Tag Archives: IT

Telecom Slowdown? Seven Reasons for Hope


We have seen recent announcement of job cuts in almost all Telecom and Tech companies, including Microsoft and Google only to name those that are new to those announcements.

GigaOm recently echoed a recruitment firm report that estimated almost 200,000 job cuts in the tech industry in 2008.

Still there are reasons for hope that the downturn will be less severe with the Telecom and Tech industries as with others:

  1. On a global scale, the demand for communications and computing is far from decelerating. As can be seen in the chart above, the penetration of mobile subs is still low in regions such as China,  India or South East Asia that are adding an aggregate of 150 million new mobile subs each year!
  2. The rise of netbooks should contribute to fulfilling the demand for affordable computing in emerging countries and also on Wireless Broadband penetration in mature markets, as netbooks are a great opportunity to bundle more 3G mobile data plans. Laptops will outsell desktops for the first time in 2009 and that is good news for mobile operators.
  3. Broadband stimulus package. As President Obama said in the inauguration speech, it is time to “dust ourselves off” and begin the work  “to lay a new foundation for growth”, building “digital lines that feed our commerce and bind us together” […] “to meet the demands of a new age”. Broadband infrastructure is a must to incentive innovation and competitiveness, and other countries are pursuing similar initiatives, including UK, Singapore and Malaysia to name a few.
  4. Airlines should be worried about the slowdown, not telcos. Telcos have a great opportunity to sell more Telepresence and more Enterprise Communication tools to help enterprises save travel costs.
  5. How can consumers save more than staying at home watching IPTV, facebooking or browsing the web? Purchasing online cheaper and better (more informed at least), can save a few dollars for families.
  6. Telecom equipment vendors have not given yet prove of slowdown in telcos investment. Ericsson CEO said when announcing Q4 results “To date, our infrastructure business is hardly impacted at all”. Huawei even dares to predict 29% growth in 2009. Nortel filing bankruptcy is not a bad news for the surviving equipment makers, as one competitors disappears
  7. It will not be worse than the Internet/UMTS licenses crash in 2001. The Economist says “It cannot defy gravity, but the technology industry is faring better than it did in the previous downturn.” The article explains why IT investment is no longer a luxury for enterprises and how innovations such as SaaS that make companies more efficient can only grow.

That the slowdown is affecting the Telecom and IT industries is out of  question, as the drama of thousands of people losing jobs demonstrates. But there are reasons to hope that these sectors will be the ones to lead the recovery, and we hope that will happen soon.

Some interesting reading and charts from The Economist:
Technology stimulus plans – Paved with good intentions
Computers per person per region in 2009 – Chart
The outlook of mobile phones in 2009 – Chart (Origin of  chart above)

Modular Data Centers: Containers for Clouds

Mike Manos, Microsoft Data Center Chief, has unveiled in his blog the design of future “Generation 4” Microsoft data centers. With the mission to provide massive easy-to-scale computing infrastructure to power the Cloud, Microsoft envisions pre-assembled containers equipped with a few thousands of servers each and its associated cabling and cooling system.

Microsoft is already using the flexibility of “containerized servers” in their Generation 3 Data Center under construction in Chicago. Generation 4 pretends to take the concept of building block even further with a central spine infrastructure for mechanical, electrical and security components, to which the pre-assembled containers are connected in a plug-and-play mode. The containers are designed for high efficiency, minimizing both footprint and the use of water or air for cooling.

The target is to achieve an average power usage effectiveness (PUE)* of 1.125 by 2012. Taking into account that current average data centers have a PUE of almost 2, that would be a huge achievement in green IT, even though Google alreadly claims to be at a 1.21 PUE in some of their facilities.

Microsoft modular container-based design is ideal for a scalable cloud infrastructure that can adapt computing capacity to demand. On top of that, not only operation costs are reduced due to the optimized footprint and cooling, but also CAPEX is improved with server containers assembled in a single manufacturing plant for far less cost than deploying the servers on-site.

Watch Microsoft video illustrating the Generation 4 Data Centers. An interesting approach to counter attack Google’s thought leadership earned with their patent filing for floating, wave-powered data centers.

