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Author: nole1 Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 17155  
Subject: The 4th wave... Date: 3/7/1999 12:47 PM
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Hi, all. This is my first post here and I probably won't be back for a while (if you respond, please click the e-mail to poster checkbox). Oracle is one of my picks for what I term "the 4th wave" and I'd like to hear your opinions. I was an Oracle developer for 2 years, so I do have some experience. I transferred to doing other software development a few months after Oracle 8 was released, so I haven't had a chance to see what it can do. I'd be interested if you could include your opinions on how Oracle 8 is compared to version 7.3, and also on the new Oracle 8i. You can find me mostly at the @Home (ATHM) board and slumming in the Oil Services board, which a group of us recently started. Thanks! Now, without further adieu....

Well, with a little rest and looking at charts, I was finally able to clear my head enough to look at the big picture!

We've all known it for some time, that's why we're at CSCO, ATHM, SUNW, UNPH and ORCL. These are my picks as the dominant players in what I call "the 4th wave".

There have been three well defined waves of technology on which you could have ridden in the past 15 years to amazing wealth by playing the dominant players and I see a 4th wave and a 5th wave developing now....

Wave 1 - The Personal Computer

The personal computer and all its attendent peripherals. These plays would have been good the whole time, because the other two waves count on continued growth in the number of PCs...

Software: Microsoft(MSFT)
Chips (INTC)
Printers (HWP)
The PCs themseleves:
Dell (DELL)
Compaq (CPQ)

Because of the open standards, the PCs themselves would have been the hardest play, DELL and CPQ have not been as obvious until more recently...

Wave 2 - Local Area Networks (LANs)

This was a relatively brief period, from about 1993 - 1996, and was, for all intents and purposes, a head fake to wave 3...the returns here would depend much more on luck, in retrospect (hindsight 20-20). The reason it was the weakest of the 3 waves, is that it was only developed for business office locations, for the most part, not for the home, though in the coming years, that might change, it's not clear (again, see wave 3).

Hardware: 3Com (COMS) (eclipsed by CSCO (see wave 3 hardware))
Software: Novell (NOVL) and later Microsoft (MSFT)
Note: this is one you could have gotten burned in, since Novell was so dominant for a relatively short period of time, when Microsoft NT took over the dominant role....if you would have held Novell for too long, the returns would not have been as stellar...it made crucial mistakes (purchase of WordPerfect, for instance.....(for those that remember the old margarine commercial: "It's not nice to fool with Mother Microsoft!")

Wave 3 - Internetworking (World Wide Web)

This wave depended on Wave 1 (PCs) gaining critical mass, that is, getting fast enough and powerful enough and having enough people with desktops that there was a need for them to communicate via computer (killer app - e-mail).

With the explosive of PCs, at home as well as in the workplace, from about 1995 or 6 until now, caused mainly by Intel developing a powerful enough chip (the Pentium) and Microsoft finally developing a 32-bit operating system (Windows '95), the TCP/IP standard which had been developing finally created true interoperability. The problem was, data transfer speed. When modems finally got to 28K bps, the ability of PCs to communicate with each other developed critical mass and the internet was born. Look at the Industry index of ISPs over the last 5 years to see this wave, particularly the last 1 year. 1998 was the year of the ISP!

Hardware: Routers - Cisco (CSCO)
ISPs: America Online (AOL)
Content Providers: Yahoo (YHOO)

With the advent of the 3rd wave bringing more and more multiple computer households in the US, the 2nd wave (Local Area Networks) as a second chance at growth. The names and stakes have changed; however, as these will be extremely small networks and the connectivity issues are so small that they will most likely become commodities, as PCs are becoming...

My prediction (finally catching on with the posters here):

Wave 4 - Broadband

The previous wave took place in the way they did, with the timing they did, because the intercommunication infrastructure was limited by its weakest link...the last mile. The backbone infrastructure has been and is being developed using fiber optic cable and can carry a huge amount of data, but it has not been tested because the link from the PC to the backbone has been using twisted pair telephone wires. With the development of last mile infrastructure (cable modems by HFC cable, and upgrades to the existing local telephone infrastructure (xDSL), the bandwidth of the current backbone will need massive upgrades. So here are my picks for the 4th wave, that include more picks and shovels:

Fiber-optic telecommunications equipment: Uniphase (UNPH)
Routers to connect them: Cisco (CSCO)
ISPs: @Home (ATHM)
Database Software: Oracle (ORCL)
Servers: Sun Microsystems (SUNW)
Content Providers: ???

Rat, it took me a while to see the "light", but I suppose everyone has to have their own epiphanies. I think picking the dominant players in these waves it the critical element to success.

Note that the transition to the 4th wave will take a few years, so wave 3 players will continue to do well during the transition.

Oracle (ORCL) is perhaps the surprising pick in my 4th wave. Remember that for Broadband to be able to have any effect, the content must be stored somewhere in a readily accessable form. With Oracle 8, released about a year and a half ago (give or take) and Oracle 8i, released at the start of March and using Java, Oracle has been developing Object Orientation and scalability into their product to handle BLOBs (binary large objects), such as video. Like Microsoft, they aren't the best at what they do, they are the most noticed at what they do.

Sun Microsystems (SUNW) has developed the software for the new internet, with Java. There is enough momentum for them to be able to leverage Java into a Server bonanza, due mostly to Microsoft's antitrust and technical scalability problems. (Windows NT 5.0 has obviously had major problems, being renamed Windows 2000, with a release date that has been pushed back an incredibly long time in internet years). I would not count Microsoft out, but the future is unclear with the US government so much in control of their future at the present time.

Uniphase (UNPH) is the dominant player in the development of the tools for the new broadband network. I defer to dataSlave and the technical folks on the UNPH board to explain why. This and CSCO are, IMHO, the best pick and shovel plays for the 4th wave.

@Home (ATHM) the dominant force in Cable Broadband at this time and for the next couple of years. With exclusive contracts with cable companies covering 60 million homes and a temporary hands off approach by the Federal Government (FCC and Justice Dept), coupled by the backing of AT&T, as the infrastructure is completed, @Home should be able to ramp up with incredible growth. As Sun will have to watch it's back (and front) to compete with Microsoft, so @Home will have to watch all sides for AOL (the dominant ISP of Wave 3), which does not currently have a good access path to broadband. Without government intervention, this would be a no-brainer. Because of government intervention; however, this will need to be revisited.

Cisco (CSCO), my other picks and shovels play will enjoy a continued dominance in the high end router market, which will show incredible growth as broadband access rolls out. As with Microsoft and now Intel, Cisco could very easily come into the government's antitrust sites. It seems that the US government is on a computer industry antitrust kick, and Cisco is the next logical choice.

The reason there are ??? by Content Providers is that broadband content will be so much different than today's internet content, it is much too early to pick the dominant players in this game. In my mind, there are several potential dominant players, but the content is such a large area, I don't forsee one dominant player, but rather a consolidation by industry (i.e. e-commerce, online brokers, etc.) and each industry's leader will be a good play.

Wave 5 - Wireless?

It's too early to tell how the 5th wave will play out, IMO, but with cell phones having already reached a critical mass, internet portability cannot be far behind. The question is, how will broadband go portable? This, for the time being will be one area where the 3rd Wave players will be competing until the fuzzy future of the 5th wave becomes clearer.


I'd like to know what you think about my picks. I'm going to post this on each of my 4th Wave dominator picks' boards and see what y'all have to say.

nole1
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