FT.com - Special reports / FT IT April 3 2002

FTIT April 3 2002

Looking ahead
Published: March 28 2002 13:25GMT | Last Updated: April 8 2002 12:05GMT

FT-IT and FT Telecoms - Complete forward schedule
Updated: March 13 2002

Here are synopses for the next few months, and summaries of later issues of the FT-IT Review and FT Telecoms, with an updated list of contributors and correspondents. Please note: this is the only document we release which gives writers' names, where they have been decided.

The FT-IT Review and the FT Telecoms supplements are published on a regular twice-a-month format, appearing on the first and third Wednesday of each month. FT-IT takes up three of every four slots. FT Telecoms will take up the fourth slot (i.e. the third Wednesday of alternate months).

NB: The inclusion of an article in the synopsis does not necessarily guarantee the article will appear in the newspaper, because of occasional space constraints. The associated web sites, www.ft.com/ftit and www.ft.com/fttelecoms, are published on the same day as the newspaper version and carry the full list.

BACKGROUND INFORMATION:
Background information and suggestions for articles or themes that have not yet been assigned to individual writers should be sent, by e-mail only please, to itsurveys@ft.com where they will be considered by Andrew Baxter, FT-IT editor. Please do not use individual e-mail addresses, fax numbers or post.

Once articles have been assigned, please send information directly to the writers concerned, but PLEASE THINK BEFORE YOU SEND - SPAM IS AN IRRITATION. All the writers are on e-mail, please see list of freelance writers at the end. (FT staff writers are all on firstname.surname@ft.com) Information should arrive six weeks ahead of publication.

PICTURES, ILLUSTRATIONS:
Pictures, illustrations and charts can also be sent to itsurveys@ft.com - as JPEGs, PDFs etc.

FT IT - April 17 2002

First theme: global semiconductor industry

1. Overview
Things are beginning to look up for the world's semiconductor industry after a dreadful 2001. Even before the damage to business confidence caused by September 11, the industry was suffering from the twin impact of overproduction and a slump in global demand and was reeling from the speed, depth and duration of a downturn that went beyond the traditional cyclical fluctuations in the sector's fortunes. Global semiconductor sales fell 32 per cent for 2001 to $139bn, with all the top 10 semiconductor vendors experiencing revenue declines. A partial recovery is now underway, and chip demand is expected to improve by 6 per cent this year. But the process of consolidation that began last year is continuing, as exemplified by the controversial planned takeover of Korea's Hynix by the acquisitive Idaho-based Micron. Meanwhile conditions remain difficult for the semiconductor equipment manufacturers - with their customers' factories running at less than 50 per cent of capacity there is little incentive to invest in new plant, apart from equipment for the new larger wafers. Even here, though, there is confidence that things will improve in the second half of the year. Despite the travails of 2001, start-ups continue to emerge and the ongoing search for new memory technologies and production methods show that the industry is keeping an eye on the future. A recent report from Gartner suggests that wireless data, networking and wireless interactivity will be the growth drivers for the industry over the next five years and beyond. Tom Foremski

2. View from the Top
Interview with a leading figure in the US semiconductor industry on the road ahead for the sector. Tom Foremski

3. Manufacturing strategies
The rising cost of "fabs" or fabrication plants and the challenges of the move to 300mm wafer production by the top chipmakers have underlined the importance of the "fab-less" business model, and increased the influence of contract manufacturers, notwithstanding the drop in demand last year which hit all companies in the industry hard. The contract manufacturers have invested huge amounts in cutting edge manufacturing technology, and some companies such as Motorola outsource to contractors even though they have their own fabs, for economic reasons. There is some reluctance, however, to contract out the manufacturing of high-end chips, because of fears over possible loss of intellectual property. Mure Dickie

4. Chip IP
Increasing numbers of companies are offering chip designs that can be combined to make chips for specialist applications. The rise of semiconductor IP firms such as Arm, Parthus and MIPS was one of the key developments of 1990s and the only way that small firms could carve a niche in a chip industry dominated by giants. In theory, as chip licences are sold up to three years before a product appears on the high street, IP firms are better insulated against any market downturn. But their business model is being severely tested in the current market conditions. Geoffrey Nairn

