed) 3. Corporate strategy dynamics (e.g., dynamic strategic analyses for players in the value chain) 4. Technology dynamics (e.g., the Semiconductor Industry Assoc. roadmap built around Moore's law) 5. Regulatory Policy Dynamics (Cross-National, Cross Sector) 4 5 Cisco’s End-to-End Integration for its Fulfillment Supply Chain • New product development on-line with supply base • Technology Supply Chain Design: Innovation through Acquisition Customers Order info flows direct to Cisco and suppliers Cisco Finished Product flows direct to customer via logistics supplier Contract Manufacturers • Single enterprise information system • Dynamic replenishment, direct fulfillment, merge in transit • Customer orders through Cisco Connection online Component Suppliers & Distributors Basic Design Principle: Arm’s length Relationship with Fulfillment Chain Partners Cisco’s Strategy for Technology Supply Chain Design 6 1.Integrate technology around the router to be a communications network provider. 2. Leverage acquired technology with - sales muscle and reach - end-to-end IT - outsourced manufacturing - market growth 3. Leverage venture capital to supply R&D Basic Design Principle: Acquisition Relationship with Technology Chain Partners Volatility Amplification in the Supply Chain: 7 “The Bullwhip Effect” Customer Retailer Distributor Information lags Delivery lags Over- and underordering Misperceptions of feedback Lumpiness in ordering Chain accumulations Factory Tier 1 Supplier Equipment SOLUTIONS: Countercyclical Markets Countercyclical Technologies Collaborative channel mgmt. (Cincinnati Milacron & Boeing) Supply Chain Volatility Amplification: Machine Tools at the tip of the Bullwhip 8 “We are experiencing a 100-year flood.” J. Chambers, 4/16/01 LESSONS FROM A FRUIT FLY: CISCO SYSTEMS 1. KNOW YOUR LOCATION IN THE VALUE CHAIN 2. UNDERSTAND THE DYNAMICS OF VALUE CHAIN FLUCTUATIONS 3. THINK CAREFULLY ABOUT THE ROLE OF VERTICAL COLLABORATIVE RELATIONSHIPS 4. INFORMATION AND LOGISTICS SPEED DO NOT REPEAL BUSINESS CYCLES OR THE BULLWHIP. Bonus Question: How does clockspeed impact volatility? 9 Roadmap Components: Dynamic Analyses 1. Business cycle dynamics (e.g., systems dynamics-like models of the bullwhip effect) 2. Industry structure dynamics (e.g., double helix in Clockspeed) 3. Corporate strategy dynamics (e.g., dynamic strategic analyses for players in the value chain) 4. Technology dynamics (e.g., the Semiconductor Industry Assoc. roadmap built around Moore's law) 5. Regulatory Policy Dynamics (Cross-National, Cross Sector) 10 Vertical Industry Structure with Integral Product Architecture Computer Industry Structure, 1975-85 IBM DEC BUNCH All Products All Products All Products Microprocessors Operating Systems Peripherals Applications Software Network Services Assembled Hardware 11 12 Horizontal Industry Structure with Modular Product Architecture Computer Industry Structure, 1985-95 Intel Intel Microprocessors Operating Systems Peripherals Applications Software Network Services Assembled Hardware Mac Moto Microsoft HP IntelEpson Microsoft Mac Mac Seagate Lotus Novell AOL/Netscape Microsoft HP Compaq IBM Dell TI etc etc AMD Unix TIetc etcetc etc EDS etc etc etc etc THE DYNAMICS OF PRODUCT ARCHITECTURE AND VALUE CHAIN STRUCTURE: THE DOUBLE HELIX 13 Roadmap Components: Dynamic Analyses 1. Business cycle dynamics (e.g., systems dynamics-like models of the bullwhip effect) 2. Industry structure dynamics (e.g., double helix in Clockspeed) 3. Corporate strategy dynamics (e.g., dynamic strategic analyses for players in the value chain) 4. Technology dynamics (e.g., the Semiconductor Industry Assoc. roadmap built around Moore's law) 5. Regulatory Policy Dynamics (Cross-National, Cross Sector) 