Microsoft is taking Cloud computing seriously, as Allan Leinwand of GigaOm writes today:

“… in conjunction with announcements of the Azure Services Platform and Office Live, there is no doubt that the giant in Redmond is aggressively focused on delivering enterprise cloud computing. ”

*Definition of PUE extracted from Google corporate site:

PUE is defined as the ratio of the total power consumed by a data center to the power consumed by the IT equipment that populate the facility:

Power Usage Effectiveness

For example, a PUE of 2.0 indicates that for every watt of IT power, an additional watt is consumed to cool and distribute power to the IT equipment.

Telecom at the Speed of Moore’s Law

While the IT industry has Moore’s law in their DNA, the Telecom industry (both telcos and vendors) have not yet been able to embrace the concept and many analyst keep raising doubts about the sustainability of Telecommunications decreasing margins.

Microprocessors, hard-drives and memory cards double its performance/cost ratio every year. The price of an 8GB SD card was $50 last year. Now you can get a 16GB SD card for the same money. The price of a mid-range laptop has been just under $1000 for many years, only that each year you get a substantially better machine.

The Telecom industry has not been able to find the trick. Voice has been the key revenue generator service for ages. With voice revenues clearly declining, the industry is only now, beginning to switch to fix monthly fee models with a cap on voice minutes. People use the phone more and more. So the focus of telcos is now to keep the monthly fee price level, but give more minutes for the same fee, instead of reducing tariffs. The model also applies to broadband. Mobile broadband is capped, but telcos will aim at sustaining the monthly fee price, and focus on adopting more performing technology that will enable to increase the volume cap every year while slightly increasing the monthly fee. On fixed broadband the game is not capping but increasing the bandwidth. If you plot the increase of broadband bandwidth over the past years the growth is also exponential, and telcos should not focus on capping, but on making sure the technology enables them to increase bandwidth every certain time.

Moore’s Law is the self-fulfilling prophecy that keeps the dynamism of the IT industry and a sustainable market. Consumers and enterprises are now used to renew their PCs even before those are 4 years old, so in mature markets the demand does not seem to decrease, but at least sustain. Add the next billion of PCs in emerging countries like China, India or south east Asia and judge if the industry is still healthy.

As IT and Telecom converge, can Moore’s Law bring the same dynamism to the Telecom vendors and operators? Will they be able to keep the pace?

IBM Supercomputer Sets Record, or rather not?

With a total of 116,640 processor cores, including AMD Opteron processors as well as 12,960 IBM Cell processors similar to those created for the PlayStation 3, IBM has broken the one petaflop mark with the new Supercomputer commissioned by the American military administration. The $133 million machine*, called Roadrunner, will be used to solve complex issues related to nuclear weapons, and to address problems like the climate change.

While a remarkable achievement, Brough Turner pointed out in his blog a few weeks ago that Google might have surpassed the petaflop mark unnoticed. The Google Cluster is built on the principle of extensive parallelization with fault-tolerance managed by software. The index is partitioned over several servers, so that a single search query is processed in parallel by many processors, minimizing the overall response time for a search. A paper describing Google Cluster Architecture (dated 2003, but worth reading), underlines how Google selects commodity class PCs, as they provide the best performace/cost ratio, without the need of expensive hardware reliability as fault-tolerance is handled by software. Google is estimated to currently have more than 500.000 servers distributed across their data centers. Assuming a performance of 14.7 gigaflops for an AMD Athlon X2 4600 processor (a good performance/cost ratio two years ago), Google platform must be handling today more than 7 petaflops!!** 

At a $500 cost per PC, Google would have spent $250 million. Still cheap comparable to IBM price for one seventh of the capacity.

Whether record or not, IBM has taken 11 years to improve their supercomputer performance a thousandfold. As the performance growth is not linear but exponential, the next thousandfold improvement, taking us to exaflops, should be expected sooner than 8 years from now. Singularity might not be that far after all.

Reference: NYT’s Military Supercomputer Sets Record

* less than $140 million Real Madrid is claimed to be ready to pay for Cristiano Ronaldo

** I have used a less powerful processor than Brough, in the assumption that a Quad Core in end of 2006 were less cost effective than an AMD dual core.