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: 30 actual Questions
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The AW-SFU01 upgrade adds production-quality HD MPEG-4 streaming, in-camera HD recording on a microSD card, and USB video/audio capabilities to the cameras' already impressive orbit of features
Panasonic has announced a powerful optional upgrade for its AW-HE40 integrated plenary HD PTZ cameras. The AW-SFU01 upgrade adds production-quality HD MPEG-4 streaming, in-camera HD recording on a microSD card, and USB video/audio capabilities to the cameras’ already impressive orbit of features. The AW-SFU01 feature upgrade will exist available for purchase in July 2015 at a suggested list price of $350.00. A special promotional proffer will provide this role upgrade in July at no imbue for cameras purchased between March 24th and May 31st, 2015.
The AW-SFU01 feature upgrade will exist available for purchase in July 2015 at a suggested list price of $350.00. A special promotional proffer will provide this role upgrade in July at no imbue for cameras purchased between March 24th and May 31st, 2015.
This unusual major feature upgrade will allow direct-from-camera, production-quality audio/video streaming (RTP/RTSP/RTCP) up to 1080/60p 24Mbps at an unprecedented price point. The upgraded camera’s IP streaming—in combination with the HE40’s benchmark IP-control, built-in MIC/LINE input and PoE+ (power over LAN cable) capabilities—enables a revolutionary “single-cable” remote production application. Additionally, the upgrade makes it practicable for the HE40 to role as a USB Super-Webcam for videoconferencing and collaboration--with a 30X zoom lens, preset functions, as well as simultaneous IP and USB streaming* and control.
The upgrade moreover enables production-quality in-camera HD MPEG-4 video and audio recording to a microSD card at up to 28mbps, which can exist utilized for Web-controlled back-up and archiving, replayed and streamed, or sent as a file via FTP. Because it is USB video-enabled, the HE40 moreover offers a premium altenative for professional-level videoconferencing via widely available USB-class applications.
The HE40’s audio functions are moreover extended by the upgrade: Auto flat Control adjusts audio input flat automatically, and an Equalizer Setting can select three types of audio input control, [ON/OFF], [LOW CUT] and [Speech]. Embedded audio may moreover exist used in conjunction with HD streaming and recording functions.
An upgraded HE40’s breadth of powerful functions facilitates the development of innovative applications in broadcasting, staging, sports, government, houses-of-worship, and education.
The HE40 is currently available in two versions, the AW-HE40H with HDMI output, and the AW-HE40S with HD-SDI output. Both versions are available in either white or black. The cameras are designed to bear worthy results in a variety of applications that require high-quality video and precise control—such as remote production, conference video, event capture, staging, distance learning, and HOW. Thanks to a precision 30X optical zoom lens, 1000 TV lines of horizontal resolution, smooth PTZ functions, and exceptional image quality, HE40 cameras are moreover example for demanding recording, streaming, and IMAG use. With IP-Preview transmission and control, and uphold for PoE+, the HE40 moreover offers the flexibility needed for cost-effective installation and easy management.
The HE40 moreover features stereo MIC/LINE-level switchable audio input for embedding, an innovative 1.4X digital extender, minimum illumination of .35 lx, and 16-axis color matrix control for precise camera “painting” and matching.
The HE40 cameras incorporate a version of the versatile IP/Serial/Web control system and IP-Live Preview pioneered in Panasonic’s AW-HE60 chain cameras. IP, RS-422, RS-232C in/out interfaces are moreover included, and a built-in Web-server enables both browser control and IP-live preview and setup from PCs, Macs and mobile devices including iPhone, iPad, and Android tablets and phones. RS-422 Serial or IP control is available using Panasonic’s AW-RP50N, AW-RP120G controllers, AK-HRP200G paintbox and the AW-HEA10 system, as well as appropriately programmed systems from Crestron, AMX, Winnov, and other manufacturers.
For more information about the AW-HE40 cameras, AW-SFU01 feature upgrade and other Panasonic professional video products, visit www.panasonic.com/broadcast or contact Panasonic at 877-803-8492.
* IP streaming is limited to VGA/QVGA JPEG streaming only when outputting simultaneously with USB.
Panasonic Solutions for BusinessPanasonic delivers dependable trade technology solutions that connect data with conclusion makers to drive better outcomes—for their customers and their customers’ customers. Panasonic engineers dependable products and solutions that befriend to create, capture and deliver data of sum types, where, when and how it is needed. The complete suite of Panasonic professional solutions for government and commercial enterprises of sum sizes addresses unified trade communications, mobile computing, security and surveillance, retail point-of-sale, office productivity, visual communications (projectors, displays, digital signage) and HD video production. Panasonic solutions for trade are delivered by Panasonic System Communications Company of North America, Division of Panasonic Corporation of North America, the principal North American subsidiary of Panasonic Corporation.
All brand and company/product names are trademarks or registered trademarks of the respective companies. sum specifications are subject to change without notice. Information on Panasonic solutions for trade can exist obtained by calling 877-803-8492 or at us.panasonic.com/business-solutions.
About Panasonic Corporation of North AmericaPanasonic Corporation of North America provides a broad line of digital and other electronics products and solutions for consumer, trade and industrial use. The company is the principal North American subsidiary of Osaka, Japan-based Panasonic Corporation and the hub of Panasonic’s U.S. branding, marketing, sales, service and R&D operations. In Interbrand’s 2014 annual “Best Global Green Brands” report, Panasonic ranked number five overall and the top electronics brand in the report. As section of continuing sustainability efforts, Panasonic Corporation of North America relocated its headquarters to a unusual facility, adjacent to Newark Penn Station in Newark, NJ. It is the first newly constructed office tower in Newark to deserve both LEED Platinum and Gold certifications from the U.S. Green pile Council.
Marvell Technology Group Ltd. (NASDAQ:MRVL) Investor Day Conference October 16, 2018 9:00 AM ET
Ashish Saran - VP, IR
Matt Murphy - President and CEO
Dan Christman - EVP of Storage Group
Raghib Hussain - EVP and Chief Strategy Officer
Tom Lagatta - EVP of Worldwide Sales and Marketing
Jean Hu - CFO
Ross Seymore - Deutsche Bank
Blayne Curtis - Barclays Capital
Karl Ackerman - Cowen & Company
John Pitzer - Credit Suisse
Vivek Arya - Bank of America Merrill Lynch
Quinn Bolton - Needham & Company
Good morning, folks, and welcome to Marvell's 2018 Investor Day. For those who don't know me, my designation is Ashish Saran; I'm the Vice President of Investor Relations at Marvell. I've been in the semi industry for over 20 years, which should deserve you question my sanity, but putting that aside, as some of you know, I recently joined Marvell. I was attracted by the very significant growth opportunities I observe in front of this company, especially with the addition of Cavium. I'm moreover very pleased to observe a lot of intimate faces in the audience, so thank you everyone for taking time out of your sedulous schedules and spending today morning with the Marvell team.
As you can see, they gain a very informative day in front of us, so Matt is going to kick things off with an update on their strategic shift to infrastructure. Dan and Raghib are going to walk you through the nuts and bolts of their storage and networking businesses. Tom will entertain you with an update on their go-to-market strategy to drive growth. And as anyone who knows Tom can attest, "Entertain" is the prerogative word to expend in describing Tom's style. Jean will deliver the money slides, followed by a mp;A session which will conclude the event.
Now, before they start, I carry out requisite to grasp you through their very exciting pecuniary safety briefing. This presentation today will hold positive forward-looking statements which carry out gain risks and uncertainties. They recount these in their filings with the SEC. They will moreover exist mentioning positive non-GAAP pecuniary measures, a reconciliation is at the conclude of this presentation, and this presentation will exist available on their Web site after today's event.
Now that sum of you gain your seatbelts tightly fastened, we're going to kick things off with a short video, followed by Matt's presentation. Thank you.
The world today, it's more demanding than ever because it's more connected than ever. Manufacturers are more autonomous because they're more automated. Smart cities provide vital services thanks to tracking data and voice technology. A lone car can learn how to drive safely, then share it with 10 million others. And soon, highly quick-witted 5G groundwork stations will connect to billions of users at breakneck speed. These emerging applications are powered by learning machines, where information is sent to the core for analysis, then back to the edge, flooding the global network with more traffic than rush hour in the rain.
To maintain it flowing, the datacenter needs to maintain morphing, so much so that you can't divulge where the core ends and the edge begins. The solution rests in the foundational technology here today. They understand; they helped build it. With decades of experience, the combined portfolios of Marvell and Cavium gain broadened their capabilities, made their core strengths even stronger, and transformed us into an infrastructure powerhouse. We've created seamless bandwidth connections between the core datacenter and the network edge, proper entire computing systems on to a lone microchip, increased storage density so companies can meet tomorrow's demands, not exist surprised by them, and discovered ways to maintain data flowing swiftly and securely, through cables or through the air. The unusual Marvell has its sights on tomorrow, not just to unearth what's next, but to deserve it available today.
Marvell, they umpire ahead, so their customers can too.
Okay. suitable morning, everybody. It's worthy to observe sum of you here. So I think, first of all, this video says a lot about what's going on today. The state of technology and it's mind-blowing how much data is being created on a daily basis in the world. If you umpire about it, most of this data today is being moved into the cloud, but more and more the data is actually being created at the edge where it needs to exist processed and actioned. And Marvell is enabling the infrastructure that makes sum of this possible. So today I'm going to talk about the kind of company that we're creating, how far we've come, where we're going, and how we're doing since we've combined with Cavium. And I'm going to divulge you how we're going to grow, which I'm positive is on everybody's minds here today.
So first, let me betoken you how far we've gain from their ultimate investor day, which was just six quarters ago, here in this room. So let me grasp you back, this was in March, 2017. For those of you that were here at the time, it was snowing outside. And this was their first ever investor day for the company. I had been on the job for about eight months, and they were just dawn Marvell's turnaround. We'd assembled a unusual leadership team which they introduced everybody, and they told their story. And that account started with the market opportunity, which was really fueled by the explosion of data and the requisite for bandwidth. They said they were shifting from consumer and mobile to cloud and infrastructure, with the depth of their IP and core capabilities really played to their strengths, and where they felt they could create the most value.
We moreover shared their plans at that time how they were going to refocus the company to build a long-term sustainable trade that could deliver well margins, cash flow; sum the things that you hope from a top-tier semiconductor company. And I umpire at that time they caught some of you off guard with their transparency. I recall during the mp;A, I umpire it was Chris Roland, who I umpire is in the margin here, who said, "I'm quiet trying to motif out what company this is. I observe the logo behind you, it says Marvell, so I guess I will just travel with that." So they did set some very lofty expectation for ourselves in that meeting. And I'm elated to report that the team has done a worthy job on delivering on their commitments.
So let's start with revenue growth, the chart -- every chart here starts with Q1 '18, which was the quarter after they had their analyst day. You can observe that revenue since that time has been up into the right. They moreover said at that time that they would achieve autochthonous margins exceeding 60% exiting their fiscal '20. Really pleased that subsequent to the analyst day they managed to enlarge their autochthonous margins every quarter. In the ultimate reported quarter they had in Q2, they reached 63.5%, which was an all-time record for Marvell. And finally, they had committed to deliver 30% operating margins existing fiscal '20. And again in Q2, the ultimate one they reported as a standalone company, they moreover exceeded 30% OM, which was about six quarters ahead of schedule.
So these were worthy results. We're very arrogant of them. But they did not chance by accident. So let me talk now about how they hasten their business. So we've really established a very results-oriented culture inside the company. It's really based on data-driven decision-making and it reflects my core beliefs and values as a leader. They start by first aligning to the prerogative markets. They are focused on fewer things, but we're focused on doing those fewer things very well. They actually hold a portfolio review of sum of their businesses in the combined company. We've done three of these now since I've joined. The ultimate one, more recently, was with Cavium. And so we've gone through now every trade in the combined company.
We understand where every R&D dollar is being spent; they understand the competitive dynamics of those businesses, the IRRs, the autochthonous margins, the growth potential, the competitive landscape. And we've now built P&Ls and three-year plans for each of those businesses. So we've actually integrated Cavium in quite quickly into their planning process. We're moreover not unafraid to desist projects or redirect resources or reallocate their precious R&D dollars where they gain to. We're very disciplined in this front. They moreover believe that time-to-market is a differentiator in their industry. So, their customers, they map their schedules around their equipment around their schedules. They're sum one and the same. And so we've completely retooled inside the company how they map their projects, their engineering projects, how they execute them, how they track them, and how they bring them to production.
So we've installed world-class program management, and most importantly, a culture of accountability inside the company. And their customers are seeing the difference. They moreover believe in a very data-driven approach to trade management. And they expend data to hasten sum aspects of their business, whether that's pricing, forecasting, claim planning, or measuring customer satisfaction. And we're making better decisions because of it, and we're already seeing the results. So this has been a very programmatic, thoughtful effort. And they observe the benefit of this kind of approach on the unusual Cavium team coming in.
Part of the turnaround moreover in the company though has been cultural. And over the past two years we've really brought the entire company along with us. Through frequent and transparent communications we've really strengthened the culture inside the company. And it starts with articulating their core behaviors and what they value and stand for. And these behaviors, by the way, they're not just coffee mug slogans and posters they stick on the wall; these are very personal to me. And it really reflects how they hasten the company. Integrity, respect, innovation, execution, supporting each other, these are sum very powerful words that resonate very well with their employees and their customers, by the way.
And we've now received numerous supplier awards in the ultimate two years. And recently they made the Forbes Best Employers list in 2018. So they believe culture is a competitive advantage. The employees observe the broad picture, they understand their role, they'll buy in and they'll fully entrust when they buy into your culture. And so this photo, by the way, is a photo of the combined Marvell and Cavium management team. It was taken shortly before they closed the merger. They sum took time to net offsite and net to know each other and align on their goals. And by the conclude of that offsite, you couldn't divulge who was a Cavium leader and who was a Marvell leader; we've sum become one team. And I would note that in this picture about 30% of the people, or almost one-third of the vice presidents in the company combined, are actually from Cavium.
So they truly merged the companies, versus just acquiring and taking the products. And I couldn't exist more arrogant to journey forward with such a talented team that we've assembled. And they set their mission to exist the leading semiconductor company serving the infrastructure market. One that developed solutions that move, store, process, and secure the world's data faster and more reliably than anyone else. They believe it's famous to gain a mission that is easy to understand. Everyone can net behind it whether it's an employee, whether it's one of their customers, or everybody in the room.
So let's grasp a second to talk about why they relish infrastructure; why is this a suitable market to exist in? I umpire it's an attractive long-term market where their IP can deliver actual value, and so let me contrast market. So there's the consumer market, is exciting. large TAM, you can talk about it with your friends at a party, it's easy to understand. But I'm telling you, as speedily as success comes in this market as speedily as it can travel away. And this is not just an academic observation I'm making, I've lived this. I've been in this world. I've lived through the notebook cycle, the digital camera cycle, the smartphone cycle, the smart TV cycle. This is a brutal trade to exist in. And they are fortunate at Marvell to gain the extravagance to participate in the infrastructure market. This is one where they don't just gain to re-win designs every year to breakeven and tarry on the treadmill. The design cycles and infrastructure are typically three to five years. So there is a long cycle of development and partnership with your customers. You don't requisite to start over every year. And those wins that you get, you actually layer on top of each other. So they compound over time.