14 ALL COMPETITIVE ADVANTAGE IS TEMPORARY 15 Autos: Ford in 1920, GM in 1955, Toyota in 1990 Computing: IBM in 1970, DEC in 1980, Wintel in 1990 World Dominion: Greece in 500 BC, Rome in 100AD, G.B. in 1800 Sports: Bruins in 1971, Celtics in 1986, Yankees no end The faster the clockspeed, the shorter the reign Clockspeed drives Business Strategy Cadence Dynamics between New Projects and Core Capability Development: PROJECTS MUST MAKE MONEY AND BUILD CAPABILITIES CORE CAPABILITIES NEW PROJECTS (New products, new processes, new suppliers) 16 17 IMPLEMENTATION OF VALUE CHAIN DESIGN: EMBED IT IN 3-D CONCURRENT ENGINEERING PRODUCT Performance Specifications Recipe, Unit Process PROCESS Technology, & Process Planning Details, Strategy Product Architecture, Make/Buy components Time, Space, Availability Manufacturing System, Make/Buy processes VALUE CHAIN ARCHITECTURES IN 3-D INTEGRALITY VS. MODULARITY Integral product architectures feature close coupling among the elements - Elements perform many functions - Elements are in close spacial proximity - Elements are tightly synchronized - Ex: jet engine, airplane wing, microprocessor Modular product architectures feature separation among the elements - Elements are interchangeable - Elements are individually upgradeable - Element interfaces are standardized - System failures can be localized Ex: stereo system, desktop PC, bicycle - 18 VALUE CHAIN ARCHITECTURE Integral value-chain architecture features close proximity among its elements - Proximity metrics: Geographic, Organizational Cultural, Electronic - Example: Toyota city - Example: Ma Bell (AT&T in New Jersey) - Example: IBM mainframes & Hudson River Valley Modular value-chain architecture features multiple, interchangeable supplier and standard interfaces - Example: Garment industry - Example: PC industry - Example: General Motors’ global sourcing - Example: Telephones and telephone service 19 20 ALIGNING ARCHITECTURES: BUSINESS SYSTEMS & TECHNOLOGICAL SYSTEMS TECHNOLOGY/PRODUCT ARCHITECTURE BUSINESS SYSTEM/SUPPLY CHAIN ARCHITECTURE (Geog., Organ., Cultural, Elec.) INTEGRAL IN TE GR AL Microprocessors Mercedes & BMW vehicles MSFT Windows MO D UL AR Digital Rights/ Music Distribution MODULAR Lucent Nortel Chrysler vehicles Polaroid Cisco Dell PC’S Bicycles OPTICAL TELECOM VALUE CHAIN: MINI CASE EXAMPLE NORTEL NETWORKS plays at at least three levels of the Optical Network Telecom value chain: 1. Network design & installation 2. Modules (OC-192 network elements) 3. Components (lasers, amplifiers) QUIZ: Should Nortel sell their components business? Hint: How likely are the scenarios of: - An Intel Inside effect in components? - Networks become sufficiently modular as to be assembled by the customer? 21 WIRELESS VALUE CHAIN:MINI CASE EXAMPLE Wireless Base Stations (WSB’S) comprise 4 key subsystems: Radio Part Digital Signal Processing Modem WSB architectures are -integral & proprietary Suppliers include: Nortel, Moto, Ericsson, Siemens, Nokia Disruptive Modem advances (e.g., MUD) can double Base Station Capacity Transmission Interface Fiber & WireBased Network Modular WSB’s might (1) Stimulate new WSB entrants (ala Dell) (2) Stimulate standard subsystem suppliers (3) lower prices to the network operators (4) Speed base station performance imp. (5) Increase demand for basestations due to improved price-performance ratios. 