This series of articles by George Gilder provides some
             interesting technological and cultural background 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 the author and Forbes and as the preface below
             indicates obtained permission to post on the Internet.  Please
             note that the preface must be included when cross posting or
             uploading this article.


The following article, THE BANDWIDTH TIDAL WAVE, was first published in Forbes ASAP, December 5, 1994. It is a portion of George Gilder's book, Telecosm, which will be published in 1996 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.


According to Web-Counter, this article has been accessed times since Nov 3, 1995.





 

THE BANDWIDTH TIDAL WAVE



BY



GEORGE GILDER



Craig Mundie of Microsoft thinks that Tiger,
his video-on-demand operating system, signals
a fundamental shift in the computer industry.
Ruling the new era will be bandwidth measured
in billions of bits per second rather than in
the millions of instructions per second of
current computers.

"We'll have infinite bandwidth in a decade's time."
-- Bill Gates, PC Magazine, Oct. 11, 1994.



     Andrew Grove, Titan of Intel, is widely known for his belief, born in the
vortex of the Hungarian Revolution and honed in the trenches of Silicon Valley,
that "only the paranoid survive." If so, the Intel chief may soon need to
resharpen the edges of fear that have driven his company to the top.  Looming
on the horizons of the global computer industry that Grove now shapes and
spearheads is a gathering crest of change that threatens to reduce the
microprocessor's supremacy and reestablish the information economy on new
foundations.  Imparting a personal edge to the challenge are the restless
energies of Microsoft's Bill Gates and Tele-Communications Inc.'s John Malone,
providing catalytic capital and leadership for the new tides of the telecosm.

     Grove's response is seemingly persuasive.  "We have state-of-the-art silicon
technology, state-of-the art microprocessor design skills and we have mass
production volumes." These huge assets endow Intel as a global engine of growth
with 55% margins and more than 80% market share in the single most important
product in the world economy.  Why indeed should Grove worry?

     One word only may challenge him and with him much of the existing computer
establishment.  Let us paraphrase a 1988 speech by John Moussouris, chairman and
chief executive of the amazing Silicon Valley startup MicroUnity, which gains a
portentous heft from being financed heavily by Gates and Malone: If the leading
sage of computer design, in his last deathbed gasp, wanted to impart in one word
all of his accumulated wisdom about the coming era to a prodigal son rushing
home to inherit the business, that one word would be "bandwidth." Andy Grove
knows it well.  Early this year he memorably declaimed: "If you are amazed by
the fast drop in the cost of computing power over the last decade, just wait
till you see what is happening to the cost of bandwidth."

     Eric Schmidt, chief technical officer of Sun Microsystems, is one of the few
men who have measured this coming tide and mastered some of its crucial
implications.  His key insight is that the onrush of bandwidth abundance
overthrows Moore's Law as the driving force of computer progress.  Until now
progress in the computer industry has ridden the revelation in 1979 by Intel
co-founder Gordon Moore that the density of transistors on chips, and thus the
price-performance of computers, doubles every 18 months.  Soon, however, Schmidt
ordains, bandwidth will be king.

     Bandwidth is communications power--the capacity of an information channel
to transmit bits without error in the presence of noise.  In fiber optics, in
wireless communications, in new dumb switches, in digital signal processors,
bandwidth will expand from five to 100 times as fast as the rise of
microprocessor speeds.  With the rapid spread of national networks of fiber and
cable, the dribble of kilobits (thousands of bits) from twisted-pair telephone
lines is about to become a firehose of gigabits (billions of bits).  But the PC
is not ready.  Attach the firehose to the parallel port of your personal
computer and the stream of bits becomes a blast of data smithereens.


TSUNAMI OF GIGABITS
     The bandwidth bottleneck of telephone wires has long allowed the computer
world to live in a strange and artificial isolation.  In the computer world,
Moore's Law has reigned.  At its awesome exponential pace, computer
price-performance would increase some one hundredfold every 10 years.  This
means that for the price of a current 100 mips (millions of instructions per
second) Pentium machine, you could buy a computer in 2004 running 10 billion
instructions per second.  Since today the fastest bit streams routinely linked
to computers run 100 times slower, at 10 megabits per second on an Ethernet, 10
bips seems adequate as a 10-year target.  All seems fine in computer land, where
users rarely wonder what happens after the wire reaches the wall.

     In the face of the 10 times faster increase in bandwidth, however, Moore's
Law seems almost paltry.  The rise in bandwidth does not follow the smooth
incremental ascent that the heroic exertions, inventions and investments of Andy
Grove and his followers have maintained in microchips.  bandwidth bumps and
grinds and then volcanically erupts.  The communications equivalent of those 10
bips that would take 10 years to reach according to the existing trend would be
10-gigabit-per-second connections to their corporate customers next year.

     During the very period of apparent bandwidth doldrums during the 1980s, phone
companies installed some 10 million kilometers of optical fiber.  So far only an
infinitesimal portion of its potential bandwidth has been delivered to
customers.  Moussouris estimates that the bandwidth of fiber has been exploited
one million times less fully than the bandwidth of coax or twisted pair copper.

     Nonetheless, the tide is now gathering toward a crest.  This year, MCI offers
its corporate customers access to a fiber connection at 2.4 gigabits per second.
Next year that link will run at 10 gigabits per second for the same price.  Two
years after that it is scheduled to rise to 40 gigabits per second.  Meanwhile,
at Martlesham Heath in the United Kingdom, home of British Telecom's research
laboratories, Peter Cochrane announced in early September that he could send
some 700 separate wavelength streams in parallel down a single fiber-optic
thread the width of a human hair.  Peter Scovell of Northern Telecom's Bell
Northern Research facility declares that by using "solitons"--an exotic method
of keeping the bits intact at high speeds through a kind of surface tension
counterbalancing dispersion in the fiber--it will be possible to carry 2.4
gigahertz (billions of cycles per second) on each wave length stream.  That
would add up to more than 1,700 gigahertz on every fiber thread.