These platforms are typically in the sphere for 10 years or more. So, when customers perceive at who they are going to partner with and design in, there's really only a handful select group of players that really gain sum the capabilities that they are looking for. So infrastructure is a much more predictable stable market. And that benefits everybody. It benefits their customers, their shareholders, and their employees who can focus on the long term as they develop their products. moreover the company's DNA is very well aligned to the infrastructure market. They gain a tenacious combination of IP and engineering capabilities in the company. They gain a 20-year track record in Ethernet, both in switches and in PHYs. They gain profound suffer with processor cores. And they gain in-house IP development such as SerDes and others that they control their own destiny on.
Finally with Cavium, they bring in a very compelling software, plenary platform that they can leverage across multiple product lines and really add a lot more value and stickiness to their customers. And finally, they gain managed to assemble on this combine company really what I can order is the world's most talented team of merge signal engineers and digital engineers designing SOCs. These chips are not easy to make. There's only a few companies that possess this kind of capability. And we've been a top innovator in their field. They gain been named for the ultimate six years as one of the top innovators in the world by Thomson Reuters and now Clarivate. And today, the company has amassed over 10,000 patents, which is very formidable and is just another sample of the kind of capability that they have. So on their ultimate Investor Day they said they were pivoting the infrastructure and that it would exist a journey. A few years back, they were about 25% of the company's revenue with an infrastructure of 75% was in things relish consumer and mobile.
At the ultimate Analyst Day, they were at about one-third of their revenue was levered infrastructure. And they said their goal was to net it to 50% in the near-term. And so, they were able to carry out that actually a shrimp bit ahead of schedule through sum the toil that they redeem in. And so, classic Marvell as of today is about half-half, fifty percent infrastructure, 50% non-infrastructure. So that was progress. They were there probably a year or so ahead of where they thought. Cavium really represented the next step in their progress here. And so when you combine Cavium in, the combine company today is now about two-thirds of their revenue is levered to these types of conclude markets. And that's only going to increase. And they observe over time that this number is probably going to exist much higher and next goal is sort of three quarters, and to maintain going from there.
And the combination, it really accelerates their progress in infrastructure. So from Cavium really what they got was a nibble start-up mentality. You are going to hear from one of the co-founders of the company, Raghib Hussain later today. He is going to talk about their networking trade and the opportunities there. They got very valuable technologies from Cavium, leadership now in processors, leadership in security, leadership in accelerators. And so, they moreover brought a very tenacious presence in datacenter and carrier which they had been trying to build. When you combine that with Marvell power and enterprise, their end-to-end product development capabilities and the operational excellence of the company, it creates a very unique value prop for their customers. They really are getting behind this combined company strategy. And in fact, I would order from the customer point of view, the flat of appointment that we've seen since they closed the transaction has been significantly higher than before either company had ever experienced. I exist of value quite frankly disburse a lot of time on the road. I gain personally met with the chief conclusion makers and CEOs and CxOs of the top infrastructure companies in the world across sum of their segments.
I gain been sedulous and I'll just give you one sample of a story. Three weeks ago, Raghib and I were - had the random to present to the gross leadership team of one of the top leading infrastructure OEMs in the world. And the meeting was really to discuss a pretty significant multi-year agreement to carry out multiple chips for this particular company and this would exist a relatively a unusual relationship or certainly an expanded one. And so after that meeting when they did the debrief, I asked the Cavium VP/GM who is now running that trade for us, I said, Look, I just got to ask, you guys gain gotten to this point on your own as a standalone company? And he said, "Well, carry out you want me to give you the politically reform answer, or the actual answer?"
So just give me the actual answer. And he said, "Absolutely not. There's just no way. They are viewed as being as too small, not having enough scale and not having sum the capabilities." And so that occasion now is one of many and you'll some more stories relish this today of the power of this combination how that's really translating into significant unusual opportunities because they are seen in a much different light now by their customers. And why carry out they like? I exist of value what carry out they observe when they perceive at the Marvell portfolio that's combined, what they observe is a leader, a leader in key technologies, in storage, networking, security, processors, connectivity. These are sum the key elemental pile blocks of what infrastructure companies are looking for. And it's not even that they gain a shrimp piece section here or there or a piece of IP.
We actually gain leadership positions from a technology perspective in each of these areas. And you are going to hear today from my team on not only where their leadership lies but what their strategy is to grow their position and continue to become a very compelling altenative for their customers. The combination moreover with Cavium really creates a much more diverse company, which I umpire was one value that they saw in doing this combination. The first of which is from a customer point of view and I won't filch Tom's thunder, which you are going to hear more from him about the unusual customers that they gain added and how actually while there is some overlap, there's a lot of incremental customers that they gain that Cavium didn't gain and vice versa. They moreover now are a much stronger and a broader array of conclude markets.
As I mentioned, they really net a much stronger presence from Cavium now in datacenter and in carrier. But the breath of the trade has moreover increased too. And if I travel back to when I joined the company, I exist of value probably the lone biggest overhang that we've had and even continues to this day in some ways was the company's overall exposure to the HDD market. Classic Marvell if you travel back two or three years highly levered to HDD. That really created a cloud over the company in some respects. It always was a source of concern for investors. So look, we've taken a lot of endeavor on their own, right, to diversify their business. And you'll hear Dan talk about this more. With the combination of Cavium plus their own efforts to diversify within their storage segment, they gain now gotten their exposure today of HDD controllers that sell into notebooks which is really the heart of the concern.
The exposure now we've got down to about 7% of company total. That's as of today and they hope that that number is going to decrease as they head into the next year and the year after as they grow their trade and continue their pivot from consumer computing to cloud and infrastructure. I don't umpire that this endeavor that they redeem in has been widely understood by investors. So I wanted to deserve positive I called this out because I umpire that represent tremendous progress from where they were from a diversification standpoint.
Okay, so now let me talk about the portfolio and what are the elements of it. So, what's engaging is their businesses are quite diverse now. So, first, they gain established businesses in their company. This is really how they hasten their company and how they segment their businesses with inside their portfolio. So the first is they gain established foundational businesses. These are businesses where they are the leader today. Two examples of these would exist fiber channel adaptors which they got from Cavium as well as their HDD business. These businesses are strong. They are stable. They are profitable. They invest and manage them to maximize their leadership and their profitability.
So that's the groundwork layer. Then they gain a number of growth businesses where either they are the leader or they are a very tenacious challenger. And examples of these comprehend embedded processors, switches and PHYs, flash-based storage, SSD, and lofty performance Wi-Fi. Now these products are sum in growing markets where they gain something that's differentiated and unique. They invest in these businesses significantly to grow them above the market and every one of them has a goal to exist the market leader in their respective segment.
And then, finally, they moreover gain several areas of strategic investment. These are unusual bets that they are making. And these comprehend automotive -- you are not going to hear about these today, these comprehend automotive Ethernet, these comprehend security solutions for the cloud, which they convene Liquid Security, which is a technology they got from Cavium, and moreover this includes their server processor investment based on ARM. So these businesses typically they leverage IP they gain already got inside the company, but they leverage them into adjacent markets, so they net a lot of reuse and benefit from that point of view. Every one of these has a lead customer or customers; that's their teaching customer, that's their sponsor, that's pulling us through to deserve positive that they define the product correctly. They invest in these businesses carefully. They track them. They milestone them, and they deserve positive that they are resourced properly to win. And so, when you step back, and you perceive at the portfolio of businesses they gain inside the company, it's quite broad and it's quite diversified from an investment profile, and they umpire the combination of sum these will result in profitable long-term growth with potential upside on the unusual bets.
So, another famous consideration for the combination was scale, and I umpire more and more today, you are not hearing this from Marvell, but you are hearing this from others that for digital semiconductor companies, scale today is incredibly important. It's no surreptitious that the cost of developing these advanced node technologies is going up fairly dramatically as companies journey to more and more advanced process nodes, and obviously you are doing it to enlarge performance, lower power, optimize dye sizes, sum kinds of benefits of making these node jumps, but they are getting more and more daunting by the day. I umpire this is a reality facing pretty much every company if you going to exist in advanced node where 16 nanometer, 12 nanometer, seven or below, it's a different world than before. And so, from their point of view, they umpire that you probably requisite to develop about half a dozen chips or so at a minimum in a key process technology, just to gain spread the investment appropriately across sum those devices. And so, if you don't gain enough scale, if you don't gain enough of a broad product line and you can't carry out a significant number of unusual products on a node, to net your money back is going to exist very, very difficult. So, this is putting pressure on a lot of companies, putting pressure on companies to scale up, it's actually putting pressure on their customers as well. Let me talk about that.
So, traditionally, their customers gain really had kind of two choices when they - broad systems companies, right, broad infrastructure companies, when they settle to -- that they requisite a key semiconductor component. One is they either want to buildup themselves, what they convene the plenary ASIC model, or you travel off the shelf and you buy merchant silicon, and typically this is where Marvell has been more in the merchant silicon side with limited on the build side. So build has made sense before, but it's getting to exist increasingly challenging especially if you are a systems company, they are seeing now some of their customers having to staff teams literally in the thousands of people to deserve this work, and obviously it's difficult to carry out that many ICs if you are a lone OEM. And so, that's a challenge for these companies today.
So they observe a third trade model actually gaining favor. This is a model that Marvell has had for sometime, but they observe it applying not just in their storage trade where it's traditionally set, but moreover across actually other conclude markets. And this partner model is -- let me account for a shrimp bit more, is really the value proposition, look, everything in the gray that you observe is IP that they are already developing today to spread across sum the chips that they do, whether it's the CPU core, a memory controller, SerDes, sum of these different blocks, they are developing these because they are going to expend them primarily across sum of their products. If you are a system OEM, you are just doing one ASIC, you gain got to travel either develop sum this yourself or license it, it's very expensive and costly and it's time-consuming. And so, this model really allows us to carry out what's in the gray and then the customer to really focus on what differentiates them, which is the red. That's their block. And this model they redeem in station in their storage trade both in the HDD side and in enterprise SSD, it's been a station for about 15 years, it's been highly successful, because the customers are able to leverage and benefit from sum the toil that they are doing, that's common across the entire company. And so, the benefit to the customer is obviously they net proven battle-tested IP that's been in the market, to net the benefit of their agreements with their suppliers, their cost structure with TSMC, the tools etcetera. So they can create their own unique thing, but they don't gain to carry out the entire product. So it's really a win-win for both companies. And they observe this is being a very compelling model especially as they gain combined.
Okay, so let me journey to the second section of my talk today. So, probably I'm saying, "Okay, this is great, looks nice, it looks relish you are pile a nice company here. Everything sounds exciting. How are you going to grow?" I umpire that's the question that's on everybody's mind today, "How are you going to grow?" So, Dan and Raghib are going to travel into the details, but let me give you my perspective. So the first is that the market forces that are out there are creating opportunities for us. There is a tenacious conclude market tailwind. The first thing, they can travel back to the ultimate Analyst Day, is that there is an explosion of data that's being created and that moreover needs to exist stored, and there are zettabytes of data being created every year. It's doubling about every two years. This creates huge demands on the storage and network infrastructure.
The second is that the data that's being created at the edge more and more needs to net processed, secured, and analyzed at the edge. And a lot of these applications now, they carry out benefit from real-time decision-making where the data is occurring. And so, more and more they observe this draw of the compute actually being pulled towards where the data is created. And so, that's a benefit to us. And Raghib will talk about that more.
The third is that in this more distributed world, you can't just secure the endpoints; you actually gain to gain a holistic security strategy to secure the entire data chain. And again, this is one where I umpire they can provide significant expertise here to provide robust security sum the passage from the datacenter, sum the passage to the edge through every point in the network. And finally, sum of this has a major repercussion on overall power efficiency. It's probably one of the biggest cause of operating infrastructure today is simply the power bill. And this really plays to their strengths. Marvell, one of the hallmarks of this company has been their engineering expertise in developing low power SoCs, leveraging advanced process nodes and unique architectures. And so, when you perceive at sum of these combines, there are multiple tailwinds that are in their favor. And so, with that at their back, they umpire there are several very unique opportunities where they can deserve an repercussion given that these market changes are happening, that are very specific to Marvell.
The first is in storage. So, sum this data, as I mentioned, it needs to exist stored somewhere, whether it's on artic storage, in the cloud on hard disks, or it's acute tangy storage on advanced twinkle memory technologies. And so, their customers are looking for ways that they could carry out this more economically and they could carry out it faster. And so, as the leader in storage technology, they are in the middle of sum of these major storage disruptions happening, because they are the core, they are controller, they are the brains, if you will, of many of the storage systems, and so, they gain unique insight and aptitude to actually influence and repercussion sum of these tremendous disruptions that are going on in the storage industry.
The second is in networking. And they gain started seeing this ultimate year, but there is a significant multi-year upgrade cycle that's occurring in the enterprise. And they disburse a lot of time at Marvell refreshing their own portfolio and optimizing it for enterprise over the ultimate few years. They bring in Cavium strength, especially in embedded processors and enterprise, and they gain a very, very formidable portfolio in the enterprise, and if you perceive just at their own results in their second quarter, their year-over-year growth just in Marvell networking was double-digits, it was relish 16% year-over-year. So, they are already seeing the benefit of those unusual products kicking in and the upgrade cycle kicking in. And they umpire that with the unusual combined portfolio, they gain continued margin for growth in the enterprise.
The third one is in the carrier market. And this may flabbergast you, but Marvell is going to exist one of the most famous companies to participate and enable the 5G rollout. Many of you were saying, "Marvell in 5G?" So you are going to hear more from Raghib on this today, but they gain very, very tenacious traction in this market, very unique solutions, and to exist clear, they umpire that 5G is going to exist one of the largest, if not the largest growth driver for the combined company over the next several years. They are very excited about this one.
And then finally, they gain emerging opportunities. These are some of their unusual bets that they umpire provide tenacious potential for growth. The first one is in automotive. We've now gone to production with their automotive Ethernet products. You know, a year ago this wasn't even in their SAM, so we've made suitable progress there. And moreover in July, they introduced and took to production the first Xeon-class Intel-competitive ARM server CPU that's ever been introduced. There's been a lot of talk about this market for years, a lot of press releases; a lot of companies gain tried. But there's actually no company that's been able to interlard and grasp to production a CPU with this flat of performance. And you're going to hear more on this from Raghib today.
Also, in HyperScale, we've had several public announcements now for their Liquid Security. You'll hear more about that today. But that's going to exist a growth driver for us as well that's emerging. And each of these products is off to a worthy start. And I umpire when you layer sum these in, whether it's store, the enterprise trends 5G, and these emerging opportunities in datacenter and automotive, they're significant. So let's translate that into the dollar amount, what's the total market opportunity. So at the ultimate investor day, this was for the standalone company, they said total market for Marvell was $8 billion. When they announced Cavium they said that the SAM for the combined company was going to double to about $16 billion.
