Thursday, August 27, 2009

Our Strength was our Weakness

I was discussing the incredible business opportunity I see in home networking over 1394 with a German 1394 enthusiast when his comments brought me up short. This is a person who has built a company doing large professional networks with 1394. Originally he was trying to use Ethernet but found the limitations of Ethernet made it unsuitable for large networks carrying real-time data such as professional recording studios or high definition video distribution. He was increasing buffers and creating sub-nets and all sorts of other things to get Ethernet to work. The so called “inexpensive Ethernet solution” so commonly referenced in networking discussion was costing a fortune to debug. He switched to 1394 and found that 90% of his problems went away. The chipsets were more expensive but his ability to do what he needed to do without taking heroic measures made 1394 a cheaper solution.

I expected him to embrace this new and growing market; home networking. To my astonishment, he indicated that 1394 was not good for cost sensitive solutions.

The fact that 1394 is better suited to complex applications is also its limitation. 1394 is much more capable than USB, Ethernet, HDMI, and a whole host of other choices. In reality, it does not cost that much more to make. I have heard, for example, that a USB cable costs around 75 cents to make and a FireWire cable around a dollar and HDMI just over a dollar. That should cause you some irritation the next time you pick up a cable at Best Buy, but there are a lot of things that go into setting the retail price than simply the cost of making the product.

The issue is not so much the cost of 1394 as much as it is the cost of developing the solution that needs 1394. You do not need 1394 in a mouse or keyboard. Even USB is overkill for those devices and since it is a few cents cheaper, USB wins that socket. When it comes to printers and scanners, the same holds true. USB is adequate for so many things, and being a few cents cheaper makes it the preferred solution.

The system being developed needs to be very complex before it will require the capabilities of 1394. Those systems are expensive to make. It is not the price of 1394 that makes it expensive. It is the capabilities of 1394 that make it only suitable for expensive solutions. In audio equipment, for example, the cheap consumer products use USB for a point-to-point connection to a computer. For professional systems with multiple streams of audio going between equipment along with command-and-control being transported back and forth, 1394 wins the socket.

This was a novel idea to me. I’d always promoted FireWire as a better all around solution, able to do everything, never realizing that our strength was also our weakness.

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