22 Roadmap Components: Dynamic Analyses 1. Business cycle dynamics (e.g., systems dynamics-like models of the bullwhip effect) 2. Industry structure dynamics (e.g., double helix in Clockspeed) 3. Corporate strategy dynamics (e.g., dynamic strategic analyses for players in the value chain) 4. Technology dynamics (e.g., the Semiconductor Industry Assoc. roadmap built around Moore's law) 5. Regulatory Policy Dynamics (Cross-National, Cross Sector) 23 Roadmap for Electronic Devices 24 Number of chip components 295oK 1018 Classical Age 1016 Quantum Age 77oK 1014 4oK 2010 SIA Roadmap 2005 Quantum State Switch 2000 1995 1012 1010 108 Historical Trend 1990 6 10 1980 104 CMOS 1970 102 101 100 10-1 10-2 Feature size (microns) 10-3 25 International Technology Roadmap for Semiconductors ‘99 Year 2005 2008 2011 2014 Technology (nm) 100 70 50 35 DRAM chip area (mm2) 526 603 691 792 DRAM capacity (Gb) 8 64 MPU chip area (mm2) 622 713 817 937 MPU transistors (x109) 0.9 2.5 7.0 20.0 MPU Clock Rate (GHz) 3.5 6.0 10.0 13.5 26 Moore’s Law Transistors per chip 109 ? 108 Pentium 80786 Pro 107 80486 Pentium 106 80386 80286 105 8086 8080 104 4004 103 1970 1975 1980 1985 1990 Year 1995 2000 2005 2010 Disk Drive Development 1978-1991 Disk Drive Dominant Generation Producer 14” 8” IBM 27 Dominant Usage Approx cost per Megabyte mainframe $750 Quantum Mini-computer $100 5.25” Seagate Desktop PC $30 3.5” Conner Portable PC $7 2.5” Conner Notebook PC $2 From 1991-98, Disk Drive storage density increased by 60%/year while semiconductor density grew ~50%/year. Disk Drive cost per megabyte in 1997 was ~ $ .10 Optical Networking is Keeping Up! 28 Capacity Voice growth OC192 OC768 OC48 OC12 Time TDM line rate growth Data growth Optical network capacity growth 29 ”Killer Technologies” of the Information Age: Semiconductors, Magnetic Memory, Optoelectronics “We define a ‘killer technology’ as one that delivers enhanced systems performance of a factor of at least a hundred-fold per decade.” C.H.Fine & L.K. Kimerling, "Biography of a Killer Technology: Optoelectronics Drives Industrial Growth with the Speed of Light,” published in 1997 by the Optoelectronics Industry Develoment Association, 2010 Mass Ave, NW, Suite 200, Wash. DC 20036-1023. Killer Question: Will Integrated Optics evolve linearly like Semiconductors with Moore’s Law or like Disk Drives with repeated industry disruptions? Roadmap Components: Dynamic Analyses 1. Business cycle dynamics (e.g., systems dynamics-like models of the bullwhip effect) 2. Industry structure dynamics (e.g., double helix in Clockspeed) 3. Corporate strategy dynamics (e.g., dynamic strategic analyses for players in the value chain) 4. Technology dynamics (e.g., the Semiconductor Industry Assoc. roadmap built around Moore's law) 5. Regulatory Policy Dynamics (Cross-National, Cross Sector) 30 Proposed MIT Communications Roadmap Consortium MPC, MTL MATERIALS & PROCESS EQUIP •Silicon •Gaas •InP •Polymers •Steppers •Etchers •MEMS •Insertion •Etc.. LIDS, RLE •Lasers •Amplifiers •Transceiver •Filters •Processors •Memories •Fiber •ASICS •MEMS •DSP’s •Etc.. •Routers •Switches •Hubs •Base Stations •Satellites •Servers •Software •O/S •Etc.. eBusiness, Oxygen, Media Lab LCS ITC COMP- EQUIPMENT MAKERS NETWORK ONENTS OWNERS •Wireless •Backbone •Metro •Access •Substations •Satellites •Broadcast Spectrum •Communic Spectrum •Etc.. SERVICE PROVIDERS •Long distance •Local Phone •Cellular •ISP •Broadcast •Hot Spots •Cable TV •Satellite TV •VPN’s •MVNO’s •Etc.. 31 CONTENT & APPLICS •Music •Movies •Email •VoIP •POTS •Shopping •ERP •SCM, CRM •Surveillance •eBusiness •Etc.. DEVICES •Computers •Phones •Media Players • Cameras •PDA’s •Weapons •Etc.. END USERS •Business •Consumer •Gov’t •Military •Education •Medical •Etc.. CROSS-INDUSTRY CHALLENGES Digital Rights ( “To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries;” U.S. Constitution, Article 1, Section 8, Clause 8 ) Access Architecture 32 All Conclusions are Temporary Clockspeeds are increasing almost everywhere Value Chains are changing rapidly Assessment of value chain dynamics Roadmap Construction