A Sad Day :-( “PMCS Announces Cost Reduction”

Most of the financial analysts are liking this move, but it comes with a human cost

These were awesome design centers with great people. It is a sad day for me.

PMC-Sierra Announces Cost Reduction Initiative and Business Outlook Update for First Quarter 2007: Financial News – Yahoo! Finance:
   
Press Release Source: PMC-Sierra, Inc.

PMC-Sierra Announces Cost Reduction Initiative and Business Outlook Update for First Quarter 2007
Thursday March 29, 4:05 pm ET

SANTA CLARA, Calif.–(BUSINESS WIRE)–PMC-Sierra, Inc. (NASDAQ:PMCS – News), today announced that it is undertaking a corporate restructuring that the Company expects will reduce on-going annualized operating expenses by an estimated $20 to $24 million per year.

iInnovate Interviews | Philip Rosedale | Linden Labs | Networking Points

I’m really liking the iInnovate podcast site.

So far I’ve listened to Eric Schmidt, Andy Grove, and Philip Rosedale of Linden Labs the developers of Second Life.

I particularly liked Andy Grove’s question to Philip Rosedale (PR), which went something like, “What do you envision your needs for computing, client & server, networking, and software to be in 3-5 years time?”

Note that Second Life already has 4,000 Servers and the site is growing 10% per month.

Rosedale starts the answer with … we are only constrained by Moore’s Law. Our world gets better at this rate

PR then gives a detailed answer which aligns very well with the Internet Stack diagram for the Internet. He is most concerned with client side appliance ( the PC) and the Servers, not so much with the network.

On the networking side, you know, broadband, symmetric high speed broadband connections, just continuing to get out there is really the biggest thing that we need. I’m probably least worried about that. We’ve got, you know, network speeds appear to be moving ahead.

Links: the clip of the Andy Grove’s Q the podcast the transcript

Chips/Semi Directions – Reaction to Drew Lanza in BWeek

tip to my friend Peter for forwarding Testosterone Chips: The End of an Era – Business Week – Drew Lanza to me this week.

This is yet another article that addresses what I call the “The Curse of Moore’s Law” and the possible new directions that the semiconductor industry could take.

From a VC point of view he nails the point that the cost of developing chips is getting higher ( he notes $20-$30M) and exit prices have not changed in a decade.

From a Comm Semi vendor point of view I would add that the end markets have not grown much in that time as well. Some areas have died and some new areas have emerged, but in the end it is not great when it costs more to play in the same size sand-box.

He notes that the possible opportunity is in Internet appliances where “smaller, cheaper, and low power” are king. I agree with this and have noted it in a previous post where I add that there may also be a great opportunity in developing chips to for “serving up applications” for these appliances. There is more to it than Intel and AMD CPUs. To support my point refer to Eric Schmidt’s comment in his recent podcast at iInnovate — “Google is a capital intensive business”.

The only gotcha that I see with this new direction is that chip development costs for appliances are also very high. For example, if one uses $20-$30M per chip development (mentioned in article) then the iPhone is leveraging ~$100M in chip development. The next stage of iPhone will be integrating the current devices into 1 or 2 chips. That will not be cheap and I’m guessing that this ~$100M pales in comparison to development cost of all the f/w and s/w the surrounds iPhone.

Heavy Rotation March -> Neil Young | Arcade Fire | Barenaked Ladies | Apples in Stereo

March was a fantastic month for music listening in hNorth-land
Picking a favorite for the month has been very difficult. Arcade Fire’s – Neon Bible is fantastic and deserves to be #1. I really like tracks 2 – Keep the car running and 6 – Ocean of Noise. The new Apples in Stereo is just too much fun, track 4 Energy is great. It is my most played song this month. Barenaked Ladies single Michael Brennan is fun, too. Then there is the sentimental pick (tipped from Fred Wilson’s blog) of Neil Young’s – Live at Massey Hall 1971 (which I got yesterday and have not stopped playing since … wow!)

I also did some digging into the eMusic catalog to discover Elliott Smith and my old favorite Husker Du dude “Bob Mould”. The Shins and Bookashade continue to spin.

Here is my March Heavy Rotation List — Happy Spinning

Arcade Fire – Neon Bible	Neil Young – Live at Massey Hall 1971
Apples In Stereo – New Magnetic Wonder	Barenaked Ladies – Michael Brennan – Single
The Shins – Wincing The Night Away	Bob Mould – Body of Song
Elliott Smith – Either/Or	Booka Shade – Movements

weekly blog chat – Apple iTV | Eric Schmidt Interview | Vitesse & Semi Hell | FreeMind |

Chatting about blog-land this week. All of these are in my delicious widget on the right and @ http://del.icio.us/hNorth/blog. Spring Break definitely hit late this week.

