Strategic News Service - Selected Issues

The most accurate predictive letter in computing and telecommunications, read by industry leaders worldwide.

Publisher’s Note: We’re approaching last call for participants in the Second Annual SNS West Coast Dinner, September 27th, at the Mark Hopkins, on Technology Breakthroughs and Opportunities; we are now nearly full.

It’s time to act, for those wanting to save $1700 on FiRe 2008, retail $4600, now going for $2900 until September 15th, or the first 50 Early Birds since the announcement. Save your company a wad, at

This story begins with U.S. manufacturers deciding, with the help of their Bain etc. consultants, that outsourcing manufacturing is a really good idea, and when the term OEM (Original Equipment Manufacturer) is born to distinguish between those who make and those who order or only assemble.

Since assembly still allows customization, this fits the Dell Direct model to a “T” and is copied by many other firms. Even Apple, once the proud Mac manufacturer, increasingly turns to others for making its stuff.

A bit of time goes by, and now, because they have become good at making things, the Taiwanese are increasingly coming up with ideas for ways to improve things. In the engineering world, this is called design, and so the OEMs rapidly also become ODMs: Original Design Manufacturers.

At the same time, the “what” of manufacturing has changed, from making desktop computers to making laptops and notebooks (let’s just call them all “lapbooks”), and it turns out that the more premium is placed on miniaturization, the more control the ODMs have over the design and process.

At this point, almost all of the stuff is both designed and made overseas, mostly in Taiwan.

During this time, the Japanese are desperately taking repeated runs at the computer market, with zero success. After several generations of tries, the wins finally look like this: Sony lapbooks for the Vaio (for arts folks), Toshiba lapbooks for their business laptops.

Meanwhile, Stanley Shih has been building OEM Acer into a global powerhouse, making computers for everyone. In the West, his brand recognition hovers near zero, as every machine is branded by U.S. makers. In the East, Acer increasingly sells under its own brand.

Q: What is the fastest-growing computer brand in the world, in terms of units sold per year?

1. Dell, which is making a strong comeback now that Michael Dell is in charge again.

3. Fujitsu, which is selling like hotcakes not only domestically, but in Europe, through its Fujitsu-Siemens JV.

5. Packard Bell, which has restructured and is selling lots of boxes in mainland Europe.

In 2003, Michael Dell was kind enough to join us at FiRe as our interview for the Centerpiece Conversation. When I asked him about Gateway’s future, he tactfully said (and I am paraphrasing): “They are closer to the end of their story than the beginning.”

In some ways, that prophesy came true Tuesday, when Acer announced its purchase of Gateway for $710MM.

Two nights ago, I had some visitors who work for a Taiwanese chipmaker, who mentioned that Packard Bell had just been bought by Lenovo.

Lenovo, you’ll recall, bought IBM’s lapbook business (the Thinkpad line) a few years ago when it was producing $1B+ annual losses for Sam Palmisano. Now, just as it seems to have turned that division around, it was apparently looking again for foreign brands, this time PB.

But there’s a hitch: Gateway appears to have an essential right of first refusal, which looked meaningless yesterday but quite strategic today, since that right now goes to Acer. By buying the Number Four U.S. brand, it also gains a chance for brand entrée into Europe.

“Worldwide PC shipments grew by 12.5% in Q2 2007, according to IDC. Asia/Pacific (excluding Japan) returned as the fastest growing region with volume increasing more than 20% from the same quarter one year ago. A competitive market in the United States also helped boost overall growth with other regions expanding in line with or slightly behind forecasts. Channel expansion and competition for the consumer and small business segments added to the trend toward Portable systems as key market drivers.”

Global PC shipments in Q2 2007
	Q2 2007		Q2 2006		Growth
Vendor	Shipments	Share	Shipments	Share	YTY
HP	11,335	19.3%	8,303	15.9%	36.5%
Dell	9,491	16.1%	9,978	19.1%	-4.9%
Lenovo	4,879	8.3%	3,989	7.6%	22.3%
Acer	4,261	7.2%	2,742	5.2%	55.4%
Toshiba	2,407	4.1%	1,981	3.8%	21.5%
Others	26,452	45.0%	25,303	48.4%	4.5%
Total	58,824	100.0%	52,297	100.0%	12.5%
Source: IDC

By merging with Gateway, Acer immediately becomes the world’s third-largest PC company, with sales over $15B and shipments over 20MM per year. (PB remains 18th globally, with under 1MM units per year.)

