Inventions (Facts, From Milken

8/22/2019 Inventions (Facts, From Milken

1/78


2/78

After the gold rush

Or: Is it just the beggingYou aint seen nothing yet


3/78

TimeInoculation

Blaming the innocent

Ubiquitous

Yossi Vardi

Value

Incubatio

nBrew

ingDeman

d

(Inhe

rentValu

e)

Explosi

on

Run-awa

ygrow

th

Disenchantment

Panic

Capitulation

ValueSqueezedOut

Perceived

Losses

FEAR/

DESPAIR

Bu

rnrateis

sobern

ess

ConcernExcess valuation,

excess deployment.

(value of excessdeployment decreasesover time due to

Moors law)

Complacency

BURST

+ Disconnect between valuation and demand -

Consolidation

Value squeeze out

Many

entries:

lots of frogs, few princes

Preemptive creation of network effects(Metcalfs Law)

Land

Grab

Supply

(valu

ation)

Contingent

Enthusiasm

GREED/DREAMS

VC

funds:th

el

eastvis

cous

e

sub

stan

cein

natu

re

Curiosity

TheStuff

that

Dream

sareM

adeof

TheStuff

that

Dream

sareM

adeof

Fora

bubble

to

devel

op

the

remust

be

avery

compelli

ngexpla

natio

nwhy

this

tim

eitis

diff

erent

New era

Arrogance

Stupidity

Pu

nishingboth

Pu

nishingboth

thegoodandthebad

the

goodandthebad

Evaporation

Realization

Ch

as

ingt

he

nex

tbi

gt

hin

g

Separating the wheatfrom the chaff

Hang over

Val

ue

Created

RealGains

The Economics of Dreams


4/78


5/78

The World Wide Web

Digital Video/Radio/TVInline skates

Snowboards

Palm Pilots

Minidiscs/DVDs (96)

MP3

Internet cafes

DBS (94)

Mobile phones

PCsMusic videos

Sony Walkman

CDs (81)

Spray paints

Camecoder (81)

E-mail

Fax

SkateboardsSynthesizers

Satellite TV

Video (70)

Platform Shoes

Makeup

Electric guitars

Pin-ball gamesThe Pill

Jet travel

LSD & hash

Duffel coats

Parkas

Vinyl records

JukeboxesTransistor radios

Jeans

Leather jackets

Condoms

The Internet

Supermodels

Role-playing

Spice Girls

The Club Kids

Vegans

Rave & smart drugs

Design collectives

Cyberspace

MTV & CNN

Hip Hop

Hard rock

Aids

Graffiti & Breakdance

Interrailing

Punk

Reggae

The Green

Movement

Disco

Glamrock

Heavy drugs

Mods

Flower Power

Young women start

working

The Vietnam

movement

Charter trips

Color TV

Rock n Roll

Teenage gangs

Beatnik

Existentialism

Movie stars

Beastie Boys

Alanis Morissette

Quentin TarantinoWilliam Gibson

Douglas Coupland

Esther Dyson

Kate Moss

Philip Starck

Irvine Welsh

Madonna

Michael Jackson

Peter GabrielMagic Johnson

Eric B & Rakim

Blondie

Michelle Pfeiffer

Frank Zappa

David Bowie

Sid ViciousABBA

Brigitte Bardot

Bob Marley

The Beatles

The Rolling Stones

Andy WarholJane Fonda

Janice Joplin

Bob Dylan

James Dean

Elvis Presley

Jack KeruoacMarilyn Monroe

Simone de Beauvoir

The 90sThe 80sThe 70sThe 60sThe 50s

The development of some major trendsetters within youth culture since the 1950s and its correlation to information technology

