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from Gilder Publishing THE FRIDAY LETTER e-mailed weekly, for friends and subscribers ====================================================== | www.gilder.com | Issue 7.0/May 11, 2001 HEADLINES: * May's Gilder Technology Report/The Great Divide * In The American Spectator/Art Laffer Says "Boom!" * Peter Huber/I, Silicon * Friday Letter Bonus/David Gelertner's "The Second Coming" * Poll Question/Break Up Microsoft? * Readings * Conference Calendar ~~~~~~~~~~~~~~~~~~ IN THE GTR, MAY 2001/The Great Divide "Today Wall Street is telling the world that all information technology companies are essentially the same. They may produce Internet infrastructure, terabit routers, Ethernet hubs, or SONET (telco-standard, optoelectronic) switches. They may manufacture cell phones or personal computers or net appliances. But whatever they do, they sell "technology," and they all face a recession, a collapse of orders, and a capital dearth. "This conventional wisdom is as wrong today as the similar view in the mid-1980s that all the companies in the semiconductor and computer industries were the same, that it didn't matter whether you invested in Intel or Monolithic Memories, in Applied Materials or Applied Microsystems, in Microsoft or Digital Equipment. A profound recession and a stock market crash were said to be pushing the entire industry massively to capital rich Japan and other Asian countries. To many observers, the most glamorous remaining U.S. projects were supercomputer ventures such as Cray Computer, Control Data, or Thinking Machines Corporation that were multiplying compute-power in a single box to 10 billion operations per second and above. "What in fact was going on in 1985 was the opening of a Great Divide in the computer industry. On one side were the companies achieving billions of operations per second in a single computer; on the other side were companies enabling production of hundreds of millions of computers. The companies such as Control Data, Cray, and even IBM that focused on performing billions of operations per second in a single costly box lost to the companies that focused on enabling millions of people to use computers: Intel, Microsoft, and Dell. "Today a similar Great Divide is opening up in networks. It also revolves around the key abundances and scarcities of an industry. This Great Divide separates the companies performing the mostly empty stunt of multiplying the number of inaccessible bits per second on a backbone fiber from the companies multiplying the number of customers who can access the network. It separates the companies focused on big, costly bandwidth from the companies focused on cornucopian connectivity." The Gilder Technology Report's May 2001 issue is available online now. Subscribers can log in at www.gildertech.com. ~~~~~~~~~~~~~~~ IN THE AMERICAN SPECTATOR/Art Laffer says "Boom!" Supply-side prophet Arthur Laffer charts smooth sailing ahead. Too often economists defer judgment on issues like the stock market because the depth and breadth of the uncertainties are enormous. Unfortunately, when economists do step aside they not only avoid making mistakes, but they also deprive others of their insights. Economists do have a lot about which to be modest, but they also have a great deal to add. Take the stock market, for example. A central concept in finance is that the price of an asset is the discounted present value of that asset's future earnings stream. While rarely employed in macroeconomics, this concept, when judiciously applied to the overall U.S. economy, allows us to evaluate the appropriate price for aggregate stock market--not too shabby if true. Read the full story at www.gilder.com. ~~~~~~~~~~~~~~~ PETER HUBER/I, Silicon "Microprocessors and bandwidth already substitute for military personnel in outer space, and before long they'll take over the fighter jet and the tank. But even as the human body ejects from the cockpit, the silicon cockpit is infiltrating the body itself. The technologies that make possible spy satellites and pilotless drones are moving into pacemakers, defibrillators, hearing aids and a boundless new array of stimulators, pumps and prostheses." Digital Power Report co-editor Peter Huber's "From Silicon Cockpit to Silicon Body" appears in the May 14th issue of Forbes. Read the full text at www.forbes.com/columnists/forbes/2001/0514/121.html ~~~~~~~~ FRIDAY LETTER BONUS/David Gelertner's "The Second Coming" "Any Microsecond Now "Computing will be transformed. It's not just that our problems are big, they are big and obvious. It's not just that the solutions are simple, they are simple and right under our noses. It's not just that hardware is more advanced than software; the last big operating-systems breakthrough was the Macintosh, sixteen years ago, and today's hottest item is Linux, which is a version of Unix, which was new in 1976. Users react to the hard truth that commercial software applications tend to be badly-designed, badly-made, incomprehensible and obsolete by blaming themselves ('Computers for Morons,' 'Operating Systems for Livestock'), and meanwhile, money surges through our communal imagination like beer from burst barrels. Billions. Naturally the atmosphere is a little strange; change is coming, soon." From "The Second Coming - A Manifesto," by Yale computer visionary David Gelernter. Originally published in Frankfurter Allgemeine Zeitung, June 2000. Read the full English text at http://www.edge.org/documents/archive/edge70.html Gelernter's new company, Scopeware, has launched a commercial version of his revolutionary Lifestreams software. Details at www.scopeware.com. ~~~~~~~~~~~~~~~~ THIS JUST IN/Gilder.com Poll Results,4-10 May 2001 Question: Should the Feds break up Microsoft? 