Of all the figures in the table above, is there one that jumps out at you? Sure; it’s Acer’s 55.4% annual growth rate. How long will it take to move into the Number Two spot ? (Although Dell showed a 4.9% drop YTY, I wouldn’t count on that continuing.) Mathematically, the answer is 2-3 years, although, as many veterans can tell you, the road to technology market success is never straight, always longer than planned, and those hairpin turns will get you most of the time.

Despite Apple’s increasing popularity, Macs still don’t make the cut. And the company’s apparent continued lack of interest in China means that: a) they aren’t as likely to get pirated; and b) they miss out on the largest potential PC market.

Is there anything else we need to add to this changing landscape, to make the picture current? I think so.

In addition to the rapidly proliferating world of CarryAlong PCs (UMPCs, in Microsoft’s current lexicon), we have Box guys making handheld computers masquerading as phones, and ready to turn in phone-like numbers.

Specifically, we have the iPhone, now looking as though it will make Apple’s internal projections of a million this year (fie on scoffers; SNSers knew it all along), which is a handheld computer with phone capabilities.

We have Nokia, which has been making game machines and its Communicator Net-enabled systems for years (the one then-Netscape CEO Jim Barksdale loved so well on launch), and which is now also making elbow room for itself as a handheld computer maker, albeit always with phone features.

And then, hot off the rumor press - What’s this? Could it be a picture of the new Google phone, made by HTC? Looks like a BRIC to me ---

“One extremely interesting point? Google Talk will become a part of the phone, adding VoIP capability to the hardware.” – Crunchgear.com.

Crunchgear was picturing a Linux OS yesterday, and ZDNet was touting the MS Mobile 6 OS today. Google, still running on an MS OS? Grudgingly, one would guess.

What kind of landscape is this? A volcanic one, with large shifts in the basic plate tectonics caused by the recent Acer deals. Not only do we have a new Top Three, but the needle is pointing strongly toward Asia. It’s as though the IT business is splitting almost cleanly along old/new PC lines, with large historic purchasing orders coming from the Dell core (business and government), while all of the serious growth is coming from lapbooks and Asia product and geographical segments.

Seen from the larger perspective of Consumer Electronics dominating the computing product portfolio, the lapbook looks just like a stepping stone into Asia, both on the manufacturing and the consumption side.

This happy accident - that miniaturization expertise in manufacturing combines with a proven market for consumer electronics - is the coincidence that will move Asia into a primary position in markets, manufacturing, AND brand during the next decade.

The fact that current chair J.T. Wang and founder Stan Shih had the vision and persistence to forge a path of these trends suggest that Acer will dominate Asia, to the frustration of its Japanese competitors; and is already, today, a top global player.

Your comments are always welcome.

Sincerely,

Mark R. Anderson

CEO
Strategic News Service LLC              Tel. 360-378-3431
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Friday Harbor, WA 98250 USA         Email: sns@tapsns.com

Video: “The Future of Robotics, from the Military to the Civilian”: A conversation with Helen Greiner, Chair, iRobot; hosted by Jim Louderback, Editor in Chief, PC Magazine.
The streaming link is:
mms://www.tapsns.com/firefive/futureofrobots_384K.wmv

Video: “The Future of Energy on a Nano Scale”: A panel discussion with Josh Wolfe, Managing Partner, Lux Capital; Dave Vieau, CEO, A123 Systems; and Keith Blakely, CEO, Nanodynamics; hosted by Steve Waite, Managing Director, Consilient Partners.
The streaming link is:
mms://www.tapsns.com/firefive/nano_384K.wmv

