A Basket of Uncertainties
Alexander E. Braun, Senior Editor -- Semiconductor International, 4/1/2001
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Although Intel no longer dominates the headlines, it does not appear that the industry, the market, or the infrastructure are prepared to fulfill the promise of wireless information devices, smart phones and Internet-ready kitchen appliances. Although correct, the SIA projection fails to consider the slower-than-expected adoption of DSL, and the fact that European and Asian cellular service providers have indicated they will not gear up for 3G service for at least two years.
Our lifeblood is digital consumer products: video games demanding multimillion-transistor graphics processors, next-generation cellular Web-enabled phones, high-performance desktops under $1000 - all too much of a good thing. Market saturation is hurting the Nokias, Ericssons and Ciscos of this world, and handhelds like Palm and Handspring - limited by a 12-character-per-second data bandwidth - are not ready to take over the Internet. Eventually, wireless networks will provide sufficient bandwidth for this, but not soon. Even in the industrialized world, considerable growth is needed to bring the Internet to its full promise. Backbones must become completely optical, while cellular and wired voice networks must retool for data. The smart devices needed for a reasonably high-volume exchange and use of information must be designed.
Regardless, the industry appears to be pinning its hopes on the wireless Internet as the major growth driver, anticipating that developments such as Bluetooth will make real the Never-Neverland of TV commercials where citizens of a united, affluent planet communicate, trade stocks, download books, and look in on the kids using their wireless PCPHONEPDAPAGERs.
The corollary to this is that virgin Third-World markets are the next growth frontier. Billion-plus-inhabitant countries like China and India long for a 21st-century communications infrastructure for their brimming populations. Processing equipment suppliers, and chip and communications equipment manufacturers, salivate over this - as well as the prospect of a vast, cheap labor pool.
Although these markets cannot be discounted, we should proceed with caution.
The belief that China - a country with a still-developing economy and some of the world's poorest inhabitants - is going to make T1 access to its population a major goal is long on faith but short on reality.
Paradoxically, India has untold potential resources, yet is one of the Earth's most underprivileged nations. Abundance is not equated with Internet access, and the desire for HDTV or Bluetooth Internet-enabled PDAs vanishes over the event horizon. Meanwhile, this situation is worsened by the exodus of their best-educated to the West.
Theoretically, trade normalization with China would make it phase out tariffs on computers, telecommunications equipment and semiconductors - as well as cut regulatory impediments to trade. But concern over the free flow of information - the Web's cornerstone - is demonstrated by the fact China is seriously considering establishing its own 3G, digital TV, set-top boxes and operating system standards, adding incompatibility to an already precarious business mix.
The Internet's promise has not yet been realized in industrialized nations. There's still work to be done and profits to be earned. We shouldn't ignore Third-World market possibilities, but let's not put all our eggs in an uncertain basket.
