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- THE FRIDAY LETTER -
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from Gilder Publishing,
for friends and subscribers)
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| http://www.gilder.com/ | Issue 335.0/April 4,
2008
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HEADLINES:
- The Week / Gilder: Meeting the Exaflood Challenge
- Friday Feature / Steve Forbes: Really Good Times Ahead,
If…
- Friday
Blogger Bonus / John Rutledge: This is important
- Readings /
|
THE
12TH ANNUAL GILDER/FORBES TELECOSM CONFERENCE |
The Week / Meeting the Exaflood Challenge
George Gilder, Gilder Telecosm Forum: A report last month from AT&T (T) on
the traffic from the some one billion devices attached to its networks affirms
that exabytes are already mounting, with consumer traffic up 145% over the past
two years, business traffic up 60%, and wireless data up 300% last year over
2006 even before the launch of the iPhone. Processing the exaflood is estimated
to require some $137 billion in new capital spending on global network
infrastructure over the next three years.
I explained to the OFC audience (in late-February) that nearly all the scores
of optics component players are treating the technology as mature and are
targeting their incremental advances on the few giant systems vendors, chiefly Cisco
(CSCO) and Alcatel-Lucent (ALU), who in turn supply a relatively small
number of carriers, such as the aforementioned AT&T and Verizon
(VZ). Multiple suppliers of incremental advances cannot win substantial margins
from oligopsonies or lucrative multiples from stock markets. We still approve
of Finisar (FNSR) and Opnext (OPXT), among others. But we are not
touting them with a target of tenfold gains.
As our old friend Clayton Christensen explains, in a settled industry it makes
sense to go modular as these companies are doing. Modularity reigns, with every
interface standardized for multiple suppliers of commodity components. But in a
dynamic industry where the existing systems will have to struggle to contain
the impending exafloods of traffic, it makes sense to optimize every interface
in an integrated system designed top down to achieve the highest possible
performance.
Optics is embroiled in a tempest of change, with no settled network or computer
architecture and no systems standard. The industry has not decided on whether
to adopt ever denser wavelength division multiplexing of scores of wavelengths
on every fiber thread or to pile up more and more bits in a single terabit
wavelength stream. It has not decided on whether to switch packets in
nanoseconds or wavelengths in milliseconds. It has not decided how to amplify
the streams or how to add and drop them. It has not resolved on whether to
modulate its signals inside the laser or outside it. It has not chosen between
loop architectures and mesh architectures. We could continue. But the point is
already clear. This industry is anything but settled.
In a dynamic industry, the profits go to the systems innovators. Systems
innovators exploit their component inventions to enable new and radically
superior systemic capabilities. Infinera (INFN) is a company that has
followed this path with photonic integrated circuits (PICs) fabricated on
indium phosphide wafers and developed into new digital systems. But we believe
that their claimed pace of advance (doubling capacity every three years) is
about half of Moore’s law and inadequate to meet the challenge of the exaflood
or even the pace of advance of wavelength division muxing optical technology.
They are an impressive company with brilliant leadership and a good systems
strategy, but they are unlikely to achieve a tenfold appreciation because of
their tricky indium phosphide substrates and their dependence on continually
converting their optical wavelengths to digital packets and back at every node
across the network.
Learn which optics stock George Gilder most strongly supports. Register to
become a Gilder Telecosm Forum member today: http://www.gildertech.com/
|
The Gilder Telecosm Forum To learn how to join this powerful network of
talented, tech-savvy investors and thinkers online daily to debate, discuss,
and decode new and emerging technologies and share valuable and actionable
investment advice, visit www.Gildertech.com
today. |
Friday Feature / Really Good Times Ahead, If…
STEVE FORBES, www.Forbes.com (04/04/08): Our next President will look like an economic genius
if he or she doesn't goof up by raising taxes, continuing the Bush
weaken-the-dollar policy or sitting by while agencies such as the FCC issue
stupid regulations.
Yes, the new Oval Office
occupant will have to clean up the Bush/Bernanke monetary mess. But don't be
misled by stock market gloom and lurid headlines on the credit crisis. The U.S.
and, indeed, the global economy are on the verge of another surge of breathtaking
innovations. As you'd expect, major breakthroughs are evolving around the
Internet, whose IP traffic could grow fiftyfold by 2015. In January Bret
Swanson, a fellow at the Progress & Freedom Foundation, in conjunction with
George Gilder, of the Discovery Institute, released a report about a dazzling
future of movie downloads, Internet video and an explosion in business traffic.