5. Graphics processing chips
The graphics processors market is one of the industry's hotspots, driven partly by the emergence of new games consoles such as PlayStation 2, Xbox and Dreamcast. As demand has surged the structure of the industry has changed - where once it was fragmented, it is now dominated by a handful of players, with Nvidia roaring to the top, displacing ATI. Can ATI return, and what else is happening in this space? Tom Foremski

6. Network processors
Another increasingly important sector, network processors are used in communications equipment such as frame relay technology, and are designed to handle packets of data. The market is currently fragmented, and there are standardisation issues to be resolved. A look at the players in this space and the market prospects. Tom Foremski

7. Wireless applications
The last 20 years of mobile communications have created a very large, primarily voice-centric, worldwide market for wireless chipsets. However, the next generation of handsets will have to support far more voice and this has spurred the development of advanced chipsets that use latest system-on-chip technology to squeeze multimedia functions into tiny devices. Geoffrey Nairn

8-11 Regional and country profiles
Beyond the US, which accounts for three of the world's top ten semiconductor companies, we look here at how the other important regional players have fared in the recent downturn, at recent consolidation and takeover moves, and at future prospects.

8. Europe - Caroline Daniel

8a. Europe - Interview /company profile (subject TBC) - Caroline Daniel

9. Taiwan - Mure Dickie

10. Korea - Andrew Ward

11. Japan - Alexandra Harney

12. Technology - memory
A review of latest developments in memory chip technology, including new types that could replace flash memory, such as M-ram (magnetic memory) and F-ram. Intel is also interested in a type of memory derived from CD recording technology. The goal is to produce faster, cheaper and more reliable memory technologies as almost everything electronic now features some form of memory. Tom Foremski

13. Technology - chip production
A look at some of the latest development in chip production and design as the industry comes close to the minimum thickness possible for maintaining an electrical connection between chip components. Despite the downturn, there is plenty of activity in this area, including developments such as dielectric materials, silicon on insulator and copper. New types of lithography are also needed and extreme ultraviolet lithography appears to be heading into the lead as the best technology for the next generation of advanced chips. Fiona Harvey

14. Profile - Transmeta
The Silicon Valley company's energy-efficient chips were touted as a genuinely disruptive technology when its groundbreaking Crusoe semiconductor launched to a fanfare of publicity in early 2000. The upstart appeared to pose a real threat to Intel's dominance as it outperformed the chip leader in performance tests. But now the company's promise has unravelled amid manufacturing problems, the recession, resurgent competition from Intel and a revolving boardroom door. Following shipment delays, Toshiba scuttled plans to launch a Crusoe-powered notebook computer in the US, last summer, while Gateway and AOL have withdrawn their Crusoe-powered Internet appliance amid slack sales. What now for Transmeta, whose technology is still feted by analysts? Can the company still carve out a niche in the $22bn microprocessor market? Stephen Phillips

Second theme: web-hosting industry and market

15. Overview
After a dramatic two years of boom and bust, the web-hosting market is pausing for breath and regrouping. A recent report by IDC said that growth in the US web-hosting market had slowed from 100 per cent in 2000 to just 25 per cent last year, because of the dotcom bust and the uncertain state of the economy, which has put a brake on corporate spending and forced companies to defer investments in their e-business infrastructure. In the near-term there are mixed signals for the development of the web-hosting industry. The turmoil in the telecoms sector, and the dotcom bust, has caused considerable fallout among many of the natural customers of the web-hosting industry, such as telecoms carriers. But on the other hand large companies can shop around to cut costs, as there is still considerable overcapacity in some sectors of the web-hosting market. Also, in the aftermath of September 11, large companies want to outsource to several hosting centres and thus ensure peace of mind as regards their technological security. But users of web-hosting services also have to bear in mind the implications if their web host goes bankrupt and ensure service level agreements are watertight. Notwithstanding the industry's problems, IDC says enterprises are only just beginning to leverage the full potential of web-hosting based opportunities, and says the market will begin to accelerate this year, eventually reaching $20.8bn by 2006. It says the market is evolving away from the dotcom era model of "internet as the business" to the post-bubble notion of "business on the internet." Joia Shillingford