Audio: “CTO Roundup”: A Design Challenge, hosted by David Brin, Science Fiction Author and star of TV’s “ArchiTechs” series; with Jeffrey Nick, CTO and SVP, EMC; Mark Bregman, CTO, Symantec; and Tom Malloy, CTO, Adobe.
The streaming link is:
http://www.tapsns.com/media/fire2007/audio/01-russiasfuture.MP3

As SNS members know, I have increasingly been looking at Nokia as a services company. Its willingness to launch and support services such as GPS and, coming soon (I would suggest), pay-by-phone, accents its impatience with carrier customers who just “don’t get it.” Historically, carriers are slow, powerful oligarchs (or monopolists) better known for their lawyer/lobbyists than for their engineering and marketing prowess.

Times have changed, and the Box Guys know it, but the Pipes Guys are a little late coming to the party. It’s like they’re showing up for an MTV Halloween party dressed for the Masque of Death Ball.

Apple has been leading this battle on the Box side, but Nokia, with a competitive offering to iTunes, will have jumped in on the 28th, as I write this.

All of these moves are good for the industry, since customers will refuse Fake Internets (a more accurate term, I think, than “Walled Gardens”), and the sooner the Pipes Guys get this, the happier they - and we - will all be.

A lot was being made in the press about France’s Orange refusing to sell the specially-designed Nokia N81 phones if they didn’t open up to other downloading services - and while the rest of the world was thinking Walled Gardens Again, you can now say you were aware of a secret deal with Apple all along for the iPhone and iTunes:

Even so, the balance of power continues to swing toward the Box Guys, and Nokia now cements its move beyond just handsets (and channel slavery) to a new, bolder model of services design, leadership, and even competition.

In my last Special Alert to members, I said that the carry trade would continue to be unwound by all of its various players. This has been happening since that warning.

This is the second shock the global equity markets have experienced from the same cause in the period beginning last March. Unless the global liquidity issue is addressed directly, I expect these shocks to be replaced by a more general decline.

At a time when the world is desperately seeking ways to reduce waste streams of non-biodegradable materials, increase reclamation of wastes for industrial use, and find new sources of petroleum, it seems that more people would be aware of the Zadgaonkars’ Unique Waste Plastic Management and Research Company.

On the other hand, maybe there’s a reason they forgot to include Marketing in their title.

Located in India’s western state of Maharashtra, at the Butibori Industrial estate, this plant claims to be converting 100% of such waste - including PVC pipes, PET bottles, ABS plastics (used in keyboards, computers, TVs), water bottles, etc., into a mix of 85% liquid hydrocarbon fuels and 15% gases.

The process, invented by Alka Zadgaonkar several years ago, is now recommended by the Indian Oil Company, and recent “tie-up” offers have been made internationally by Izemitsu, Applied Science, Inc., and Germany’s Marlos Thormann Energy Solutions, according to the website www.mangalorean.com.

Alka is reported to be interested in keeping the commercial center of the enterprise in India.

The process is the result of research begun by Alka in 1995, and consists of anaerobic heating of a mixture of 90% plastic waste and 10% coal in the presence of a catalyst. Indian scientists President A.P.J. Abdul Kalam, hearing about Alka’s work at a 2003 conference, then had the work vetted by the Department of Science and Technology and the Ministry of Petroleum and Natural Gas, both of which reportedly have certified all claims.

The work is also discussed in a complete chapter in John Wiley and Sons’ “World Polymer” series.

I’ve seen no discussion of costs, which could be a complete deal-breaker, but it seems that someone might want to take a look at this from within the SNS ranks, and, if it really works and makes economic sense, get rich by doing good.

If it’s really all about the Japanese Carry Trade, then it seems a good time for a closer look at Japan, starting with the recent plunge in the Yen / Dollar ratio. The Yen is

stronger against all currencies because debtors unwinding their positions in the carry trade have to come through (buy) the Yen. Here you see it happening:

What are debtors doing with their redeemed funds? Apparently, not buying Japanese stocks. Here’s the picture:

So no one can blame all those Japanese housewives the business press talks about for investing in Australia and New Zealand.

