Ubiquiti Networks: The Age Of Distributed Computing

| About: Ubiquiti Networks, (UBNT)

Summary

With the new technology advances in Wi-Fi, fully distributed computing may become a reality in the next 2-3 years.

To have fully distributed computing, it is important to have high bandwidth display transmission and high-speed wireless storage (personal cloud).

The result is that the 5 critical components of a computer can be distributed, with a very small client terminal connecting them together.

As a pioneer of Wi-Fi technology, Ubiquiti Networks is well positioned to take advantage of the big trend in this new age.

The Five Components of a Computer

When we look over the history of computers, we can see several revolutions, from Main Frame computers, to Mini-computers (despite the name, they were the size of file cabinets), to personal computers, to Laptops, and finally to mobile devices (phones and tablets).

Through these revolutions, however, what didn't change is the fact that they all have 5 critical components:

CPU, Memory, Storage (hard drive), input devices (mouse, keyboard, or touch screens), and output devices (displays or printers).

So, even though we did see the trend of computers getting smaller and smaller, they still had all the five components, which didn't change.

However, recently, there is a trend of moving many things to "cloud," which include "cloud computing" and "cloud storage." In fact, Chromebook is a classic example of that trend. However, it simply shifted some of the components online: in Chromebook's case, some of the computing service and storage are shifted online, but display and input devices are still attached with the local client terminal.

On the other hand, the Intel (NASDAQ:INTC) Compute Stick has distributed input devices and display, but still included everything else (CPU, Memory and storage) as a part of it. Of course, you could use cloud services on it by using a web browser instead, but that is not a part of its core design.

The Future of Distributed Computing

The real fully distributed computing has to make all the five components separable and be wirelessly connected (except that the CPU may stay together with Memory).

However, to connect these components wirelessly, we need powerful networks and more importantly, stable networks.

People are already familiar with Bluetooth technology, which seems to be good for some audio streaming purposes or used in a wireless mouse/keyboard. However, the bandwidth of Bluetooth is only 26Mbps, and it is on 2.4Ghz band, which usually has too much noise to be very stable in longer distances.

To connect a remote display (such as a HDTV) and remote storage (personal cloud), we need high bandwidth wireless transmission in the order of multi-gigabits.

Fortunately, the Wi-Fi technology is already getting very close to realizing that dream. The existing 802.11AC standard could already allow Gigabit Wi-Fi. More importantly, the 802.11ad standard in 60Ghz band will allow 6Gbps of maximum bandwidth. That is even before the recent FCC announcement to open a new spectrum in the 64Ghz-71Ghz band. With this new 7Ghz band opened up, the total unlicensed spectrum in the 60Ghz band will reach 15Ghz, which may potentially double the maximum bandwidth in the original 802.11ad standard.

You might ask: why do we need 10Gbps connection speed, when Netflix's (NASDAQ:NFLX) 4k streaming only needs 50Mbps?

The answer is that there is a hidden catch in all the current video streaming technology (including the Apple (NASDAQ:AAPL) TV's display mirroring): they are not lossless transmissions, unlike the HDMI cables, which have lossless transmission of the display. Here, "lossless" transmission means there is no loss of image quality during the compression and decompression of the video images. Most of the current video files are in fact "lossy" compressed format (including the Blue-ray disks) since the lossless format takes too much storage, even for Blue-rays.

Even though we couldn't easily detect the "lossy" video formats, it is always a desired luxury to have "lossless" video streaming, like the wireless HDMI technology. Also, besides the better video quality, without compression and decompression, lossless video streaming also makes the video transmission easier and faster, especially for Display Mirroring.

Besides remote display, a remote storage is also convenient and desirable. I think people are already used to the convenience a USB stick brings. Certainly, it feels nice when you can carry a 256GB USB stick and plug in anywhere you want.

However, with that technology, you still have to carry that physical device, and it is only 256GB. Isn't it even nicer if you have a personal cloud where you can have virtually unlimited storage and don't have to worry about carrying it, losing it or plugging it in?

