Today’s speaker: John J. Peters, Executive VP of Engineering

1. IEEE Communications and Aerospace Engineering Societies 08-24-2004 Ethernet Everywhere! How IP and Ethernet are driving the converged market Today’s speaker: John J. Peters, Executive VP of Engineering Performance Technologies Inc. BSEE 81’ Rochester Institute of Technology Email: jjp@pt.com

2. What is this lecture about? Ethernet Network Consumer electronics How IP and Ethernet are driving The Converged Market!!! Computing Internet Protocol (IP)

3. Questions that will be examined….. • What exactly is the converged market? • Is the converged market a so called “inflection point”? • Why are technologies such as Ethernet and IP enablers? • How will the market be reshaped as a result of all this? • How will product design and innovation be influenced?

4. What is the “converged market” “The converged market is the merging of consumer electronics and computing. These traditionally independent business segments will be brought together in such a way as to be dependant on each other for vast new waves of products, services and applications. For the 1st time in history these markets will be linked and have the potential to provide value to customers, far in excess of what they could achieve individually.”

5. Is this an “inflection point”?

6. What is a “Strategic Inflection point”? “A strategic inflection point is a time in the life of a business when fundamentals are about to change. Strategic inflection points can be caused by technological change but they are more than technological change.” Andy Grove former CEO, Intel Corp Book: “Only the Paranoid Survive” By Andrew S. Grove

7. “These days you can’t succeed as a company if your consumer led - because in a world so full of constant change, consumers can’tanticipate the next big thing.Companies should be idea-led and consumer-informed!” Customers do not always drive this! Doug Atkin, partner, Merkley Newman Harty

8. Inflection Points = “Divergent Convergence” • The act of creating new markets or products from seemingly divergent technology and/or applications. • In plain English: The whole is far greater that the sum of the parts. • Most found in industries that are ‘fast movers”. • Can often be explosive and create whole new sectors. • Often, market timing is critical. “Planetary alignment” • Can be better visualized using the “Wheel of fortune”

9. Realizing new market opportunities is like… Playing! WHEEL-OF-FORTUNE-WHEEL-OF-FORTUNE- WHEEL-OF-FORTUNE-WHEEL-OF-FORTUNE- “Wheel of Fortune” • Letters = new technologies and/or new applications • Technology and application timing = letter turning • As more letters are turned, new product/market ideas emerge • Successful companies, recognize new product/markets (words) 1st EXAMPLE: Invention of the Personal Video Recorder (i.e. TiVO) O i T V MPEG Video DISK DRIVE Network Interface LINUX

10. GPS PC XM Radio ? Pilot Weather Advisor Another example:

11. Converged market5 key factors:(some of which are divergent) • Economic Recovery • Content Digitization • Broadband Deployment • Ethernet in Home • Bandwidth Demand WHY WHAT HOW WHERE WHEN

12. Factor #1:Economic Recovery = why • High Technology limbo, no revenue = no investment • Pent up demand (3 years) by customers for new products • Economic recovery for high tech = new products/services • “Divergent” technology development has continued forward • Time for “convergent” innovation is ripe and necessary

13. Factor #2:Content Digitization = what

14. Consumer industry as it was….. Consumer industry as it is becoming! Video Photos Radio Music TV Digitization of Content Entertainment Content

15. Factor #2:Content Digitization (key points) • 1st time in history ALL entertainment content is digital. • Can be shared, copied, transmitted, altered, stored etc. • Sharing of content the norm, if not totally legal yet….. • Genie not going back into bottle, the rules must change. • Change = opportunity but what will be the new market be? • Revenue opportunities for both intra- and inter- net apps. • Can we move the “content bits” in, about and out of the home, office and world? Is the infrastructure in place?