Tre

nd

se

tte

rs

Happ

en

ing

s

Pro

du

cts


6/78

Eruptive IndustriesThe Cutting Edge Of Technology

Financial Mania Fuels Eruptive Industry Development

Steamboat TelephoneRailroad Television

Electricity Radio

Car ComputerAirplane Internet


7/78

. Like Cinderella, they knewthat midnight would bring the

pumpkins and mice, but,

hating to miss a second of a

great party, they stayed too

long Warren Buffett


8/78

The two things which areinfinite, are the universe

and human stupidity,and I am not sure about the

first one.Albert Einstein


9/78

48%

37%

23%

0%

10%

20%

30%

40%

50%

60%

Under 300kb 100 Merrill-Lynch Index Over 500kb Size of10k report

Retained Value

2000 Vs.1999

The Harder They Fall, The Bigger The Report

When The Argument Is Weak, Move Your Hands Forcefully

!Less then 20% of companies with 10k over 500kb outperformed the 100 Merrill-Lynch Index

! Turning point is 400kb. over that level rapid deterioration

! Some samples: IBM 367kb 81.3%

AOL 1861kb 140% (exception)CMGI 1939kb 2.3%

636kb 3.2%


10/78

PercentofCo

nsumerUs

e

Years Since Introduction

Automobile

(1886)

Telephone

(1876)

Electricity

(1873)

Television

(1926)

Radio(1905)

VCR

(1952)

Mobile Internet

(2000E)

PC Internet

(1991)

Cell Phone

(1983)

The Internet The Fastest

Penetrating in History


11/78

ICQ Milestones

0

20

40

60

80

100

120

140

0

7-96

1

2-96

0

3-97

0

6-97

0

9-97

1

2-97

0

3-98

0

6-98

0

9-98

1

2-98

0

3-99

0

6-99

0

9-99

1

2-99

0

3-00

0

6-00

0

9-00

1

2-00

0

3-01

0

6-01

0

9-01

1

2-01

Cu

rrentNumber

ofUsers(inM

illions)

7/96 Mirabilis Founded in Tel Aviv

11/96 First ICQ Client

7/97 1 Million Users



6/98 AOL Acquires ICQ


05/00 100 MillionDownloads on c|net

09/00 2Way SMS




12/78

Growth Enablers! Rapid deployment

!

New innovations will inspire new opportunities! Open standards

! Limitless scalability architecture: Loosely coupled federations, DNS

! DNS- finding the pins in the digital hay stack

! viral marketing! The message is the product

! Metcalfs laws

! Moors laws storage, processing

! Gilder laws

! Commodigitization

! Always on at home, on the road, reach and can be reached

! Enabling the grass-root, bottom-up

! Wide spread of new consumer electronics connected to the internet

! Continues partial attention

! Still lot of room to grow in internet, wireless

! Persistence connection


13/78

Mega Trends The Promise! The digital life style - New paradigms of consumption and delivery

of music, video! Life @ the edge, peer-to-peer

! The fight over the living room

! The fight over the food chain content distribution platforms

! Wireless, cellular, wifi

! Average age going up,cognitive age going down

! Pervasive computing

! Converting TV time to digital life style time! Info Now! Time and location sensitive info

! ASP

! Collaboration, sharing, communication

! Micropublishing

! Information oligarchy.

! Attention is the scarcest resource - Attention deficit disorder!

! The big will get bigger


14/78

Digital life style narrow band

! Communication and community

! Self expression, collaboration, sharing.! E-mail

! Instant messaging, chat

! Message board

! Usenet

! Blogs

! Home pages


15/78

Digital Lifestyle: Rich Media! Hardware:

Rich media PC, MP3 player, digital cameras, wireless text phones,game platforms, rich media phones, DVD, burners, camcoders,webcams, 802.11, home hub.

! Software:

Rippers, video editing, photo editing, file sharing burning,downloading, games, moving assets around, compression, codecs,players, viewers.

! Services:

Music, video sites, on-line games, storage, streaming & downloading.

! User activities:

Editing, self publishing, collaborating, sharing

! Access:broadband, wireless, storage, semi conductors

! Content:

Music, video


16/78

27.5%

40.3%

31.3%

26.9%24.7%

38.7%

46.9%

37.2%

32.6%

43.9%

0.0%

20.0%

40.0%

60.0%

Listen to Music on theComputer

Listen to Music on the Radio Instent Messaging / ChattingOnline

Watch Television Talk on Phone

Activities

PercentofRespondent

New Users (


17/78

Internet Users And Multi-Tasking

While They Are On The Internet

27.5%

40.3%31.3% 26.9% 24.7%

38.7%46.9%

37.2% 32.6%

43.9%

0%

20%

40%

60%

Listen to Music on

the Computer

Listen to Music on

the Radio

Instent Messaging /

Chatting Online

Watch Television Talk on Phone

Act iv it ies

PercentofRespon

dent

New Users (


18/78

Life @ the edge

! Finding people IM

! Create content: self expression

! Collaborate peer-to-peer

!