     Blocking such bandwidths until recently was what is called in the optics
trade the "electronic bottleneck." The light signals had to be converted to
electronic pulses every 35 kilometers in order to be amplified and regenerated.
Thus fiber optics could not function any faster than these electronic amplifiers
did, or between two and 10 gigahertz.  In the late 1980s, however, a team led by
David Payne of the University of Southampton pioneered the concept of doping a
fiber with the rare earth element erbium, to create an all-optical broadband
amplifier.  Perfected at Bell Labs, NTT and elsewhere, this device overcomes the
electronic bottleneck and allows communications entirely at the speed of light.

     IBM's optical guru Paul Green prophesies that within the next decade or so it
will be possible to send some 10,000 wavelength streams down a single fiber
thread.  Long prophesied by fiber optics pioneer Will Hicks, these developments
remain mostly in the esoteric domains of optical laboratories.  But IBM recently
installed its first all-optical product--its MuxMaster--for a customer
running 20 wavelengths on a fiber connecting offices in New York to a backup
tape drive in New Jersey.  Telephone companies from Italy to Canada are now
deploying erbium-doped amplifiers.  Long the frenzied pursuit of telecom
laboratories from Japan to Dallas and government bodies from ARPA to NTT (now
turning private), all-optical networks have become the object of entrepreneurial
startups, such as Ciena and Erbium Networks.

     Returning from the ethers of innovation to existing broadband technology
connecting to people's homes, Craig Tanner of CableLabs in Louisville, Colo.,
maintains that a typical cable coax line can accommodate two-way streams of data
totaling eight gigabits per second.  In Cambridge and other eastern
Massachusetts cities, Continental Cablevision is now taking the first steps
toward delivering some of this bandwidth for Andy Grove's PC users.  Today,
using Digital Equipment's LANCity broadband two-way cable modems, David Fellows,
Continental's chief technical officer, can offer 10 megabits per second Ethernet
capability 70 miles from your office.  That increases the current 9.6 kilobits
per second speeds of most telephone modems by a factor of 1,000.

     The most important short-term contributor to the tides of bandwidth is a new
communications technology called asynchronous transfer mode.  ATM is to
telecommunications what containerization is to transport.  It puts everything
into same-sized boxes that can be readily handled by automated equipment.  Just
as containerization revolutionized the transport business, ATM is
revolutionizing communications.  In the case of ATM, the boxes are called cells
and each one is 53 bytes long, including a five-byte address.  The telephone
industry chose 53 bytes as the largest possible container that could deliver
real-time voice communications.  But the computer industry embraced it because
it allows fully silicon switching and routing.  Free of complex software, small
packets of a uniform 53 bytes can be switched at enormous speeds through an ATM
network and dispatched to the end users on a fixed schedule that can accommodate
voice, video and data, all at once.

     Available at rates of 155 megabits per second and moving this year to 622
megabits and 2.4 gigabits, ATM switches from Fujitsu, IBM, AT&T, Fore Systems,
Cisco Systems, SynOptics Communications and every other major manufacturer of
hubs and routers will swamp the ports of personal computers over the next five
years.

     Why should all this bandwidth arouse the competitive fire of Andy Grove?  The
new explosions of bandwidth enable interactive multimedia and video, riding on
radio frequencies, into every household--through the air from satellites and
terrestrial wireless systems, through fiberoptic threads and cable TV and even
phone-company coax.

     If the personal computer cannot handle these streams, John Malone's set-top
boxes, Sega or Nintendo game machines or Bill Gates's new communications
technology will.  A communications technology that can manage multimedia in full
flood can also in time relegate one of Grove's CPUs to service as a minor
peripheral.  The huge promise of the PC industry, with its richness of
productivity tools and cultural benefits, could give way to an incoherent babel
of toys, videophones and 3D games.

     Redeeming the new era for the general-purpose PC entails overcoming the
technical culture and mindset of bandwidth scarcity.  In today's world of
bandwidth scarcity, arrays of special-purpose microprocessors constantly use
their hard-wired computer cycles to compensate for the narrow bandwidth of
existing channels and to make up for the small capacity of the fast, expensive
memories where the data must be buffered or stored on the way.  This is the
world that Intel dominates today--a world of CPUs incapable of handling full
multimedia and radio frequency demands, a world of narrowband four-kilohertz
pipes to the home accessed by modems at 9.6 kilobits per second and a world of
what Moussouris call arrays of "twisty little processors," such as MPEG (Motion
Picture Experts Group) decoders from C-Cube and IIT, graphics accelerators from
Texas Instruments and an array of chips from Intel.

     By fixing the necessary algorithms in hardware, these devices bypass the
time-consuming tasks of retrieving software instructions and data from memory.
Thus these chips can perform their functions at least 100 times faster than more
general-purpose devices, such as Intel's Pentium, that use software.  But all
this speed comes at the cost of rigid specialization.  An MPEG-1 processor
cannot even decode, MPEG-2.  When the technology changes, you have to replace
the chip.  Such special-purpose devices now handle the broadband heavy lifting
for video compression and decompression, digital radio processing, voice and
sound synthesis, speech recognition, echo cancellation, graphics acceleration
and other functions too demanding for the central processor.

     By contrast, contemplate a world of bandwidth abundance.  In a world of
bandwidth abundance, specialized, hard-wired processing will be mostly
unnecessary.  In the extreme case, images can flow uncompressed through the
network and onto the display.  Bandwidth will have obviated thousands of mips of
processing.  The microprocessor instead can focus on managing documents on the
screen, popping up needed information from databases, performing simulations or
visualizations and otherwise enriching the conference.  The arrival of bandwidth
abundance transforms the computing environment.

