The next killer app? the internet, and it's here now

Electronic News, Nov 26, 2001 by Paul Scrivens

THE SEMICONDUCTOR industry has now dropped to a low, surpassing the 1985 slump, and is locked in a downturn as severe as anything seen since the mid-1970s. Now is the time to focus on new product development and on the technologies that will revitalize the market and lead it to the next phase of growth. Financial and industry analysts claim they can't find the next big market driver. They keep looking around for the next killer application, sometimes sounding a bit desperate or uneasy, but it's right under their noses.

The Internet is the most ambitious large system of any kind ever developed. When it emerged in the mid-1990s and propelled the IC and communications sectors, we had a boom. Now, the Internet and its associated communications technologies are poised for the predictable evolutionary changes and improvements that create new demand.

These things run in cycles of product development, rapid growth, consolidation, then evolution and steady long-term growth. Typical are the cycles we saw with the PC and the cell phone. Looking back to 1985, rapid growth of the PC market clearly carried the semiconductor industry through the '90s. Technology--driven by miniaturization and reduced per-unit cost--stepped ahead in a regular pattern of breakthroughs in processor performance, graphics and audio systems, memory and mass storage capacity, every 18 to 24 months. The PC started the revolution by delivering business tools, then broadened to consumer communications and entertainment products. Few could forecast this back at the cycle start after the 1985 downturn. Now it's history.

Now, the Internet and communications sectors will be subject to the same cycle. The telecommunications industry will see more change in the next 10 years than it's seen in the past 95, with the expansion of optical transmission, satellite communications, wireless products, broadband digital technologies and Internet services.

We'll need these improvements. The amount of information an individual uses in a lifetime is now measured at some 20 billion bits of data. Bell Labs has already achieved speeds of 3.28 trillion bits/sec. over dense multiwave fiber optic cable; Alastair Glass of Bell Labs speculates that rates of 200 terabits/sec. are coming. A single terabit/sec. channel allows a user to send 200,000 books, 200 million faxes or 20 TV channels from point-to-point in just one second. This means everything an individual will ever think of or say in an entire lifetime could be transferred in just a few milliseconds. And as the data pipes increase in speed, every aspect of communications will change.

The Internet is continuously changing, too. At given points in time one part of the system becomes the weak link, then is improved, and the weakness moves to another location. This creates a dynamic evolution, which drives toward higher performance, lower-cost semiconductors and components. The Internet is the killer application everyone is looking for. It is here, now, moving through the predictable cycle, leading us to the next cyclical upturn.

Paul Scrivens is the president of SZ Testsysteme's U.S. business, SZ Testsysteme Inc. of San Jose.