Communicate


19/78

The Power Of The Hyper DNSFinding The Needle In The Haystack, Find And Act:

! People:

ICQ, Ebay, Napster, Match, Classmate,

Monster.

! Objects:Google, Amazon, Shopper, Browser.

I t ti f F d ti


20/78

Interconnection of FederationsThree Layers of Interconnectivity

! Home

! Intramodal

Home

network

TV PC

PC

-Cell

TV-Cell

gateway

Cell

PC-TV

Gateway

PC-Cell

Gateway

Lots Of Room For Growth (Part I)


21/78

Lots Of Room For Growth (Part I)U.S. Household Penetration of Consumer Electronics

Jan-97 Jan-00Laserdisc Player 2% 2%

DVD Player - 5

All LCD TV 10 11

Home Fax Machines 9 11Direct to Home Satellite 7 13

Projection TV 11 14

TV/VCR Combinations 10 18

Multi-line Phone 15 21Home Theater System 14 21

Caller ID Equipment 14 25

Car CD Player 18 26

Personal CD Player 20 26Electronic Car Alarm 27 29

Camcorder 26 36

Pager 28 37

CD Boom box 27 37

Lots Of Room For Growth (Part II)


22/78

Lots Of Room For Growth (Part II)U.S. Household Penetration of Consumer Electronics

Jan-97 Jan-00Monochrome TV 46% 43%

Computer printers 38 49

Wireless Telephones 34 51

Computer w/ CD-ROM 21 51Modem or Fax/Modem 19 51

Personal Computers 40 54

Home CD Players 49 56

Color TV with Stereo 55 65Phone Answering Device 65 74

Cordless Phone Device 66 78

VCR Decks 89 93

Corded Phone 96 96All Television 98 98

Color TV 98 98

Home Radios 98 98

Rack Audio System 36 42

M Hi h T h D i Y t T R h 60% f H


23/78

Many High-Tech Devices Yet To Reach 60% of HomesHousehold Adoption & Manufacturer Sales of Selected High-Tech Electronics

Device Introduction 1998 1999 2000 2000 2001 (Est.)

Gaming Hardware 1972 40% 42% 44% $2.70 $3.20

Personal Computer 1975 48% 54% 58% $16.40 $16.60

Computer Printer 1978 44% 49% 54% $5.10 $4.80

Modem 1980 38% 51% 55% $1.60 $1.40Cellular Phone 1983 44% 51% 59% $3.20 $3.70

Digital Camera 1995 2% 4% 8% $2.30 $2.90

Internet Access Device 1996 1% 2% 3% $0.20 $0.20

DVD Player 1997 1% 5% 15% $1.70 $2.40MP3 Player 1998 N/A N/A 5% $0.20 $0.20

Personal Video Recorder 1999 0% 0% 1% $0.60 $1.00

Adoption

Sales

($US Billions)

Innovations Inspire Opportunities


24/78

Innovations Inspire OpportunitiesEnvisioned Uses of Key Technologies Before and After

Technology Original Use Imagined Eventual Use SuccessfulTelephone Broadcast programming to Enabled one-to-one

consumers individual communication

Radio Enable One to One Broadcast advertisingcommunication sponsored programming

to consumers

Television Would replace movies Got lucky; followed thesuccessful radio model

Cable Improve fuzzy broadcast Mass market programreception aggregator, and

developer/supporter ofpremium-price programming

VCR Recording Video Renting, Buying andProgramming Playing Pre-recorded Video

Programming

Home Microwave Quickly prepare meals Quickly prepare pre-mademeals

Internet/World Wide Enable Electric Commerce Become and AdvertisingWeb-based Online supported, multimedia, some

