STRUCTURED CABLING: Well Connected, Again!

With a
growth
of 30% in FY 10-11, the structured cab ling (SC) market is back on
track after
surviving global recession and de-growth for 2 years. The market
faced the brunt of recession and declined by 22% in FY 09-10 after
the crunch in spending by IT/ITeS companies. The fluctuating copper
prices also led to the decline of structure cabling market. The
sectors that are driving the structured cabling market include BPO,
manufacturing, telecom, healthcare, retail, government, and BFSI.
Therefore, there is an inclination of all organizations towards
implementing more computing applications,
virtualization, etc, are attracting more number of customers in this
market. Huge expansion in infrastructure, communications and consumer
segments are enabling
SC to fuel this growth.

The services
like SaaS, online citizen services, on-demand entertainment,
evolution of mobility devices, etc, are growing to demand high
capacity and high bandwidth requirements. The demand and extension of
urban lifestyle to rural areas is another sphere, which is going to
increase the SC market across the length and breadth of the country.
Each and every vendor is playing well in the market, though Dax and
R&M were the only
players not affected in the time of recession. Acquisition was one of
the key market trends observed with TE Connectivity acquiring ADC and
DigiLink becoming a part of Schneider Electric and Belden merging
with two companies and joining the league of Merger and Acquisitions,
which helped these companies strategically.

TECHNOLOGY
TRENDS

According to
CMR, a research agency in India, the preferences of Indian
enterprises predominantly are CAT 6 and CAT 6 A, as compared to 5e,
and CAT 6 continues to be the
dominant cab ling solution deployed across major verticals. Despite
the advantages of using CAT 7A cabling solutions, like higher
bandwidth of up to 600 MHz and lower cost compared to using a fiber
LAN, the enterprises do not seem to invest in CAT 7A. The prime
reason seems to be not that Indian market is not prepared for CAT 7A
installation or there is no demand, but it takes a lot more time and
is a very cumbrous and also 7A is very heavy with much larger cable
diameter than CAT 6A. 10G compliance is also a major issue faced by
category 7A. The preference of copper wire over fiber optics is also
one of the technical trends observed probably again because of
simpler installation process by copper wire, though fiber offers
larger bandwidth than the copper, fiber is also not affected by
electro-magnetic interferences enabling faster flow of data.
Enterprise adoption of fiber will further take large amount of time.

SYSTEM
INTEGRATOR'S BUSINESS

Most of the
vendors are adopting very clear plan of working with partners,
ensuring maximum reach to customers. These vendors also ensure
required training and certification to partners. One of the prominent
SIs in structured cabling market is Artek Enterprises, which
generates one-fourth of its total revenue from SC. Artek generated
overall revenue of Rs 111 crore in FY10-11, and out of that
structured cabling market amounted for a total of Rs 32 crore. Artek
is planning to explore more in this space, and is expecting Rs 40
crore revenue from SC market in the current fiscal. The company
basically relies on Digilink, Systimax, and TE Connectivity, as they
have major marketshare and are established brands. The company is
capitalizing in this space as networking is becoming an integral part
of any IT infrastructure, and customers
will definitely invest more in SCs to get the maximum benefit out of
their IT infrastructure setup.

Speaking to
the DQ Channels on the structured cabling market, Anil Gupta,
MD, Artek Enterprises said, “Structured cabling is becoming an
integral part of any LAN. The networking market is growing every year
by 25-30%, and this directly links to equivalent growth for
structured cabling. Although, Wi-Fi is a direct competitor but certain
organizations like defence or other sensitive govt
departments do not opt for Wi-Fi because of security reasons. Also,
structured cabling is more stable and suitable for
high-speed operations.”

Anil further
stated, “We offer turnkey net working solutions, which includes
site surveys, connectivity plans, cable laying, certification
testing, etc, and we see a continuous growth in structured cabling
demand. There is a definite shift from Cat5 to Cat6. The current size
of the market in India is estimated around Rs 900 crore. The major
driving factors for the structured cabling market in India are growth
of convergence of data, voice, video, surveillance, IP TV using the
same media, ie,
structured cabling. Multi-storied apartments catering to integrated
requirements of internet are also likely to be the growth drivers.”
Major projects deployed by Artek are worth Rs 16.3 crore in the
Indian Army and bagged Rs 1.2 crore project from Kurukshetra
University. As the kind of growth that structured cabling market
holds, SIs see an exponential growth in the structured cabling and
expect to double the current size in 4-5 years. The huge requirement
in the expansion of infrastructure, communications, consumer segments
will fuel the growth of SC market as well increase the SI's market.

Ganesh
Mahabala, VP, Value Point Systems, Bengaluru makes a very important
statement on this market, “The Indian SC market requirements are so
diversified that 'one size doesn't fit all'. The ability of an
SI to be able to 'understand customer's need' and address them
with a solution will be the deciding factor for the customer
decision makers.”

