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Where There Is Warm-blooded Life,
Parasites Thrive: Dell Announces PocketPC PDA
By Clay Ryder
Dell announced this week its first handheld computer
line dubbed Axim: PocketPC-powered PDAs based on the Intel Xscale (nee
StrongARM) processor that are initially being offered in two configurations.
The $349 Axim X5 features a 400MHz Xscale CPU, 64MB of SDRAM, 48MB of ROM,
integrated Secure Digital and CompactFlash slots, and a 3.5-inch
transflective TFT 240x320 resolution color display. This configuration
features a synchronization and recharging cradle with
an extra battery charge slot that accommodates either a standard (1440 mAh)
or high-capacity (3400 mAh) battery. Users with reduced system requirements
can choose the X5's $249 configuration, which features a 300MHz CPU, 32MB of
SDRAM, 32MB of ROM, and a USB sync cable instead of a cradle and the rest of
features found in its higher-priced sibling. Both configurations have
standard one-year, next-business-day Advanced Exchange service and feature an
introductory $50 mail-in rebate or discount. The Dell Axim will initially be
available in the U.S. and Canada, with plans for other regions in early 2003.
One of the more remarkable events in recent IT
memory is the plummeting price of PCs accompanied by their astonishing growth
in performance. The poster child for this trend is Dell, which has managed to
squeeze the cost out of manufacturing and delivering Industry Standard
Component-based computing solutions to the point where smaller, less
powerful, hand held devices have ended up costing more than a fully loaded
desktop system — that is, until this announcement. To many, the Axim X5 would
seem to be another price/performance breakthrough, with many advantages to
the customer, and more headaches for Dell’s margin-strapped competitors. But
will the value proposition to the customer come to rival that of the Dell PC
or does this portend a dark cloud hovering over the industry in a scant few
years time? We tend to believe the latter — here’s why.
The desktop PC market is arguably mature, or at
least old enough to vote, with numerous technological breakthroughs and
countless innovations — that is, until a couple of years ago. In an industry
that has experienced (and already financed) the bulk of its leading edge and
mainstream innovation, market forces tend to shift toward cost containment as
opposed to value add. Dell has been very successful in taking well
established mainstream technology and optimizing the hell out of its cost
structure. But in this scenario, cost structure and street price are the
driving considerations, not innovation. As a result, monies for real
innovation are few and becoming harder to come by, resulting in products that
will tend to become less expensive but only incrementally more capable or
even stagnant. By contrast, the PocketPC marketplace is fresh, developing,
and anything but mature. This leading edge position and current market price points permits vendors to channel profits into innovation,
thus continually enhancing the value add to customers. If Dell is successful
at prematurely (in our opinion) shifting the PocketPC market towards cost
containment, we believe many potential innovations will wither since R&D
funding sources will be emasculated at the behest of the bottom line.
Consider: If PCs ceased being innovative in the late 1980s and became the
price-driven commodity they are today, multimedia, graphical interfaces, digital
recording, and even home-based Internet access would probably not be
prevalent today. Companies such as Dell that simply cut costs are rarely
innovators and in fact are parasitic on the market as a whole, taking
advantage of the innovations created and financed by others and then driving
market value downward, often quickly. Though some will be quick to applaud
the lower price points of the Axim, we fear the market may itself ultimately
become a victim by limiting innovation monies in the PDA space effectively
setting the capabilities of these devices in stone prematurely. If such an
unfortunate circumstance comes to pass, it would cripple the potential and
future of the PDA.
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Shapes of Things: IBM, Intel Announce
Supercomputing Products/Wins
By Charles King
IBM announced this week that the company has been
awarded a Department of Energy (DOE) contract valued at $216 to $267 million
to build two supercomputers with a combined peak speed of up to 467 trillion
calculations per second (teraflops). According to IBM, the two systems
together will have more processing power than the combined power of all 500
machines on the recently announced Top500 list of supercomputers. The first
system, ASCI Purple, will consist of a cluster of IBM pSeries eServers with a
total of 12,544 POWER5 processors running AIX 5L. The second system, Blue
Gene/L, which employs advanced IBM semiconductor and system technologies
being developed by IBM and the DOE, will consist of 130,000 processors
running Linux. The new systems will be used by three NNSA labs (Los Alamos, Sandia,
and Lawrence Livermore) for simulating nuclear weapons tests, turbulence,
material properties, and high explosives behavior. In a separate
announcement, IBM introduced a trio of graphics workstations, including
midrange systems based on new Intel Pentium 4 and Xeon processors, and a new
high end POWER4-based system. In yet another unrelated announcement, Intel
discussed the newly released TOP500 rankings of supercomputing sites
worldwide, highlighting systems based on the company’s products. The November
2002 TOP500 list includes fifty-six Intel-based systems compared with two
Intel systems three years ago.
