Well, Apple has finally quashed (most of) the rumors and announced its “new iPad”. It has the quad-core A5X processor, Retina display with photorealistic resolution, and is much faster on cellular wireless—21Mbps HSPA+, DC-HSDPA at 42Mbps, and LTE at 73Mbps. However, the notion of a fully software-define radio capable of supporting anyone’s service isn’t in the cards; while Apple says the new iPad has the “most bands ever” and is world-capable, there are separate versions for at least AT&T and Verizon. The price is pretty aggressive too; $499 for the 16G version in WiFi and $629 for the same in LTE. That’s the same price as the current iPad.
Apple fans will say the new gadget is revolutionary, and it is certainly noticeably better than the earlier model in both display quality and processor performance. To me, though, it’s the LTE dimension that will be the revolution, and it’s hard to say at this instant just how far that revolution will go.
Up to now, the majority of tablets have been WiFi-enabled and the current market trend has been to increase the WiFi lead rather than to reduce it. Tablets on 3G, even the HSPA versions, are somewhat limited after all. But on LTE there’s a decent chance that the new iPad would outperform a WiFi device. And the quality of the device, particularly in gaming, may pull through additional units and thus generate a larger base of tablet buyers who have at least the potential to migrate to LTE.
So imagine these great graphics-and-video gadgets exploding on the marketplace, pulling in new LTE customers. It’s easy to see how you could start to generate a lot more traffic, how some of those MWC predictions from vendors could seem sensible. The problem of course is that all this traffic only increases the pressures on operators that have already driven them away from all-you-can-eat mobile pricing and into tiers and caps and throttling and excess charges.
It’s also likely that the new iPad is both driving and is driven by the video-on-the-run interest. Video, in TV and movie form, is entertainment. People who are not engaged in some activity typically want entertainment. When they get home, finish dinner, and relax they “watch TV”. Arguably, video entertainment is the diversion of choice and so it’s not surprising that if you equip users with the technical means to enjoy it while they’re on a bus or train or sitting in a waiting area, they will. My own research and most of the other stuff that I think is thorough and objective has showed that we’re not really “cutting the cord” in TV viewing as much as in living; we don’t have TV everywhere we want to watch something. Lifestyle shifts do shift entertainment needs and it doesn’t mean people don’t watch TV any more.
This whole scenario is what I think is behind Netflix’s rumored dance with the cable MSOs. Cable may have some lingering paranoia about being cord-cut, but most of the savvy planners in the industry that I’ve talked to realize that this isn’t about protecting their core—it’s about extending their influence in an incrementally new eyeball market. Those extra viewing hours are a chance to make money. One way is TV Everywhere, a kind of ad-supplement strategy that links viewing rights to channel subscription. Another is to sell VoD, and Netflix is a way of doing that.
But that still gets us back to network impact. Ciena has been stumbling along, like many players in carrier networking who weren’t router vendors, but now it’s coming into its own just as it seems that routers may be in jeopardy. The same factors are driving both movements, in fact. Networks need capacity, and we’ve long-since passed the point where efficient capacity management is cheaper than raw bits for the kind of capacity growth the network needs. Operators are therefore looking to flatten the OSI stack, to create a network that is more about capacity and less about aggregation and bandwidth management. You can’t get capacity without the optical layer, so this new trend is favoring optical vendors. That’s why Cisco and Juniper are singing optical songs even though optical convergence “undermines routing”. In fact, it’s explosive demand that undermines routing; optical convergence is just the right way of coping with it. So either you have a good optical strategy or you lose, because you’re going to lose in routing one way or the other.