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-  THE FRIDAY LETTER  -

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for friends and subscribers)

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 | http://www.gilder.com/ | Issue 328.0/February 15, 2008

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HEADLINES:

-  The Week / EZ Reaction
-  Friday Feature / Mobile Carriers See Gold in Femtocells
-  Friday Blogger Bonus / The Lifespan Limit: The Coming Ad Revolution
-  Readings /

 

The Week / EZ Reaction

 

LanOptics Announces 130% Revenue Growth in 2007: Yokneam, Israel, February 11, 2008 -- LanOptics Ltd. (NASDAQ: EZCH), a provider of network processors, today announced its results for the fourth quarter and full year ended December 31, 2007. 
READ ON: http://www.ezchip.com/pr_080211ln.htm

EZchip Corporate Presentation: http://www.ezchip.com/Images/pdf/LNOP-investorsQ407-080214.pdf

Gilder Telecosm Forum Member #1 (2/11/08): The only way to listen to the company's comments and be discouraged is if you are using the daily stock price as your primary source of research…

Any frustration is a function of our own expectations which have been formed off of an incomplete understanding of the development cycle. But we now have the window for the break-out narrowed down to a few months…


Gilder Telecosm Forum Member #2 (2/11/08):
I too was struck by [CEO] Eli Fructer not ruling out a 1H08 Cisco move to production with NP-3c… Eli has always been conservative and understated.

George Gilder (2/11/08): The key to EZ is its role in the critical path of the next three generations of networking technology. It defines the system level products on the fiberspeed level. That means it is slow to get off the ground, but once aloft will fly high for a long time.

 

For me there was one major upside surprise. I would not have guessed that 20 percent of EZ's design wins were with the two first tier customers. That means a minimum of 10 design wins with both Juniper and Cisco. That strikes me as huge. EZ penetrated Cisco only a year or so ago….

To read more of George Gilder’s comments and dozens of Gilder Telecosm Forum members’ reactions to the EZchip conference call, visit http://www.gildertech.com/ and become a Forum member today.


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Friday Feature / Mobile Carriers See Gold in Femtocells
 
John Borland, Technology Review (2/15/08):
On its face, it sounds like a company's technological fantasy: a product sold to customers that will also save the business itself money.

 

That's roughly the attraction of a young wireless phone technology called femtocells, which promise to give homes and businesses their own private wireless phone networks.

 

Similar in concept to the Wi-Fi routers that many people use to blanket their homes with wireless Internet access, these little boxes instead provide a network for carrying the voice and high-speed data services of mobile phones. They're designed to give bandwidth-hungry cell-phone subscribers the strongest possible connections at home. But by keeping those customers off the main mobile network and using home broadband connections to transfer data, they could wind up saving the phone companies money, too.

 

It's no wonder, then, that equipment vendors say that mobile phone companies are rushing into this market--with technology and even commercial trials beginning on both sides of the Atlantic--even before standards have been set or final technological hurdles cleared.

 

"Usually in the networking business, you build equipment, and then drum up demand," says Paul Callahan, vice president of business development for Airvana (http://www.airvana.com/), a femtocell equipment vendor. "This time, demand is already really strong”.…

 

Read the complete “Technology Review” article:
http://www.technologyreview.com/Biztech/20293/

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Friday Blogger Bonus / The Lifespan Limit: The Coming Ad Revolution

Taylor Frigon (2/15/08): Here is a link to a story in today's Wall Street Journal by Esther Dyson entitled "The Coming Ad Revolution" which discusses major changes in advertising that have been on their way for years but which few people today even see coming.

The article outlines an impending paradigm shift in the way people find information, which will have a tremendous impact on the advertising business and those that support it.

But this revolution in the way that people find information will impact more than just the ad industry. We wrote about some of the potential implications in the world of search two months ago in a post entitled "What is the future of search?" And there are thousands of other ways in which the kinds of changes that Dyson is discussing in this article will impact business and life beyond business.

George Gilder predicted these very same revolutionary forces in his 2000 book Telecosm: How Infinite Bandwidth Will Revolutionize our World. In chapter 18, "The Lifespan Limit," he wrote:

"The supreme time waster, though, is television. Many people still have trouble understanding how egregious a time consumer, how obsolete a business model, how atavistic a technology, and how debauched a cultural force it is. [. . .] For as much as seven hours a day, on average, consuming perhaps two thirds of your disposable time, year after year, all in order to grab your eyeballs for a few minutes of artfully crafted advertising images that you don't want to see, of products that you will never buy.

[. . .] In the future, no one will be able to tease or trick you into watching an ad. Your time is too precious and you are too powerful. Advertisements will truly add value rather than subtract it" (247 - 252).

The value of your trusted circle of friends, family, colleagues, and various networks to which you belong or with which you associate may become much easier to tap into to help you with decisions than ever before, diminishing the power of old-fashioned advertising as Gilder foresaw years ago and as Dyson describes in today's article.

You may well make purchasing decisions based on these existing networks, as well as based on new networks which arise to provide you with access to what products other consumers like you find valuable.

Based on this outlook, the tremendous valuations for companies like Google, whose revenues are based upon a very primitive version of tying advertisements to what you are looking for, may be something of a house of cards. If the paradigm is truly shifting in the ways that are foreseen by Dyson and Gilder, there are new opportunities few see now, and the companies most dominant today may become examples for future discussions of the topple rate.

 

Check out Taylor Frigon’s blog:

http://taylorfrigon.blogspot.com/2008/02/paradigm-shift-in-way-you-get.html
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Readings /

The Coming Exaflood: Will the ISPs Lead or Follow?
http://www.nojitter.com/blog/archives/2008/02/the_coming_exaf.html

Qualcomm. Nokia Close to an Agreement
http://online.wsj.com/article/SB120302411169369463.html?mod=technology_main_whats_news

Renesas, Sharp and PSC To Team Up on LCD Chips

http://online.wsj.com/article/SB120296181660167847.html?mod=technology_main_whats_news

The Privacy Paradox
http://www.forbes.com/technology/2008/02/15/search-privacy-ask-tech-security-cx_ag_0215search.html

Gilder Technology Index
http://www.gtindex.com/

News Corp Seeks Stake in Yahoo
http://www.forbes.com/technology/2008/02/13/newscorp-yahoo-microsoft-tech-cx_wt_0213yahoo.html

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Friday Letter Editor: Mary Collins George / mcollins@gilder.com
 

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