16. Factor #3:Broadband Growth = how

17. Factor #3:Broadband Growth (key points) • Availability is no longer an impediment • Multiple choices: Cable, DSL, Sat, wireless • 802.ah (EFM) and 802.16 (metro-WiFi) coming • Once tasted, user’s want more and don’t go back • Applications catering more and more to broadband • “Always On” will be just as important as speed • Parallels between broadband and electrical power

18. Factor #4:Ethernet in the Home = where

19. 1st, what is Ethernet? • A set of protocols at the datalink (OSI L2) and physical layers (OSI L1) • Invented by Bob Metcalfe, May 22, 1973 (see copy of memo above) • Developed by Xerox in the late 1970s • Promoted and used by Dec, IBM and Xerox in 1980s (DIX) • Rapid growth early on due to Novell and Netware in the early 1980s • Became an IEEE standard in 1985 - 802.3 • Currently used in about 80-90% of all LANs

20. What is Ethernet becoming? “That’s what this thing is that they call Ethernet - a business model. Buy some today.” Bob Metcalfe Electronic Design, December 9, 2002

21. Ethernet-in-the First-Mile (EFM) (802.3ah) Metro-wired (802.3ae) “10 Gig” Factory Floor (Industrial) Metro-wireless (802.16) “fixed wireless” Home Network (802.11a/b/g) “wireless” Embedded Market (chassis) cPSB/aTCA FUTURE? Storage Area Networks (SAN) (iSCSI) FUTURE? So….why Ethernet in the Home? ESAN (PICMG 2.16) “Backplane” Because it's everywhere else!!! Enterprise (802.3ab/u) “Ethernet”

22. Resistance is Futile! Ethernet Everywhere!

23. To many, IP and Ethernet are synonymous. • 95% of the world’s data travels on a form of Ethernet at some point • 87% of all networks worldwide are Ethernet • 154 million switched Ethernet ports sold in 2002 alone • 22 million home networks today, 65 million by 2007 • 6.8 million 802.11 units shipped to home in 2002, 33 million by 2006 • 11.6 million 802.11 units shipped to enterprise in 2002, 99 million by 2008 • 95% of all notebooks will have wi-fi in 2004. • IP is the Internet and is becoming the Intranet in the home. IP-ETHERNET-IP-ETHERNET-IP-ETHERNET-IP-ETHERNET-

24. Ethernet in the Home (wired/wireless) Printer Son Mom and Dad The 3 PC family! Daughter

25. How Ethernet (WiFi) will change the home? Dad’s work Notebook Printer Mom’s PocketPC Son’s PC Daughter’s PC Family AV system Security Camera Family TV Kitchen TV Mom and Dad’s home SERVER

26. Factor #4:Ethernet in the Home (key points) • Next great “land claim” for the networking industry • Ethernet firmly entrenched both in home and enterprise • Wireless promotes easy adoption and provides mobility • Significance lies in standardization, cost and availability • Today: Home PCs are networked and on the Internet • Tomorrow: The homeis an extension of the Internet

27. Factor #5:Bandwidth Appetite = when Kbit/s near future Future applications will demand far more bandwidth today

28. Factor #5:Bandwidth Appetite (Key points) • e-mail > web > music > photos > video > gaming > TV • And….of course the largest consumer of all….SPAM • The home server will provide vast amounts of content • The ability to store fosters a natural desire to share • Current broadband not sufficient for the types of content • Technologies like EFM are natural to provide bandwidth • Think of bandwidth as a service: 110 vs. 220 etc.

29. Review of 5 key factors: • (WHY) Economic Recovery • (WHAT) Content Digitization • (HOW) Broadband Deployment • (WHERE) Ethernet in Home • (WHEN) Bandwidth Demand

30. Let’s tie this all together…. “The economic recovery is dependant on the industry's ability to deliver both to, throughout and beyond the home, vast amounts of bandwidth intensive Digital Content. This “Converged Market” represents the next Strategic Inflection Point for the collective consumer and commercial electronics industries.” J. Peters

31. Let’s think out of the box……

32. “Near” real time content delivery • Daily music uploads • Morning newspaper • “To do” list review • e-mail listening • Audio books

33. What if? • IP = EP? Metering vs. bulk? Everywhere! • Content was pay per use vs. pay to own? • Routing was based on “time alive” (GPS)? • The home = the enterprise (client/server) • Homes supply as much content as they take?

34. Thank You!