The real question then becomes, where is all this unwound global money going, as it leaves private debt equity, derivatives, hedge funds, and the financial/banking sector?

I couldn’t find a chart of M1 money supply for the last week, so just imagine one going straight up, if I’m right about investors going to cash. We’ll replace it with the real one when it comes out in a quarter or two - if any of us still cares by then.

“We think it is going to make a big impact in India.” Neelam Dhawan, managing director, Microsoft India; on the company donating software to India’s NASSCOM Foundation, for distribution to 35,000 non-profits; quoted in the AP.

“…thought to be the highest [speed] recorded in the UK for such an offence.” The result of A 33-year-old London man driving a Porsche 911 at 172mph on the A420 in Oxfordshire, the BBC reports.

“The U.S. government is freaking out.” William D. Watkins , CEO of Seagate, on disclosing the issue of Lenovo making a run for his company.

“For a monostatic detection, no reflection wave will be received by the detector if the imperfect cloak has a matched impedance with the free space. Therefore, the imperfect cloak, even with its parameters deviated far from the ideal parameters, still can be made completely invisible with the monostatic detection as long as it satisfied the impedance requirement.” Hongsheng Chen, Bae-Ian Wu, Baile Zhang, and Jin Au Kong, on their research showing perfect “invisibility cloaks” to be possible, in a recent issue of Physical Review Letters.

“It's an extremely grey [area], because I don’t think the exemption was altogether clear. The idea of trying to use copyright to, in a sense, establish exclusivity in a service contract ... is going to be an interesting thing to watch.” Bart Showalter, intellectual property lawyer in Dallas with the Baker Botts LLP law firm, on Apple and AT&T using copyright law to prevent the unlocking of iPhones.

“… you grant Google a worldwide, non-exclusive, royalty-free license to reproduce, adapt, modify, publish and distribute such Content on Google services for the purpose of displaying, distributing and promoting Google services…” from the Terms of Service Agreement attached to Google Apps, reported by ZDNet’s Joshua Greenbaum, now calling Google “the evil empire.”

“Google is currently assessing over twenty HTC models and refining its final handset design and will create a special version of Google Maps, compatible with built-in GPS, and compatibility with Gmail and the calendar app. There is also some talk that Samsung will be releasing gPhone handsets as well, but that has not been confirmed.” Crunchgear, today, quoting an HTC insider.

Very insightful as always, but let me add a specific internet video application which adds to your analysis of why Chambers has such a large smile.

What John Chambers sees is that internet collaboration and conferencing is emerging as the killer app for business customers. First, he buys the industry leader for desktop meeting services, WebEx, which most people don’t know is a company that uses global dedicated networks and can add video conferencing to shared desktops. Second, Cisco has recently introduced advanced collaboration systems termed TelePresence which adds business value to the customer every time it is used. I have been prototyping synchronous collaboration systems for twenty years and this Cisco TelePresence system is the first time a commercial system has really taken off.

I expect Cisco is having a hard time keeping up with the orders! And yet in spite of the "just as good as being there" for a business meeting feeling, it only requires about 3 megabits per second of bandwidth per screen. HP is also selling a different telepresence system, termed Halo, which your FiRe attendees got to experience last May, but in spite of its realism it only uses 45 megabits per second. So these first virtual meeting systems need minimum bandwidth--but what about the future?

Calit2, the FiRe laboratory of the future, is experimenting with digital cinema realism, using 500 megabits per second compressed and 7,600 megabits per second uncompressed. We run these experiments over the National Lambda Rail, whose physical layer consists of a Dense Wave Division Multiplexing (DWDM)-based national optical footprint using Cisco Systems' 15808 and 15454 optical electronic systems, with a maximum capacity of 40 and 32 wavelengths per fiber pair respectively, each with a 10 Gigabit per second (Gbps) transmission speed.

As jet travel becomes more and more "ungreen" (note the demonstrations at London's Heathrow yesterday over the addition of a third runway which the protestors correctly claim will increase carbon dioxide emissions from more jet flights) and costly to business, the demand for commercial products for virtual meetings is essentially without bound. And with these experiments, Cisco is leading the way for a great expansion of the market demand for their top end optical routers and switches.