And now, we've got the team under one roof, we've been integrating, we've been looking at their opportunities, they went through their gross portfolio review, and I'd order the evolution has been -- they umpire there's about another $2 billion of market that we're now participating in that primarily is driven, as we've sort of gotten their arms around everything. One is the incremental 5G occasion they umpire is pretty big. It's going to enlarge their SAM today. And moreover we've now, because we've made such progress and we're in production, we've moved the automotive Ethernet SAM that was not there before into their SAM. And so that's a today number, that's $18 billion, which is pretty significant given the size of their company today.
So when you smash the $18 billion down, $3.5 billion today is in storage. This is a trade where we're the leader today; they gain almost half of this market. This is a stable business. It's profitable, it's growing modestly. But they gain tenacious share and a tenacious position, and occasion to grow. After the combination with Cavium, networking now represents over $10 billion of SAM today. And this market is growing at 9% a year. They carry out gain a tenacious position here as well, but they hope to gain share and grow faster than the market. Overall, these two markets combined, they're huge. This is $14 billion going to $17 billion just for the storage and the networking portion.
Now, as I mentioned, we're moreover investing in ARM server, and they decided to smash this out to exist super lucid about where the drivers of their SAM are coming from. This is one where they observe the addressable portion of the ARM server market today, at about $4 billion. That SAM they umpire is growing very fast, by about 14% a year. And so when you add that occasion on top, which again is unusual and emerging, total company SAM goes from about $18 billion to immediate to $24 billion over the next few years. So there's a significant occasion if you perceive at the evolution of where they were, order at ultimate analyst day looking at an $8 billion opportunity, to now just a brace of years from now being able to address something relish $24 billion of market. So you could observe this market we're going after, it's healthy. It's large, it's growing, and we're very well positioned to capitalize on this opportunity.
So let me close. So in summary, the first point is we're planning to grow the company. We're planning to grow the company to exist a leader in the infrastructure market. They gain the scale, they gain a diversified trade model, and that's one that's positioned to deliver long-term success. They continue to innovate and invest in the future, and this is going to enable us to allow their customers to disrupt their markets. One sample is 5G that you'll hear about. I'm moreover especially arrogant that their team has consistently delivered and established a tenacious track record of execution that's going to exist very famous as they head into their next aspect of growth. And so look, in short, with the team we've got, markets that they are going after, tenacious customer pull; I strongly believe that Marvell is going to drive ourselves forward. Their goal is to create a worthy company with worthy technology to enable the infrastructure of the future.
Thank you very much. Dan?
All right. Thank you, Matt. sum right, so I'll interlard myself first. I am Dan Christman. I am the Executive Vice President in Marvell, In-charge of Storage. Today, I am going to talk to you about their storage business. And they will talk about market dynamics, the occasion in front of us as well as innovation and how they are targeting their investments. And most, importantly, I umpire their pivot to datacenter, infrastructure and really as a solutions-based storage company.
So, Marvell is the leader in storage and they actually gain significant share here. As Matt mentioned almost 50% of the market is a market share now for Marvell. We're investing in leadership which for their storage primarily means datacenter. They gain thought leadership. They gain a company that only has 20 years plus in storage can provide to the market that allows us to innovate, bring unusual architecture to the market, and decipher their customer's toughest storage problems.
We are targeting growth segments which are helping us expand their SAM in the storage space and they are providing higher value solutions in the future. So let's talk a shrimp bit about this. As you combine Marvell's classic storage trade of HDDs and SSDs along with Cavium's now fiber channel business, you actually net the largest and broadest portfolio of storage solutions in the industry.
Fiber channel is over a $500 million in occasion and Marvell is number one in fiber channel adapters. HDD solutions is $1.9 billion opportunity. Marvell is number one in HDD controllers. And they started shipping in lofty volume this year preamplifiers. Their twinkle solutions business, which includes their SSD controllers, is a $1.1 billion occasion today and it's growing fast.
Marvell is number one in merchant SSD controllers. And now they are affecting beyond controllers. They are providing innovative unusual architectures and solutions. And they will talk about those in these slides. So as Matt mentioned, the storage market for Marvell is a $3.5 billion market today. It's growing at about 3% a year to $3.9 billion. Now if you smash down a little, you will observe the PC space is shrinking at about 5%. They observe this is an belt that's harder to differentiate, is less innovation, is less requisite for unusual functions and features.
But the Edge in other market which includes automotive, industrial, video surveillance, home gateways, gaming, direct attached storage, this is actually a very highly resilient and stable market. Talking about 1% growth over the next three years, but really the occasion is no flabbergast based on Matt's intro is datacenter. This market is growing at 9% a year. It's getting bigger.
We recognized this early and they focused their R&D dollars into this market. So, let's perceive at their revenue here. So if you perceive at the classic Marvell storage revenue, which again was HDD and SSD, you can observe a brace years ago almost half their revenue was coming from PCs. And you fast-forward it today and you'll observe a much more balanced portfolio in the storage trade for Marvell. But a brace of years out looking just at classic Marvell, you observe the PC drops below quarter of their revenue while the Edge and other remains very stable across sum three of these snapshots in time. The datacenter becomes very meaningful for Marvell. It actually becomes their largest segment in just a brace of years. When roll in the fiber channel trade from Cavium and you observe that Marvell has become a uniform infrastructure storage powerhouse.
PC is now down to 18% of their storage revenue and in a smaller percentage of the Marvell company revenue. So when they talk about fiber channel, today again it's a $500+ million opportunity. Marvell is the market share leader with tenacious incumbency. They are the preferred supplier for leading OEMs and Fortune 1000 companies, and due to the faultfinding and the sensitive nature of the data that gets moved in security onto fiber channel infrastructure, they observe this is a very stable market with longevity. And the fact is that Marvell is quiet innovating here, prerogative we're helping extend their leadership through areas such as in-line security and NVMe over fiber channel and this is what customers supervision about.
Now, there is no surprise, I umpire everyone here in this margin understands that the HDD is going through a secular decline, prerogative if you perceive at units this is about a 10% a year unit decline in the market but due to the conducive mix, the addition of preamps, the higher capacity drives going into datacenter, the SAM itself they projected decline about 7% a year.
Let's dig a shrimp deeper, you observe that really PC is the market that's most impacted really driven by the replacement cycle of SSDs in the PCs replacing HDDs. If you perceive in fact at both desktop and notebook both markets are declining in the mid-20s. But when your journey PCs, you observe the stable piece underneath which is actually relatively flat and if you dig in deeper, there you observe really what Marvell's focused on which is a near line segment in hard disk drives, these are the artic storage drives in the datacenter where they manage broad Data, if you grasp a photo about a week later, it's probably on multiple artic storage HDD drives and in the datacenter.
In fact in calendar year 21 about 40% in the entire HDD market will exist in the near line segment, this is where cost per gigabyte matters and without hard disk drives in a datacenter they would not exist able to store their data. Why Marvell is focused here is number one it's a growing market, that's pretty obvious but number two we're very well situated to win this space, right, where we've been in this industry for over 20 years. They are in 21th generation now of read channel development, we're a technology leader in sum the famous aspects that deserve these drives work.
If you perceive at the aerial density increases that really drive the capacity, you perceive at unusual technologies, they talk about energy assist ultimate time they hear, HAMR, MAMR, Dual Actuator, multi-actuator, these sum grasp investment, they grasp a partner that understands how to carry out this and Marvell is number one in this space for a reason, they project that we're going to continue to grow in this space with the market and even beyond the market.
I moreover talked about in the dawn the fact we're going to exist more of a solutions provider, so an HDD that means preamplifiers. This is meaningful revenue in the future it's meaningful SAM for sure, this is a subset of the SAM I showed you on the previous glide not incremental but because Marvell has a tenacious position in the HDD controller space, we're getting extremely tenacious draw from their customers to toil with them in the preamplifier space. They want partners who are actively investing with them in the HDD space and if you perceive at the current wave, that's driving preamplifiers today, it's really about capacity increases due to adding platters in the drives.
So to expand capacity, they add more and more platters in these drives today and when you add a platter, every platter is two channels of preamplifier. So as you travel from two to three to four to up to 10 platters per system, you travel from one or two preamplifier channels to up to 20. So that actually becomes very meaningful where the content for a pre-amplifier in an near line drive can almost equal the content for an HDD controller.
Okay. So it's very, very meaningful. The next wave is really through technology innovation. Again as I talk about these acronyms HAMR and MAMR, these technologies that the customers are developing acquires Marvell that moreover develop unusual technologies, the controller in the preamplifier gain to communicate together to control these unusual technologies, you gain to control the energy elements within the system with the preamplifier.
So these are unusual opportunities for Marvell, they add more value and net more content in these unusual hard drives and what I'm arrogant to order is that today Marvell is shipping preamplifiers into the market, we've qualified with their customers, their customers are shipping drives in the market with Marvell preamps and they hope this to exist meaningful, meaningful revenue next year for Marvell.
So the overall repercussion of the market dynamics I just described to you as well as strategic R&D investments really betoken here the fact is that the notebook exposure is decreasing meaningfully in the HDD space for us, it'll exist less than 15% in a brace of years.
Our investment in datacenter is clearly paying off as you can observe in this chart and they believe by diversifying their HDD revenue and by growing in preamps that they can partially offset this secular decline in the market and achieve better than the overall market.
So let's journey on to twinkle solutions. Now FMS which is a very celebrated betoken for the twinkle industry, it's twinkle memory Summit, it's held in Santa Clara every year, it was ultimate held in August, it was really a coming out party for Marvell, this is their booth here in the show, they came out as a company, they said perceive we're more than an SSD controller company. Right, they are a twinkle solutions company, we're focused on effectively or more efficiently managing the twinkle based storage systems, this evolutions been driven by their aptitude to leverage the broader Marvell IP to enable unusual figure factors for their customers, unusual trade models and provide unique and innovative architectures at the platform level. This of course adds up for more content for Marvell and it grows their SAM.
So let's talk about now the evolution of twinkle storage, if you umpire about it really started off as an HDD replacement, in the PC space people basically took a two and a half inch hard drive out, they swapped in a two and a half inch SSD drive, identical figure factor, identical interfaces, they went on to unusual figure factors, they order perceive they don't know necessarily gain to beholding to this HDD figure factor, they can optimize for their PC. So they redeem unusual figure factors in that were smaller and more space efficient, they did unusual interfaces relish NVMe which took edge of the actual twinkle and optimize the performance and after PCs went through this, the datacenters went through the exact identical cycle of replacement.
But now they're looking for more, they're looking for unusual architectures, they're looking for unusual trade models, they're looking for a platform based solutions. From a trade model in an architectural standpoint, I want to talk about this carry out it yourself model, they did talk about it shrimp bit ultimate year but I want to talk more about it today, this is an occasion that when you shake off the limits of a hard disk drive, the mechanical limits of the figure factor limits and you order perceive I'm just focused on twinkle memory, you really can now optimize, you can optimize for space and power, you can optimize for workloads, you can station the controller directly on your board or build an OEM and unusual figure factor. This is really enabled by the fact that the customers can buy a controller from a company relish Marvell directly.
They can source their NAND from multiple lofty character Tier 1 NAND vendors and they can build custom firmware. They really optimize this solution for their needs. Now Marvell's uniquely positioned here because we're a merchant supplier. They gain tenacious and long lasting relationships with sum of the Tier 1 NAND vendors. They sum toil together in strategic relationships as partners to develop these systems for their customers and then once we're on the board they can integrate additional functionality they observe this is additional occasion for Marvell, you can perceive at the architecture can exist changed. And this is basically more content and more value occasion for Marvel in this space that this started in a datacenter but we've seen it journey beyond a datacenter now in Marvell's one designs already here you'll start to observe revenue over the next brace years here it's already a next year because it's kind of a paradigm shift for Marvell in the industry.
So let's talk now about platforms and how Marvell helping disrupt them platforms let me decode this glide first for you, you observe this gray box here is the SSD controllers. They ship those today; will continue to ship those in the future but this red box is unusual content for Marvell. I'm going to verse sample here this is an aggregator. Now their customers are looking to add more and more capacity as they add more capacity and they travel beyond PC centric figure factors to datacenter centric figure factors. The limitations start to become the SSD controller. The controllers can only handle so many NAND behind them and when you try to add more and more of these together you conclude up either with limited capacity or limited performance.
So Marvell's now interlard unusual aggregator, NVMe aggregator chips that basically even grasp in seamlessly stitched together multiple controllers or multiple SSD drives and present them as a single, lofty capacity, lofty performance drive enabling unusual figure factors in a datacenter. In the second sample you hear a lot about Microsoft Project anally, open channel it's really about more efficiently managing the twinkle storage at a flat above the drives which means are putting management kind of at the host. I know when you perceive at doing that you order well carry out I want to redeem that on my CPU and squander those cycles I could exist renting out and the admit is always No.
And I umpire a Rag will talk about accelerators later but here they gain storage accelerators. And these accelerators basically will carry out functions relish compression, redundancy, security, IO virtualization and multi tenant systems and offload the CPU to befriend more efficiently manage the twinkle storage, it allow that cloud datacenter customers to rent out those CPU cycles. The ultimate sample here is a revolutionary architecture that they actually announced to at twinkle memory pinnacle is an ether net bunch of twinkle they convene it the eve off.
And this is an end-to-end chipset for Marvell that includes their controllers, it includes their NVMe converters and moreover pulls in content from their networking group on the Ethernet switch side, if you perceive at traditional server based storage in a datacenter when you want to add more storage you gain to add more compute they travel together, prerogative in the Eve off even essentially this aggregated these, are you able to scale up your twinkle storage independently creating a lofty performance rack of flash. Now this is connected over the Ethernet so it looks relish its local, if you perceive at latency is in performance it appears to exist local to the host.
So when you want to add more drives and more capacity is simply add more drives into the rack, its scales linearly now they announced as I mentioned this that FMS has been very well received by their customers as an indigent lot of interest in this unusual architecture. So the occasion in the twinkle market for Marvell is huge prerogative if you perceive at their classic controller trade this has a 17% CAGR. Their initial entry into here was in P.C. as I mentioned but we've pivoted towards a datacenter, in the datacenter customers value their performance their value reliability, they value advanced in unusual features and architectures. This unusual Sam on top here is actually growing faster than the overall controller trade so they conclude up with a 19% total CAGER for a twinkle solutions business.
The gray box is incremental; it adds about 25% on top of their FI or calendar year 21 CAGR there or Sam. And they gain some trade here already it's relatively tiny but it's growing and going forward they talk about their SSD trade will really start talking about their twinkle solutions trade with SSD as section of that trade so you can observe here how this sum comes together. They recognize the occasion in datacenter early. They aligned their R&D resources towards the datacenter. As they continue to execute on this pivot to exist a provider of optimized solutions for the datacenter, you can observe how this dramatically shifts their revenue profile.
