San Jose, Calif. – So far, when it comes to making money, the online video explosion is mostly about potential. Studios selling TV shows and movies for download and websites such as YouTube that link ads to user-generated content stand to reap billions from the Internet’s hottest trend.
But a select group of companies whose products exist largely outside the public view are already profiting handsomely. Led by industry powerhouse Cisco Systems Inc., the network equipment makers are seeing their gear snapped up by service providers who must upgrade their networks to accommodate surging Internet traffic and booming broadband demand.
“Cisco would like to see video delivered to every device everywhere,” said Zeus Kerravala, a network infrastructure analyst with Yankee Group. “If you’re looking to something to create the next wave of network upgrades, video is front and center. It drives bandwidth like we’ve never seen before.”
Video consumes thousands of times the network space of e-mail messages, and demand is growing so fast that it’s poised to overtake peer-to-peer file sharing as the dominant form of Internet traffic.
That’s a rich opportunity for Cisco, Alcatel-Lucent, Juniper Networks Inc. and Redback Networks Inc., companies that build the Internet’s infrastructure.
Their products – routers and switches that direct traffic over the Internet and other networks – help the cable companies and telecoms manage the growing traffic load and intelligently direct massive amounts of data.
Charlie Giancarlo, Cisco senior vice president and chief development officer, said the push also is forcing Cisco to change the way its products are built to deliver high-quality video, which puts more strain on the network than voice or data transmissions.
50 MILLION
Estimated new subscribers yearly
$1.3 BILLION
Expected growth in online video revenue in 2006
$7 BILLION
Anticipated online video revenue by 2010