John Chambers is very cleverly repositioning Cisco as the "Collaboration and Virtual Meeting Company."

As the world’s expert on supercomputing and supervisualization - and, of course, as the head of the incredible new FiRe Lab (i.e., the California Institute for Telecommunications and Information Technology), we accept everything you say as being totally on track.

John is riding the dual waves of video and visualization. From the tops of those two waves, everything must look exciting and easy.

Thank you for a great letter, and we’re all looking forward to joining you again for even more new and mind-blowing demonstrations during FiRe 2008.

I think Apple has a once in a generation opportunity to grow OS share and convert Windows users.

With Vista, very few people are going to upgrade their existing machines. Vista's hardware requirements are just too steep and the upgrade process to painful. Instead, people are going to buy a new machine. And as long as they are shopping and going to switch OS's to something similar but still quite different, Apple has a golden - I would say, once in a generation - chance to convert those people who are buying a new machine into Mac users.

They are not really going after this opportunity full blast, when they could and should. Maybe it's Panther on Windows boxes. Or even just bundle Parallels on Macs instead of the crappy Bootcamp. With Parallels, you can run your existing apps side by side with Mac apps. It makes the transition smooth and painless.

Even with Panther on Windows boxes, I would include Parallels to make the transition easy.

What was the knee in the curve for iPod adoption? It was when they added Windows support. Initially it was Mac only and an interesting product but otherwise limited. With iTunes for Windows, the product took off.

They have Safari for Windows now (yawn) and QuickTime, but they really haven't put Windows squarely in the crosshairs.

Customer resistance to Vista is high. If you're buying a new machine, why not just move to a Mac? Especially if you can run all your existing apps? And not put up with the incredibly terrible OOBE [opening of box experience] on Windows these days thanks to all that crapware. Have you bought a Sony laptop recently? Beautiful machine but the OOBE must be experienced to see how bad it can be.

The next Vista won't be till 2010. What an opportunity for Apple! Such an opportunity hasn't existed since 1995 for Windows 95. Back then, it was Apple that couldn't get an OS out the door to save itself. Remember Copland? Rhapsody? Wow. Now, they have their act together.

This is a theme that keeps coming up in these pages. Given that I have the luxury of knowing who you are (did I mention that this person was a key player at MS in earlier times?), this just adds to the likelihood of all of it being true.

I saw an article claiming that one out of six laptops sold today are Apples, according to the NPD Group, but this is kind of like saying “All Chinese goods sold in the UlSl except through Wal-Mart,” since Dell sells almost exclusively direct. Even so, Apple’s notebook sales are growing faster than the market.

I seem to have gotten to the point where notebook/laptop (“can we just call these ‘lapbooks’ now?”) sales are all that matter, looking forward.

Thank you for writing in to us. I know that your fellow Redmondians are listening. One wonders if they feel there is much they can do.

Not surprisingly, this edition’s topic is all about our spreading sub-prime debacle. Is it me or do we have pretty much a 10 year cycle of financial disasters?? Ten years back was the Long-Term Capital Management & International currency crisis, 10 years before that was the ’87 market crash – soon followed by the S&L crisis, and then the rest of the 40+ crowd likely remembers the mass inflation run of the late 70’s (I recall getting a now seen as unbelievable 18% interest rate on my money market fund!).

Warren Buffett accurately predicted an inevitable calamity in the hedge fund and derivatives markets about two or so years ago. Buffett truly is the great Sage of financial markets and a world example of integrity, honor, & discipline. We should all take serious note of his wisdom in the future and also as a role model of outstanding character.

Congratulations are in order for you also considering your carrytrade, etc. warnings. I’m looking forward to receiving your future insights as economic events unfold.

P.s. Looks like Steve Jobs doesn’t have to get into a potentially nasty battle with AT&T after all concerning the iPod [iPhone?] not being strapped to the AT&T network. As described in the below link, a 17 year old wiz-kid has figured out a way to modify the actual iPhone hardware so that it works on any GSM-based network (too bad they can’t get it to work on Verizon/CDMA!). The below article also mentions that another group can unlock the AT&T handcuffs via software which they intend to sell.