These segments are becoming more and more meaningful. They started about a third of their business. Now it's half of their business. A brace years from now it'll exist three quarters of their business, so I'm going to summarize one more time for you. We're leading from a position of power in sum of their storage businesses. Their shift to datacenter is well underway. We're seeing the results you saw the results today in their revenue mix. We're working with their partners of to pioneer unusual and exciting innovative architectures to befriend them more efficiently store and manage their data.
We've expanded from being a product solutions company to a more complete solution provider. And finally we're positioned for uniform growth. Thank you very much.
Thanks, Dan. Guys, we're going to grasp about a 15 minute break, so let's exist back here at 10.15 Eastern Time for folks on the webcast. Thanks.
Hey, folks. We're going to net started, so if everybody can grasp their seats. sum right, so we're going to net the program going again. And it's my gladden to interlard Raghib Hussain, who will grasp you through their networking business. Raghib?
Welcome everyone. It's suitable to observe so many intimate faces and the unusual ones too. It has been a sedulous year, plenary of excitement and a lot of potentials. I'm very excited to exist section of this unusual combined company. And I'm fully committed to grasp it to worthy success. Let me divulge why I'm excited. The potential that this combined company holds far exceeds what they had at Cavium. Now, just to give you a background, I'm founder of Cavium. And at Marvell I am Chief Strategy Officer and running the networking business. The scale that they gain in this combined company, the breadth of product portfolio, and the engineering knowhow, it is just incredible.
What excites me most is the team, the technology, but most importantly the innovative products that they are working on. And I'm going to share sum those detail with you today. But to inaugurate with, they are tenacious in enterprise, and growing. They are very well positioned to exist the leading semiconductor supplier for 5G rollout. They are driving transformation in compute for datacenter, and they are enabling the next generation of edge computing. So before they perceive forward, let's start by taking a perceive what is going to drive the growth in infrastructure, the spending in the next generation in the global markets. Exponential enlarge in devices is generating a massive amount of data. This data needs to exist processed to generate value.
Now, engaging characteristics about this data, that it is perishable, it means the sooner you extract the value higher the value is. In a traditional architecture this data was generally generated by devices and brought to some central datacenter for processing, convene it a cloud. Now, because of the sheer volume of this data it is not feasible, and in many cases impractical to bring this data to some central devices -- central datacenter. And a large percentage of this data is used by the application which is faultfinding in nature, for example, although the amount of data in 5G has increased, but the latency requirement remains the same, one millisecond.
The data generated by the sensor around the car has to exist processed instantaneously for car to deserve faultfinding decision, relish it has to apply the breaks. Now imagine if sum these data was hypothetical to travel to some central cloud for processing, it would gain been disastrous situation. So the network is morphing out of necessity and it is becoming more and more distributed. In other words, they will gain datacenter not only in the cloud but moreover in the enterprise, in the carrier, and moreover at many of the edge devices. So if you really perceive at it data has got gravity. So instead of pulling data towards the compute, data is pulling compute towards itself. sum these trends are massive occasion for Marvell.
And not only compute has to journey towards data, it has to exist efficient and optimized for the real-time application. It means that they requisite lofty performance compute and efficient processing at every node of the network, from datacenter to carrier to edge. And at each node they gain very specific requirements in terms of cost, power, and performance. It means one-size-fit-all is not applicable anymore. And with this distributed processing model the security has to exist implemented at every node of the network. sum these requirements are being addressed by purpose-built SoCs, application-specific hardware accelerators, and in some specific cases FPGAs and GPUs.
Now, both efficient compute and security play in Marvell's strength. The combined company has a comprehensive array of products, both for processors and networking. They gain a complete portfolio of processors ranging from baseband processor, to security processor, to multi-core generic purpose processor, as well as sum the passage to ARM-based server processors. They gain complete Ethernet networking solution, from switches to PHYs, to NIC adaptors. And they gain high-performance Wi-Fi connectivity solution for both access point as well as client. So in other words, the depth and breadth of the product portfolio that they got is second to none. And sum these products are going to drive the growth for their company in the infrastructure market.
We are using the portfolio to disrupt infrastructure market end-to-end, really enabling their infrastructure customer to net the most out of this data economy. If you perceive at these infrastructure applications they gain a lot in common. They sum requisite high-performance compute, they sum requisite security, they sum requisite lofty bandwidth connectivity, and then sum requisite low power efficiency. In many cases they are addressing the needs of these markets through a lone piece of silicon, for example, the switches, the PHYs, and the multi-core processor. In some sample they are actually pile market-specific application-specific optimized solution using their common portfolio of IP. For example, baseband processor. In other words, these markets gain common characteristics and they are leveraging their investments across their infrastructure markets.
Our product portfolio has a large growing addressable market. They gain established here in a groundwork $10.5 billion SAM, which is growing at a 9% CAGR. Processors and networking are growing faster than Wi-Fi. In addition, they gain $4 billion SAM for ARM server processor, which is growing at a higher CAGR of about 14%. So, sum in all, their SAM CAGR is 11%. Here is another view to perceive at their groundwork $10.5 billion SAM mapped to their target ends market. As you can see, it is fairly distributed across sum four market segments. As a company their IP, their R&D, and product portfolio are well aligned with the major market trends in the infrastructure.
So let's talk about enterprise. Both Cavium and Marvell has a tenacious position in enterprise. It is about $2 billion market, and they gain about 30% share. Enterprise SAM growth for us is higher than the overall market growth, and it is because we're expanding their market share through unusual design wins. ultimate time, in 2017 investor day, they talk about upcoming enterprise upgrade cycle and how Marvell is positioned to uphold upgrade from a gigabit to a multi-gigabit driven by the bandwidth needs. As you can observe from this chart, the IT upgrade cycle is here. IT budgets are expected to grow driven by the needs of either upgrading the outdated equipments or by the security concern. It is just getting started. And consistent with these cycles of the deployment of the infrastructure equipments, upgrade equipments, they hope it to continue.
While other companies gain lost their focus on enterprise, Marvell has invested in innovation in enterprise, pile targeted solution with feather that their customer wants. It is quiet a multibillion dollar market, and their OEM customer needs product to enable solutions for their conclude customers. They requisite the latest geometry node, they requisite the low power; they requisite the features needed for the evolving requirements on this industry. By serving the needs of their customers Marvell is already growing its share in enterprise. ultimate investor day they talk about 25 unusual product, at that time they were ramping in revenue. Today, the revenue generated by those products is about $200 million, and it is quiet growing.
With the combination of Cavium, now they gain a complete product portfolio from access to aggregation to core. And that will continue to drive their share in enterprise. Their merger brought together a complementary power that enable us to provide complete solution for their customers. Cavium was tenacious in aggregation and core, and really the processors, and Marvell is tenacious in access and switching networking. Together they are able to provide complete solutions, complete platform for their customer from access to aggregation to core. And that makes us the prerogative strategic partner for their customers. Their complementary customer groundwork is moreover a tremendous value for us. For example, Cavium had significant presence in some large-carrier OEM as well as large server OEMs, where Marvell did not gain much presence.
Now, with the combination of the company and the combination of the product portfolio, now they are considered a strategic partner. As a result, they are getting networking -- switching design wins moreover in those conclude customers. So let's grasp an sample of a typical security networking appliance out there. As you can see, that there are always a switch and a PHY setting on the motherboard along with the processor. Processor conclusion are generally made first. Before, neither company had the complete solution. Cavium had suitable established presence in the processor, Marvell had established presence in the switch and PHY. Now this picture is a coincidence that they both were in the identical boat; however in many designs they had some third-party vendor serving the other side.
Now, with the combined portfolio they are able to provide the complete solution for their customer. And along with the processor, they can actually provide the switch and PHY solution as well so that their customer can deserve their conclusion upfront to bring the prerogative solution. They gain already started winning designs in this area, and there are plenty to go. This is another example, Marvell is tenacious in switch and PHY but they did not gain many core processor to address the needs of aggregation and core. Now with the combined company, they gain complete platform with a switch, and PHY and a processor and the platform solution serving the needs of their customer from access to sum the passage to core.
So you can observe the combined IP and the product portfolio that Marvell and Cavium bring together uniquely position us for tenacious growth in enterprise. On top of that, they are in the upgrade cycle, it has just started. And they gain the loaded product portfolio with the latest feature to maintain driving it -- to continue driving it. Due to their commitment with enterprise their customers are considering us a strategic partner. And that is a position of power for us which will continue their growth in enterprise market.
Let's journey on to datacenter. As unusual compute models are established they gain multiple high-growth opportunities in datacenter. Cavium has had a tenacious presence in datacenter through security and networking services offload. It is about $2.5 billion market, and they gain about 10% share. In addition, the ARM server processor in datacenter has about $4 billion SAM. We'll discuss more details about it in subsequent slides. They sum know datacenter compute is changing driven by multiple trends. The first one is distributed security and network services. As the datacenter is evolving, driven by the needs of elasticity and virtualization, the network services are being implemented at every node.
The second trend is cloud-optimized ARM server processor. And then they sum know there's a unusual trend, simulated intelligence, and they will discuss more about it. Marvell has been market leader in providing efficient compute security and network services offload for over a decade. If you perceive at any enterprise security or network appliance, and if you open it up, you will observe that OCTEON and their NITROX processor are in it. When it comes to security and the data plane processing Cavium has been market leader for over a decade. In cloud, security and network processing requirements are changing and it is getting distributed as they talk about. And as a result, these are implemented in every node, but there moreover you requisite the similar kind of acceleration. Marvell's Liquid Security product lines are designed and very well positioned for that market.
We are engaged with sum the HyperScale datacenter providers, as well as several data platform companies. So two of the HyperScale gain already announced their security services based on Liquid Security. And they are engaged with many more, so you hope to hear more about this. This trade is in early stages prerogative now, but it's already generating a suitable revenue, and has a significant growth potential.
Server for datacenter is a huge opportunity. It is about $16 billion TAM, and they hope that ARM servers can address about $4 billion TAM. Marvell Thunder 2X is the first Xeon-class processor. When I order Xeon-class processor, it is really the dual-socket ARM server processor which has the performance as well as memory bandwidth and hurry and connectivity of a really Xeon class which can exist used in a generic purpose server application. They gain wider software and hardware ecosystem. ThunderX2 platform has gone in production in July, and they are engaged with several HyperScale conclude customer at various stages at EVT, DVT, and qualification and application tuning.
We are working closely with several vendors in U.S. and Asia. If you grasp a perceive at these recent announcement by their customers, several customers gain announced platform based on ThunderX2, and then there are several independent third-party analysts gain published the benchmark comparing ThunderX2 with the Intel and AMD processors. One, of the -- one which is Astra, which is the first world petascale supercomputer, it is among the top 100 supercomputer in the world and it is based on ARM server processor ThunderX2. It has 145,000 processor cores, ARM cores, delevering about a 2.3 petaflops of performance.
Now, one of the reputed analysts is AnandTech and this is what he has to order about ThunderX2, "In short, ThunderX2 is the first SoC that is able to compete with Intel and AMD in the generic purpose server CPU market. And that is a pleasant surprise. At last, an ARM server solution that delivers." They are seeing a suitable traction in this market, and they hope it to exist long-term growth driver for Marvell.
Now, about simulated intelligence, they sum know simulated intelligence is the next -- is the unusual gold rush out there. It works just relish their brain. So for example, the fact that they know this is a bottle because their brain neural network has been trained over time that things that perceive relish this is a bottle, by different types of bottle, the perfume bottle, the wine bottle, and so on and so forth. So that section of the neural network is called training and learning. And then when they observe something that perceive relish a bottle their brain predicts that it is probably a bottle, that section is called prediction or inference.
Now, training is generally done in cloud because it is a laggard process, it's a batch process, it requires a lot of data and it does not requisite to exist in the real-time. It can be, it can exist done in a batch process way. However, inference, it's not only done in the application in the cloud but moreover in application enterprise carrier and the edge in the edge devices. Now inference has to exist done in the actual time and instantaneously because this is where you're predicting, you cannot grasp maintain the consumers waiting or user waiting for the result, right. So as a result of that, it has to exist done at every application. As they sum know one vendor out there has made a fortune out of exploiting training. However inference today is generally done in the software because the number of applications that are using inference is in a growing stage at the moment.
We believe that inference is going to exist much bigger market in the overall simulated intelligence and it has a long term growth potential. Inference requires a purpose built solution optimized for a scale and power and cost efficiency, sum of these AI processing plays in the core power of their company, they gain a DNA of multi-core processing, hardware acceleration flowing out, engine scalable architecture. Gavin was working on AI for the ultimate several years and they gain developed some core IP and architecture.
Now what they are doing now, they are pile a purpose-built inference processor. Size properly, for volume application, application of scales, so that it can plug in every server and every edge devices. That is a low-power that is a programmable solution to proper the evolving neural networks needs. And it is moreover pluggable through the existing software ecosystem. They are actively engaged with several hyperscale customers out there and co-developing it with one lead partner. They gain been working moreover closely with the ecosystem, you must gain seen intelligence related to glow compiler initiative driven by Facebook. It is an initiative to really standardize the inference usage. They observe AI a multi-billion dollar market occasion for us and a faultfinding role in future Marvell products.
Well, they are very excited about the prospects of this. They are not adding it in their SAM at the moment. However, we'll maintain you updated with the progress that they make. So let's grasp a perceive at Edge and other related areas, the Edge and other belt for us is really the automotive, the industrial, the video surveillance, the home gateways, gaming et cetera. It is about $2 billion market and they gain about 14% share. If you grasp a perceive at sum these products, Marvell has been present in sum these products for many years, a major result of the data economy is that the trend that compute is affecting towards the edge, towards sum devices.
As a result of that, many of these devices are becoming very sophisticated, in some cases really becoming a mini datacenter relish for sample in car. Marvell is actively engaged with sum of these trends, the automotive market is going through a massive transformation, traditionally in car electronics was connected together with the low bandwidth interconnect. With the introduction of advanced driver assist and ultimately the autonomous cars, massive amount of data is being generated by the sensors around the car and it needs to exist transported and moved around in the car at a speedily pace. This requires benchmark groundwork lofty bandwidth networking, Marvell is leading this trend, Marvel has long history in automotive industry, it is a lofty barrier to entry industry.
It requires a specific character as well as supply chain requirement. Over time, they gain established ourselves a credible automotive supplier. In 2017, they introduced the first secure networking sites and five product for automotive working. This enables the data by the sensors to exist moved around in the car at a gigabit hurry and car can deserve sense the wall around it and deserve a actual time decision. They are one of the early leaders with design wins and many Tier 1 OEMs. This design takes time but they are a significant long-term growth potential for Marvell. And this year they gain included this SAM in their overall SAM and they observe it about half a billion dollar occasion and this is growing at a speedily pace.