5% Yes! Microsoft is an imperial predator. 95% No! Microsoft is no longer the dominant player. Up next: Will Lucent survive as an independent company? Yes/no? Weigh in at www.gilder.com. =-=-=-=-=-==-=-=-=-=advertisement =-=-=-=-=-=-=-=-= Special Online Offer - a FREE Trial Issue of Forbes Magazine! Click on the URL below to order today. https://commerce.cdsfulfillment.com/FRB/subscriptions.cgi?IN_Code=IK03FTA =-=-=-=-=-=-=-=-=-=-==-=-=-=-=-=-=-=-=-=-=-=-=-=-=-= READINGS IBM reports breakthrough in computer display manufacturing http://www.ibm.com/news/2001/05/03.phtml Wireless Phones Spark Gallium Feeding Frenzy http://markets.ft.com/ft/gx.cgi/ftc?pagename=View&;c=Article&cid=FT3EQ16KJMC&live=true&tagid=IXL1WGBYICC&subheading=commodities Court Rules Against Rambus http://news.cnet.com/news/0-1003-200-5878071.html BlueTooth Goes to the Dentist http://www.internetworld.com/news/archive/05082001c.jsp IBM pushes to 2GHz with PowerPC chips http://news.cnet.com/news/0-1003-200-5890974.html?tag=lh Music Trading: Back to the Underground http://news.cnet.com/news/0-1005-200-5862906.html E Pluribus Internet http://www.forbes.com/forbes/2001/0402/036.html (registration required) No Escape: Boeing to Wire Skies http://www.thestandard.com/article/0,1902,24285,00.html?nl=mg Microsoft Attacks Open Source: Linus Torvalds Replies http://web.siliconvalley.com/content/sv/2001/05/03/opinion/dgillmor/weblog/torvalds.htm The High Price of Privacy http://www.wired.com/news/privacy/0,1848,43654,00.html Touch Me, Feel Me http://www.informationweek.com/835/payments.htm 'Visibility': Where's The Beef? http://www.businessweek.com/bwdaily/dnflash/may2001/nf2001059_220.htm Mutual Funds Get Venturous http://globalarchive.ft.com/globalarchive/articles.html?id=010508001433&;query=robert+clow Three Cheers for Slavery! http://www.nytimes.com/2001/05/07/opinion/07SAFI.html (registration required) Foreign Affairs: Green With Envy http://interactive.wsj.com/articles/SB989448196102773055.htm (subscription required) Globocops in Cyberspace http://news.ft.com/ft/gx.cgi/ftc?pagename=View&;c=Article&cid=FT3MPAYCJMC&live=true Repo Man in The Valley http://www.msnbc.com/news/568651.asp?0nm=C17O =-=-=-=-=-=-=-=-=-=-==-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=- GET THE GILDER TECHNOLOGY REPORT Monthly, From the Heart of the Telecosm http://www.gildertech.com ~~~~~~~~~~~~~~~~ GET NEW ECONOMY WATCH Reshaping the Competitive Landscape http://www.neweconomywatch.com ~~~~~~~~~~~~~~~~ GET THE DIGITAL POWER REPORT Electrons Matter http://www.digitalpowerreport.com ~~~~~~~~~~~~~~~~ GET DYNAMIC SILICON Linking the Microcosm and the Telecosm http://www.dynamicsilicon.com ~~~~~~~~~~~~~~~~ GET THE AMERICAN SPECTATOR Online special--50% off cover price! http://www.gilder.com/AmSpecSub.asp =-=-=-=-=-=-=-=-=-=-==-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=- GILDER CONFERENCE CALENDAR September 12-14, Telecosm V, Squaw Creek Resort, Lake Tahoe CA. The one and only. Produced by Forbes Inc and Gilder Publishing. Details and registration at http://www.forbes.com/conf/telecosm/agenda1.shtml October 22-24, Powercosm 2001, Featuring Peter Huber and Mark Mills, The Fairmont Hotel, San Francisco, CA Digital Power in the Silicon Age. Register now at http://www.gilder.com/powercosm_forms/Conference.asp -=-=-=-=-=-=-=-=-=-==-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=- The Friday Letter is published weekly for subscribers and friends of Gilder Publishing. If someone you know would enjoy it, please feel free to forward a copy. SUBSCRIBE and UNSUBSCRIBE information can be found at the bottom of this FRIDAY LETTER STAFF ~~~~~~~~~~~~~~~~~~~~~~~ John Hammill (jhammill@gildertech.com) Jorin Hawley (jhawley@gildertech.com) E-Mail Wizard Dave Dortman CONTRIBUTORS THIS WEEK: Charlie Burger, Aaron Charlwood, Mary Collins, Dave Dortman, Spencer Reiss, Jeff Stambovsky, Brett Swanson, John Hammill ADVERTISING INFORMATION ~~~~~~~~~~~~~~~~~~~~~~~ The Friday Letter is mailed each week to more than 60,000 subscribers and friends of Gilder Publishing. For information about advertising, contact Brian Cole, VP Business Development at bcole@gildertech.com, tel 860-434-0614. FEEDBACK AND PROBLEMS ~~~~~~~~~~~~~~~~~~~~~ Send letters to the editor to Fridayletter@gildertech.com For technical problems, please e-mail Fridayhelp@gildertech.com You can also contact us via: Gilder Publishing, Customer Service 888-484-2727; outside the U.S.1-413-274-3000 1-413-274-3030 (fax) Copyright 2001 Gilder Publishing LLC --- You are currently subscribed to gilder-technology-report as: alewis@ect.enron.com To unsubscribe send a blank email to leave-gilder-technology-report-661837S@earth.lyris.net
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