You can realize that dream with a personal cloud server, which is simply a fast storage connected to the internet (could be connected with wired and wireless connection). What is more important is that the client is usually on wireless, and it needs to access the centrally located storage online in a very fast speed (comparable to the current hard drive read/write speed). Since a good SSD drive only has 4Gbps read speed, this is certainly achievable using 802.11ad (WiGig) standards.

The Curse and Blessing of a High Frequency Band

A 60Ghz band may sound very nice as it will have a 15Ghz wide spectrum. However, there is a big curse on all the high frequency bands: it won't travel very far.

Because of the high frequency and short wavelength (basic physics lesson teaches us that wavelength is the inverse of frequency), radio waves in this band don't have good penetration capability, not only it can't penetrate walls like 2.4Ghz or 5Ghz band, it can't even penetrate furniture. Fortunately, it can bounce off walls in an indoor environment so that "line of sight" is not mandatory.

That said, there is also the good side of a high frequency band: there is virtually no interference from outside. Today, the 2.4Ghz band is so crowded that even smart Wi-Fi APs won't perform very stably. This is especially true when you live in an apartment where there are so many neighbors around you and so many devices on 2.4Ghz. In other words, since 2.4Ghz has better penetration ability, you also get more interference in this band. That is why dual band APs can perform much better: it is simply because 5Ghz has less penetration ability. In this sense, 60Ghz is even better since it can't get out of the room at all.

Since 60Ghz is localized within a room (and not bigger than a 10-meter radius), this means we will need an AP in every room. So it is going to be more costly, but once we have mass-produced 60Ghz Wi-Fi chips and dozens or even hundreds of wireless devices in a home, the cost of this kind of high-density deployment should be justifiable.

IoT and Distributed Computing

IoT (internet of things) is a very hot topic/concept these days. The conventional interpretation is that it is a network of "things." So essentially, everything can be connected to a network.

In some sense, my "distributed computing" concept is related to the "IoT" concept, but they are not exactly the same. Here, I would focus on the fact that the computer becomes fully distributed and what we perceive as a "computer" is not a centrally located or organized computing device. What seems to be a computer could in fact just be a small client terminal. Since it only needs limited functions (Wi-Fi to connect to the other components), it could be very small and in fact could be built into almost every "thing."

For example, we may turn our eyeglasses into a computer, where it has the ability to wirelessly connect to the personal cloud to upload videos to the server (recording whatever we see every day). It could be used as a display as well, projecting images onto the eyeglasses, or may be used for "augmented reality" purpose. Because it doesn't need to have much of its own computing power, it could be very small and built into a pair of regular eyeglasses.

UBNT and IoT Devices

As a pioneer of wireless technology, Ubiquiti Networks (NASDAQ:UBNT) will benefit enormously from this huge trend. As a young company with a young CEO, it has the proven capability to both innovate on hardware and develop software efficiently.

In fact, recently, Ubiquiti Networks has already started to develop some IoT devices, such as Drones and Home Automation/IoT devices in the Amplifi lines. Since stable and high performance Wi-Fi is a big part of these devices, UBNT's existing expertise in Wi-Fi may give it some competitive advantages.

The upcoming 802.11ad wireless APs will also potentially bring more revenue to Ubiquiti since it requires high-density deployment (one AP per room). To get there, however, we will need both 802.11ad capable client devices and mass-produced cheap Wi-Fi chips in the 60Ghz band first, which may not happen until 2-3 years later.

Conclusion

The implication of advanced wireless technology may be much more profound than what we perceive today. It is hard to imagine what the future world will look like, but it seems to me that wireless technology will play a very important role there.

While it is difficult to speculate how many secret projects UBNT currently has at the moment, and how successful they may be, I can see the company as well positioned to take advantage of the next revolution in the history of computing.

Disclosure: I am/we are long UBNT.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.