Moving on to carrier, this is a worthy growth occasion for Marvell and it is a market they are extremely excited about, 5G is here and it is happening and Marvell is well positioned to exist the leading silicon supplier for 5G. Carrier is a massive SAM for us, it is about $3.5 billion SAM market and they gain about 10% share which means they gain a lot of margin to grow. Their carrier SAM CAGR is higher than the market growth, this is mainly because in the 5G platform, they are increasing their content and hence increasing overall portion in the TAM. pile on a decade of innovation in 3G and 4G, now they are established to exist a tenacious leader in 5G, here they are positioned to disrupt the market and grow their share, I'm really excited about 5G and I observe 5G as the biggest growth driver for this company, the combined company has the broadest IP portfolio and capability is needed to enable to serve the requirements of the infrastructure market.
In fact, they are the leading market silicon supplier with end-to-end capabilities. From DSP, baseband processing for ARM multi-core processor, for control and data plan, for ARM SoCs, from security, Ethernet connectivity as well as software for the complete solution. They not only gain sum the faultfinding pile blocks but over time, they gain established ourselves a credible supplier to deliver lofty performance platform for baseband applications. This makes us a very attractive silicon partner for the carrier OEM. While today they will talk a lot about wireless and the groundwork station, it is famous to note that the combined company has much broader presence in carrier. Their products are designed in multiple appliances for both wired and wireless side of the carrier network. Their position in groundwork station has grown with every successive generation of wireless infrastructure deployment.
When they engage first time carrier OEM came to us, at that time they were security leaders, so they came to us to provide a solution to secure the link between groundwork station and the core. However with their multi-core capabilities, they were able to provide a solution for protocol processing for transport in addition to security. So in 3G, they were solution for the transport. Working closely with a lead partner, they were able to develop baseband capabilities and 4G they were able to proffer baseband processing in addition to transport processing.
I'm arrogant to state that today the groundwork station built on their products for 4G are being deployed across the world. And specifically the LTE network of a region with over billion population is powered by their baseband processors, they gain shipped over seven million groundwork station processors as of today. And now with the combined company, if you perceive at the requirements of the 5G groundwork station 5G deployment, it has a requirement of low latency, lofty performance compute and lofty performance capability of security, it sum aligns with Marvell's core capability.
So as a result, they are able to provide the complete 5G platform, looking at it another way, this is the complete stacks of the groundwork station, in 3G they were able to provide the protocol processing, in 4G they expanded their offering to cover the baseband processing and now with 5G, they are going to proffer the complete digital portion of the baseband processing. In other words, they are taking the workload, which were traditionally done in FPGA. If you perceive at the 4G groundwork station, in the main card they used to gain Octeon processor and in the line card, they used to gain three baseband processors.
Now in 5G with the key requirement, they gain two Octeon processor in the groundwork main card and typical configuration of 5G has two line card and each one gain not only a three baseband processor but moreover Octeon processor. Now just relish in enterprise playing through the combined portfolio, they moreover gain a switch and PHYs in this groundwork station application. Translating it into what they sum supervision about in 3G, they had a content of brace of hundred dollar in the groundwork station, in 4G they increased by three to four times and 5G they are going to enlarge it another 4X. It means that the groundwork station shipped by their OEM partners is going to gain the content which is quadruple in 5G compared to 4G. But there's more, if you perceive at the number of OEM providers in 3G timeframe, carrier had a altenative to select from a large number, typically carrier select three OEM for a specific region.
In the 4G timeframe because of consolidation, it was reduced to seven, eight and now it is really reduced to only five OEM providers out there. And now because of geopolitical situation, several large countries of the world are limited to altenative of only three OEM providers as they are engaged with sum of them. So if you grasp a perceive at this chart, it betoken there is a lot of activity going on in 5G, there are many announcements related to 5G and it is really picking up. Initial deployment of 5G is going to chance in U.S., China, Korea, Japan and India and of course the relaxation of the countries will result from here.
Carrier infrastructure deployment cycles are long, it's a long-term business, if you grasp a perceive at let's order for sample 3G it expand over a decade, the carrier are quiet OEM are quiet shipping groundwork station for 3G. 4G had a acute RAM driven by the bandwidth needs of the applications and it has had a suitable run. They hope 5G to gain similar RAM driven by the application needs of the various applications that are driving 5G deployment.
So groundwork station based on the design wins and their attraction with the customers they hope 5G to exist the leading growth driver for this company because they gain proven track record and IP. They gain position with enlarge content and they gain broader traction with multiple OEMs, so if you want 5G in your portfolio guess what Marvell is your stock, so by now you must gain figured out why are we, so excited about the potential of this combined company.
We are tenacious in enterprise and growing significantly. They are investing in the prerogative products to drive the growth in datacenter and Edge. They are well positioned to grasp the leading position, leading silicon supplier for a 5G roll out and they are leading that disruptive trends which is on server processor datacenter security, automotive networking and simulated intelligence due to driven consolidation in the semiconductor industry there not too many companies that are investing in the long term innovation and the growth drivers.
Marvell is a unique company which is not only established today and growing but moreover committed to the long term growth. Thank you very much. I'd relish to invite Tom now to give the how to drive the growth.
Good morning, everybody. I guess mic is on now. It's suitable to observe you sum again, it's been a order six quarters since they were ultimate together. As you can observe this is a very different company. Today than even six quarters ago when you guys were ultimate here Dan, Raghib, Matt talked about a broad portfolio, focus on the infrastructure market a lot of attention from customers and you're probably sum sitting there going yes, expected you to order that today so what are the customers gain to order about this and so that's why they asked me here today to kind of give you the perspective from the customer side of how this acquisition is being perceived and how this unusual company has being perceived.
Okay, so as you recollect when I was here ultimate time. It was March 2017 they were sum in this margin together it was snowing outside and I had been with the company for about three months and I told you sum I said perceive in order to net this thing on track they first order a trade is to align the sales and marketing role with the strategy of the company at the time, okay and I said these are the things we've got to carry out and what we've got to carry out quickly, so what it would how we've done what they carry out here, so I talked about a coverage map in the first thing I had to carry out was build a team, so I rebuilt my entire staff and then they drove that sum the passage down to the bottom flat probably about half the people on my staff gain worked for me before they understand my system.
They understand what I want to carry out they understand what I value. The other half gain not but having guys who toil for me before on there gain been a worthy value to the team in that they've helped him quite a bit. They talked about relationships, in an SOC semiconductor company today, it is more difficult than ever to deserve the sale there are more stakeholders involved in every transaction than ever before so they actually developed relationship major cities across sum the major customers they executed those major cities and we've expanded their relationships across sum the major customers. They had to antiseptic up the channel. So they went down to a lone global distributor they reduced sum the distribution partners in the regions around the world.
We wanted to enlarge their scale with sum these partners to net more share of mine, so they restructured the entire channel that was sum done and they did that literally within the first three or four months of me being here. On the sales strategy side you know as I told you ultimate time I'm very much metric space data driven, so they did a lot of toil around analytics metrics tools and processes understanding the selling capacity of this organization, collecting sum the data and analyzing the life cycles of opportunities how these opportunities converted to revenue sum that stuff toil started done started then they started collecting data they worked on the historical data they had and they redeem sum that in place.
We did the entire implement flow. They focused on solution selling and they really kept the organization hybrid to extend their gain with the variable expand sales obligate of reps and distribution that they have. THEY talked about account penetration. They gain maintained sum of their top accounts and as a matter of fact we've grown their top accounts from the Marvell side since they were ultimate here. They grew some unusual accounts, they added a number of nice accounts into the top ten list and as they integrated Cavium in. They really only had one customer in common in their in their in their respective top ten lists, so they had a very complimentary top ten list we'll talk a shrimp bit more about that later but we've got a very suitable account list going forward and we're continuing to toil their relationship matrix and expand their relationships up and down we'll talk a shrimp bit about some of these actual meetings and a shrimp bit. On the marketing side I told you they had fix digital marketing, the first thing they did is they spent a lot of time perfecting their digital marketing techniques, a lot of very targeted account based marketing programs.
Targeting customers with specific messages in a very cost effective manner, driving into their website, cleaning up their website adding a lot more relevant content to it sum of this stuff has resulted in a lot more activity and a lot more unusual customers coming to us. They basically looked at and examined their public relations and trade shows strategy making positive they got maximum recur on money spent there and they instituted quarterly reviews with the trade units to deserve positive that they had a marketing cadence for unusual product introductions and marketing activities every quarter so a lot of toil on the marketing side.
I talked to you about trade development and I told you that trade development in my world was two things creating preference and awareness at the conclude customer for Marvell products and pile relationships with people in their industry that needed to that were famous to us but weren't necessarily going to buy from us and so what carry out they do, so the first thing they did was they built out their automotive BT BD role when I was up here ultimate time you guys didn't even know they had an automotive trade within three months of being up here ultimate time, they had introduced the world's first gigabit secure gateway for the cars and my sales organization was overwhelmed with the activity coming in and sum the design activity that was happening with that product line.
We now gain complete coverage in sum the car companies in the world with BD folks and so that's been built out. We've built out or are now processed to their section participating in pile out their service provider organization and we're cultivating a lot of strategic partners in the industry that they requisite in order to continue to travel forward, people relish Nvidia with the automotive market, people relish Intel they gain strategic relationships with as they travel forward, so they did sum of this through 2017 as we're enter ending 2017. They decided their life was far too simple so they bought Cavium and they started it sum over again and this is what we're actually doing now this is where they are with the Cavium integration. In November, they announced the transaction, in July they closed the transaction and in those eight months they spent massive amounts of time planning for the day one activities. They spent time coming through the organization making positive that they were going to assemble the best organization possible.
We spent time looking at sum the implement flows to deserve positive that they were going to grasp tools the best tools from both organizations and expend them to create a best in class implement rush for the company. And so on July whatever it was when the transaction actually close, they immediately instituted a program. Today they gain the best of both worlds where the top talent for both companies 62% of the organization came from Marvell, 38% came from Cavium a very suitable merge of talent across the sales organization. Literally within weeks they brought everybody into Santa Clara from the Americas organization sales and FA's and they did product cross training to net these guys affecting quickly on selling the unusual merged portfolio.
And they did a recording of sum that so that EMEA and Asia at least until they can net out there doing things in person had training as well and they could actually participate online tools and systems are merging now, will exist actually introducing the merged system within literally within a brace weeks and for those of you who know me in my world, in the world of SoC semiconductors I view value as design wins, design wins are the lifeblood of this company and so starting in the next fiscal year everybody goes on the identical pay map where they will compensate for value creation in value created is design wins are really focused on keeping the keeping the life blood flowing getting into production and then driving it over to Andy and the guys to deserve it on a regular basis.
And then after sum this was done I heard I hauled Murphy sum over the world and they talked to sum of the customers about this company and what they were actually doing and so how did they react. Okay, so they basically told the account of their observation of the market what they saw what you saw in the video today what you've heard from Raghib, what you heard from Dan about market dynamics that were driving the strategy that we're deploying and they talked about the fact that they had a focused infrastructure powerhouse that they were pile a pragmatic suffer partner that's going to grasp their intellectual property portfolio and decipher their problems with everything from IP based semi custom designs sum the passage to benchmark products and we're going to apply this IP, this IP to their next generation learning machines and every customer universally to a customer yes they agree with sum of your observations in the market.
Yes, they got slides just relish that yes they were moreover extremely surprised by the breadth of the intellectual property and every one of them to a customer acknowledged a want for a deeper and broader relationship with the company and so they really told the, there are their customers and they are out there we're pile a company that thinks ahead so you can too and you heard that in the video today very well received by the customers. Now you know I'm going to hasten the risk of offending the animal rights activists in the margin again. I showed this to you guys ultimate time and I basically said perceive if you want to trap broad fish, you've got to fish where the broad fish are in other words we've got to deploy their sales and marketing organization, align their resources with their largest customers. This is the best recur of expended sales and marketing money that I can deliver to the company.
We gain to win the largest customers in their chosen markets first, the relaxation are going to result so they are aligning the sales organization we're deploying their resources next to the largest customers in every market. We're going to expend the broad portfolio in a collaborative way; we're going to decipher their customer's problems. They gain actually built the company the customers relish and want to carry out trade with. So where are these broad fish, who are they what are they doing so prerogative now as they merge their customer list as they merge the companies eight of their top 10 customers are currently over $100 million, the next two are within spitting distance and we've got a number of customers today who are sort of mid Tier customers that you heard about from Raghib and Dan that are probably going to shove their passage into that top 10 over the next brace years.
All the top accounts are direct but we're quiet investing in the channel, things relish putting deploying an FAE certification program this past year flat one flat two, so that FA's are tested literally given a written test basic erudition flat one, basic advanced erudition to uphold products flat two and flat two actually has pecuniary repercussions for the distributor, so they're motivated to continue to add uphold and add resources to their product line. So grasp a perceive at this list Enterprise carrier datacenter it's a who's who of blue chip customer list if you want to carry out trade in these markets and these are not aspirational customers, we're doing trade with every one of these guys today they are contacting connected with every one of these guys today.
On the edge side I specifically left automotive in there to talk about, primarily because the car is the ultimate edge computer, it's a learning machine that's creating massive amounts of data it's making latency sensitive actual time decisions on that data. It's filtering that data it's sending it back to the core that current millions relish it are doing that that data is being filtered at the core learning is taking station and it's going back to the edge the data gravity that that Raghib had actually explained to you. And so as they came into this thing with that gigabit gateway that they introduced ultimate year, they started doing trade with everybody on the planet who you want to carry out trade with, who is an automobile manufacturer design wins at major car companies that will start to actually generate revenue next year and relationships with every Tier 1 on the planet that they really supervision about, so you can observe a number of up there from if you Chrysler to Ford to G.M. to Bosh to B.M.W. We're working with every one of these companies prerogative now.
So it's a very tenacious customer list okay, so we're really using this IP portfolio in this industry. To provide platform solutions using flexible trade models to unparalleled uphold to exist a valued partner to their customers. We're literally selling these technologies into these markets okay, so how is this playing at the customer's Let's grasp a perceive I will travel through three examples of actual customer meetings on how this portfolio is creating tremendous amounts of occasion from one side to the other okay. So this is a this is a datacenter platform if you umpire about a mega scale datacenter it's got a hardware layer, resource management layer, virtualization layer a services layer. They typically play in the hardware layer as you would expect.
Now, they recently had a meeting, Raghib and I with the CEO of a cloud -- public cloud provider, a hyper scale datacenter guy. And so, at that company before the merger, Marvell played in there in the storage and in the networking side. They had SSD design wins where they are working with them with their SSD controllers so that they can provide purpose bill acute tangy storage for their storage arrays. They are working with them on some of the datacenter twinkle system solutions that Dan talked about, some of the aggregators and accelerators. They worked with them on switches and PHYs, and some of their two and four core Armada processors for data plane and control plane processor. So they had an established relationship with this company.
