The same transformation is sweeping through companies that make flash memory, a smaller and cheaper form of memory that's used in digital cameras. I think we're headed to a world that puts localized storage everywhere so that consumers can reformat content and then store that personalized content near at hand. In disk drives, companies to look at include Western Digital ( WDC), Seagate Technology ( STX) and Maxtor ( MXO). In flash memory, companies to check out are SanDisk ( SNDK) and Korea's Samsung Electronics ( SSNLF), which has clearly taken the flash memory momentum away from Intel. In these two groups, I prefer Western Digital and SanDisk on valuation and corporate governance issues.
The Next Generation of the Internet
Someday soon we may know who actually won the competition to build the major pieces of the precursor to the next generation of the Internet. Just as the current Internet grew out of a government network built for the Defense Department's advanced research arm, the next generation, officially the Global Information Grid Bandwidth Expansion project, is being built for the Defense Information Systems Agency with an equipment budget of about $900 million over two years. A contract of that size would itself be a prize to struggling equipment makers such as Sycamore Networks ( SCMR) and Ciena ( CIEN) among the contract winners. Of these, I like Cisco and Sycamore Networks.
Convergence With a Vengeance
Yeah, yeah, they've been talking about convergence for years -- the magic moment when PCs are TVs and TVs are PCs and the world of consumer electronics and personal computers meshes. But it's finally here. Really. And it is a big thing, just as we've been promised all along. What convinced me was Intel's announcement that it was planning a chip for large-screen, high-definition television sets. (The official unveiling apparently is scheduled for Jan. 8 when the Consumer Electronics Show opens in Las Vegas.) The chip would use liquid crystal on silicon technology to produce a much sharper picture than current technologies, analysts outside Intel say. Whatever. The important thing is that Intel's huge manufacturing efficiencies will drive the price of big TV sets, the ones that go up to 60 inches and sell for $3,000 to $10,000, down and down.