Is Off-the-shelf Too Expensive for China?

Our inboxes have been flooded recently with so many stories of ATCA success – I often wonder how much of it I can believe?  Have we really tapped into a big enough slice of TEM development to say we’ve achieved success in the off-the-shelf mission?  I don’t know about you, but when I see hockey-stick growth for ATCA on marketing charts I have to ask myself if I really believe it will take off at this rate.  However, we’re seeing it happening every day, as the most competitive TEMs in the market are winning those ATCA-based deals.  How are they, and Chinese TEMs in particular, achieving low-cost solutions based on ATCA? 

We often consider China to be the epitome of rapid success and low cost, so people are asking themselves whether  off-the-shelf is too expensive for China?   On a recent trip to China I got to witness first-hand what is going on with some of the most aggressive TEMs in our industry right now.  Not only are the major China TEMs like Huawei deploying wireless infrastructures on ATCA, but they are winning deals around the globe with their aggressive low-cost solutions.  Let’s admit it – it can be intimidating for us Off-The-Shelfers to play in a low-cost market.  However, the market elements have recently come together to enable the ATCA/AMC growth we all want:

• We have reached a critical mass of companies offering ATCA and AMC form factor solutions that short-cut TEM development time.
• These solutions can actually SAVE TEMs from continuing to buy certain expensive, space-hogging, energy-hungry pieces of equipment, resulting in a strong business case.
• TEMs can focus their development effort on essential customer applications that drive higher ARPU and/or reduce carrier OPEX (and that does not mean building backplanes, again), which also improves the business case.

If I were a TEM reading this, I would jump on the opportunity provided by these COTS solutions, or I’d ask for proof.  So here goes...

This is a real-life use case based on first-hand knowledge of not one but two similar customer scenarios in China.  In both cases, the customers were using a switch to terminate ATM traffic and convert it to Ethernet alongside their ATCA system.  Not only did the switch take up valuable rack space and require cooling and power, it cost over $40,000 dollars to start, with an incremental cost of about $20,000 more for more than one OC-3 port, and nothing about that is cheap!  A proprietary I/O blade alone can cost $18,000.  Enter a small, modular AMC solution that took the functionality of that entire switch and put it inside the ATCA platform, in a single AMC slot and with pre-integrated software.  What a tremendous value, with the added benefit of being open standards-based!

With a business case like this, it no longer makes sense for a TEM to re-invent the wheel, when a) it already exists and took significant development to create, b) it costs a fraction of the cost of the existing solution and c) its software is easy to integrate into the TEM application.

So, coming back to the question of how the most competitive TEMs are winning deals with low-cost ATCA/AMC solutions – the answer is more than just how much it costs, it’s how much VALUE that solution provides.  And, there are many more examples of how innovation at the modular level on COTS hardware equates to innovation for TEMs, for service providers, and for end customers – customers like me who are playing with their iPhones during hockey-stick marketing presentations…