Cavium came in from the server side with server-based CPUs, network offload in the figure of smart NICs for Ethernet and security offload with the Liquid Security platform. So they were having this high-level meeting, the CEO of this company and his lieutenants were sitting there, and they are discussing the portfolio. Now, I gain to read some of the comments he made, because they were more incredible to me as a sales guy, but I literally wrote them down. During this meeting, as they were going through them, the CEO said to us, "It is in their interest to enlarge the trade relationship with Marvell." regular sales guy, CEO sits there and says, "It's in their interest to enlarge the trade relationship with Marvell. This doesn't suck. This is a suitable thing." Okay? "It's much better than you guys think. You can't execute me -- web paper bag, don't convene us, they will convene you."
So I literally wrote that one down, and they continued to toil with this guy, and they are talking about sum of their products and how they map into his products, how they can carry out more trade together. And he says, and I quote, "We requisite to gain this flat of fealty around sum things Marvell is doing." Again a quote that I kind of relish as a sales guy. And so, they literally walked out of there. And the top lieutenants at this company are aware of the fact that this guy wants to basic gain a broader relationship with this unusual expanded company, and they gain actually had more opportunities open up there in the past several weeks since that meeting that you can possibly imagine. Okay? So that's sample one.
So let's talk about carriers and in particular they will talk about cellular groundwork station carriers, okay? So Raghib talked about this, talked about 4G, 5G; both companies had a history in this market from LTE and endpoints before. Marvell primarily selling switches and PHYs into this market and the two and four core processors for data plane, control plane mostly in backhaul applications. And Cavium was selling their baseband in sum multi core integrated processors in there both of us had a history. So they were having a meeting again with the CEO of one of their customers who provides groundwork stations into this market. And they were kind of -- he was kind of acknowledging, you know, they are sort of very faultfinding to each other at this space as 5G market acknowledges. And he proposed that maybe they want to account having a written agreement, a multi-year supplier agreement where they could maintain focused on each other. Again, as a sales guy, they fight tooth and nails to net these multi-year supplier agreements, net customers entrust for long-term. And they got a customer proposing that they badge this agreement so that they could tarry focused on them. So, very, very tenacious relationship with these guys, this relationship is affecting forward in a very suitable manner.
And finally, they will talk about enterprise. You perceive at enterprise, and in enterprise you got access, aggregation, and core. The accesses were the -- the humans interfaced to the network aggregations where they sum aggregated cores where sum the routing and processing takes place. And so, they were meeting with a lot of -- they met with the execs of almost every customer who has portfolios to sell into this market, people relish Cisco, HP, Dell, Aristo, Juniper, Extreme, Lenovo, these are guys who sell into this enterprise market, broad portfolios of equipment. And again, they were meeting with the CEO and several of his high-level executives. One of these companies provides a broad spectrum of products in there.
Now, Marvell has done trade in this market primarily through access going into aggregation with switches and PHYs, again those multi core processors for control plane and data plane, and with Wi-Fi for enterprise access point. And they pushed into aggregation. Cavium is coming from the other side doing trade primarily in the core with ARM-based CPUs and security processors and coming this way, so that they kind of met in the middle. And during this meeting, the CEO is acknowledging the broad portfolio and how faultfinding they are to their trade going forward, and he asks Matt for a favor, "You know, I requisite you to net this one product affecting a shrimp bit. They got customer commitments. Can you befriend me?" "Yeah, yeah, they will help," Matt made the commitment and went away. And as they are getting ready to leave, they said, well, you know, since they are asking each other for favors, they said, "Hey, Mr. CEO, you got a switch design that they are fighting for in one-year trade units. Could you let us know how they are doing there?" He said, "Well, I will check." And literally within two weeks they won that switch opportunity.
Now obviously, they are not going to win this opportunity, if they don't gain everything it takes to carry out it technically and gain the pricing and the requirements of the customer needs but getting a shrimp phone convene from the CEO saying hey how is Marvell doing in this switch occasion socket, certainly doesn't ache when they are actually competing in there and so these types of things maintain happening, they maintain happening over and over again.
In the past, they were the guy with the narrower portfolio that would struggle to compete with the broader portfolio. They are now the guy with the broader portfolio and the customers are valuing it and so you could see, this is a faultless example. These three examples that I've given you are faultless examples of how portfolio breath is helping us and these are just three examples. This is happening every day, they are seeing people coming and order this portfolio is very valuable to us. They want a broader relationship with you guys. Okay, so just to kind of wrap it sum up, we've been on a journey, the first 11 months they took sales and marketing apart, they redeem Humpty back together again.
And then, they did it sum over again after the Cavium acquisition to give you a more predictable analytical metric driven function, okay and so they are largely done on the integration this thing is done. They created this infrastructure powerhouse for you and customers are sitting up and taking notice. We've had high-level meetings with pretty much every customer they want to carry out trade with and everyone is excited about what they had to proffer and how they can grow together. So as far as I'm concerned, their future is so bright, you got to wear shades. I was going to bring in the custom sunglasses for every one of you guys, unusual 11 lens Marvell on the other, but Jean carve my budget again. I didn't gain the money to carry out it. So best I can carry out now, order thank you for listening, and interlard Jean, who is their CFO.
Thank you. Thank you, Tom, you know what, when you submit your revenue synergy plan, I'll wear sunglasses. So Hurry up. So as you can see, it's a truly exciting time to exist at Marvell. Their team talked about the tremendous opportunities they gain ahead of us and that they moreover talked about how they build a complete infrastructure portfolio to address those opportunity. So well how carry out they disburse the next minutes to tie together what you heard of this morning without pecuniary model?
First as a team that they umpire about pile shareholder value is to really exist with the powerful trade model to focus on infrastructure market to generate a top-line revenue growth earning expansion and moreover returns to shareholders. But they umpire about is as their team talk about opportunities and their unique position. Matt talked about the characteristic of infrastructure market which attend to gain a very long product cycle, it requires a unique IP extraordinary engineering execution to toil with the customers. So the barrier to entry is very lofty and Raghib actually gave you real-time sample to talk about 3G, 4G and the 5G product cycle, they ultimate 8 to 10 years.
And then, Dan talk about how they toil with the customers, create innovative solutions in the storage market. So when you hear sum those that's relish music to CFO's ears and I'm pretty positive you are sum esteem it too because what it means is only build their pecuniary model, it's predictable revenue stream, lofty and the stable autochthonous margin and the long -- and the consistent of free cash rush with a higher terminal value. So those are the characteristic of infrastructure market, and moreover means in their pecuniary model, they actually don't gain so many what if assumptions which are focused on refuge and parameters relish NAND spot pricing next week. I can covenant you that's the input in my model.
So I'll cover three topics. First, I'll carry out a quick recap of their pecuniary performance. Secondly, I'll discuss their long-term pecuniary model and underlying assumptions. Third; I'll talk about what carry out you supervision most is the capital return. Matt showed you this charter earlier about their pecuniary performance since the ultimate Investor Day. I'll provide you a shrimp bit more details to betoken you as a company, how they gain fundamentally changed the structure of their trade model.
So just as a quick reminder, the gross management team, joined Marvell after Q1 fiscal '17 and that time Marvell was a company that served a broader role for consumer and the market. The autochthonous margin was low 50s. It's actually quite consistent with the consumer semiconductor companies. The company moreover invest in large amount of R&D in sum different kind for fancy consumer and the markets. The investment is large, the product cycle is very sharp, it's a year and some of them never generated the top-line revenue growth and earnings on the investment. So if you perceive at the operating margin back then, its barely single-digit.
So during the ultimate two-and-a-half years, their team really pivoted the trade into the infrastructure market. As you gain heard from sum the team members and that they increased the infrastructure revenue as total revenue percentage is significantly -- when you combine their change over the strategy and their team's tenacious execution, they expanded their autochthonous margin from low 53s to 63.5, 1000 basis point increase, it feels really suitable to order that because you don't net many opportunities to order you increased your autochthonous margin by 10 percentage point.
On operating expenses side, Matt talk about in detail how they approach results avocation. It's really particular data driven, result driven focused on returns, so when you perceive at that and perceive at the how the leverage of their model, they gain increased their operating margin from low single-digit to 30%. They are very arrogant about the model they gain viewed. This model generates a lot of a cash rush too. So when you perceive at it, starting from Q2 fiscal '17 to Q2 fiscal '19 despite of their long suspension over share repurchase associated with the Cavium transaction. They gain returned a billion dollar cash back to shareholders, through share repurchase and the dividend. They are very committed to recur cash to shareholders.
Let me switch gear to talk about their merger with the Cavium and their long-term pecuniary model. As their team highlighted earlier, this merger really increased their market occasion from $8 billion to $18 billion. The infrastructure revenue as a percentage of total revenue increased to two-third. And also, they increased their skill and the diversification with the 200 million synergies, when you add sum of them together, it truly accelerates their top line revenue autochthonous earning expansion and to generate higher intrinsic value for shareholders in the long-term.
So I'll grasp you through their revenue profile and assumptions under their long-term pecuniary model. Matt talked about earlier, if you perceive at their core networking and storage market, they hope the market SAM without a server SoC to grow 7% going forward. They are very well-positioned to address the market occasion to grow Marvell overall top line revenue by 6% to 8%.
We hope their storage trade to grow low single-digit largely in line with the market and then within storage, Dan talk about their opportunities and that they actually hold a very cautious assumption by the HDD market, which they hope the overall market dollar SAM them to decline 7% but they hope they continue to expand into the datacenter near land market which is growing double-digit they moreover observe their preamp revenue to continue to ramp. Those are their unusual product cycles for Marvell. They will create incremental revenue opportunities to offset the market decline, so they believe their HDD trade is going to exist flattish or decline single-digit going forward. Fiber channel market has been really stable and healthy, so they continue to hope their fiber Channel trade to exist flattish going forward.
Now on the twinkle solution business, it's very exciting for us. Dan talked about the continued expansion to cloud enterprise datacenter. This trade design cycle actually it's very long, if you can recall Dan's charter to perceive at the percentage of revenue they are going to enlarge in non-PC segment, those are the design wins they already secured and their team are really working on execution of those design wins, so they carry out observe revenue continue to grow driven by those opportunities. More importantly, they are very excited about the design wins their teams are working on to address large opportunities in both emerging embedded solutions and the twinkle solution market. So, overall, they continue to hope their twinkle solution trade to grow inline or faster than market in the long-term.
Now let's switch into networking, the most exciting ingredient of their growth story. They carry out hope their networking trade to grow faster than market at the low teens going forward. Both Raghib and the Tom talked about the exciting opportunities they gain ahead of us. At the highest level, if you perceive at both their processor product line and the internet product line, they are going to grow faster than market and their Wi-Fi product line largely is going to exist in line with the market.
So from the end-market perspective, they observe growth occasion across sum their conclude market, which are so exciting, and that there are so many different drivers. I'm going to only highlight a few key drivers. First is the enterprise, the upgrade cycle Raghib has talked about and if you recall Marvell's enterprise switch and the five businesses has been growing double-digit during the ultimate few quarters and the Cavium side their enterprise trade has been growing double-digit too. When you combine the both portfolios, the leverage they gain and the design wins their team already won, they carry out umpire their enterprise trade will continue to grow with a tenacious momentum.
Next on 5G, I'm pretty positive you guys sum recollect Raghib's 4X chart that's what I remember, that's how my brain functioned. So 5G is really largest growth occasion for Marvell going forward and then their current model assumption actually is just their lead customer maintain their existing market share and their team are working really hard to deliver on the schedule of the design wins.
Next is datacenter, they gain a very unique set of very innovative product lines in datacenter ranging from a security to Ethernet offload to gearbox re-timer. So sum of them when you perceive at the in the overall context of Marvell today, which you know, it's over $3.4 billion revenue, the revenue groundwork is tiny but sum of them actually are going to gain a worthy occasion going forward. The growth rate of sum those product lines actually it's going to exist higher than carrier space and enterprise space. So they carry out hope their datacenter revenue to grow most significantly and enlarge their presence in datacenter in the long-term.
Next their comment on the server processor business, they really only included very moderate revenue in their baseline model just based on current customer design wins and the customer engagement. I'll talk about later what they did not include. so other product line for modeling purpose, they continue to hope other product line to decline high-single-digit.
Now let me talk about what are the upsides they can observe going forward. First, revenue synergy; Tom talked a lot about the portfolio, the appointment they gain with the customers. They gain not included any revenue synergy in their baseline model. So if they generate a revenue synergy that will exist tremendous upside. Of course, their trade has long cycle, so you should hope it for the future business. Secondly, 5G in their baseline model, they only included the current design wins their team are working very hard to deliver, they did not comprehend any additional customer design win especially on the baseband side. If they win unusual designs there's going to exist tremendous upside, I really requisite your sunglass in that time. That's very exciting. You don't net CFO excited most of the times.
And so, the next one is Hyperscale ARM server adoption, so in their baseline model, as I said, they only comprehend the design wins with the OEMs, you know some of the testing chips, any major hyper secured datacenter adoption is not in their current model, so there will exist upside the too. So as you can see, they gain a lot of the exciting opportunities ahead of Marvell and their team is working really hard to execute because sum of their businesses are very long cycle business, so everything I talk about here their team is executing forward.
Now let's switch gear to talk about synergy and moreover talk about their operating expense model. So they reached their synergy to $200 million during their ultimate earnings call, then they got the questions about why it's so high, why it's so high. So you guys never had, so now let me account for to you why they achieved, they are going to achieve $200 million synergies.
So this is about 8% of the total company's disburse which comprehend both the cost of sales and operating expense, which is actually within the orbit of previous transactions but it certainly powers the high-end. The reasons they could achieve with these kinds of unique synergies because they carry out gain unique opportunities. I will highlight it to you, first, it's on the R&D side. So both companies were investing in high-end the datacenter switch and embedded the server processor -- embedded the processor trade and a lot of you know, those are very large investment. So their team worked extraordinarily hard to consolidate the roadmap. So in each business, they select the most competitive roadmap going forward which they conclude up saving a lot of money and contributed significantly to the savings over $200 million synergy.
The second one is facility consolidation. It's relatively smaller, but it's moreover very significant for us. They gain a lot of overlapping offices across different locations, they can consolidate, but the most unique one is they gain their large Design center and headquarter located immediate to each other and one of us chance to gain actual space. So they actually they are going to exist able to journey the gross Cavium headquarter and the large design team to Marvell's campus without enlarge in any space that consolidation is very efficient. So they gain been able to redeem more facility cost which is a fixed cost as you guys know to achieve synergy and contribute it to this $200 million revenue.
Now let's perceive at their synergy execution timeline. Their team actually is executing ahead of time. On autochthonous margin side, they expected to achieve $50 million synergy which was started in Q1 fiscal '20 and over time to ramp up to achieve the total $50 million synergy. As they perceive at their autochthonous margin, they usher their Q3 as combined the company autochthonous margin to exist around the 64.5%. So if they achieve their $50 million synergy target, they will exist able to net it to around 66% autochthonous margin.
