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from Gilder Publishing THE FRIDAY LETTER e-mailed weekly, for friends and subscribers ============================================= | www.gilder.com | Issue 11.0/June 8, 2001 HEADLINES: * The Week/Let The Bells Have It * Biotech Watch/Old Cells Do It Better * Friday Feature/Gelernter Live * Poll Question/Bell Shareholders? * Readings * Conference Calendar ~~~~~~~~~~~~~~~ THE WEEK/Let The Bells Have It "The lack of cheap, always-on, last-mile broadband connections to small offices and homes is a short leash around the U.S. economy's neck. Yes, taxes are too high, especially those on capital formation. We hope Congress will figure out what every businessman knows: This recession is investment-led. And yes, the Fed should drop its funds rate to 3%. And yes, there is huge inventory overhang everywhere you look in IT. If all that isn't enough to give you a bad hair day, ponder the telco debt bomb that threatens to blow up Wall Street. "The dot-com boom started in 1995 and went bust in 2000. Every dolt imagined he was a venture investor. There was overfunding galore, idiot businesses up the gazoo--and then pfft. Net Boom, Act II awaits. It will occur when a catalyst technology changes everything, just as the 386 chip and graphics transformed PCs. What the Net awaits is obvious: cheap broadband (enough for streaming video) and always-on connections. "Already I can hear skeptics howling that bandwidth demand is not a sure thing, that the dogs will never eat it. But who can forecast demand without the supply that fires the imagination and stirs entrepreneurs to create radically new uses, not just extensions? Who in 1984 ever guessed that most CEOs would use e-mail by 1998? Who in 1989 imagined the necessity of Web-based supply-side chains, let alone the Web? How accurate is it ever to gauge, say, traffic for a proposed bridge by counting ferry boats and swimmers? Forget last-mile as you know it today: clunky DSL or cable modem service. These are mere swimmers and ferry boats. The bridge will come when last-mile connections are easy to order (one phone call or Web click); quick to deliver (the very next day); always on (like electricity in, uh, 49 states); and cheap ($20 a month or less). When the dogs are served that, they'll eat till they burst." Nobody makes the bandwidth case better than our great friend and tireless Silicon Valley watcher Rich Karlgaard. Read the full text of "Let The Bells Have It" at http://www.forbes.com/columnists/forbes/2001/0611/051.html ~~~~~~~~~~~~~~~~ BIOTECH WATCH: Old Stem Cells Do It Better "All systems were go for federally funded embryo stem-cell research at the National Institutes of Health. New guidelines bequeathed by the Clinton administration for skirting a congressional ban were in place. A meeting to review the first applications for grants was set for mid-April, when NIH's acting director Ruth Kirschstein suddenly received the word from on high: cancel the meeting. Health and Human Services Secretary Tommy G. Thompson wanted a chance to review the new guidelines. Some NIH researchers were aghast. "What's all the fuss about? Stem cells represent a mother lode of possible new treatments for diabetes, heart disease, Parkinson's, Alzheimer's, and more. Capable of differentiating into the full spectrum of other cell types--from a new liver cell to a new neuron--they could be ideal for repairing or replacing diseased organs. The furor is not over their usefulness, but their source: Should researchers use aborted or discarded human embryos? Or should they be restricted to adult stem-cells, found in fat, bone, and the brain? "Those ethical questions are riveting, but they are being trumped by the market, specifically the venture investment market, which is voting with its dollars for adult stem-cell research. The universe of established companies doing stem-cell research encompasses about 30 public and private biotechnology firms. Of these, fewer than half are involved primarily in developing treatments from stem cells. And only two of those 15 pure-play companies do significant work with embryonic cells." Dr Scott Gottlieb, Gilder's newest analyst, dives into the stem-cell debate in June's issue of The American Spectator. Read the full text at www.gilder.com. You can also join Scott for a half-hour live Webcast focused on biotech market prospects, Tuesday June 12th at 2 pm. Sign up now at www.gilder.com. ~~~~~~~~~~~~~~~ FRIDAY BONUS/Gelernter Live Venerable Peter Drucker argues that the greatest profits go to whoever supplies the key missing element in a technology, igniting new spirals of advance. Think Windows or CDMA and you have the idea. With an elegant software