Services to some, Information/Commerce Myway

The Pervasive Computing:


25/78

The Pervasive Computing:

! Chips will be networked

! Hierarchical organisms

! Communities

! Civilizations will be developedThey will be networked together and then

different civilizations will be first threaded

and then interoperated, converged, andintegrated together

Cognitive Age Is Getting Lower


26/78

Cognitive Age Is Getting LowerHarley Buyers Are Aging:

! Medium age of Harley buyer:

1990 - 37ys old

2001 46ys old

! Possible reasons: Utilitarian products are positioned as expensive toys

People carry their toys over the years

More free time

Certain toys become fashionable

Older people want to do young things

As toys become more-hi-tech they appeal to older ages

Sony Playstation


27/78

Sony PlaystationExpanding Demographics

0%

5%

10%

15%

20%

25%

30%

35%

< 12 13-17 18-23 24-34 35+

Play Station (Avg. Age = 20.2)

Play Station 2 (Avg. Age = 23.6)

Expanding North America


28/78

0

5

10

15

20

25

30

35

40

45

0-4

5-9

10-14

15-19

20-24

25-29

30-34

35-39

40-44

45-49

50-54

55-59

60-64

65-69

70-74

75-79

80+

Expanding North AmericaDemographics Enlarge Target Base

2000

2005Traditional gaming population:

70 MM in 2005, up from 66

MM in 2000.

Potential new

gaming population:

91 MM in 2005.

Population in Millions

ALL THE TIME


29/78

On Persistent Connection At Home

Will Be Driven By Broadband ConnectionWill Change the Way the Internet is Used at Home! Always on & home networking will enable to use the Internet

in each room in an appropriate way.

! Broadband will be the foundation to revolutionize theentertainment delivery and usage, affecting video, audio,music, games, TV

!

A device at every room! Different device for different rooms

! The Web-Pad (keyboard-less)

! Home network

! Streaming music! Short sessions, info-on-demand

! Home entertainment: TV, Multimedia PC, Game Consul

! Networked image capturing and presenting devices

Great Experiences


30/78

Great Experiences! Conversations! Story telling! Movies! TV! Music! Books! Visual Arts! Performing Arts! Dinning! Travel! Sports! Hunting! Games! Chatting! Recreation, outdoor, scenery! Hobbies! Homes, gardens,DIY! Internet

! Cars!

Video, photography! Romance! Dance! Construction, building!

Collecting! Shopping! Pone sing Owning! Amusement parks! Architecture! Sailing, cruise! Beach! Religion! Youth movement! Organization! Fantasy! Role playing! Computers

Paradigm Shift - From: Bringing The People To The


31/78

Paradigm Shift From: Bringing The People To The

Experience To: Bringing The Experience To The People.

500 Years Of History

Books Picture Magazines

Newspapers B/W TelevisionMagazines Color TV

Catalogs Video

Records PC

Personal Photography Home Printing

Radio Internet

Colored Books DVD

The Emergence Of The Couch Potato


32/78

More Frequent vs. Less Frequent Activities

-50% -25% 0% 25% 50%

Spending Time @ Home

Watching TV

Reading Books

Visiting w/ Friends or Relatives

Entertaining Friends @ Home

Eating Out

Visiting w/ Faraway Friends or Relatives

Going Out for Entertainment

Doing MoreDoing Less

The Emergence Of The Couch PotatoAmericans Began Cocooning In The 1970s

The On-Line Living Room


33/78

The On Line Living Room

PC E-PhotosMusic Voice Over IP

Games BrowsingInteractive TV Home Printing

Radio DVDVideo Editing, Sharing, Storing File Sharing

Rich Media Delivery CamcorderHome Networking Webcam

The Quest For The Consumers Heart


34/78

Reading

16%

Web

16%

Movies16%

TV19%

Video Games33%

e Quest o e Co su e s ea tWhat Is The Most Satisfying Entertainment Activity?, 2000

B i i P l T Th E i T h


35/78

Bringing People To The Experience: Togetherness

! The River Bank, The Well, The Town Square,

The Coffee Shop, The Theater

Bringing The Experience To The People: Solitude

!

