Monaco,
This excerpt is from Barron's on line gives one view on the topics of processing power and bandwidth:
interactive.wsj.com
(for those with access).
It is worth reading the article in its entirety.
Steve
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Landis: If you focus on IT spending, that's a very old way of looking at end
markets. With the possible exception of E-commerce, that's not where the
world is going. It's not so much about computers as it is about connecting. It's
not about MIS departments; it's about consumers.
McNamee: The world used to be about processing power. In the early days
of mainframes, processing power was a scarce resource. Everything was
optimized to maximize the productivity of the processor. You had
air-conditioned rooms, manned by folks in white lab coats, protecting the
computer from users. PCs came along and reversed the polarity of the
system. You gave the end-user processing power. Then along came the
Internet, and suddenly you had this reversion to a centralized model.
Q: But not the same centralized model.
McNamee: Processing power still matters. There are graphics applications,
for instance, which really reward you for more processing power. But at the
margin, what matters is bandwidth. People use computers to communicate
more than to calculate. You're seeing a reallocation of budgets away from raw
processing power and toward things that enhance communications. Cisco is a
direct play on that. Intel is not.
Q: No?
McNamee: Intel is trying to reposition itself to be a bandwidth player, but
the reality is that Intel's success was driven by a monopoly franchise in
processing power. It's going to be hard to find an economic model as
compelling as that in the bandwidth world if you're Intel. That doesn't make
Intel a bad company. It's just that the system is shifting.
Q: Processing power matters less than bandwidth.
McNamee: I'd say the two are now on the same stage together.
Q: But the balance seems to be shifting.
McNamee: Before, it was 100% processing power. That was the story in
mainframes, minicomputers and PCs. You always wanted to upgrade as
rapidly as you could to the next processors, because whatever you had
before was obsolete the day you bought it. Today, Intel is struggling to find
something that actually needs a 400-megahertz processor. Video games do.
But it's hard to find anything in an office that requires it.
Landis: Bandwidth is where there's scarcity, and therefore opportunity.
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