Though somewhat disparate, this group of
announcements offers a window into a number of elemental changes we see
occurring in the supercomputing and high performance computing (HPC) spaces.
Beyond the sheer size of the systems IBM will be building for the DOE, their
disparate (AIX and Linux) operating environments indicates the growing
influence of Open Source solutions, and also begs the question of how
industry consolidation may be affecting the supercomputing space. The past
three years has seen some aggressive jostling in the supercomputing space
among players including IBM, HP, Compaq, Sun, and NEC, but it is unclear
which of these players besides IBM and HP could actually muster the products,
knowledge, and experience necessary to compete for a project like the DOE’s.
If larger and larger systems become the lingua franca of supercomputing, the
top end of the market is likely to be increasingly dominated by a handful of
players (minus a couple of fingers). The other piece of this puzzle is the
notable shift in the TOP500 list toward cluster and constellation systems and
away from traditional monolithic SMP systems. This shift is the source of
Intel-based systems notable rise, and is also an area we expect HP will
profit from over time, given the company’s close relationship with Intel and
the advanced clustering technology that came to HP in the Compaq acquisition.
Good enough, but what does all this mean away from
the rarefied air of government research labs? The fact of the matter is that
technology tends, by nature or intention, to percolate downward. High-end
clustered HPC solutions, such as the crash testing simulation installation
IBM recently sold to General Motors, are gaining increasing traction across a
variety of industries and applications, a trend we expect will gain momentum
with evolution of grid computing and similar technologies. By that same
token, IBM’s new workstations offer a desktop view of this evolution. As
workstation technologies gain power and sophistication, the roles of
individual desktop machines will continue to expand in HPC-focused solutions
such as high-end graphics rendering, 3D visualization, product design and
modeling, and data analysis. That high performance and supercomputing systems
and applications are becoming increasingly distributed and cost effective for
commercial users while they are simultaneously becoming increasingly powerful
indicates that these areas are undergoing an evolutionary shift that could
fundamentally change the way we look at and think of computing.
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Poindexter’s Big Adventure
By Jim Balderston
The Pentagon has officially confirmed the existence
of a development effort called the Total Information Awareness Program, a
giant database that is designed to aggregate information about individuals
concerning their financial transactions, including purchases, and detect
suspicious patterns that may lie therein. The project is being led by the
Defense Advanced Research Projects Agency. The data captured by the TIAP will
be combined with law enforcement, intelligence, and immigration information
for the purpose of attempting to foil evildoers. The project is the
brainchild of Admiral John Poindexter, who was convicted of lying to Congress
during the hearings surrounding the Iran-Contra scandal in 1987.
The Total Information Awareness Program is no small
package. In fact, the ability to track virtually every consumer transaction
in the country is staggering. As this is a consumer nation, and consumer
spending represents two-thirds of the national GDP, one can argue that this
database will have insights into the inner workings of the U.S. economy on a
granularity unimaginable only a few years ago. But to our way of thinking, the
opportunities for mischief with such capabilities far outweigh any insights
the program might offer. When one considers how hard it is to rid oneself of
pesky telemarketers, the thought of trying to get off a mistaken list of
potential evildoers generated by this Pentagon behemoth is chilling, to say
the least. One could imagine the process taking years, during which time an
individual could not do as much as purchase a soft drink with a credit card,
if soft drinks were available in the prisoners’ commissary at Guantanamo Bay.