Technology

• Apple iTV ships this week.
  • Apple iTV – Intel and NVIDIA Inside- Nyquist Capital Andrew comments on the details provided in AnandTech.
  • Apple TV Part 1: Unboxed and Dissected – AnandTech Many part post … stripped right down to the chips. Intel and NVidia. Great Stuff!
  • Making Apple TV Work – Kedrosky K points to a blog where the iTV is hacked to provide XviD. Excellent
  • Apple TV Coverage: The Day After – NewTeeVeeGigaOm provides a good list of posts on the topic.
  • Guest Opinion: Apple TV a Game-Changer – NewTeeVee Opinion piece on iTV vs. Cable Co’s … notes gestation will likely be on par with iPod ( ie 5 yrs ) … but it moves the discussion from vapourware to 1st product.
• a podcast about innovation and entrepreneurship: Eric Schmidt, CEO of Google – iinnovate tipped via Guy K’s blog — love the opening quote “You don’t learn very much when you yourself are talking”.
• Is The Party Ending For Wireless? – Forbes.com tip to Andrew@Nyquist – Clayton M. Christensen (Mr. Innovator’s Dilemma/Solution) & others discuss the challenges looming for Wireless Industry.
• Femtocells – What are they and why are they important? – Telco 2.0 More good stuff from Telco 2.0 guys. Wireless penetration of the Digital home (not WiMax) Femtocells are tiny access points that plug into a residential broadband connection to provide a 3G mobile signal directly in the home. Cool
• WR Koss has good posts on Optical Growth?, Mobile ARPU Declining?, and BigBand post IPO
• Vitesse Q107 Conference Call Notes – Nyquist Capital Looks ugly
• Centillium – Next on Someone’s Shopping List? Nyquist CapitalUpdated – Mar 24 – Andrew wondered why I didn’t react to his juicy comments wrt/ PMCS. Honestly, I skipped over this post this week. My first reaction to CTLM is usually “big in japan” – they could make a CD titled “CTLM – Live at Budokan”. Not sure if this is still accurate, but historically they never were able to leverage jp success to another shore. On another tack, PMCS has ADSL2+, VDSL, and VoiP products in its “Digital Home” product line.

Careers & Mgmt

• not this week.

MarComm

• not this week.

General Interest ( Fun )

• Mind Mapping with FreeMind (Review) « “The Authentic Fake!” Freemind is very cool. I’m gonna give it good try to organize my thoughts for new posts. I already like outlining, but this appears to be way better. This post provides an good introduction.
• JP Morgan Expects A Selloff In Semiconductor Sector Aaargh … semi’s are too challenging
• iPod Video – Too Much Fun – MPEG-4 Tools

Vitesse | Andrew@Nyquist | Comm Semi Markets

I finally got around to reading Andrew’s review of VTSS’s 1Q07 call. I’ve always admired Vitesse for their ability to survive. Somehow they came out of the super-computer mess in the early ’90′s, but their current woes seem worse.

I’m a markets & positioning guy, and the first thing that leaps out at me is that VTSS is mostly in what I call the “middle”, and the “middle” is not good. To survive in comm semi, or semi at all, requires exposure to Data Center Equipment for hosting/serving applications ( ie Storage Computing ), Broadband Access Technologies ( xDSL, PON ), Wireless Access Technologies ( air-i/f or wireline back-haul), or consumer appliances. The rest is a “hell zone”

I developed a simple model for visualizing the good Internet markets (Thinking About Network Diagrams.) The simple way to pick good Comms markets today is …. stay at the outer-most points of the Internet stack. The middle is dead.

The middle is dead because it has been very successful in providing for the proliferation of Applications ( ie Google, AMZN, Skype, etc) and Consumer Appliances (PC, iPod, etc). The IP Network provides an amazing Application platform, and we are only in the beginnings of an Internet Application bonanza. For applications and appliances to grow further, they don’t want the middle to change (they’ll work around its problems in the datacenter or appliance). I’m speculating that this is a key point behind Cisco’s recent acquisitions in the Application Layer.

And yes I purposely drew the Internet to like a giant LAN, PC, or any electronic device… to irritate & motivate. Each block is “fractal”, they are all fundamentally the same. So there are good & bad bits in each block. I’ll get to this later.

Celebrating the Arrival of my 1,000th Blog Spam :evil:

Akismet has caught 1,153 spam for you since you first installed it.

I’ve read many bloggers complaints about blog spam. I was waiting for the 1,000th spam before saying anything. It happened today!

Since this blogs inception I’ve had 4,718 hits and Akismet has caught “1,153″ spam comments. The amount of spam is “incredible”

Network Processor & Cavium Comments

The Cavium posts were my first stab at reviewing a company in a public space. Lots of people enjoyed them, they were easily among the most popular posts here on my blog. Only the What the !@#$ Market Do? series has had more hits.