application called Scopeware, Yale's prodigal David Gelernter could hold a similar key to unlocking the pent-up power stemming from the intersection of big bandwidth and data storage--what we call the storewidth paradigm. At our Storewidth 2001 conference in Laguna Niguel in April, edited excerpts from a videotaped interview we did with Gelernter in New Haven earlier this year riveted the house. Now we're making the full two-hour conversation available for the first time. Tune in now, at www.gilder.com. ~~~~~~~~~~~~~~~~~~~~~~ UNDO: As many loyal Texas readers noted, SBC's headquarters are in San Antonio, not Austin. ~~~~~~~~~~~~~~~~~~~~~~ THIS JUST IN/Gilder.com Poll Results 2-8 June 2001 Question: Do you own AT&T? Lucent? Yes - 31.62% No - 24.90% Both - 16.21% Neither - 27.27% Up next: Is it ethical to use: adult stem cells for research ; embryo stem cells; we shouldn't be playing God Weigh in at www.gilder.com. =-=-=-=-=-==-=-=-=-=advertisement =-=-=-=-=-=-=-=-= Get a FREE Trial Issue of Forbes! Special online offer--click on the URL below to order today. https://commerce.cdsfulfillment.com/FRB/subscriptions.cgi?IN_Code=IK03FTA =-=-=-=-=-=-=-=-=-=-==-=-=-=-=-=-=-=-=-=-=-=-=-= =- READINGS Cable Guys Just Say No to DSL Ads http://www.nytimes.com/2001/06/08/technology/08CABL.html (registration required) Local Option: Super-Secret Soma Ready to Roll http://interactive.wsj.com/archive/retrieve.cgi?id=SB991602307540464676.djm&template=pasted-2001-06-04.tmpl (subscription required) Broadband Phonery http://www.nytimes.com/2001/06/06/technology/06TELE.html?searchpv=day01 (registration required) Storage Love-In http://www.informationweek.com/840/storage.htm Qualcomm's Asian Assist http://public.wsj.com/sn/y/SB991764083181439497.html Roamable: WAP-less Wireless http://www.internetworld.com/news/archive/06052001c.jsp Sun: Jxta Jini? http://interactive.wsj.com/archive/retrieve.cgi?id=SB991605891607167289.djm&template=pasted-2001-06-04.tmpl (subscription required) P2P: Strength in Numbers http://www.nytimes.com/2001/06/03/technology/03HARN.html?searchpv=day04 (registration required) Big Blue Stretches Chips http://www.nytimes.com/2001/06/08/technology/08BLUE.html (registration required) Lucent: Chilled http://www.nytimes.com/2001/06/05/technology/05LUCE.html?searchpv=day02 (registration required) ATT iTV: Goodbye to Mister Softee http://www.nytimes.com/2001/06/07/technology/08SOFT.html (registration required) Java Calling http://www.informationweek.com/840/java.htm Enron's DRAM Market http://interactive.wsj.com/articles/SB991950275840386069.htm (subscription required) Germany OKs Shared Wireless Networks http://www.nytimes.com/2001/06/06/technology/06TELE.html?searchpv=day01 We Want Our IT! http://www.informationweek.com/840/confidence.htm It's the Market Share, Stupid http://yahoo.smartmoney.com/techmarket/index.cfm?story=20010606&afl=yahoo High-Temperature Superconductors http://www.nytimes.com/2001/05/29/science/29SUPE.html?searchpv=day01 (registration required) High Bandwidth Power Lines http://www.wired.com/news/technology/0,1282,44213,00.html Rambofone http://www.siliconvalley.com/docs/news/svfront/054988.htm Useless Export Controls http://www.nytimes.com/reuters/technology/tech-tech-computers-e.html (registration required) URL Crazy http://www.zdnet.com/intweek/stories/news/0,4164,2768503,00.html Spectrum Foolery http://interactive.wsj.com/archive/retrieve.cgi?id=SB99169790137637676.djm&template=pasted-2001-06-05.tmpl (subscription required) Governments Against E-Commerce http://news.ft.com/ft/gx.cgi/ftc?pagename=View&c=Article&cid=FT3JFSFCDNC&live=true&tagid=YYY9BSINKTM&useoverridetemplate=IXLZHNNP94C WWW.Vegas.com http://www.zdnet.com/intweek/stories/news/0,4164,5092022,00.html Green Biz Squeeze http://globalarchive.ft.com/globalarchive/articles.html?id=010604000857&query=inside+track Andy Grove's Rational Exuberance http://www.wired.com/wired/archive/9.06/intel_pr.html =-=-=-=-=-=-=-=-=-=-==-=-=-=-=-=-=-=-=-=-=-=-=- -=- 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 andonly. 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 email. FRIDAY LETTER STAFF ~~~~~~~~~~~~~~~~~~~~~~~ John Hammill (jhammill@gildertech.com) Jorin Hawley (jhawley@gildertech.com) E-Mail Wizard Dave Dortman CONTRIBUTORS THIS WEEK: John Hammill, Dave Dortman, Spencer Reiss ADVERTISING INFORMATION ~~~~~~~~~~~~~~~~~~~~~~~ The Friday Letter is mailed each week to more than 60,000 subscribers and friends of Gilder Publishing, including industry leaders, financial professionals and individual investors. 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.1-413-644-2100 1-413-644-2123 (fax) WE'VE MOVED! NOTE THE NEW PHONE NUMBERS. 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