     Led by Grove's and Intel's bold investments in chip-making capability -- some
$ 2.4 billion in 1994 alone--the entire information industry has waxed fat and
happy on the bonanzas of Moore's Law.  Now, however, some industry leaders are
gasping for breath.  Exkhard Pfeiffer of Compaq has denounced Intel's avid
campaign to shift customers toward the leading-edge processors such as Pentium,
embodying the latest Moore's Law advances.  Gordon Moore himself has recently
questioned whether the pace of microchip progress can continue in the face of
wafer factory costs rising toward $ 2 billion for a typical "fab." He has
pronounced a new Moore's Law: The costs of a wafer fab double for each new
generation of microprocessor.

     Sorry, but the new world of the telecosm offers no rest for weary microchip
magnates or future-shocked PC producers.  Driven by the new demands of video and
multimedia, the pace of advance will now accelerate sharply rather than slow
down.


FEEDING THE TIGER
     Contemplate the advance of the Tiger, Microsoft's all-software scheme for
video-on-demand based entirely on PCs.  Although Tiger has been presented as
merely another way to build a "movie central" for cable headends or telco
central offices, its real promise is not to redeem the existing centralized
structure of video but to allow any PC owner to create a headend in the kitchen
for video-on-demand.  Today, such capability would mean buying a supercomputer
plus an array of expensive boards containing special-purpose processors.
Tiger's consummation as a popular product therefore will require a new regime
of semiconductor progress.

     Driven by this imperative, a pioneering combine of Gates, Malone and
Moussouris is making an audacious grab for supremacy in the telecosm.  Just
three miles from Intel and fueled by ideas from a 1984 defector from an Intel
fabrication team, Moussouris's MicroUnity is a flagrantly ambitious Sunnyvale,
Calif., startup launched in 1988.  Fueled by some $ 15 million from Microsoft
and $ 15 million from TCI, among several other rumored backers, it plans a
transformation of chip-making for the age of the telecosm, optimized for
communications rather than computations.

     MicroUnity's goal is a general-purpose mediaprocessor, software programmable,
that can run at no less than 400 billion bits per second--some hundreds of
times faster than a Pentium--and perform all the functions currently done in
special-purpose multimedia devices.  Escaping the tyranny of fixed hardware
standards, the mediaprocessor could receive decompression codes and other
protocols, algorithms and services over the network with the video to be
displayed in real time.


THE GREAT BANDWIDTH SWITCH
     In launching Tiger and MicroUnity, Gates and Malone are signaling a
fundamental shift in the industry.  Ruling the new era will be bandwidth or
communications power, measured in billions of bits per second rather than in the
millions of instructions per second of current computers.  The telecosmic shift
from mips to bandwidth, from storage-oriented computing to communications
processing, will change the entire structure of information technology.

     In the past, the industry has been driven by increases in computer power
embodied in new generations of microprocessors--from the 8086 to the Pentium
and on to the P-6 and new Reduced Instruction Set screamers such as the Power
PC, Digital Equipment's Alpha and Silicon Graphics new R-1000 (the latest in the
family from Moussouris's previous company Mips Computer, now owned by Silicon
Graphics).  External computer networks typically run much more slowly than
internal networks, the backplane buses connecting microprocessors, memories,
keyboards and screens.  These buses race along at some 40 megabits per second,
up to Intel's new gigabit-per-second PCI bus.  Even when computers are linked
in local area networks in particular buildings at 10 megabit-per-second
Ethernet speeds, they face a communications cliff at LAN's end: the
four-kilohertz wires of the telephone company.  Under this regime, the
processor is king and Moore's Law dictates the pace of change.

     In the age of the telecosm, however, all these rules collapse.  When the
network increasingly runs faster than the processors and buses in the PC, the
computer "hollows out," in the words of Eric Schmidt.  The network becomes the
bus and any set of interconnected processors and memories can become a computer
regardless of their location.  In this bandwidth-driven world, the key chips are
communications processors, such as digital signal processors (DSPs) and
MicroUnity's mediaprocessors, which must function at the pace of the network
firehose rather than at the pace of the Pentium.

     For the last five years, communications processors have indeed been improving
their price/performance tenfold every two years--more than three times as fast
as microprocessors.  This kind of difference add up.  Soaring DSP capabilities
have already made possible the achievement of many new digital technologies
previously unattainable.  Among them are digital video compression, video
teleconferencing, broadband digital radios pioneered by Steinbrecher (see Forbes
ASAP, April 11, 1994), digital echo cancellation and spread-spectrum cellular
systems that allow 100% frequency reuse in every cell.  All these schemes
require processing speeds far in excess of the bit rate of the information.

     For example, in accord with the prevailing MPEG standards, digital video
compression produces a bit stream running at between 1.5 and six megabits per
second.  But in order to produce this signal manageable by a 100 mips Pentium, a
supercomputer or special-purpose machine must process raw video bit flowing 100
times as fast as the compressed format--uncompressed video at a pace of 150 to
600 megabits per second.  The complex and exacting process of compressing this
onrush of bits--compensating for motion, comparing blocks of pixels for
redundancy, smoothing out the flow of data--entails computer operations
running 1,000 times as fast as the raw video bits.  That is, the video
compression algorithm requires a processing speed of between 150 and 600
gigabits per second--hundred of times faster than the Pentium.

     Similarly, just to digitize radio signals requires a sampling rate twice as
fast as the radio frequency--at a time when new wireless personal
communications systems are moving to the two gigahertz bands and wireless cable
is moving to 28 gigahertz.  A broadband digital radio must handle some large
multiple of the highest frequency it will process.  Code division multiple
access (CDMA) cellular systems depend on a spreading code at least 100 times
faster than the bit rate of the message.

     In order to feed the Tiger and other such bandwidth-hungry systems,
communications processors will have to continue this breathtaking binge of
progress beyond the bounds of the microcosm.  Grove does not believe this
possible.  He contends that the surge in DSP will dwindle and converge with
Moore's Law, allowing the central processor to suck in functions currently
performed in digital signal processors and other communications chips.  DSP is
nice, Grove observes, "but it is not free--unless, that is, it is performed
in the Intel CPU, obviating the need to buy a DSP chip at all.