16. Web-hosting - who's left?
The last two years, since the beginning of the dotcom bust, have wrought havoc in the web-hosting industry. Big name casualties include Exodus Communications of the US, which was forced to sell most of its assets to Cable & Wireless after filing for bankruptcy, and Globix, which said in January it was filing for Chapter 11, and Global Crossing, which hosted internet hotels as well as its global fibre network. In Europe, CityReach international went into administration in August. C&W is not the only cash-rich telecoms infrastructure operator to enter the market - NTT of Japan has also acquired Verio, while WorldCom recently bought Digex. Meanwhile, traditional IT outsourcing companies such as EDS and IBM are entering the managed hosting market - although it is not clear how long some of the new entrants will stay. Nuala Moran

17. Selecting a web host
Although many web hosting enterprises have gone out of business in the economic downturn, been acquired, or been forced to change their strategy, there are still as many hosts out there as there are kinds of service. Potential clients have to think about such parameters as cost, security, the level of technological support and the web host's track record. Above all, they have to ensure they are getting value for money - which is difficult when the charges vary from thousands of dollars a month to next to nothing. One interesting development is the emergence of a large number of consumer websites dedicated to comparing and ranking the 6,000-7,000 web-hosting companies. Chloe Veltman

18. Managed server market
With prices for hiring racks in data centres or internet hotels falling, those who rent the space and sell on servers as "managed servers" are charging as much as ever. A recent report from Yankee Group says that that whereas the revenue from data centres (or internet hotels) will continue to decline, the value-added managed server market will grow from 35 per cent of hosting revenues today to 55 per cent in 2005. Managed server providers will also find it easier to specialise on certain industries than the internet hotels, whose offering are generic. So why is there such disparity between the data centre and managed server markets? Paul Talacko

19. Web-hosting for SMEs
SMEs can choose from a very diverse market of web-hosters, large and small, which normally run shared servers that host many sites simultaneously. As in the managed server market, prices in the shared server space have remained constant. Although the choice of vendor remains large, there is growing evidence of consolidation, at least in the US, which will make the market for attractive for small businesses. A recent Gartner report, following the acquisition by Interland of the small-business web-hosting assets of AT&T and the merger between Affinity and Cybergate, said the shared hosting market responds best to a fixed-cost, standardised and automated infrastructure, where profitability comes from economies of scale. Other big operators in this area include NTT/Verio and XO Communications. Paul Talacko

20. Application servers
Hosted web applications are getting more complex and so an industry-standard application server is seen as essential to minimise complexity and support interoperability. But who to choose? IBM, Sun and BEA are fighting to establish their Java-bases J2EE application servers, while Microsoft pursues its own .Net strategy. Geoffrey Nairn

21. Case study - UEFA
Seeking a web-hosting service that could support the internet's largest football portal, UEFA teamed up with NTT/Verio, whose sophisticated solution includes fully managed web and application servers, coupled with database clustering high-availability firewalls, load balancing and virtual private networks. Other features include content distribution and managed storage. The aim is to support the site's global penetration and growth plans. Andrew Gellatly

22. Profile: Pair Networks
This Pittsburgh-based company won the award for best web host in Webhosting Magazine's first survey of grand web-hosting companies. Started in 1996, Pair is considered to be one of the strongest providers in terms of profitability, customer support, and long term-growth prospects. Chloe Veltman

23: Profile: Cable & Wireless
What is a venerable company like C&W doing getting into the web-hosting business? First, early last year, it bought Digital Island, and then, several months after initially being rebuffed by Exodus Communications, it snapped up the key assets of the stricken US company, which in the space of two years went from a market value of $20bn to Chapter 11 bankruptcy. The answer is that web hosting diversifies C&W's revenues away from its commodity internet backbone business - where prices are under severe pressure - and provides extra traffic to that backbone. Joia Shillingford