I received plenty of comments via e-mail. The following comment was so good that I asked if I could post it. I got a yes ( with some edits). Here it is:

Iain:

I would call this the NPU two-step. We’ve seen it before:
* ATOMIZER I & II, PowerQUICC I & II (III finally), Maker SWAN (155 & 622), Intel IXP,. Moto C-PORT, and the list goes on.

The basic problem as I see it is this:

* In the 1st gen the NPU vendor designs an architecture that will scale nicely (read no SW changes) into the next node of technology. The marketing aggressively sells the capabilities to the point that the technology port is actually required to deliver so the 2nd gen (the two-step) is secured & everyone parties.

* Now we come to the third gen of technology and the NPU vendor is faced with a serious dilemma. Technology has advanced so far that many architectural decisions are no longer valid.

* Therefore, the NPU dude has to reset the architecture and (unlike an ISA where SW costs are distributed) bear the burden of changing all the tools, probably introducing new ones, and porting all the SW. This is where things go TILT. A processor has an eco-system where every level makes money (HW, SW tools, SW apps). Not so in an NPU space (SW comes for free as the sell is at the application level).

* Why ? – Others & I surmised that this was due to the market size issue. NPUs have broader applicability to the application spaces compared to ASSPs but they carry all the costs of a processor development without the associated market/eco-system to defray on-going costs. This is why many go to MIPS/ARM, otherwise a company would need to carry the NPU “eco-system” burden.

As Moore’s law rolls along it also opens up markets for commodity technologies (as you suggest) and closes markets for Application specific technologies. I see the NPU as just another technology node sandwiched in between ASSPs (early gens) and CPUs & FPGAs (next gens) that are addressing the same applications.

* So how does a Cavium make money ?
Stop thinking as a chip guy and start thinking as an application guy or a technology guy. To succeed, the apps guy needs to “surf” the waves of technology that can address a specific application. The end-game here is an application SW stack and some of the waves may be hard to transition.

A technology guy pushes his technology into the niches that Moore’s law opens up for him. Security, Parsing, home networking, … and adapts the peripherals and capabilities. Here the challenge is doubling the # of markets addressed by a specific tech node to keep up with costs.

A hybrid model exists, where application knowledge is transferred into a space where a new technology can be developed. I am interested as to how this actually plays out. Basically taking networking knowledge developed in the mid 90s and applying it to the home network of the late 2000s. Both networks probably have the same level of complexity. I suspect there are a lot of these application transition opportunities are available. What do you want in your home that only exists in your office? What would an enterprise guy want that only exists in the Aerospace/Defence industry. What do you want on your person that only exists in a stationary format today.

* Back to Cavium – I am assuming that the days of the native market (the one they started out in) doubling to keep pace with moores law are over.

Other good news for Cavium is that many vendors have exited the high-end MIPS marketplace.

Either way some fancy footwork is needed to survive.

 

Take Care

******

Bay Hill 6th to become a Par 3? (Lorne Rubenstein)

I like Lorne Rubenstein’s golf column. This weekend’s discussion of JB Holmes trying to drive the Bay Hill 6th green in a practice round is “too crazy”

It’s the final score that counts, not par:
Mike Weir …. last Tuesday.

“We were on the fourth hole and J.B. [Holmes, one of the game's longest hitters] was on the sixth,” Weir said. “There was a crosswind and he was into the wind. He’s hitting across the water and trying to drive the green.”

…

Now Holmes was trying to drive the green. On a par-5. The carry directly across the water from tee to green is 340 yards.

“His ball landed three yards short of carrying the water,” Weir said, laughing at the absurd reality of what he saw. “Downwind, he’d get there easy.”

It’s obvious where this is going. The famous round-the-lake par-5 sixth hole at Bay Hill could one day be a par-3. Yeah, right. Or wrong. Who cares?

(Via Lorne Rubenstein – The Globe and Mail.)

iPod Video – Too Much Fun – MPEG-4 Tools

There is yet another iPod in our house the iPod Video. The video part is very new to me. So …. I spent some time figuring out how to load home video clips and other stuff on to it.

MPEG Streamclip 1.8 continues to be a very useful tool for all things Mac Video. I’ve used it for a few years for converting my Sony camera’s mux’d MPEG video clips to something the Mac can use. No version of Quicktime supports this

Converting .mov, .mpg, .flv, and other formats is straight-forward. Open the video clip in Streamclip, select “File -> Export to MPEG-4 … , in the dialog box that appears select iPod, then select 4:3 or 16:9, “et voila” the conversion ( slow ) takes place. This creates an .mp4 file which is copied to iTunes for syncing to iPod.

This is going to be a “beautiful time waster”

The following links were very helpful in my quest to understand video for the iPod:

• The Last iPod Video Guide You’ll Ever Need at Plastic Bugs
• Convert YouTube Videos for Your iPod
• Perian – The swiss-army knife of QuickTime® components