     But in an era when the network advances faster than the CPU, it is more
likely that communications processors will gradually "suck in" and "hollow out"
the functions of the CPU, rather than the other way around.  Echoing Sun's
perennial slogan, Schmidt predicts that the network will become the computer.
In this era, Moore's Law and the law of the microcosm are no longer the driving
force of progress in information technology.  Bandwidth is king.

     As the great pioneer of communications theory Claude Shannon wrote in 1948,
bandwidth is a replacement for switching.  Since ultimately a microprocessor is
a set of millions of transistor switches inscribed on a chip, bandwidth can even
serve as a substitute for mips.  With sufficient communication, engineers can
duplicate any computer network topology they want.  As the network becomes the
computer, they thus redefine the optimal architectures of computing.  As an
example, take the problem of video-on-demand now being confronted by every major
company in the industry from IBM to Microsoft.

     In 1992, Microsoft assigned this problem to Craig Mundie, a veteran of Data
General in Massachusetts, who had gone on to found Alliant Computer, one of the
more successful of the massively parallel computer firms.  As a supercomputer
man, Mundie initially explored a hardware solution, hiring a team of computer
designers from Supercomputer Systems Inc.  SSI was Steve Chen's effort to follow
up on his successes at Cray Research with a machine for IBM.  Although IBM
ultimately closed SSI down, Chen commanded some of the best talent in
supercomputers.  Mundie hired George Spix and a team from SSI.


LOOKING TO SOFTWARE
     On the surface, video-on-demand seems a super-computer task.  It entails
taking tens of thousands of streams of digital images, smoothing them into
real-time flows, and switching them to the customers requesting them.
Essentially huge hierarchies of storage devices, including fast silicon
memories, connected through a specialized switching fabric to arrays of fast
processors, supercomputers seem perfectly adapted to video-on-demand, which as
Bill Gates explains, is "essentially a switching problem." This is the
solution chosen by Oracle Systems, using its nCube supercomputer, and by Silicon
Graphics, employing its PowerChallenge server.

     According to Mundie, the SSI team developed an impressive video server
design.  But they soon discovered they were in the wrong company.  As Gates told
Forbes ASAP, "Microsoft looks for a software solution to all problems.  IBM
looks for a mainframe hardware solution.  Larry Ellison owned a supercomputer
company so he looked for that solution.  Fortunately for us, software solutions
are the most scaleable, flexible, fault-tolerant and low cost."

     Enter Rick Rashid, a professor from Carnegie Mellon and designer of the Mach
kernel adopted by Next, IBM and the Open Software Foundation and incorporated in
part in Microsoft's Windows NT operating system.  Rashid joined Microsoft in
September 1991 and began to focus on video-on-demand in 1992.  Like most other
people confronting this challenge, he first assumed that the huge bit streams
involved would require specialized hardware--RAID (redundant arrays of
inexpensive disk) storage, fast buffer memories and supercomputer-style
switches.  Soon, however, he came to the conclusion that progress in the
personal computer industry would enable an entirely software solution.

     For example, the memory problem illustrates a tradeoff between bandwidth and
processing speed.  Expensive hierarchies of RAID drives and semiconductor buffer
memories managed by complex controller logic can speed the bit streams to the
switch at the necessary pace.  But Rashid and Mundie saw that bandwidth offered
a cheaper solution.  Through clever software, you could "stripe" the film bits
across large arrays of conventional disk drives and gain speed through
bandwidth.  Rather than using one fast memory, plus fast processors, and
hard-wired fault tolerance to send the movie reliably to a customer, you spread
the images across arrays of cheap, slow disk drives--Seagate Barracudas--which, 
working in parallel, offer bandwidth and redundancy limited only the number of
devices.  Having dispensed with the idea of contriving expensive hardware
solutions for the memory problem, Rashid recognized that with Windows NT he
commanded an operating system with real-time scheduling guarantees that laid
the foundation for a software solution.  On it, he could proceed to build
Tiger as a continuous digital stream operating system.

     Liberated from special-purpose hardware, the team could revel in all the
advantages of using off-the-shelf personal computer components.  Mundie
explains: "The personal computer industry commands intrinsic volume and a
multi-supplier structure that takes anything in its path and drives its costs
to ground." A burly entrepreneur of massively parallel supercomputers, Mundie
became a fervent convert to the manifest destiny of the PC to dominate all other
technologies in the race to multimedia services, grinding all costs and
functions into the ground of microprocessor silicon.

     Video-on-demand has been heralded as the salvation of the television
industry, the supercomputer industry, the game industry, the high-end server
industry.  It has been seen as Microsoft's move into hardware.  Yet nowhere in
the Tiger Laboratory in Building Nine is there any device made by any TV
company, supercomputer firm, workstation company, or Microsoft itself.  On one
side of the room are 12 monitors.  On the other side are 12 Compaq computers
piled on top of each other, said to be simulating set-top boxes.  Next to these
are a pile of Seagate Barracuda disk drives, each capable of holding the nine
gigabytes of video in three high-resolution compressed movies.  Next to them are
another pile of Compaq computers functioning as video servers.

     All this gear works together to extend Microsoft's long mastery of the
science of leverage, getting most of the world to drive costs to ground--or
grind cost into silicon--while the grim reapers of Redmond collect tolls on
the software.  Exploiting another of Sun Microsystems co-founder Bill Joy's
famous laws--"The smartest people in every field are never in your own
company"--Gates has contrived to induce most of the personal computer
industry, from Bangalore to Taiwan, to work for Microsoft without joining the
payroll.

     In the new world of bandwidth abundance, however, it is no longer sufficient
to leverage the PC industry alone.  Gates is now reaching out to leverage the
telephone and network equipment manufacturing industries as well.  Transforming
all this PC hardware into a "Tiger" that can consume the TV industry is an ATM
switch.  In the Tiger application, once one ATM switch has correctly sequenced
the movie bits streaming from the tower of Seagate disks, another ATM switch in
a metropolitan public network will dispatch the now ordered code to the
appropriate display.  Microsoft's Tiger and its client "cubs" all march in
asynchronous transfer mode.


