Products in the Network with High Margins are Related to High Integration Effort of the Complexities

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• Products like digital switches and IP Routers (with high Margins) are  complex and require very high and complex integration effort to secure the quality and reliability. By locating and encapsulating these complexities in manageable network elements, the overall complexity in the network can be handled.

• The network provider will of course try to lower the price of these high margin products. The standardisation effort of access networks to digital switches was one such approach (late in the product life time of the switches) . It hardly limited the high margins for the digital switches, however. Open source solutions for software and white-box hardware are promising to reduce the high margin of routers (e.g. edge routers). The interesting question will be how the additional integration complexity with the associated cost on the network level will justify this.