Speaking
specific about Value Point's business, he adds, “We had a good
growth in our SC business. We are seeing an increasing demand of
quality of work, documentation, easy to manage and change
configuration requirements. Customers are becoming cautious to select
SI partners, who can be with them for long-term. The growth factor in
business is also coming from newer innovations in products, ability
to advise customers on better designs and solutions and provide them
a delighted experience. As we are an end-to-end IT infrastructure
systems integrator and services organization with 20 years of
experience in this field, we have the experience and capability to
advise the customer the best of SC solution that will best suit their
business and IT infrastructure needs. With our esteemed partnership
with leading vendors in this space, we provide solutions on both
unmanaged and managed SC, combined with managed services of Value
Point. We provide SC services from design, supply, implementation,
testing and management.”

The
structured cabling market is also observing the commoditization of
it. Not many IT managers spend time looking at products, features and
leave this to architects, builders, facility managers, etc. Another
major player, Rajiv Kumar, director and promotor, Proactive Data
Systems, New Delhi emphasizes on the above point, “Our strategy is
to reduce efforts on the commodity part of this business. We still
work with quality-conscious customers on structured cabling. We will
concentrate on the setting up of a complete data center, where
structured cabling is a part.”

He further
added, “We do almost 22% of our overall business in structured
cabling. We expect a normal 20—25% growth in this business in the
current year. New infrastructures, data centers, campus wide LANs,
physical security requirements will be the driving factors for the
structured cabling market. Customers have standardized on Category-6
for UTP. They are reducing cable per desk. We expect the trend will
increase for Category 7 type cables when video traffic picks up.”

Over all
investment pattern of the customers is also changing in the structure
cabling market. Customers are now willing to invest on quality of
product and service. SIs are also exploring customers from all
segments exploring to learn and test managed 'Structured Cabling'
compared to the test the traditional SC for higher availability,
faster responses and easier management. Also, in the emerging
service-oriented industry, 'customer experience' is becoming the
center point of the investments.

Anand Rao
Balluru of Par Data Systems, one of the leading players in structured
cabling solutions in Bengaluru mentions, “I like to emphasize on
the consumer behavior as they get more inclined to end-to-end cabling
solutions from a single vendor, who complies with the major IEEE, UL
and TIA/EIA Standards besides several other standards. Customers are
eager to spend on cabling solutions that deliver good performance,
scalability and Return on Investment.” Par Data Systems accounts
70% of its annual revenue from the structured cabling market. The
company is growing in terms of customer reach, and other allied
products and services that go hand-in-hand with structured cabling
solutions.

Balluru
further adds on the amount of growth that SC encompasses, “The IT
industry as everybody knows is growing by leaps and bounds every
year, and so is the spending on the IT infrastructure. The structured
cabling is viewed as the significant investment among all
infrastructure assets, since the cabling once done cannot be altered
or replaced that decides the performance of the entire IT operations,
the bandwidth and data transfer rates, the scalability and ease of
maintenance. With lots of new ventures from MNCs in India moving in,
and rapid growth in the already existing ones in all major cities,
the structured cabling market is seeing great potential and growth.
Structured cabling industry is ready to meet the growing demands of
increasing bandwidth for emerging applications, fiber solutions, and
total and comprehensive solutions for huge data centers. Both central
and state governments have taken decisions to allocate huge budgets
for the IT deployments in the recent past, which shows that the
government vertical too is a great potential customer for the
market”.

Another
prominent player in the market, Spark Technologies, marked its entry
into the structured cabling market in 2006. It has a strong hold in
the government sector and undertook many projects in Tripura,
Jharkhand and Uttaranchal and also did a massive SC work in Common
Wealth Games worth Rs 6.7 crore. Its expertise includes premises and
campus-wide structure cabling solution, intelligent cabling solution
and data center cabling solution.

SR Nautiyal,
MD, Spark Technologies says, “Overall, due to the sluggish economy,
many infrastructure projects are on hold, which are impacting the SC
market. Last year we did a business of Rs10 crore in the SC market,
in which large chunk was accounted by CWG deployments. We have also
gained a project from National Informatics Center worth Rs 1.5 crore
and we are expecting 10-15% increase in our overall revenue generated
from the SC market.” He also adds by disagreeing to CMR India, “I
think there will be a huge adoption of CAT 7A cables in the Indian
market, though the installation is little complex. The overall market
will grow 20-25% y-o-y.”

MAJOR
CONCERNS

With growing
structured cabling needs, the need for skilled labors is also
increasing. In general, India lacks skilled engineers to install,
troubleshoot and design networks. Moreover, the erratic pricing of
copper wires makes a significant impact, as frequent price correction
by vendors challenges the SI as well as the customer, to plan the
budget. The cabling industry in India also doesn't have any
standard body. Ganesh Mahabala of Value Point feels, “Currently,
the major barrier is the fluctuating prices due to LME and
dollar/currency instability, which make customer and SI's budget
hugely unpredictable. The unstructured labor market with rarity of
local labors and lack of timeline committed vendors of transporters
and fabricators amongst other problems hinder the growth of the
market.”

SOLUTIONS
CHAMP

After
observing the market and solutions offered to customers, Artek
Enterprises emerges as the solution champ for the structured cabling
market. The company has a straightforward vision and business
strategies leading to a growth in the structured cabling field. With
abundant technological expertise and projects bagged, the company
seems to be a leading SC. Artek's focus on its partner also made an
impact on its structured cabling business.