Books, TV, Radio

The Internet: Offering Virtual Togetherness

! Sharing, Collaborating, Interpersonal Comm.

TV, Radio and VCRs Are Most Common


36/78

,U.S. Household Adoption Rates For Selected Products

DVDCamcorder

PagerModem

CD PlayerPC

Cell PhoneAns. Machine

VCRRadio

Television

100

80

60

40

20

0

Household Adoption Rate

CD, DVD, And Internet Penetration


37/78

CD, DVD, And Internet PenetrationUnited States

Worldwide Console Hardware Shipment


38/78

p

0

5

10

15

20

25

30

35

40

1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002E 2004E

HW

Units

in

millions

Total 8 Bit System (LHS) Total 16 Bit System (LHS)

Total 32/64 Bit System (LHS) Total 128 Bit System (LHS)

Worldwide Console Software Shipments


39/78

p

0

50

100

150

200

250

300

1982 1985 1988 1991 1994 1997 2000 2003E

8 bit 16 bit 32/64 bit 128 bit

Units in Millions

Growth In Worldwide Installed Base Of


40/78

Internet-Enabled Televisions

Music


41/78

! Distribution, Selling CD, Selling Digital

! Sharing! Selecting

! Reaping CD

! Burning CD

! CDDB, Lyrics! Background Info

! Fun Clubs, Interest Groups

! Artists Info

!

Juke box! Searching, Advising

! Lockers ,Web Storage

! Microcasting

!

Radio Stations, Creating, Listening! Stand Alone Appliances

! Wireless Delivery

! Creating Posting

!

Creating Clips

Average Number of MP3 Files


42/78

On Home Computers By Age

348

721

340

177124

72

0 100 200 300 400 500 600 700 800

18-24

25-34

35-44

45-54

55-64

65+

No. of MP3 files

Age

Forecast Unit Growth


43/78

MP3, PDAs, And Digital Cameras

0

10

20

30

40

50

60

1999 2000E 2001E 2002E 2003E

Totalu

nits(inmillions)

MP3 PDAs Digital Cameras

File Sharing Based VOD


44/78

Home Brewed

! TV

! PC

! Scam converter

! Fasttrack

!

Wireless keyboard

File Sharing


45/78

3rd generation

! Fasttrack

! Kazaa

! Morpheus (Music City)

! Grockster

!

Lime wire

4 Largest Cellular Markets


46/78

0

50

100

150

200

250

300

350

84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03

C

ellularSubscribers(Million)

Europe

USA

Japan

China

Europe: Single standard, seamless service

provision, economies of scale, articulated poli cy,international roaming

US: Competing standards, no seamless service

provision

Japan: Lack of spectrum, propr ietary standard(I -mode)

US=97Million end of June 2000

J= 59Million end of March 2000

GSM Total Subscribers - 361.7 million (to end of August 2000)

The Disappearing TerminalC ll l Ph W i h Y i M k


47/78

0

10

100

10000

1987 1991 1995 1999 2003 2007

Weight(Grams)

1999

Nokia, Motorola:

100g

1987

Ericsson: 7kg

2005

Cell phone on achip prediction

by Bell Labs

Cellular Phone Weight vs. Year in Market

The Fight Over The Food-Chain


48/78

Dividing The Pie

!Content!

Distribution!

platforms


49/78

RICOCHET

OPPORTUNITIES

The Milken Institute

Discussion

April 24, 2002

The Aerie/Ricochet Opportunity


50/78

! Demand outstrips supply for high-speed access! The first broadband wireless network with extensive

coverage

! Proven technology built in 21 markets 51,000customers

! Inventoried capital to build 20-40 additional markets

! Over $1B invested to develop and deploy network

! Limited CapEx to deploy variable OpEx requirements

!

Low cost customer acquisition plan! Scalable business plan with low market share breakeven

! Team and resources to execute

Ricochet Micro Cellular Data Network


51/78

HighHighHighHigh----SpeedSpeedSpeedSpeed

IP LinesIP LinesIP LinesIP Lines

Where Was Ricochet Deployed?


52/78

National Network Coverage

21 Major U.S. Markets

Inventions (Facts, From Milken

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