THE MASTERS OF LEVERAGE
     Why is this a brilliant coup?  It positions Microsoft to harvest the fruits
of the single most massive and far-reaching project in all electronics today.
Some 600 companies are now active in the ATM forum, with collective investments
approaching $ 10 billion and rising every year.  Not only are ATM switches
produced by a competitive swarm of companies resembling the PC industry, ATM
also turns networks of small computers into scaleable supercomputers.  It
combines with fiber-optic links to provide a far simpler, more modular and more
scaleable solution than the complex copper backplane buses that perform the
same functions in large computers.  ATM and fiber prevail by using bandwidth
as a substitute for complex protocols and computations.

     Microsoft Technical Director Nathan Myhrvold points to the Silicon Graphics
PowerChallenge superserver as a contrast.  "They have a bus that can handle 2.4
gigabytes per second and which is electrically balanced to take a bunch of
add-in cards (for processor and memory)." The complexities of this solution
yield an expensive machine, costing more than $ 100,000, with specialized DRAM
boards, for example, that cost 10 times as much per megabyte as DRAM in a PC.

     This problem is not specific to Silicon Graphics.  All supercomputers with
multiple microprocessors linked with fast buses face the same remorseless
economics and complexities.  By contrast, the $ 30,000 Fore systems ATM switch
being used in Tiger prototypes--together with the PCI buses in the PCs on the
network--supply the same 2.4 gigabytes per second of bandwidth that the
PowerChallenge does.  And, as Myhrvold points out, "ATM prices are dropping like
a stone."

     The Microsoft sage explains: ATM switches linked by fiber optic lines are far
more efficient at high bandwidth than copper buses on a backplane.  ATM allows
"fault tolerance and other issues to be handled in software by treating machines
(or disks, or even the ATM switch itself) as being replaceable and redundant,
with hot spares standing by."

     As Gates told ASAP, video-on-demand is essentially a switching problem.  You
can create an expensive, proprietary, and unscaleable switch using copper
lines and complex protocols on the backplane of a supercomputer, or you can
use the bandwidth of fiber optics and ATM as a substitute for these
complexities.  You can put the ATM switches wherever you need them to create
a system optimized for any application, allowing any group of PCs using
Windows NT and PCI buses to function as video clients or servers as desired. 
As Microsoft leverages the world, it won't object if the world chooses to
lift NT into the forefront of operating systems in unit sales.

     Mundie and his assistant Redd Becker earnestly explain the virtues of this
scheme and demonstrate its robustness and fault tolerance by disabling several
of the disk drives, cubs and servers without perceptibly affecting the 12 images
on the screen.  They offer it as a system to function as a movie central server
resembling the Oracle nCube system adopted by Bell Atlantic, or the Silicon
Graphics system used by Time Warner in its heralded Orlando project.  But the
Tiger is fundamentally different from these systems in that it is completely
scaleable and reconfigurable, functioning with full VCR interactivity for a
single citizen or for a city.  It epitomizes the future of computing in the age
of ATM, a system that will soon operate at up to 2.4 gigabits per second.  Two
point four gigabits per second is more than twice as fast as the Intel PCI bus
that links the internal components of a Pentium-based personal computer.

     Thus, ATM technology can largely eclipse the difference between an internal
hard drive and an external Barracuda, between a video client and a video server.
To the CPU, a local area network or even a wide area network running ATM can
function as a motherboard backplane.  With NT and Tiger software, PCs will be
able to tap databases and libraries across the world as readily as they can
reach their own hard disks or CD-ROM drives.  Presented as an
application-specific system for multimedia or movie distribution in real time,
it is in fact a new operating system for client-server computing in the new age
of image processing.

     Gordon Bell, now on Microsoft's technical advisory board, sums up the future
of computing in an ATM world: "We can imagine a network with a range of PC-sized
nodes costing between $ 500 and $ 5,000 that provide person-to-person
communication, television and when used together (including in parallel), an
arbitrarily large computer.  Clearly, because of standards, ubiquity of service
and software market size, this architecture will drive out most other computer
structures such as massively parallel computers, low-priced workstations and all
but a few special-purpose processors.  This doomsday for hardware manufacturers
will arrive before the next two generations of computer hardware play out at the
end of the decade.  But it will be ideal for users." And for Microsoft.

     For manufacturers of equipment that feeds the Tiger, however, what Bell calls
"doomsday for hardware manufacturers: may well be as profitable as the current
rage of "Doom," the new computer game infectiously spreading from the Internet
into computer stores.  The new Tiger model provides huge opportunities for
manufacturers of new ATM switches on every scale, for PCs equipped with fast
video buses such as PCI, for vendors of network hardware and software, and
perhaps most of all for the producers of the new communications processors.

     For all the elegance of the Tiger system, however, Gates understands that it
cannot achieve its goals within the constraints of Moore's Law in the
semiconductor industry.  The vision of "any high school dropout buying PCs and
entering the interactive TV business" cannot prevail if it takes a supercomputer
to compress the images and an array of special-purpose processors to decode,
decrypt and decompress them.  Facing an ATM streams of 622 megabits per 
second--perhaps uncompressed video, 3-D or multimedia images--Eric Schmidt points
out, a 100 mips Pentium machine would have to process 1.47 million 53-byte cells
a second.  That means well under 100 instruction cycles to read, store, display
and analyze a packet.  Since most computers use many cycles for hidden
background tasks, the Pentium could not begin to do the job.  Gate's adoption of
Tiger, his alliance with TCI, his investments in Teledesic, Metricom, and
MicroUnity, all bring home face-to-face with the limits of current computer
technology in confronting the telecosm.  With MicroUnity, however, he may have
arrived at a solution just in time.

