Telecom/1996-04-telecom-walnutcreek.iso/george.gilder.essays/gilder.meets.critics

Text File | 1995-06-07 | 24.2 KB | 538 lines

Date: Sat, 3 Jun 1995 00:11:03 -0500
From: TELECOM Digest (Patrick Townson) <[e-mail].e
  Date: Mon, 29 May 1995 12:36:26 -0400
  From: Gordon Jacobson <[e-mail]>
  Subject: George Gilder Meets His Critics


          The "Critics" comments in this article and the response by
     George Gilder, provides third party opinions and analysis that
     has not heretofore been available in the long running Telecosm
     Series.<P>

          The Gilder articles provide some interesting technological
     and cultural backround that helps prepare readers to better
     understand and place in proper perspective the events relative
     to the National Data Super Highway, which are unfolding almost
     daily in the national press.  I contacted Forbes and George
     Gilder and obtained permission to post on the Internet.<P>

          The letters from Mr. Gilder's critics have posted without
     the express permission of each of their respective authors.  The
     postings have been made under the doctorine of "Fair Use." If
     any author wishes to have his letter deleted, an Email message
     to such effect, addressed to [e-mail], containing a reply
     address and/or telephone number will initiate a dialog.<P>

          Please note that the preface must be included when cross
     posting or  uploading this article.<P>


               The following article, GILDER MEETS HIS CRITICS, was
      first published in Forbes ASAP, March 5, 1995.  It is a portion
      of George Gilder's book, Telecosm, which will be published in
      1995 by Simon & Schuster, as a sequel to Microcosm, published
      in 1989 and Life After Television published by Norton in 1992.
      Subsequent chapters of Telecosm will be serialized in Forbes
      ASAP.<P>


                          GILDER MEETS HIS CRITICS

                 ASAP contributing editor George Gilder ran
                 into a buzz saw over recent bandwidth and
                 big-bird articles.

            Right after George Gilder took on feisty Tom Peters in
            the Battle of City vs. Country, we struck a low blow:
            We gave the exhausted futurist a mountain of mail he
            had to read and answer, quick.  Here, we print a
            sampling of the responses to Gilder's piece the onrush
            of bandwidth (Forbes ASAP, Dec. 5);  a letter from
            Steven Dorfman of GM Hughes about an earlier article
            (Oct. 10); and Gilder's answers to all.

            Thanks, George! {Editors, ASAP}


Nicholas Negroponte - Director,
MIT Media Laboratory,  Boston, MA

Debunking Bandwidth:

     When our world is fibered, the planet is like a desktop.
Earth is but a backplane for a single computer.  True.  But as
mere humans, the bandwidth we're really interested in is the one
that exists between us and computers, be they the size of a cuff
link or a country.  That bandwidth is often one we want to be
smaller, not bigger.  Most of us, most of the time, want less
bits, not more bits.  Sure we want gigabits, but only for a few
millionths of a second at a time.

     Remember the early days of computing when stacks of
fanfolded output were dropped on an executive's desk?  People
caught on quickly; that was data, not information.  Today, for
some reason, we have forgotten some simple concepts about what
constitutes meaning and understanding and where they come from.
You.  So while it is real easy to ship vast amounts of data and
high-resolution images back and forth between computers and while
it is suddenly possible to ignore geographic constraints, let's
not forget that in many cases "less is more" when it comes to
bandwidth.

     Narrow channels force us to be smarter.  Yes, bandwidth will
be free, but so will computing.  The future will not be driven by
either MIPS or BPS, but information and entertainment content.
Andy Grove does not need to worry about John Malone or Bill
Gates.  He has to worry about Michael Ovitz.


Mark Stahlman - President,
New Media Associates,  New York, NY

Bandwidth to Burn: Now What Do We Do?

     Gilder has made a case for vastly expanded bandwidth
overwhelming the influence of the steady march of computing
power.  [But] what new need will drive businesses to translate
the inventions Gilder describes into significant new media
opportunities?