Supporters of such measures as the Total Information
Awareness Program will argue that such measures are necessary to catch
terrorists and their ilk, and that this will greatly aid that effort. Of
course, who will be deemed a terrorist — or their ilk for that matter —
remains a question yet to be answered, since the definition appears
slipperier than Osama Bin Laden. One also has to remember that new tactics on
a battlefield always spawn innovative, successfully evasive counter-measures.
Surely committed and technologically sophisticated terrorists will find ways
around the Program. Finally, one has to ask, what oversight will be in place
for Admiral Poindexter’s little project? A basic rule of thumb might argue
that the greater the sensitivity of the information stored, the greater the
safeguards necessary to ensure its safety and proper use. Considering the
value of the information available in such a database, it is reasonable to
assume that illicit dissemination of that data will be too financially
rewarding to ignore, and mid-level staffers will suddenly find themselves
very desirable friends to have. In such circumstances, we believe abuse is a
foregone conclusion. In fact, even as terrorists successfully evade the
system, many of those caught in its clutches will be innocent citizens who
will subsequently spend years and fortunes trying to disentangle themselves
from this intrusive, over bearing and ill-considered Program.
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What Role for Windows in a Future
Dominated by Partnering?
by Jacques Halé
Earlier this week, Lindows announced its low-cost
operating system that also features StarOffice 6.0 word processing, At Comdex
Fall 2002, SuSE said it will offer a Linux desktop solution with CrossOver
Office software (from CodeWeavers) to let Microsoft Windows programs run on
Intel-based Linux computers. In addition, IBM and Sharp announced an initiative
to make Sharp's Linux-based handheld more attractive to businesses.
Linux and Open Source Software have created a buzz
and a surge of partnerships that could represent a new business model for the
creation and deployment of applications. Product innovation is the most
obvious aspect of what is happening in the industry, but there is a new
willingness to co-operate with partners at all stages of the product life cycle
that could be more significant in the long term than specific technical
innovations. Supporters of Linux (aka Open Source Software) are still trying
to chip at the Microsoft Windows and Office block, probably out of
desperation. These companies supporting Linux for office applications are
trying to rally the ABM crowd by an attack based on Microsoft’s pricing and
license conditions. This is a proven tactic for so-called “disruptive”
strategies, offering the same functionalities at a reduced price. However, we
believe that it is a losing battle for the heart of the overwhelming majority
of office productivity — unless the battle shifts to another ground.
This is a marked contrast between the success of
Linux at the “high” and the “low” end of the market. With IBM, HP, CA, and
Sun to a lesser extent, investing heavily in the support of Linux for
servers, arguing its place in the server market is a purely academic
exercise. The triumphal march of Linux for system infrastructure seems to
continue unabated with Gartner-Dataquest projecting that Linux shipments in
the server market will double to almost $4 billion, or 9% of the market
opportunity. If Linux is successful at maintaining its market position as an
open and cheaper solution, for many, the operating systems roadmap will
reveal Linux at the “high end,” Windows at the “low end,” and a middle ground
of the application servers fighting it out between the Linux camp, J2EE, and
Microsoft .NET. However, Microsoft may find itself under severe pressure for
low-end applications if it does not willingly make it easier for all vendors
to play nicely together. The ensuing battleground will be dominance in the
array of devices that will replace the jumble of PDAs, phones, tablets, and
portable computers that we use today. In this scenario, there are new
parameters that Microsoft does not fully control on its own: integration with
a range of mobile technologies, integration with Web Services infrastructure,
new licensing conditions, and market price. Despite recent U.S. court
decisions to force Microsoft to behave more openly in some respects, we
believe that this alone cannot replace a business strategy based in
partnering, which will be essential for any vendor’s future strategy and
success.
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The Department of Redundancy Department
By Jim Balderston
The U.S. Senate voted this week to approve President
Bush’s Homeland Security Department in the form of the Homeland Security Act
of 2002, in which twenty-two Federal Agencies will be combined into one large
super-agency charged with guarding the nation’s security. The vote in the
Senate was 90-9 with one senator not voting. The new reorganization of a
substantial part of the federal government is the most sweeping
reorganization since 1947, when the Department of Defense was formed. Part of
the new agency’s role will be the securing of government information
networks, as well establishing a national clearinghouse for computer security
issues. The agency will also spend approximately $500 million a year in security
research. The new agency will have 170,000 employees.