     MicroUnity seems like a throwback to the early years of Silicon Valley, when
all things seemed possible--when Robert Widlar could invent a new product for
National Semiconductor on the beach in Puerto Vallarta, and develop a new
process to build it with David Talbert and his wife Dolores over beers on a
bench at the Wagon Wheel.  It was an era when scores of semiconductor companies
were racing down the learning curve to enhance the speed and functions of
electronic devices.  Most of all, the MicroUnity project is a climactic episode
in the long saga of the industry's struggle between two strategies for
accelerating the switching speeds in computers.


A NEW MOORE'S LAW?
     Intel Chairman Gordon Moore recently promulgated a new Moore's Law,
supposedly deflecting the course of the old Moore's Law, which ordains that chip
densities double every 18 months.  The new law is that the costs of a chip
factory double with each generation of microprocessor.  Moore speculated that
these capital burdens might deter or suppress the necessary investment to
continue the pace of advance in the industry.

     Gerhard ("Gerry") Parker, Intel's chief technical officer, however, presents
contrary evidence.  The cost for each new structure may be approximately
doubling as Moore says.  But the cost per transistor--and thus the cost per
computer function--continues to drop by a factor of between three and four
every three years.  Not only does the number of transistors on a chip rise by
a factor of four, but the number of chips sold doubles with every generation
of microprocessor, as the personal computer market doubles every three
years.  Thus there will be some eight times more transistors sold by Intel
from a Pentium fab that from a 486 fab.  At merely twice the cost, the new
fab seems a bargain.

     Of course, Intel gets paid not for transistors but for computer functions.
To realize the benefits of the new fabs, therefore, Intel must deliver new
computer functions that successfully adapt to the era of bandwidth abundance.

     Moreover, it is worth noting that measured in telecosmic terms of useful
terabits per second of bandwidth, a MicroUnity fab ultimately costing some $ 150
million might generate more added value than a $ 2 billion megafab of Intel.


RETURN TO LOW AND SLOW
     Since as a general rule, the more the power, the faster the switch, you can
get speed by using high-powered or exotic individual components.  It is an
approach that worked well for years at Cray, IBM, NEC and other supercomputer
vendors.  Wire together superfast switches and you will get a superfast machine.

     The other choice for speed is to use low-powered, slow switches.  You make
them so small and jam them so close together, the signals get to their
destinations nearly as fast as the high-powered signals.  This approach works
well in the microprocessor industry and in the human brain.

     Despite occasional deviations at Cray and IBM, low and slow has been the
secret of all success in semiconductors from the outset.  Inventor William
Shockley substituted slow, low-powered transistors for faster, high-powered
vacuum tubes.  Gordon Teal at Texas Instruments replaced fast germanium with
slower silicon.  Jean Hoerni at Fairchild spurned the fast track of mountainous
Mesa transistors to adopt a flat "planar" technology in which devices were
implanted below the surface of the chip.  Jack Kilby and Robert Noyce then
substituted slow resistors and capacitors as well as slow transistors on
integrated circuits for faster, high-powered devices on modules and printed
circuit boards.  Federico Faggin made possible the microprocessor by replacing
fast metal gates on transistors with slow gates made of polysilicon.  Frank
Wanlass and others replaced faster NMOS and PMOS technologies with the 1,000
times slower and 10 times lower-power Complementary Metal Oxide Semiconductors
(CMOS) that now rule the industry.

     Low and slow finds its roots in the very physics of solid state, separating
the microcosm from the macrocosm.  Chips consist of complex patterns of wires
and switches.  In the macrocosm of electromechanics, wires were simple, fast,
cool, reliable and virtually free; switches were vacuum tubes, complex, fragile,
hot and expensive.  In the macrocosm, the rule was economize on switches,
squander on wires.  But in the microcosm, all these rules of electromechanics
collapsed.

     In the microcosm, switches are almost free--a few millionths of a cent.
Wires are the problem.  However fast they may be, longer wires laid down on the
chip and more wires connected to it translated directly into greater resistance
and capacitance and more needed power and resulting heat.  These problems become
exponentially more acute as wire diameters drop.  On the other hand, the shorter
the wires the purer the signal and the smaller the resistance, capacitance and
heat.

     This fact of physics is the heart of microelectronics.  As electron movements
approach their mean free path-- he distance they can travel "ballistically"
without bouncing off the internal atomic structure of the silicon--they get
faster, cheaper and cooler.

     At the quantum level, noise plummets and bandwidth explodes.  Tunneling
electrons, the fastest of all, emit virtually no heat at all.  It was a new
quantum paradox; the smaller the space the more the room, the narrower the
switches the broader the bandwidth, the faster the transport the lower the
noise.  As transistors are jammed more closely together, the power delay 
product--the crucial index of semiconductor performance combining switching 
delays with heat emission--improves as the square of the number of transistors 
on a single chip.

     Since the breakthrough to CMOS in the early 1980s, however, the industry has
been slipping away from the low and slow regime.  Falling for the
electromechanical temptation, they are substituting fast metals for slow
polysilicon.  For better performance, companies are increasingly turning to
gallium arsenide and silicon germanium technologies.  Semiconductor engineers
are increasingly crowding the surface of CMOS with as many as four layers of
fast aluminum wires, with tungsten now in fashion among the speed freaks of the
industry .  The planar chips that built Silicon Valley have given way to high
sierras of metal, interlarded with uneven spreads of silicon dioxide and other
insulators.  Meanwhile, the power used on each chip is rising rapidly, since the
increasing number of transistors and layers of metal nullify a belated move to
three-volt operation from the five volts adopted with Transistor Transistor
Logic in 1971.  And as the industry loses touch with its early inspiration of
low and slow, the costs of wafer fabrication continue to rise--to an extent
that even demoralizes Gordon Moore.