Somehow, I don’t think Jobs will be standing in the way of the hacks – or perhaps he is not so surprised by these occurrences… Hmmm…

First, I recommend all of our members read both Bill Gross and Warren Buffet whenever they can. Bill is the master of all things bond-like, and Warren has just seen it all before.

In the case of Warren’s call, I think you just get to a point of experience when, whatever the hot thing is, you get ready for it to unload. Investors really are lemmings, including all the hedge and mutual funds. Mark Cuban said it best, when he explained his revelation on winning in the market: you don’t have to beat the companies, you have to beat the other investors.

I think you’re right about Stevej, but he will be getting HUGE royalties off of these 10% gross deals he has made with the carriers.

I’m writing about the EIU global IT competitiveness index that was recently launched and I wondered if you’d be interested in commenting for the piece, especially if you think the recent issues around global liquidity and the US lack of control over their economy have any bearing on the topic. The main questions I’m aiming to answer are

-- How can companies find out which countries are a good environment for developing and using IT in?

-- Where can you find a skilled workforce or a good infrastructure or the best regulatory environment?

We're looking at outsourcing separately so I’m not covering that and my deadline is September 5th.

As for developing IT, I don’t think you want to do it where you will lose it before it reaches you, so piracy has to be a big issue. As Sidney Rittenberg, corporate advisor and author of The Man Who Stayed Behind, puts it: “Don’t take the recipe for Coke to China.”

I think the actual history of IP development is perhaps tautological: the countries where it did happen are probably those where it was best suited.

As for workforce, infrastructure, and regulatory environment, I would tend to go to Eastern and Central Europe. These things already exist in the more-developed world, so I assume in asking that you are looking for the next wave.

I hope that you are well. I read your road trip issue with great interest. I covered about 1/4 of your trip a year earlier on a Fat Boy. Nice riding and beautiful scenery.

Recently, I took a trip with the family to Jackson Hole. In my opinion, The Tetons are the most striking mountains in the US.

While in Wyoming, I was keeping in touch by using a Verizon broadband card. I have been working with a company out of the UK on a consulting assignment. I attempted to send an e-mail to provide status on a project task and the note bounced. That was just the beginning. Every e-mail I sent bounced.

After three days of using an alternate, and cumbersome, method of sending e-mail and a very long thread of discussion with my hosting provider, I deduced the source of the problem.

When I dialed into the Verizon network an IP address was assigned to the session, each one of the Verizon IP addresses had been flagged as a source of spam by SpamHaus and the Composite Blocking List (CBL). The UK firm uses SpamHaus and the CBL as a pre-filter for all incoming mail.

The value of my Verizon mobile broadband connection just diminished greatly. What a pain.

In sharing with us the amusing if unfortunate difficulties encountered while “out on the range” with all those buffalo, you have, I think inadvertently, managed to bring up one of my BIGGEST PET PEEVES.

1) illegally blocking legal IP address numbers, just because it is too lazy, stupid, or technically naïve to do it properly (Yes, SpamHaus and anyone like you);

2) extort money from you (yes, SNS has been forced to pay this illegal fee) to stop it, and then

3) returned to blocking you a short time later. (Did I say it was too lazy, stupid, or technically naïve to handle its own business?)

For readers who are unaware of the Composite Blocking List and how it works, it is maintained AS THOUGH it were an accurate list of “illegal” IP addresses, such as those of known criminals, bot runners, spammers, etc. But, because this involves long lists, billions of numbers and lots of investigation, they just - wing it. Yes, they SELL the CBL as though it is accurate, and any IP addresses that happens to get wedged in between other addresses they don’t like, they just block as well.

Why take the time to investigate each address before you essentially prevent it from doing business on the Net? That would take time, after all.

I think someone should file suit over this, and at the very least force these guys to stop blocking legal addresses, to stop extorting funds for their own errors, and to pay penalties instead on a per-error per-day basis.