There was much ballyhoo in the press following this
historic vote noting that federal spending on Internet security could be a
boon to the private IT sector. Also, the research efforts conducted by the
government could also pump badly needed cash into the struggling IT
marketplace. And of course, security vendors have predicted boom times to
come. Of course, this reorganization is going to take years, if not decades
to complete. Not only will it require time to actually determine how the
agency works and who reports to whom; the human struggles over turf and
territory, money and manpower will go on for some time, unseen outside the
Beltway for the most part.
So what will the effects be in the real world (i.e.,
outside Washington, D.C.)? We suspect there will be a bounce to the IT sector
as a result of this vote. In fact, we would not be surprised to see systems
integrators executing what will surely become multi-decade projects that
involve not only tying together existing systems but re-engineering many of
those before they can be brought into the larger whole. In short, what many
see as a major long-term boon could also become a major, long-running
nightmare. Remember that fifty-six years ago data flow — i.e., paper — was
much less complex than in today’s electronically-based environment. The
integration contemplated here, with both its human and technological elements,
could simply be more than any single bureaucracy can handle. For this and
other reasons — like the long string of failed mergers in the private sector —
we have real doubts that any meaningful change in operations of this agency
will occur any time soon. In fact, in what might become a highly ironic
development, we would not be surprised if at some point in the future we
begin to see movement to “spin out” separate pieces of the agency to
recapture the agility and responsiveness that has always been the hallmark of
smaller, leaner organizations. Also ironically, we expect such reconfigurations
of the Homeland Security Department will be described as necessary to fight
an enemy dedicated to asymmetrical warfare.
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Pew Report Charts Wired
Parents/Non-Parents
By Charles King
A new report from the Pew Internet and American Life
Project compared Internet usage trends between parents and non-parents, as
well as differences between married and unmarried parents. The survey
discovered that about 70% of U.S. parents were likely to have used the
Internet, compared with 53% of non-parents. As a group, parents constitute
43% of all Internet users. Parents are also more likely to be more
enthusiastic than non-parents about technology and less burdened by
technological change, leading them to more frequently own DVD players, cell
phones, and pagers. A vast majority of parents cited the importance of
Internet access to their children, believing that knowing about computers and
the Internet are keys to future success. In fact, parents without Internet
access are more likely to be interested in going online in the future than
are non-parents. However, wired parents are less likely to use the Internet
than non-parents on a typical day, and tend to spend less time online than
non-parents. Overall, online parents are more likely than non-parents to use
the Internet for school, training, or job research, for contacting local
community, support, or religious organizations, and to use the Internet for
banking. However, the online behavior of single parents differed from married
parents markedly, with only 58% using the Internet compared with 71% of
married parents. Of the 6.5 million single parents who go online, about 4
million are single mothers. Online fathers tend to use the Internet more than
online single mothers. While married parents tend to utilize the Internet for
research, single parents’ online activities revolve around communication such
as instant messaging, chat rooms, and posting to bulletin boards.
At one level, the results of the Pew Project survey
are hardly surprising. Wired parents cite the importance of the Internet and
technology to their children’s future success, and are less likely to spend
time online than non-parents. This behavior offers few mysteries to people who
deal with kids. Nor is the interest shown by wired parents in online
education, banking, and research, since the Internet’s capacity for
information access can provide significant savings of time and effort. The
interest in utilizing the Internet for communications by single parents is
perfectly natural, and we expect online communications offer a welcome adult
respite from days dominated by Kid Speak. We find it somewhat curious that
wired parents are more technologically adventurous than non-parents, but
believe that this may be the tip of the larger iceberg beneath this story.
The fact is that the Internet shines as a medium for exploring, gathering,
and exchanging information, and a technology’s success (as we have discussed
regularly) is best measured by how transparent it becomes. How transparent is
the Internet? Judging by the Pew survey, parents have embraced the Internet’s
ability to inform, educate, entertain, and communicate in ways that
fundamentally improve their families’ lives. With consumer PC prices dropping
like stones and online access becoming easier and more widespread than ever,
we would argue that the Internet is well on its way to having the impact and
invisibility of the telephone.
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