     In radically transforming the methods of semiconductor fabrication, John
Moussouris and James ("Al") Matthews, MicroUnity's director of technology, seem
to many observers to be embarking on a reckless and self-defeating course. 
But MicroUnity is betting on the redemptive paradoxes of the microcosm. 
Returning to low and slow, Moussouris and Matthews promise to increase peak
clock speeds by a factor of five in the next two years and chip performance
by factors of several hundred, launching communications chips in 1995 that
function at 1.2 gigahertz and perform as many as 400 gigabits per
second.


MATTHEWS AND MEAD
     In pursuing this renewal of wafer fabrication at MicroUnity, Matthews has
applied for some 70 patents and won about 20 to date.  A veteran of
Hewlett-Packard's bipolar process labs who moved to Intel in the early 1980s and
spearheaded Intel's switch to CMOS for the 386 microprocessor, Matthews has also
worked as an engineer at HP-Avantek's gallium arsenide fabs for microwave chips.
Commanding experience in diverse fab cultures, Matthews thus escapes the
cognitive trap of seeing the established regime as a given, rather than a
choice.

     At Aventek, Matthews plunged toward the microcosm and prepared the way for
his MicroUnity process after reading an early paper by Carver Mead, the inventor
of the gallium arsenide MESFET transistor.  Mead had prophesied that the
behavior of these transistors would deteriorate drastically if the feature sizes
were pushed below two-tenths of a micron at particular doping levels
(technically impossible at the time).  In the mid-1980s, though, Matthews
noticed that these feature sizes were then feasible.  Testing the Mead thesis,
he was startled to discover that far from deteriorating below the Mead
threshold, these transistors instead showed "startlingly anomalous levels of
good behavior," marked by high gain and plummeting noise.

     Based on this discovery, he created a low-noise, gigahertz-frequency
amplifier for satellite dishes being sold in the European market.  Matthew's
process reduced the cost so drastically that Sony officials were said to be
contemplating claims of dumping.  Avantek was charging a few dollars for
microwave frequency chips that cost Sony perhaps some hundreds of dollars to
make.

     Having discovered the "anomalous good behavior" of gallium arsenide devices
pushed beyond the theoretical limits, Matthews at MicroUnity decided to
experiment with bipolar devices.  Bipolar devices are usually used at high power
levels with so-called emitter coupled logic to achieve high speeds in
supercomputers and other advanced machines.  Inspired by his breakthrough with
gallium arsenide, Matthews believed that biopolar performance also might be
radically different at extremely low power--under half a volt and at gate
lengths approaching the so-called Debye limit, near one-tenth of a micron.

     Once again, Matthews was startled by "anomalous good behavior" as processes
approached the quantum mechanical threshold.  It turned out that at high
frequencies biopolar transistors use far less power even the CMOS transistors,
famous for their low-power characteristics.  At these radio-frequency speeds,
however, he discovered that the transistors could not operate with aluminum
wires insulated by oxide.  Therefore, he introduced a technique he had used with
fast bipolar and gallium arsenide devices: gold wires insulated by air.
Replacing oxide insulators with "air bridges" drastically reduces the
capacitance of the wires and allows the transistor to operate at speeds
impossible with conventional device structures.

     With these adventures in the microcosm behind him, Matthews was ready to
develop a new process and technology for MicroUnity.  Based on combining the
best features of biopolar and CMOS at radially small geometries, the new
technology uses bipolar logic functioning at gigahertz clock speeds, with CMOS
retained chiefly for memory cells and with gold air bridges for the metalization
layers.  Perhaps it is a portent that the gold wires across the top of the chip
repeat the most controversial feature of Jack Kilby's original integrated
circuit.  (Matthews is also seeking patents for methods of using optical
communications on the top of a silicon chip).

     In essence, Matthews is returning to low and slow.  He is shearing off the
sierras of metal and oxides and restoring the planar surfaces of Jean Hoerni.
Because the surface is flat to a tolerance of one-tenth of a micron,
photolithography gear can function at higher resolution despite a narrow depth
of field.  Elimination of the aluminum sierras also removes a major source of
parasitic currents and transistors and allows smaller polysilicon devices to be
implanted closer together.  A major gain from these innovations is a drastic
move to lower power transistors.  Rather than using the usual three volts or
five volts, the MicroUnity devices operate at 0.3 volts to 0.5 volts (300 to 500
millivolts).  In the microcosm, smaller devices closer together at lower power
is the secret of speed.

     Although MicroUnity will not divulge the details of future products, ASAP
calculates on the basis of information from other sources that the MicroUnity
chip can hold more than 10 million transistors in a space half the size of a
Pentium with three million transistors.  With lower power transistors set closer
together, the MicroUnity chip can operate with a clock rate as much as 10 times
faster than most current microprocessors and at an overall data rate more than
100 times faster.  Low and slow results in blazing speed.

    For ordinary microprocessor applications, an ultrafast clock is superfluous.
Since ordinary memory technology is falling ever farther behind processor
speeds, fast clocks mean complex arrangements of cache on cache of fast static
RAM and specialized video memory chips.  By using the MicroUnity technology at
the relatively slow clock rates of a Pentium, MicroUnity might be able to
produce Pentiums that use from five to 10 times less power--enabling new
generations of portable equipment.

     MicroUnity, however, is not building a CPU but a communications processor.
In the communications world, the fast clock rate gives the "mediaprocessor" the
ability to couple to broadband pipes using high radio frequencies.  Most
crucially, the mediaprocessor can connect to the radio frequency transmissions
over cable coax.

     Along with Bill Gates, one of the leading enthusiasts of MicroUnity is John
Malone, who for the last year has been celebrating its potential to create a
"Cray on a tray" for his set-top boxes and cable modems.  For the rest of this
decade, most Americans will be able to connect to broadband networks only over
cable coax.  Thus the link of TCI to MicroUnity and to Tiger offers the best
promise of an information infrastructure over the next five years, affording a
potential increase in bandwidth of 250,000-fold over the current four-kilohertz
telephone wires.

