Micro Tca Economic Drivers Final041307

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Micro Tca Economic Drivers Final041307

  1. 1. MicroTCA Economic Drivers B.W.Stuck Executive Chairman CorEdge Networks
  2. 2. Outline <ul><li>Introduction: Definitions </li></ul><ul><li>Gross Profits Analysis </li></ul><ul><ul><li>Mainframe Computer vs Personal Computer </li></ul></ul><ul><ul><li>Network Equipment Gross Margins </li></ul></ul><ul><li>Economic Drivers for Standards </li></ul><ul><ul><li>Winners and Losers </li></ul></ul><ul><ul><li>Not If but When </li></ul></ul>
  3. 3. Introduction: Definitions <ul><li>Revenues=Sales of Goods+Services </li></ul><ul><li>Cost of Goods Sold (COGS) </li></ul><ul><li>Gross Profits=Revenues-COGS </li></ul><ul><li>Gross Profit Margin=Gross Profits/Revenues </li></ul><ul><li>Earnings Before Income Taxes, Depreciation, and Amortization=EBITDA </li></ul><ul><li>Net Profit=EBITDA-Income Tax-Depreciation-Amortization </li></ul><ul><li>Net Profit Margin=Net Profits/Revenues </li></ul><ul><li>Cash Flow=Net Profit + Depreciation + Amortization +Changes in Working Capital </li></ul>
  4. 4. IBM Mainframe vs Dell PC Gross Margin Comparison
  5. 5. Network Equipment System Value Add Gross Margin
  6. 6. Network Equipment System Value Add Gross Margin
  7. 7. Price Comparison: 20 Port 10GbE Switch Proprietary vs ATCA vs MicroTCA
  8. 8. Key Points: Underlying Economic Drivers <ul><li>Winners and Losers </li></ul><ul><ul><li>Economies of Scale Favor Standards </li></ul></ul><ul><ul><li>Economies of Scope Favor Standards </li></ul></ul><ul><ul><li>Original Design Manufacturers are Winners </li></ul></ul><ul><ul><li>Customers are Winners: More Choices at Lower Prices </li></ul></ul><ul><li>Value Accrues to Components </li></ul><ul><ul><li>Intel for Microprocessors </li></ul></ul><ul><ul><li>Microsoft for System and Application Software </li></ul></ul><ul><li>Software and Services Value Add </li></ul><ul><ul><li>IBM migrated there, others will follow </li></ul></ul>
  9. 9. Additional Reading <ul><li>B.W.Stuck, M.Weingarten, Chipping Away at Value Add, Business Communications Review, December 2001 </li></ul><ul><li>B.W.Stuck, M.Weingarten, The Impact of ATCA on Telecom Economics, Business Communications Review, December 2005 </li></ul><ul><li>B.W.Stuck, M.Weingarten, Micro (and Pico)TCA: Setting the Standard for Less Expensive Carrier Network Gear, Business Communication Review, October 2006 </li></ul>
  10. 10. B.W.Stuck Biographical Information <ul><li>Executive Chairman, CorEdge Networks, 2004- </li></ul><ul><li>Managing Director, Signal Lake, 1998- </li></ul><ul><li>Independent Consultant, 1984-1998 </li></ul><ul><li>Bell Laboratories, 1972-1984 </li></ul><ul><li>MIT: SBEE, SMEE 1969, ScD 1972 </li></ul><ul><li>http://signallake.com/ has more materials </li></ul>

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