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▪ The Week / The Semi
Industry’s Two-edged Sword
▪ Friday Feature / Parrotheads Working For The Spooks
▪ Friday Bonus / Last Mile: Triumphs and Threats
▪ Book of the Month /
▪ Upcoming Events /
▪ Readings /
Week / The Semi
Industry’s Two-edged Sword
Excerpted from a recent post to the www.Gildertech.com subscriber-only message board.
George Gilder (04/02/06): In the semiconductor industry, production volumes rule. This is a two-edge sword for EZchip (LNOP). The problem with application-specific integrated circuits (ASICs) is that their non-recurring expenses (design, engineering, and debugging costs) are steadily rising with each generation, requiring ever-larger volumes, thus diminishing the number of possible markets. This gives EZ its opportunity. In the currently turbulent network scene, programmable network processors have become ascendant. With its NP2, a great product, EZ is now moving to line cards, which give it 10x larger volumes than the central service cards that it previously supplied.
As the market settles and the network standardizes, the need for programmability steadily diminishes and customers will turn toward ASICs (as Bill Rossi and Rich Heaton of the well financed Greenfield Networks assume from their extensive experience at Cisco). More specifically, customers turn to application-specific standard products (ASSPs) of the kind that currently dominate the Ethernet enterprise market from Broadcom (BRCM) (its SGX line) and Marvell (MRVL).
Then for the high performance and fast changing niches, the market will go to field programmable gate arrays (FPGAs) as Nick Tredennick still predicts and as Xilinx (XNLX) and Altera (ALTR) are now betting heavily. At the Linley Group conference, Xilinx launched an impressive field programmable traffic manager.
At present, FPGAs are far too large cumbersome and costly to menace EZchip. (A Xilinx Virtex-based traffic manager costs between $500 and $1000.) But, they are beginning to contend. At a certain point, sometime during the next five years, the capabilities of the FPGAs will enable sufficiently large volume production to bring down the price to a competitive point, wiping out all but the highest performance ASICs and NPUs, and if Nick has his way DSPs (digital signal processors) and CPUs as well.
Among the direct rivals, Xelerated is widely dismissed as a goner, but Broadcom-Sandburst is an increasingly potent rival that has yet to make much of a dent but cannot be counted out, and Marvell is closely aligned with EZ.
Down-market, with the ever-changing protocol zoo of PONs and
DSL variations, programmble NPUs are needed, but they are being supplied by Wintegra
(soon to go public), Intel (INTC), Agere (AGR), Applied Micro.
(AMCC), and others.
To read more posts by George Gilder and to access to the April issue of the Gilder Technology Report logon at www.Gildertech.com with your GTR subscriber password.
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Friday Feature / The Parrotheads Working For The Spooks
Andrew Gillies, Forbes.com (04/05/06): If you like a touch of irreverence in a chief executive, you'll appreciate
Jimmy Buffett? Chocolate? Not exactly the sort of stuff you'd expect to hear about an executive in Essex's
Speak with Essex brass about strategy, however, and Moodispaw's line about not growing up starts to make more sense. Indeed, company execs see that youthful spirit as one of its most important assets in a tough intelligence-tech services market.
It's a market that's been good to Essex recently. Since 2000, Essex's revenues have grown to $159 million from $3.3 million, a breakneck annualized rate of 117%. For its fiscal year ended last December, the company's net profits nearly quadrupled to $8.6 million.
All that growth has Wall Street panting. Essex stock now trades at 2.9 times sales and 58 times trailing 12-month earnings per share. Among five equity analysts covering the stock, the consensus for three- to five-year earnings growth stands at 37% annualized.
But those numbers look stretched compared with other companies selling information technology services to the federal government.
Making things hairier for Essex, its business mix isn't terribly diverse. In 2005, the company drew 69% of its sales from one intelligence customer; a third of revenues came from one contract.
So what does Moodispaw's belief in "growing older but not up" have to do with all this? For one, company executives insist that an entrepreneurial spirit and technological innovation are key to the company's success. "We can't just focus on big programs," says
Example: Jaehne says his chief scientist,
Other new initiatives are more mundane but could broaden the revenue mix in the shorter term … [Read On]
Read the Complete Article:
Friday Letter Book of the Month
Friday Bonus / Last Mile: Triumphs and Threats
A Superspeed Connection Covering That Vexing Last Mile, New York Times (04/05/06):
IT'S the bottleneck that bedevils businesses everywhere: the "last mile" of wire connecting offices to a phone company's switching station. In most of America, one carrier — typically a Bell company — maintains the high-capacity data and calls over that route, which means little competition and high prices.
But Lou Slaughter, the chief executive of GigaBeam, a technology company in Herndon, Va., has come up with an alternative: millimeter-wave technology, which transmits data over wireless connections at one gigabit per second — 1,000 times as fast as a DSL connection.
The idea of commercial high-speed wireless connections is not new. Companies like Sprint, Winstar and Teligent made stabs at developing similar line-of-sight technology a few years ago, but the projects were stopped for various reasons.
GigaBeam's proprietary technology, though, may be a more elegant — and potentially more durable — solution. Unlike many other high-speed wireless technologies, including Wi-Fi and WiMax, GigaBeam's pencil-thin signals travel over licensed spectrum, which is regulated and thus requires paying fees and much paperwork. Using this spectrum also means that GigaBeam's signals do not interfere with other signals and are thus more secure … [Read On]
Read the complete New York Times Article (PDF file):
Re-regulation Threatens Last Mile
George Gilder (04/05/06): Separating content and conduit by force – “net neutrality” – unnecessarily exalts regulation and elevates bureaucrats over market forces. The million-word re-regulation of the industry that was the Telecom Act of 1996 resulted in the Great Telecom and Technology Crash of 2000-2003. Net neutrality risks a replay of this carnival of lawyers, micro-mis-management by apparatchik, price controls, the socialization of infrastructure and the screeching halt of innovation and investment in the "last-mile" local loop.
For years the doomsayers have said telecom will contrive
content-conduit plays like the cable industry, that they will thereby reap
profits from broadband content and that it will be the end of civilization as
we know it. They forget that content and conduit are naturally separate. If you
have the best content, you want it on everyone’s conduit. If you have the best
conduit, you want everyone’s content on it. There are absolutely no synergies
between creating attractive and original content and building powerful and
available broadband networks. By far the most profitable product in cable is
not their pathetic TV content with its endless clutter of ads and spam but
their open Internet service. The market will continue to push telecom and cable
to provide consumers with more choice not less.
Now with the
worst regulatory excesses finally behind us, last-mile telecom investment
finally poised take off, and an expectation of a deregulatory path to the
future, is Congress seriously contemplating re-regulating the industry again?
Gilder Technology Report subscribers are winning big in ‘06:
Upcoming Events /
April 11: Portland
Telecom's Last Frontier
Featuring U.S. Sen. Gordon Smith & Futurist George Gilder
APRIL 13: SEATTLE
Is the Blogosphere the Death of the Mainstream Media?
Featuring George Gilder
Taking The City Wireless
iSuppli Upgrades Semi
Karlgaard & Tredennick: Al Gore’s Whale Oil Economy
Global Warming Hysteria Has Arrive
Global Growth Inflates….
the Economic Truths Of Immigration Reform
For The Masses?
Member Claims Processor Design Breakthrough
Battle Of The Borders
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