On the operating expense side, their combined company's operating expenses hasten rate groundwork is about $325 million and then they guided their operating expense for Q3 fiscal '19 to exist in the orbit of $300 million and $305 million. So what had implied is we're going to achieve $90 million hasten rate of synergy out of the gate as a combined company. Then you are going to observe some payroll tax and the merit enlarge in the first-half of fiscal '20, but once they migrated to second-half of fiscal '20, they are going to exist able to complete one ERP program and achieve the remaining $60 million synergy for the overall $150 million synergy.
So when you umpire about how they manage their operating expense, Matt talked about extensively the discipline approach they have. On SG&A side, Marvell standalone already achieved below 8% SG&A as a percentage of revenue. They will continue to drive operational excellence to target SG&A as a percentage of revenue to exist between 6% to 7%.
On the R&D investment side, they want to invest for the future, so they hope their R&D investment ranges around 24% to 25%. The passage they approach it as Matt discussed is for the established business, they will manage R&D expense to exist much lower than 24% to 25% to maximize long-term cash flow.
For autochthonous business, they are going to invest higher than 24% to 25% to drive their trade autochthonous and the expansion. For strategic investments, those are the investments that we're creating future and to innovate, we're going to monitor those investments and focus on recur on those investments.
Automotive is a worthy example, in the past ultimate year they did not comprehend automotive into their SAM but the investment has been paying off and we're very excited about their opportunities in the automotive Ethernet market.
So when you redeem sum together to perceive at their long-term pecuniary model, they hope to deliver top line revenue growth in their baseline model to exist at 6% and 8%, they hope their autochthonous margin to exist greater than 66%. On the operating expense side, they will deserve positive they enlarge OpEx less than their revenue increases to net to the leverage model. So operating margin, we're expecting to exist greater than 35%.
Our free cash flow, the company has a very lofty free cash rush conversion because their CapEx is only 2% to 3% of revenue and the depreciation it's probably 3% to 4%. So it's very efficient that cash rush conversion model, they hope their free cash rush to exist approximately 100% of non-GAAP net income which is about 30%. So when you perceive at this model we're pile which is focus on infrastructure market, that's why they can gain this kind of a fundamental economics behind their model.
Now let me talk about the capital structure and the capital returns, so the passage they umpire about the capital structure is to really gain a tenacious pecuniary flexibility, so they can invest for the longer term, that's how they structured a Cavium transaction.
So at conclude of Q2 fiscal 2019 after they closed the transaction, they gain over $500 million cash and moreover they gain $500 million undrawn credit facility, their leverage is very reasonable, their autochthonous leverage ratio is about two times and the net leverage ratio is only 1.5 times.
As a company, it's very famous for us to maintain their investment grade because they really want to invest for the future, so they want to gain ample access to that market at very reasonable cost, invest through economic cycles and moreover grasp edge for consolidation opportunities if they present themselves. They are going to start to pay down their debt, since they generate a lot of the cash flow, they umpire of between their debt reduction map and their EBITDA expansion they will exist able to achieve 1.5 times autochthonous leverage ratio in the next 18 months in the next 12 months.
Now let's talk about capital returns. You gain heard from their team, they gain tremendous opportunities ahead of us. So their number one objective is to invest in their trade organically and through acquisitions, then their long-term objective is recur cash to shareholders is to recur at least 50% of free cash rush to shareholders through both dividend and the share repurchase.
In the near-term, let me talk about their priorities, first their trade is generating significant cash rush even prerogative now, so they carry out umpire they can maintain their dividend flat and started to pay down the debt, the flat for debt reduction is going to exist modified with their share repurchase plan.
As of you'll probably gain seen is this money, their board of directors raised their share repurchase map to $1 billion by authorizing 700 million share in repurchase, so when you perceive at their numbers some of you may track it closely not is they actually already started to buying their shares after Q2 earnings call, they already bought back about $50 million of their shares, we're really buying their share at this current flat as worthy investment.
If you perceive at their long-term target model, if they can achieve their long-term target model, they will observe huge upside. So in summary, when you umpire about the Marvell, they are very well positioned to address very large opportunities in the infrastructure market space and that they gain a very powerful trade model with underlying tenacious fundamental economics to drive long-term cash flow. And they moreover gain a tenacious pecuniary position and a tenacious pecuniary flexibility, so they can both continue to invest for the long-term and then recur cash to shareholders.
Before I invite their team to gain up for mp;A, I just want to grasp this occasion on behalf of their gross team to really thank everyone for your interest in Marvell and moreover thank their long-term shareholders for your tenacious uphold through their journey to build really worthy company. Their objective is to build the trade for the longer term and that they want to create a shareholder value for the longer term.
Thank you and I will invite their team to gain up for mp;A.
A - Ashish Saran
All right, folks. We're going to travel to the mp;A session. There are folks who gain wow. It's going to exist interesting. Can they start on here, please?
He has got the mic.
Okay, travel ahead. Well, that was fast. Okay.
My apologies. Thanks for taking my question. I had a brace of questions about the -- some of the products of Cavium that were rationalized or decided to -- you started to stick with. So first with XPliant, what inside of XPliant from an IP perspective helps to preserve product line maybe in the core enterprise conclude market, and then as well affecting into the datacenter conclude market? And with respect to ThunderX2, what was the thought process behind, or the considerations in deciding to maintain that? Was it because you basically had sunk sum the R&D cost already, you decided to roll the dice, or is it indicative of the product having some suitable long-term growth prospects?
Okay. So when it comes to XPliant product line, it is combining. They gain combined a roadmap of the two product line that they were working at Marvell, Falcon product line as well as XPliant, they were both targeted for the identical market. There are few areas -- blocks in XPliant, which is very interesting, for example, a flexible capability of flexible parcels [ph] and the gross aspects of visibility and programmability, so being able to really gain the capability to view the packets through the network and so on. So they gain taken those thing and they gain merged the two architecture in the subsequent architecture. So that was the thought process behind XPliant.
I'll give a quick comment on Thunder. I exist of value I gain never been a believer that you continue with the project, because of the sunk cost or looking at how much you've spent today to warrant let's maintain going forward I wasn't raised that way, trained that way, nor believe that. So they very much perceive at that occasion as on the go-forward, and what's the market opportunity, how is the traction going, what's the customer adoption and sum that's going very well as you heard from Raghib. So that one we're enthusiastic about.
The overall traction is really excellent, and we're making worthy progress, and that's how they umpire sum of their businesses.
Thanks. prerogative here, Ross Seymore from Deutsche Bank. Two questions; first one for Matt, during the ultimate few months there was a lot of consternation about the Cavium revenue level. I know you went into worthy deal to detail in your ultimate conference convene about that, but any updates as to either the claim side or the channel rationalization side that they can perceive at going forward?
Sure. So yes, so they did their convene maybe a month ago. I umpire they gave the outlook. They gave -- they leaned in a shrimp bit more than they normally do, right, to give investors visibility. And so, when they publish their next earnings, obviously we'll give you guys a bit on the short-term. Today's goal was really to focus on, "Hey, what are the long-term prospects of the company? Where are they taking it? And where are they heading?" So, not going to comment about the short-term today.
I'll travel with the long-term follow-up with Raghib…
- the 5G side, obviously that's an belt you're very excited about that 4X multiple as they travel from 4G to 5G, talk a shrimp bit about the mile markers and the timing of when they can start to observe some of that evidence within your networking business?
So, with their already design wins and the lead customer, they are expecting revenue started later section of the next year. And of course, it will ramp into calendar year '20. Now, in addition to that, as they mentioned earlier and Jean moreover pointed out, they are actually heavily engaged with the lot of other OEMs. So they are actually in a very suitable position to win additional design. So, their current groundwork map does not comprehend any of the additional design, or does not comprehend actually additional market share gain by their lead customers.
Thanks, Blayne Curtis of Barclays. Two questions for Raghib or Matt, this is the first time you've mentioned that AI inference product, if you can give any view on timing of that when you deserve sample, and then obviously as everybody knows there's many public and private companies chasing after this market, if you maybe just talk about the differentiation, you gain been working on this, I umpire you said two years, why you decided as Mike commented, to travel forward with the product? And then, just following up on Ross's question on 5G, if you did win on these next-gen 5G groundwork stations, just may exist some timing as to when that could contribute? Thanks.
So, the product that they are going to sample, they are -- it's going to sample next year, right, in terms of timing of the product. Now, if you perceive at this gross market, as I mentioned earlier, there is a gross kind of goal, right, sort of -- I umpire everybody is trying to really chase the broad guy out there, which is really focused on training. That is why everybody is trying to build the biggest and baddest sort of a thing, right?
Our approach is their working with the customer is that they really requisite a solution which is really designed for a scale, right, and that is why they -- when -- just relish always that they did in Cavium as well, they establish not only that they umpire that way, but other broad customers moreover umpire that way, and that's how they started working with a immediate partner, and that's why we're developing the part.
Maybe I'll just add, I umpire we're well-positioned there as well, because in the conclude when sum these chips are available and sum the benchmarks are done, a huge consideration I umpire of any infrastructure company that's going to deploy AI processing into their hardware, into their systems, is going to want the identical dynamics that they described today, you know, large supplier, viable, focused on the conclude market, track record of execution. And so, I umpire that's going to conclude up playing to their strengths, but as Raghib said, it's an lively project, we're developing the chip, we're sampling it next year, we've done the evaluation of its prospects, right, relative to other investments we're making, we're very excited about it. And they umpire that although we're not including it in their SAM, because by the passage the SAM at this point is actually -- these numbers are so large that it's hard to really -- you could net third-party reports, so they prefer to execute the project, kind of toil with their customers, and as they deserve progress shrimp bit relish they did with automotive Ethernet, then comprehend this at a later date in terms of the SAM and the opportunity…
Blayne, and just to add a shrimp bit more, actually in terms of sum of the benchmarks, sum of the metrics, and in terms of performance, power efficiency, cost efficiency, actually their solution what they know based on sum the other available, is going to exist the market-leading solution in the market.
There was a follow-up question I umpire on additional baseband customers, and maybe you can just comment timing -- you know, it takes a brace of years.
Sure. Yes, I umpire that -- again, we're very focused on getting their lead customer production and enabling them to exist successful. I umpire the partner model that they showed when they said plenary ASIC merchant partner, I umpire that's being very well-received especially in this 5G cycle, where there's a pretty large diversity of not only companies developing infrastructure for this, but the kinds of radios that they want to develop are moreover going to exist quite disparate. And so, just to carry out a gigantic ASIC for each of these is going to exist a huge lift, and I umpire the fact that the Cavium team actually has this proven track record on 4G and 5G IP, that partner model, but starts to perceive very attractive. So anything they were -- they would exist able to win there would clearly exist a unusual product development. They requisite to travel often start that chip. So these are not ones that would ramp any time next year, they would exist in the future, but this again is a very suitable long-term occasion because as you can observe from the 3G cycle, the 4G cycle, now the 5G cycle, these are multi-year. And if you talk to their customers, they umpire actually 5G is going to ultimate even longer from a cycle point of view than 4G. So, these are longer term opportunities that would layer in.
Hi, Karl Ackerman from Cowen. Two questions please, I umpire the shift from media to flash-based storage is clearly a tailwind for you, but I umpire one of the concerns from investors is how speedily SSD controller ASPs approach those of your hard drive controller? So, how should they umpire about sustainability of the premium you receive on twinkle controllers versus hard drive controllers? Is it in a strictly linked to NAND ASPs per gigabyte?
And I guess as a follow-up, how they umpire about both the trajectory and potential competition between yourselves and the sum twinkle array providers as your Ethernet bunch of twinkle seems relish a worthy alternative for NVMe over fabric arrays? Thanks.
Okay, the first question was really ASP comparison between HDD and twinkle controllers, was that the question?
How sustainable you umpire the premium of your NAND controllers will remain above hard drive controllers?
I see. Okay. So I umpire it depends on the segment that you're in. So clearly, with their focus more towards a datacenter and enterprise we're able to provide unusual features, functions, and net a higher value out of those. Certainly in the notebook or PC space, you'll observe transitions as you change interfaces or -- but that's more difficult in that space, and that's why we're focused more towards the other end.
And as far as the EBOF, right, for instance the sum twinkle arrays, I would order that those types of customers deserve in the sum twinkle arrays and the enterprise customers are customers that we're focusing on with those products. So I umpire that's actually very complementary that they hope to observe them adopt those architectures.
To add to what Dan said, right, recollect in the twinkle controllers that they design typically takes three years to design into the customers, walkway the customers, tenacious IP in cloud datacenter. The ASP actually is a wider range, right, it's because you contribute IP to your customers. So overall, as I said earlier, when you perceive at the more commodity kind of pricing, that has nothing to carry out with their controller pricing, which is very much embedded into the IPO provider for the customers.
John Pitzer with Credit Suisse. Just Dan a follow-up on the storage side of the market, can you talk a shrimp bit about the want of NAND twinkle providers to actually net into the controller market, and how you observe sort of the merchant controller market, market share developing over time? And then Matt, as a follow-on or second question, you haven't included Cavium synergy -- revenue synergies into the forecast, can you just talk about where they should observe those synergies first? I know in the past, you've talked about, for example, Cavium using other people's PHYs and that sort of an easy switch, how carry out they umpire about the build of revenue synergies over time especially given the long duration design cycles that you're involved in?
So I mean, obviously vertical integration with the NAND vendors is that we've always seen, we've always considered in their SAMs that you know, they model based on some assumptions there as well. We've traditionally had trade with those customers. They continue to toil with them on positive trade models. So I umpire it's a natural section of the evolution of that market. Clearly on the carry out It Yourself models and some of the stuff we're doing at datacenters, you've got to recollect that they're going to focus a lot of their investments on some of the higher volume segments, but yet when you requisite some of the IPs and when you perceive at going from order 28 to 12 to seven nanometers doesn't that kind of betoken that graph of how much expenses that gets to be. Marvell leverages across many, many chips. So there are certainly segments that build carry out stuff themselves, there are segments where they will work, they will buy something directly from Marvell, or working some of these partner models and the trade models that -- again that showed. So I umpire it's something that they account when they perceive at their models, whether it exist the SAM or the revenue.
Yes, just one quick comment on that, I umpire they gain been operating in that environment since I joined. I exist of value they had -- I umpire the first month I was here, they had a management consulting company offered to carry out a free month of toil for us, you know, to befriend us net integrated. And so, one of the studies they did was on their product lines, and they said, "Hey, you know, the SSDs product line, they recommend you shut it down because everybody is going vertical." And then they said, "Okay, well, let's really perceive at the data," and of course that would gain been a horrible decision, because that became a hugely famous trade for the company. So I umpire they are going to co-exist and I umpire as Dan mentioned, it's going to exist different trade models.