     Apparently, it's the need for video-on-demand.  [But] if
this were a plausible mass market, the streets of New York would
be filled with bicycle messengers delivering Tom Cruise with bags
of Chinese food.  No, during the next five to 10 years, bandwidth
will certainly be consumed in much greater quantities_but for
completely different reasons.  We will dramatically extend
ourselves and our social relationships with video-telephones.  We
will consume substantial bandwidth by substituting bandwidth for
gasoline_through telecommuting.  We will network to multimedia
databases (such as the current Internet-based World Wide Web) and
dramatically expand our range of social contacts_across borders,
cultures and tribes.

     Unfortunately for Gilder's bandwidth braggarts, these
enormous markets will be built using a telecommunications
technology which began deployment over 10 years ago_ISDN_and in
which none of them has any important financial stake today.
Unglamorous, ungainly, even downright ugly, ISDN (integrated
services digital network) will be supplied by old-time telephone
companies (not cable companies) and it will be driven by the
steady progress of personal computers_themselves now a 15- to 20-
year-old industry.  As has been widely noted, we tend to
overestimate (sometimes dramatically) the near-term impact of new
technologies and underestimate the long-range effects.

     In this age, new technology hype has become an epidemic.
Reality itself, as it turns out, is far more interesting.


Michael Slater - President,
MicroDesign Resources,

and Editorial Director,
Microprocessor Report,  Sebastopol, CA

     Increasing bandwidth will provide computers with more
information to process, and this will increase, not decrease, the
computational requirements.  Having high bandwidth makes it
possible for the interface nodes to be less intelligent, but this
is not necessarily desirable.  Furthermore, the time frame must
be considered; high-bandwidth WAN (wide area network) connections
are not going to be widely available for years, and in the
meantime, computational power will continue to be critical as a
way to mitigate bandwidth limitations.

     No matter how much bandwidth is available, it is still very
desirable to have high-performance computational ability in
desktop systems.  Rendering of three-dimensional images from
mathematical representations, for example, is something that has
widespread application not only in games, but in other consumer
applications (like home and garden design programs).  Orders of
magnitude more performance will result in direct improvements in
such applications, and bandwidth is no substitute here.

     Finally, with regard to the inclusion of signal-processing
capabilities in general-purpose microprocessors, I disagree with
Gilder's conclusion that this will not occur.  Minor extensions
to general-purpose architectures, such as the ability to perform
four 8-bit additions in parallel using the same hardware that
normally performs a single 32-bit addition, will provide a
significant boost for applications such as video decompression.
The cost of adding these features is small, and the benefit is
great.  Sun and HP have already made such additions to their
processors, and I expect Intel and other x86 vendors will do so
in the future.  Dedicated DSPs will always be able to provide
higher performance, but the incremental cost/performance of
adding functions to the host CPU is superior.


Michael E. Treacy - President,
Treacy & Co.,  Cambridge, MA

Treacy is co-author of The Discipline of Market Leaders

     [Gilder's] view is rounded on the narrow philosophy of
technological determinism.  It is a peculiar and persistent form
of myopia based on the wobbly assertion that the best technology
will win in the marketplace.  He who rides the best technological
wave will ascend to glory.  Oh, if it were only so!  If
technology determined success, there would be no Microsoft today.
By any reasonable standards, MS-DOS, the foundation of Mr. Gate's
empire, was an average technology when it was brought to market
more than a decade ago.  But Microsoft had all the other elements
that created a compelling value proposition for its customer.

     Value is what customers want.  Intel has got what it takes
and has been a value leader for many years.  Andy Grove has
already begun to direct Intel's development portfolio toward
communications opportunities.  He has read the signals and made
the call, just as he did several years ago when he vacated the
memory-chip business, in advance of grinding competition and
shrinking margins. With constant vigilance and change, Intel's
success can continue for years to come.


Howard Anderson - Managing Director,
The Yankee Group,

and General Partner,
Battery Ventures,  Boston, MA

     George Gilder's analysis of the changes in the computing and
communications tradeoff is brilliant, concise, analytical_and
flawed.  His portrait of the rapid changes in communications and
relative disadvantage of the old-line computer industry (Intel,
etc.) does not overestimate the movement.  It underestimates how
the next 10 years will be the decade of Bandwidth on Demand.
Consider this:

          From 1995-2005, the cost of bandwidth will
          drop faster than the cost of computing.