Real-time 3-D will become a reality. Each month YouTube traffic is 50
petabytes; in comparison, annual original cable, television and radio content
created is 100 PB. In other words, YouTube matches traditional media's annual
content every two months. And this kind of creativity and social interaction
is only just beginning.
The implications for medicine
are staggeringly positive. Imagine, Swanson points out, digital medical imaging
being able to examine your brain 1,024 ways. As he also notes, "[All this]
will require a dramatic expansion of bandwidth, storage and traffic management
capabilities in core, edge, metro and access networks. In the U.S., currently
lagging Asia, the total new network investments will exceed $100 billion by
2012."
Peter Huber, senior fellow at
the Manhattan Institute and an extraordinarily insightful observer of
technology, wrote in his Feb. 25 FORBES column ("Techno-Optimism"):
"Scientists will soon bioengineer bacteria to melt oil out of tar sands,
turn grass into diesel fuel and scavenge natural resources of every kind out of
low-grade, thinly dispersed deposits. They can design drugs to replace, boost
or suppress anything in nature. … Within a decade or two sensors will allow
microprocessors to see, hear and feel far better than we can. Microengineered
materials are simultaneously transforming the manufacture of clothes, cars,
jets--just about everything people make--because they're far stronger, lighter
and more functional than metals, plastics and natural fibers."
The next President must
overhaul the FCC, lest it--with the connivance of lobbyist-influenced
Congress--gum up these advances with stifling regulations or by enacting net
neutrality, which would have politicians and bureaucrats fixing prices for
access to broadband networks. Such price controls would halt investments in
expanding capacity. It's happened before: Congressional/FCC price controls in
the mid-1990s cratered investment in fiber-optics projects, which enabled South
Korea and others to leap past us. Observe Swanson and Gilder: "South
Korea, with just one-sixth the population of the U.S., now approaches the U.S.
in Internet traffic. [The country] deployed fiber-optic networks sooner than
the U.S. did. South Korea also was an aggressive first builder of 3G
[broadband] mobile networks."
Are you listening, Senators
McCain, Obama and Clinton?
HEAR
STEVE FORBES SPEAK AT TELECOSM 2008.
Register today: www.TelecosmConference.com.
|
FRIDAY
LETTER BOOK OF THE MONTH |
Friday Blogger Bonus /
John
Rutledge, www.Rutledgeblog.com: This is important. India has crossed the 250 million
mark with the addition of 8.53 million mobile phone subscribers in February.
India will become the second largest wireless network in the world after China
in the first half of April 2008. (Hint: That makes the U.S. #3.)
Read the full article in the Economic
Times:
http://www.telecomasia.net/article.php?type=article&id_article=7760
Future growth of income, productivity and jobs will depend on who has the best
information and communications technology, because high-speed communications
allows the economy to perform as a massive parallel-processing information
network. Hats off to China and India for making R&D and investment in new
networks a priority. Wouldn't hurt if the U.S. government were a positive force
for investment here too.
Continue Reading:
http://www.rutledgeblog.com/askrutl/archives/2008_03.html#000571#more
HEAR JOHN RUTLEDGE SPEAK AT
TELECOSM 2008.
Register today: www.TelecosmConference.com.
__________________________________________
Readings /
15th Anniversary: Why the
Future Still Needs Us a While Longer
http://ladycmog.multiply.com/links/item/97/15th_Anniversary_Why_the_Future_Still_Needs_Us_a_While_Longer
Global High Performers
http://www.forbes.com/home/business/2008/04/02/global-high-performers-biz-2000global08-cx_bj_0402high_land.html
Lightwave Logic's Terry Turpin to Appear on Panel
at Gilder/Forbes Conference
http://www.pr-inside.com/lightwave-logic-s-terry-turpin-to-r515972.htm
With Bleak Jobs Data In Hand,
Investors Await Earnings Season
http://online.wsj.com/article/SB120730342714789539.html?mod=hpp_us_whats_news
What Killed Bear?
http://www.forbes.com/home/wallstreet/2008/04/03/banking-bear-bernanke-biz-wall-cx_bw_0403bear2.html
Graphene Transistors
http://www.technologyreview.com/read_article.aspx?ch=specialsections&sc=emerging08&id=20242
__________________________________________
Friday Letter Editor: Mary Collins George / mcollins@gilder.com
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