On the revenue synergies, the broad occasion there really is the design wins. I exist of value there are -- there is not a lot of discretionary trade they gain in their portfolio, and I umpire that's actually a suitable thing by nature that they are typically highly proprietary sole source. So, going out and chasing a customer through distribution or something is typically tough especially if you are trying to sell an Octeon. I umpire that's a challenge, right, but I carry out umpire there are some tactical things that they are doing certainly in the short-term, but the overwhelming revenue synergy that they can achieve is actually from the examples that Tom gave, which is really going in as a combined company leveraging the combined IP of the two, and really selling a gross system solution versus just selling a chip. And the pull-through is very strong. When you gain a processor, you know, a tenacious processor portfolio, it does enable you that sort of insight into the decision-making on the board at the earlier stages. So I umpire that's really where you should about it, and I umpire to the extent they are successful in doing that, then they will just shove their revenue growth long-term at the higher conclude of their model.
Hi, Matt. Vivek Arya from Bank of America Merrill Lynch. Thanks for hosting the Analyst Day today. So first, near-term, I understand you don't want to talk about Marvell specifically, but there is a lot of worries about just the semi conductor cycle broadly, you know, China trade tension, CPU shortages, so to whatever extent you could, you know, befriend redeem their mind at ease about how are you seeing just the broader psychodynamics play out? But longer term, give us relatively of a report card about the integration process, because Cavium was running a very different way, right, it's very entrepreneurial company, but the pricing dynamics, lead times, customer engagements were done in a very different passage than what they were used to seeing in Marvell, especially when after you and Jean took over. So, give us some sense of report card that are you through that integration process is now being hasten as one smooth company, with one united front of customers, so that they can exist assured that there is going to exist the prerogative execution behind some of the targets that you gain laid out? Thank you.
Sure, great, great. Two questions, so, yes, the first one I umpire is pretty interesting, right, to host an Analyst Day in the middle of -- about as pandemoniac an environment as they gain seen in a longtime, and I umpire sum those issues are very actual and upon us in terms of the geopolitical issues and the global issues with respect to tariffs. It's unclear what ramifications and sum that are going to be. They are quiet working their passage through that. I umpire on the PC one, I umpire to the extent that there is -- they are downstream from that, right, so I umpire the best source of information would exist travel talk to the PC makers, or even the drive guys, right, and they are two levels removed. And so, they are going to just react, depending on what happens, but you certainly umpire any shortage there has to exist short-term in nature just because at some point there will exist enough PCs to supply the world, I umpire the world without enough PCs doesn't deserve sense to me. So I umpire they will toil through that issue, okay? And they will deal with it.
I umpire on the integration, I will deserve a few comments and then maybe I will let Raghib comment too since he came from the Cavium management team, he befriend build the company, but they are very far long in integration. I umpire the fact that -- I exist of value I showed the picture for a reason, they were very purposeful and thoughtful about the fact that it was a different culture and a different kind of company, and I umpire they took steps early on to obviously give the Cavium leaders significant roles in the combined company, they took significant steps to enroll them in their culture and walk them through kind of how they hasten their business.
Our point of views has been very well-received. I umpire -- and they gain really -- I umpire integrated them well into their system, I exist of value the fact that they did this portfolio review, which is really one of the most famous processes they gain in their company. They disburse a gross week doing that, and they probably had -- I don't know, eight or 10 Vice Presidents -- technical by the way, most of them are either follows or engineering leaders from Cavium actually connect and befriend us review the gross combined set of businesses. And then at the conclude they made decisions about how they are going to confiscate their resources, you know, these guys are smart, right, they net that. "Okay, wait a minute. This trade is really not making as much money as they thought," or this one looks relish it doesn't gain enough resources, or you know, and so when you actually grasp the tenacious technical acumen of Cavium and you combine it with the tenacious pecuniary acumen on Marvell, they view that as a very intertwined capability in their company. I umpire it's been very well-received. And so, the ultimate point in that would exist Tom has brought in the sales organization, they are pivoting from kind of commission-based, design win based, right, from an operations point of view, Andy Micallef, who is their leader there, he has done a worthy job in driving Marvell's operational excellence, right, that gross team now reports with him. And I umpire people observe the benefit to running it this way. So, maybe Raghib will give you a comment since you are…
Yes. So I want to order overall integration is going on very well, and let me divulge you although at outside it looks very different company, but when it comes to core engineering DNA, what company has similar DNA? They are hard working and engineers focused to create in a passage to create value out there, right? So that is a suitable thing.
The other aspect which actually worked out really well in this situation, the passage top-down the Marvell management actually provided the environment, right? So it was very inclusive and very open. It's not like, okay, it's my way, what's your passage sort of a thing. It's just like, okay, let's net together, motif out what is the prerogative thing to do, which one, as Matt mentioned, which are the -- when you are merging the businesses, which makes sense to keep, which makes sense to let travel and things relish that. So, sum those decisions were very inclusive, and the team really feel like, "You know, I did section of the overall thing." So, not only at the top level, but moreover at various engineering flat and so on. So, overall environment is very, very kind of cooperative. They observe the value of overall objective-driven and goal-driven system in which actually, is really appreciated by a lot of folks in the Cavium side as well. They carry out realize that the scene are not done based on politics, but based on overall bigger company goals. So, those values actually are taken really well.
At the identical time, it is not that -- you know, entrepreneurial thing is kind of squash or Kill at all. I exist of value if you really perceive at kind of products they talked about today, I mean, they are investing in a lot of worthy potential innovative products, right? So, I would order the overall thought-process of being innovation-driven and being leader in positive areas is moreover appreciated on overall management side. That is working out very well.
I mean, grasp one ultimate question before they requisite to wrap up.
Quinn Bolton with Needham. Just a follow-up on 5G, you gain talked about the 4x enlarge as you travel from 4G to 5G, so I umpire your content occasion is probably approaching a $1,000 per groundwork station, and you gain talked about embedded processors or layer four to seven, you gain got the baseband processors, you net your Ethernet switches and PHYs, where does the value gain from? Is it fairly evenly spread across those different solutions? Does the baseband processor represent the largest percentage of the dollar occasion for groundwork station?
Okay. Should I grasp that? So first of all, I thought you guys in finance can carry out a better math, but anyways, just to repeat, in 3G they worked up for a $100 content, in 4G they increased it three to four times, and it's going from 4G to 5G, they are increasing another 4x compared to 4G, right? So you can carry out the math.
Now, on the other -- on the side of where it is coming from, in reality it's a mix, it is more -- of course the processor side, the baseband processor as well as the Octeon [ph] processor is higher ASP, but then the additional -- you know, significant addition with the combination of switches and PHYs, because now this time the bandwidth which is affecting data you know, handle data by the groundwork station, bandwidth is much higher, and as a result of that, you requisite switches which is at a much higher bandwidth flat compared to the before previously.
All right, well, thanks everyone for attending the session today. They really prize the time you spent with us, and for folks in the room, there is a lunch next door. You will gain the random to network a shrimp bit more with the executive team there. So, thanks again.
The USS Zumwalt getting a coat of paint at Bath Iron Works. The ship is exotic in many ways, but it runs on off-the-shelf computing technology. It moreover costs nearly $4 billion.
General Dynamics Bath Iron Works
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When the USS Zumwalt (DDG 1000) puts to sea later this year, it will exist different from any other ship in the Navy's fleet in many ways. The $3.5 billon ship is designed for stealth, survivability, and firepower, and it's packed with advanced technology. And at the heart of its operations is a virtual data center powered by off-the-shelf server hardware, various flavors of Linux, and over 6 million lines of software code.
On October 10, I flew up to Rhode Island to visit Raytheon's Seapower Capability center in Portsmouth, where engineers assembled and pre-tested the systems at the heart of the Zumwalt and are preparing to carry out the identical for the next ship in line, the USS Michael Monsoor—already well into construction. There, Raytheon's DDG-1000 team gave me a tour of the centerpiece of the ship's systems—a mockup of the Zumwalt's operations center, where the ship's commanding officer and crew will control the ship's sensors, missile launchers, guns, and other systems.
Over 20 years ago, I learned how to exist a ship watch stander a few miles from the Raytheon facility at the Navy's Surface Warfare Officer School. But the operations center of the Zumwalt will gain more in common with the fictional starship USS Enterprise's bridge than it does with the combat information centers of the ships I went to sea on. Every console on the Zumwalt will exist equipped with paw screens and software capable of taking on the needs of any operator on duty, and broad screens on the forward bulkhead will parade tactical plots of sea, air, and land.
Perhaps it's confiscate that the first commanding officer of the Zumwalt will exist Captain James Kirk (yes, that's actually his name). But considering how heavily the ship leans on its computer networks, maybe they should perceive for a chief engineer named Vint Cerf.
Off the shelf and on the ship
Enlarge / Data center in a box: Electronic Modular Enclosures being configured at Raytheon's Portsmouth, Rhode Island, facility.
In the past, you couldn't just redeem off-the-shelf computer systems aboard a ship for mission faultfinding tasks—when I was aboard the USS Iowa, they had to shut down non-tactical systems before the guns were fired because the shock and vibration would crash systems hard. So typically, individual computer systems are ruggedized. But that adds heavily to the cost of the systems and makes it more difficult to maintain them.
The design of the Zumwalt solves that problem by using off-the-shelf hardware—mostly IBM blade servers running Red Hat Linux—and putting it in a ruggedized server room. Those ruggedized server rooms are called Electronic Modular Enclosures (EMEs), sixteen self-contained, mini data centers built by Raytheon.
Measuring 35 feet long, 8 feet high, and 12 feet wide, the 16 EMEs gain more than 235 equipment cabinets (racks) in total. The EMEs were sum configured and pre-tested before being shipped to Bath, Maine, to exist installed aboard the Zumwalt. The EME approach lowered overall cost of the hardware itself, and allows Raytheon to pre-integrate systems before they're installed. "It costs a lot to carry out the toil in the shipyard," said Raytheon's DDG-1000 deputy program manager Tom Moore, "and they net limited time of access."
Each EME has its own shock and vibration damping, power protection, water cooling systems, and electromagnetic shielding to obviate interference from the ship's radar and other broad radio frequency emitters.
The EMEs tap into the Total Ship Computing Environment, the Zumwalt's shipboard Internet. Running multiple partitioned networks over a merge of fiber and copper, TSCE's redundantly switched network system connects sum of the ship's systems—internal and external communications, weapons, engineering, sensors, etc.—over Internet protocols, including TCP and UDP. Almost sum of the ship's internal communications are based on Voice Over IP (with the exception of a few old-school, sound-powered phones for emergency use).
Enlarge / A diagram of the Zumwalt's control systems and their connections to the Total Ship Computing Environment.
There's moreover some wireless networking capability aboard the Zumwalt, but Raytheon officials giving me the tour were not at liberty to discuss just what sort of wireless this is. Still, that capability is hypothetical to allow for roving crew members to connect to data from the network while performing maintenance and other tasks.
Systems that weren't built to exist wired into an IP network—other "programs of record" within the ship, which are installed across multiple classes of Navy ships—are wired in using adaptors based on single-board computers and the Lynx OS real-time Linux operating system. Called Distributed Adaptation Processors, or DAPs, these systems connect things relish the ship's engineering systems, fire suppression systems, missile launchers, and radio and satellite communications gear into the network so they can exist controlled by networked clients.
It looks relish you want to launch a missile
Enlarge / The mock-up of the Zumwalt's operations center at Raytheon's Portsmouth facility, complete with haze-gray paint, has the exact dimensions of the space on the ship itself. The Zumwalt will comprehend a second flat to host the operations of units deployed with the ship.
Some of those networked clients were what I was looking at in the mocked-up Zumwalt operations center. The operations center isn't just where screens are watched and commands are shouted—the gross ship can exist practically hasten from the space, from guns and missiles to engines. There's no "radio room" on the Zumwalt; sum the communications are managed from the operations center. The ship's guns are fully automated and operated by an operations center watch stander instead of a gunner's mate in the mount. Theoretically, the ship could even exist steered from the ops center—the ship is piloted by computer, not a helmsman. And sum of these tasks are performed from the identical kind of console.
Enlarge / The impress 57 vertical launch system, developed by Raytheon, can carry a merge of anti-ship, anti-aircraft, and land storm cruise missiles. It communicates with the operations center over the ship's network.
Called the Common parade System, or CDS (pronounced as "keds" by those who toil with it), the three-screen workstations in the operations center are powered by a collection of quad-processor Intel motherboards in an armored case, which gives unusual import to the naval phrase "toe buster." Even the commanding officer's and executive officer's chairs on the bridge gain CDS workstations built-in.
Each CDS system can hasten multiple Linux virtual machines atop LynuxWorx's LynxSecure, a separation kernel tthat has been implemented in CDS as a hypervisor. This allows the workstation to connect to various networks partitioned by security flat and purpose. "Every watch stander station runs out of the identical box," Raytheon's DDG-1000 developer lead Robert Froncillo told me. "So they can sit at any CDS and bring up their station."
This may not look relish a broad deal to most people. But on past ships, workstations tended to exist purpose-built for a specific weapons system or sensor. That meant every system had a different configuration and interface, and you couldn't gain a watch stander handle multiple tasks without having to switch seats. The CDS workstation uses common USB interfaces for its peripheral devices (such as trackballs and specialized button panels) and is equipped with touchscreens, as well, so that watch standers gain a altenative between "classic" and paw interfaces.
That doesn't exist of value there's necessarily a "Clippy" to befriend unusual operators master their systems. The Raytheon team has had sailors in to achieve usability assessments from before code was even written, showing them screen shots of interfaces to net feedback from users. "We had a chief that said, 'We don't want any 'wizards,'" said Froncillo.
A digital illustration of how the Zumwalt's operations center will look, complete with its second-level suite for hosting operations for air detachments and other units deployed aboard.
Putting sum of the pieces together is a collection of middleware running on those IBM blade servers. Many of the shipboard systems expend a commercial publish/subscribe middleware platform to route updates to operator consoles. But for other systems that requisite to exist more tightly coupled (like, for example, missile launch commands), the Navy has specified the expend of the Common remonstrate Request Broker Architecture (CORBA)—the military's favorite mission-critical middleware model. (The software for the Joint Tactical Radio System's software-defined radios was moreover developed using CORBA.)
The next release
Enlarge / The Zumwalt bow-on at Bath Iron Works. DDG-1001, the USS Michael Monsoor, sits behind her, more than 60 percent complete.
The Zumwalt may not gain sailed yet, but its software has already shipped six times. When Release 5 was completed, Raytheon brought in more sailors to test the system, tethering it to the company's Total Ship System Simulator to hasten through a number of combat scenarios. "We did antisubmarine warfare, air, and land storm missions," Froncillo said. The lessons learned were incorporated into release 6, and 7 will exist installed on the ship before the ship's "shakedown" cruise. Another upgrade will exist installed post-delivery, and interminable improvements will exist made as the software is deployed to the other two ships in the class.
But the life of the technology being deployed on the Zumwalt won't conclude there. CDS will exist used as section of the Navy's Aegis Modernization Program to upgrade the systems of the fleet's guided missile cruisers and destroyers. "And there are a lot of things we're developing that will exist reused," Moore said.
Considering how much has been spent over the past decade trying to net the Zumwalt built, and the other technologies that were developed in the process, one can hope that more than just the software gets some reuse.