          From 1995-2005, the cost of switching will
          drop Aster than the cost of bandwidth.

     Historical examples: The cost of a T1 line (1.54 megabits)
coast to coast in 1985 was $ 40,000/month.  Today?  Under $
2,000/month, a drop of 95%.

     Assume the following: by 2000, computing is free, and
bandwidth is free.  Now_design the future!

     The amount of money spent on ATM Research and Development
(Source: Yankee Group ATM Planning Service):

          1993:$ 335 million
          1994:$ 550 million
          1995:$ 950 million

     So Gilder is right on about the impact of ATM.  In fact,
Fore Systems, where our sister company Battery Ventures is the
second-largest outside stockholder, carries a market
capitalization of $ 900 million_on a $ 60 million sales base
demonstrating that the ATM value is well known within the
industry.

     This past year, the Yankee Group trained 5,000 end-users on
the use of ATM technology and the most frequently asked question
was, "How in the world am I going to use all that bandwidth?" But
it was only 10 years ago that users thought they would fall off
the end of the earth if they went faster than 2.4 kilobits!

     Which leads to some immutable laws about networks, which
Gilder alludes to:

          Networks always grow.

          Networks always become more complex.

          Networks find applications that double
          the bandwidth needed every three years.

          The cost of bandwidth is artificially high.

     Andy Grove is right: "Only the paranoid survive."


G. A. Keyworth, II
The Progress and Freedom Foundation,  Washington, D.C.

     George Gilder's article goes yet another step in
establishing him as the forefront signal-to-noise processor" of
information technology.  Yet, I confess to being somewhat
confused by it.

     My dilemma resides in what I will call the "30-30 rule"_that
we humans can take in information at only about 30 megahertz
through our eyes or, even slower, at 30 kilohertz through our
ears.  The kind of bandwidth that Gilder projects are important
to machine-to-machine communications, i.e., to networks, but it
is the computer (in some form, whether PC, PDA, digital-phone or
digital-TV) that will continue to determine the "match" between
bandwidth and the inherent limitation of the 30-30 rule.

     Bandwidth is important, because it will make the connection
a richer one, but the fact remains that we humans lack broadband
input channel to access all that bandwidth directly.  And it is
the computer that must bridge that gap, keeping it in the
driver's seat as we enter the realm of ubiquitous, connected
computing.

     Gilder's article makes an additional point, and one that
falls too often on deaf ears in Washington.  That is that
bandwidth scarcity, the basis for much of our telecommunications
regulation, is an outdated concept.  Only major revamping of the
government's role in telecommunications will permit the natural
competition between computing and communications to play out.


Eric Schmidt - Chief Technical Officer,
Sun Microsystems,  Mountain View, CA

     Gilder's article does a wonderful job showing the potential
impact of the bandwidth revolution.  Let me give you two examples
of approaches in computer systems to exploit enormous bandwidth
increases:

     The speed of light is not doubling every 18 months.  There
is a revolution in system design for small, fast machines just as
significant as the one for broadband networks in your article.
What we call today "large servers" will in fact have to become
physically very small.  We are now approaching "design for light
speed" in computer systems, and we have to keep our handy ruler,
measured in nanoseconds, ready for each new board design.  Light
travels about four inches in a nanosecond in today's wires, so
that, in a 500-megahertz (two nanosecond) computer design, we
have less than eight inches of room for our signals to travel in
a synchronous processor design (as most are).  This means that
the fastest computers in our future will also have to be the
smallest!

     The backplanes of these machines have to be physically very
short.  The limit of a single backplane makes it hard to keep up
with the improvements in processor speeds, using traditional
backplane designs.

     Switching becomes a core strategy for computer systems.  Two
approaches that merge switching and architecture are now popular.
One, called Distributed Shared Memory, uses a switching network
to link cache-coherent memories together.  In DSM computers, the
power of shared memory designs can be extended over very high-
speed switched memory networks.  The other, called clustering,
has been around for at least 15 years, and uses a switching
network to link computer systems.  In this approach, applications
are modified to share common disks, peripherals and software.