     The Regional Bell Operating Companies and the cable companies agree that
cable coax is the optimal broadband conduit to homes and that fiber optics is
the best technology for connecting central switches or headends to neighborhoods.  Looping through communities, with a short drop at each home--rather than running a separate wire from the central office to every household--hybrid fiber-coax 
networks, according to a Pacific Bell study can reduce the cost of setup and maintenance of connections by some 75% and cut back the need for wire by a 
factor of 600.

     In order to bring broadband video to homes, companies must collaborate with
the cable TV industry.  Collaborating with TCI, Microsoft once again has chosen
the correct technology to leverage.  With Digital Equipment, Zenith and Intel
all engaged in alliances for the creation of cable modems--and several other
companies announcing cable modem projects--Gates may well be leading the pack
in transforming his company from a computer company into a communications
concern, from the microcosm into the telecosm.


Fiber Miles (Millions) Deployed in U.S. as of 1993

Local Exchange Carriers 7.28 Inter-Exchange Carriers 2.50 Competitive Access Providers 0.24 Total 10.02 Source: MicroUnity




DRIVING FORCE OF PROGRESS
     All the bandwidth in the world, however, will get you nowhere if your
transceiver cannot process it.  By returning to the inspiration of the original
Silicon Valley, MicroUnity offers a promising route to the communications
infrastructure of the next century, overthrowing Moore's Law and issuing the
first fundamental challenge to Moore's company.  As Al Matthews puts it: "Bob
Noyce [the late Intel founder with Gordon Moore] is my hero.  But there is a new
generation at hand in Silicon Valley today, and this generation is doing things
that Bob Noyce never dreamed of."

     Moussouris promises to deliver 10,000 mediaprocessors for set-top boxes in
1995.  As everyone agrees, this is a high-risk project (although Bill Gates
favorably compares MicroUnity's risk to his other gamble, Teledesic).  Even if
it takes years for MicroUnity to reach its telecosmic millennium, the advance of
communications processors continues to accelerate.  Already available today, for
example, is Texas Instruments' MVP system--the first full-fledged
mediaprocessor on one chip.  It will function at a mere 30 to 50 megahertz but
performs between two and three billion signal processing steps per second or
roughly between 1,000 and 1,500 DSP mips.  Rather than revving up the clock to
gigahertz frenzies, TI gained its performance through a Multiple Instruction,
Multiple Data approach associated with the massively parallel supercomputer
industry.  The MVP combines four 64-bit digital signal processors with a 32-bit
RISC CPU, a floating point unit, two video controllers, 64 kilobytes of static
RAM cache and a 64-bit direct memory access controller--all on one sliver of
silicon, costing some $ 232 per thousand mips in 1995, when Pentiums will give
you a hundred mips for perhaps twice as much.

     This does not favor the notion that microprocessors will soon "suck in" DSPs.
DSP mips and computer mips are different animals.  As DSP guru Will Strauss
points out, "As a rule of thumb, a microprocessor mips rating must be divided by
about five to get a DSP mips rating." To equal an MVP for DSP operations, a
microprocessor would have to achieve some 5,000 mips.

     Designed with the aid of teleconferencing company VTEL and Sony, the MVP chip
can simultaneously encode or decode video using any favored compression scheme,
process audio, faxes or input from a scanner and perform speech recognition or
other pattern-matching algorithms.  While Intel and Hewlett-Packard have been
winning most of the headlines for their new RISC processing alliance, the key
development in the microprocessor domain is the emergence of this new class of
one-chip multimedia communications systems.

     One thing is certain.  Over the next decade, computer speeds will rise about
a hundredfold, while bandwidth increases a thousandfold or more.  Under these
circumstances, the winners will be the companies that learn to use bandwidth
as a substitute for computer processing and switching.  The winners will be the
companies that most truly embrace the Sun slogan: "The network is the computer."
As Schmidt predicts, over the next few years "the value-added of the network
will so exceed the value-added of the CPU that your future computer will be
rated not in mips but in gigabits per second.  Bragging rights will go not to
the person with the fastest CPU but to the person with the fastest
network--and associated database lookup, browsing and information retrieval
engines."

     The law of the telecosm will eclipse the law of the microcosm as the driving
force of progress.  Springing from the exponential improvement in the power
delay product as transistors are made smaller, the law of the microcosm holds
that if you take any number (N) transistors and put them on a single sliver of
silicon you will get N squared performance and value.  Conceived by Robert
Metcalfe, inventor of the Ethernet, the law of the telecosm holds that if you
take any number (n) computers and link them in networks, you get n squared
performance and value.  Thus the telecosm builds on and compounds the
microcosmic law.  The power of Tiger, MicroUnity and TCI comes from fusing the
two laws into a gathering tide of bandwidth.

     With network technology advancing 10 times as fast as central processors, the
network and its nodes will become increasingly central while CPUs become
increasingly peripheral.  Faced with a CPU bottleneck, multimedia systems will
simply bypass the CPU on broadband pipes.  Circumventing Amdahl's Law, system
designers will adapt their architectures to exploit the high bandwidth
components, such as mediaprocessors, ATM switches and fiber links.  In time the
microprocessor will become a vestigial link to the legacy systems such as word
processing and spreadsheets that once defined the machine.  All of this means
that while the last two decades have been the epoch of the computer industry,
the next two decades will belong to the suppliers of digital networks.

     The chief beneficiaries of all this invention, however, will be the people of
the world, ascending to new pinnacles of prosperity in an Information Age.
Although many observers fear that these new tools will chiefly aid the existing
rich--or the educated and smart--these technologies have already brought
prosperity to a billion Asians, from India and Malaysia to Indonesia and China,
previously mired in penury.

     Communications bandwidth is not only the secret of electronic progress.  It
is also the heart of economic growth, stretching the webs of interconnection
that extend the reach of markets and the realms of opportunity.  Lavishing the
exponential gains of networks, endowing old jobs with newly productive tools and
unleashing creativity with increasingly fertile and targeted capital, the
advance of the telecosm offers unprecedented hope to the masses of people whom
the industrial revolution passed by.


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