Thanks, John, for bringing this up. It sucks. The German government should step in and stop this embarrassment.

Mark,

Ray Ozzie read your recent newsletter and asked me to follow up on one of the letters. I’ve copied it below.

I used to work on OneNote and now work on some other emerging technologies. There have been similar ideas to the description in the letter as possible features in OneNote, Office, IE and so on. Per Ray’s request, Id like to get in touch with Steve the Letters author to further understand what he is asking for. Could you put me in touch?

Thanks,

Mark,

I wonder if you could answer a question for me? How does one go about getting a fundamental idea across to a company like Microsoft? Or, how does one get this kind of thing addressed?

I've done advanced research for many years, and have noticed that nearly all of it is wrapped around the functional process of establishing, examining, and evaluating linkages. In most cases the linkages are of a simultaneous nature.

In terms of computers, that means that I'd need to see, for instance, the left hand side of the screen displaying my principal document, and the right hand side of the screen simultaneously tracking through the references. And while there are many tools that could appear on the right hand side, or even both screens sequencing through a logical reference series, the two major factors are

1) simultaneous and linked windows

2) maintenance of links, so that any sequencing does not cause positional loss

I've done enough thinking about this that I could talk knowledgeably, but when I've tried to make contact, all I get are the usual polite form letters telling me that the company is unable to listen to outside ideas.

I really would like to see the tools created that would speed up, not only my research but research in general, but have no idea how to communicate this. Any advice?

Steve Lovell

Chris,

My thanks to you and to Ray for responding so quickly. I am bccing this email to Stephen; I would expect he will write back to you shortly.

Thanks again, and I hope that something useful comes out of your mutual dialog.

I’ve just heard back from Steve, and he is planning on sending you detailed papers on this subject. He seems very pleased to have heard from you.

My thanks to longtime SNSer Ray Ozzie for paying attention, even with fifty balls in the air.

Mark Anderson

Yesterday’s drivers of innovation, such as information technology and business process re-engineering, have become part of business as usual – offering little hope for disruptive advantage. At the same time, the pace of discovery and invention in physical-sciences R&D is accelerating, making scientific discovery an immediate commercial imperative for a growing number of firms. Meet the businesspeople and scientists bringing science-driven innovation to the market at the 2007 Lux Executive Summit.

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Mark serves as chair of the Future in Review Conferences, SNS Project Inkwell, The Foresight Foundation, and Orca Relief Citizens’ Alliance.

Disclosure: Mark Anderson is a portfolio manager of a hedge fund. His fund often buys and sells securities that are the subject of his columns, both before and after the columns are published, and the position that his fund takes may change at any time. Under no circumstances does the information in this newsletter represent a recommendation to buy or sell stocks.

SNS Future in Review (FiRe) Conference website: www.futureinreview.com

SNS Members’ Gallery: www.tapsns.com/gallery.php

SNS Project Inkwell: www.projectinkwell.com

Orca Relief Citizens’ Alliance (www.orcarelief.org), a 501(c)(3) non-profit effort to study and reduce Orca mortality rates, supported largely by technology workers. Contributions may be sent to: ORCA, Box 1969, Friday Harbor, Washington 98250.

On September 7th, Mark will be meeting with Governor Jon Huntsman to discuss SNS Project Inkwell and new one-to-one pilot schools in Utah. On September 9th-11th, he will be at EdNET in Chicago; please email a Hello if you plan on attending. On September 27th, he will host the Second Annual SNS West Coast Dinner at the Intercontinental Mark Hopkins San Francisco; to register, go to http://www.tapsns.com/sanfrancisco/2007/ . In October, he is headed for China.

In between times, he will be admiring the new pair of Percheron work horses, just arrived from their long trip, Missouri to Washington; watching them learn the lay of the new farm, as we learn what they need to drive a carriage or a plough straight and true.

“Strategic News Service,” “SNS,” “Future in Review,” “FiRe,” “SNS Ahead of the Curve,” and “SNS Project Inkwell” are all registered service marks of Strategic News Service LLC.