     Small size and switching are the future of high-performance
computing.  Both are based on networking as their core.  As the
switched networks get faster these architectures will come to
dominate computing.  The fastest improving technology, in this
case networking, always drives the architecture.  The hollowing
out of the computer occurs when high-performance computers truly
span networks.  ATM asynchronous transfer model, now in its
infancy, is the likely network for us to bet on.


Bill Gates - Chairman and CEO,
Microsoft,  Redmond, WA

     George Gilder's piece on bandwidth was good.  But I don't
understand how Intel gets hurt unless it stops delivering the
best price/performance microprocessors. The more network
connectivity the more we need MIPS.  Andy Grove is right that
DSPs are just a complex way of getting more MIPS.  Just because
bandwidth reduces some of the need for compression doesn't mean
bandwidth reduces demand for cycles.

     In any case Gilder is very stimulating even when I disagree
with him, and most of the time I agree with him.


Steven Dorfman - President,
Hughes Telecommunications and Space Co.
GM Hughes,  Los Angeles, CA

     In "Ethersphere" (Oct. 10) Gilder offers the view that high-
powered geostationary satellites_the mainstay, high-capacity
platforms of our past, current and future service offerings_are
already antiques, and soon will be displaced entirely by
thousands of low earth orbiting satellites.  That these highly
touted systems are nonexistent, unlaunched and unproven [and
require major technical breakthroughs] are details that
conveniently escape Gilder's scathing assault on geostationary
systems.

     Gilder should recognize that new technology products are
designed and brought to market based on a host of considerations
in addition to pure technical feasibility.  Tradeoffs are_must
be_made.  But to Gilder, "tradeoff" would appear to be synonymous
with "sellout."

     In the corporate world, this is business naivet.  In
deciding what form Hughes's new Spaceway and DirecTV services,
for example, should take, our goal was to deploy systems that:
maximized technology insertion, thereby minimizing risk; provided
a low-cost service for which there was demonstrated consumer
demand; and faced minimal regulatory, technology-development, or
financing delays, thereby expediting service introduction.

     A Ka-band GEO system, evolved from U.S. defense
communication satellite applications, Spaceway is the logical
extension of Hughes's universe of 120,000 very small aperture
terminal antennas worldwide, used for private network, two-way
voice, data and video.  Our me-satellite regional approach
provides global coverage at a cost of $ 3 billion.  Because
service can be rolled out incrementally, revenues can be
generated before full system deployment.  (By contrast, virtually
all 840 Teledesic satellites must be operational_at a $ 9 billion
system cost_before service can begin.)

     Our comparatively low investment cost and highly efficient
spot beam architecture, whereby we cost-effectively target our
capacity to the world's most populated regions, yield significant
savings and low user costs. . .critical because developing
nations with limited communications infrastructure are a key
market.

     For voice, we expect that developing regions without access
to low-cost terrestrial voice service will embrace Spaceway
despite the fractional time delay_at least until terrestrial
infrastructure is available.  This is a significant, revenue-
generating window of opportunity for us.  As for data
applications, our VSAT experience has shown that custom developed
protocols provide totally acceptable throughput efficiency and
seamless interactivity.  In short, we believe "the delay issue"
has been overstated.  There is a different delay issue, however,
that cannot be overstated.  Gilder is, I believe, overly
optimistic about how soon Teledesic's technology will be
ready_and hence, how soon service revenues can be generated.

     I believe Spaceway is the best technological solution for
this market at this time.  But if tomorrow the technology and
market are in place so that the LEO system makes sense, rest
assured that Hughes will introduce an innovative LEO product of
Our own.

     Gilder attaches far too little import and value (in the form
of operating profits) to today's technology.  Nowhere is this
more clear than in his assessment of satellite direct-to-home
television programming.  Gilder calls DBS "one-size-fits-all
programming," stressing its lack of sufficient consumer choice
and absence of Interactivity.  But in holding out for a fiber
solution, Gilder is making a poor business decision.

     Today, Hughes's two DirecTV GEO satellites are filled with
150 program channels.  We are adding 3,000 subscribers a day, and
will break even (three million) by mid-1996.  With 10 million
subscribers projected by 2000, DirecTV will be a $ 3 billion a
year business, with $ 1 billion in operating profit.

     Waiting for the future, Gilder, carries a price tag most
CEOs can't afford, and are not prepared to pay.



GEORGE GILDER REPLIES:

     I want to thank my correspondents for their alternately
poetic, ironic, trenchant and pithy responses.  So many of them,
though, share the notion that I predicted dire straits for Intel
that I must assume a lack d clarity in my treatment of the issue.
I predicted that new and larger opportunities would arise in the
field of communications processors and systems that central
processing units would bear a declining share of total processing
not that they would in themselves decline in any absolute sense.
Indeed, CPUs should continue to improve their cost-effectiveness
apace with Moore's Law, plus an increment for architectural
advances in parallelism.  Such advances, however, will fail to
keep pace with the onrushing expansion of bandwidth, as further
detailed by Howard Anderson's intriguing letter.  Bandwidth gains
will be fed on the demand side, as Mark Stahlman incisively
observes, more by the needs of teleconferencing and telecommuting
than by the need for one-way video-on-demand.

     Thus I agree with Bill Gates that Intel can continue to
thrive as long as it continues to produce the most cost-effective
microprocessors.  I did raise the possibility, foreshadowed by
Microunity's new semiconductor lab process, that Intel's existing
technology might face rivals that could produce more MIPs or
gigabits per second per watt.  Power efficiency will be a crucial
index in a time of seething CPUs and increasing demands for power-
saving designs from producers of mobile appliances, such as the
digital cellular communicators which will be the most common PCs
of the next decade.

     Focusing on gigabits per second as a prime spec, these
devices may well eclipse CPUs in raw processing pace and find a
wide range of applications in digital radio, real-time
compression and decompression, pattern recognition, echo-
cancellation and other digital signal processing uses.  The
demands of these applications have already impelled an array of
processing and architectural advances at Microunity, Texas
Instruments and elsewhere in the pullulating field of DSP.
Unconstrained by proprietary legacies and immense installed
bases, perhaps other manufacturers will also find ways to excel
the Moore's Law pace of Intel's majestic progress down the
learning curve of three-volt CMOS technology.

     Jay Keyworth and Nicholas Negroponte both eloquently point
to the central paradox of the information age.  While production
systems of the industrial age use scarce resources, such as land,
labor, and capital, to create abundance, production systems of
the information age use abundant resources, such as bits and
bandwidth, to create knowledge scarce enough to fit the bandwidth
of humans. This distillation function_delivering correct and
useful data to human beings with their Keyworth window of roughly
30 kilohertz cochlea and 30 megahertz retinas_requires processing
speeds orders of magnitude above the human rates, just to sample,
quantize and codify the flow.  To scan, select, recognize,
correct, decompress, echo-cancel, visualize or otherwise
manipulate the data entails still further accelerations of
processing power.

     Communications processors may well emerge as most efficient
for many of these tasks.  The idea that all such functions will
be sucked into the CPU has a long history, but motherboards and
their buses remain as crowded as ever.  I suspect that the
bandwidth explosion will offer many opportunities for processors
specializing in communications.

     Steven Dorfman of Hughes, I predict, will do better both for
his company and his two-way communications from space by moving
quickly rather than slowly to low earth orbits.  I fully share
his admiration for the point-to multipoint-powers of DBS and I
have long cited them as a prime reason for the obsolescence of
cable TV regulations based on the assumption of monopoly. Indeed,
I predict far more than 10 million users by 2000 if Hughes and
its suppliers can meet the demand.  But satellite and cable TV
vendors will prosper best by providing two-way channels for the
110 million personal computers in the land.  I expect that these
channels_particularly CATV, not ISDN_will provide the dominant
access channel for computers over the next decade.

     Above all, I hope that whoever Andy Grove fears most, it is
not Michael Ovitz.  Grove goes Hollywood and we'll all be in
trouble.

                               #####

Regards,


                            Gordon Jacobson
                     Portman Communication Services
                            [phone]

           [e-mail]               MCI Mail ID:  385-1533

           Home Page: http://www.seas.upenn.edu/~gaj1/home.html

                    Channel One BBS - Cambridge, MA