We've spent some time discussing what we believe is the biggest transformation affecting both the business landscape and our day-to-day lives: the enormous increase in the amount of data that can be sent rapidly and inexpensively from place to place. We would advise readers to go back and visit our recent post "Another wake-up call" and look at the graph depicted in the image on that post, and watch the video linked in that post discussing that graph, if they have not already done so.
We would also recommend going back to a post to which we often refer, "The Unstoppable Wave," in which we link to a 1996 article by George Gilder. In that article, George explains his very compelling definition of a "paradigm shift," and foresees the paradigm shift taking place right now, saying: "To grasp the new era, you must imagine that bandwidth will be free and watts scarce."
The rapid increase in bandwidth (the amount of data per second that can be sent through the network) and the rapid decrease in the cost of bandwidth that George describes and that we have been living through in recent years has led to transformative changes in our lives and in many industries, and these changes will only accelerate.
Video is now easy to upload and download for free. People can watch premiere sporting events online, some free and some for a small fee, typically less expensively than through cable TV or satellite. Some readers may remember the days when sending or downloading a file of a few megabytes would tie up their data connection on their computer for hours!
EZchip Semiconductor is an innovative fabless semiconductor company which designs processors used in the equipment that moves the increasing volumes of data flowing across the networks. These network processors are built into switches, routers, and other networking equipment designed by companies such as Juniper Networks, Alcatel-Lucent, Ciena and others.** See the EZchip diagram above, which shows where in the network such equipment resides.
EZchip's network processors incorporate functions that previously required several different chips (such as processing engines, classification engines, and traffic managers). By incorporating the functions that formerly required several chips into one chip, network equipment designers can save both space and energy use in their products, which are extremely important considerations. Equally critical is the fact that EZchip's processors provide higher bandwidth throughput capacity than chips offered by other merchants or chips designed by the network equipment companies themselves.
EZchip is headquartered in Israel, where a tremendous amount of innovation is taking place right now, and many of the executives and engineers at the company are graduates of the prestigious Technion Israel Institute of Technology.
Amazing as it may seem, many in the investment world are unaware of the importance of the paradigm shift described above, and of the specific value-add that EZchip network processors bring to the companies which make the equipment that must handle the rapidly swelling tide of data being sent over the web. We believe that some on Wall Street are just now beginning to notice this company and taking positions in the stock.
We believe that EZchip meets the definition of a Taylor Frigon growth company that we've described in numerous previous posts (see some of the criteria discussed in this post, and some of the examples provided in previous posts such as this one or this one). We would advise investors to analyze EZchip for themselves, and to understand how it and companies like it fit into the larger paradigm underway.
We would also recommend going back to a post to which we often refer, "The Unstoppable Wave," in which we link to a 1996 article by George Gilder. In that article, George explains his very compelling definition of a "paradigm shift," and foresees the paradigm shift taking place right now, saying: "To grasp the new era, you must imagine that bandwidth will be free and watts scarce."
The rapid increase in bandwidth (the amount of data per second that can be sent through the network) and the rapid decrease in the cost of bandwidth that George describes and that we have been living through in recent years has led to transformative changes in our lives and in many industries, and these changes will only accelerate.
Video is now easy to upload and download for free. People can watch premiere sporting events online, some free and some for a small fee, typically less expensively than through cable TV or satellite. Some readers may remember the days when sending or downloading a file of a few megabytes would tie up their data connection on their computer for hours!
EZchip Semiconductor is an innovative fabless semiconductor company which designs processors used in the equipment that moves the increasing volumes of data flowing across the networks. These network processors are built into switches, routers, and other networking equipment designed by companies such as Juniper Networks, Alcatel-Lucent, Ciena and others.** See the EZchip diagram above, which shows where in the network such equipment resides.
EZchip's network processors incorporate functions that previously required several different chips (such as processing engines, classification engines, and traffic managers). By incorporating the functions that formerly required several chips into one chip, network equipment designers can save both space and energy use in their products, which are extremely important considerations. Equally critical is the fact that EZchip's processors provide higher bandwidth throughput capacity than chips offered by other merchants or chips designed by the network equipment companies themselves.
EZchip is headquartered in Israel, where a tremendous amount of innovation is taking place right now, and many of the executives and engineers at the company are graduates of the prestigious Technion Israel Institute of Technology.
Amazing as it may seem, many in the investment world are unaware of the importance of the paradigm shift described above, and of the specific value-add that EZchip network processors bring to the companies which make the equipment that must handle the rapidly swelling tide of data being sent over the web. We believe that some on Wall Street are just now beginning to notice this company and taking positions in the stock.
We believe that EZchip meets the definition of a Taylor Frigon growth company that we've described in numerous previous posts (see some of the criteria discussed in this post, and some of the examples provided in previous posts such as this one or this one). We would advise investors to analyze EZchip for themselves, and to understand how it and companies like it fit into the larger paradigm underway.
* At the time of publication, the principals of Taylor Frigon Capital Management owned securities issued by EZchip Semiconductor (EZCH).
** At the time of publication, the principals of Taylor Frigon Capital Management did not own securities issued by Juniper Networks (JNPR), Alcatel-Lucent (ALU), or Ciena (CIEN).
** At the time of publication, the principals of Taylor Frigon Capital Management did not own securities issued by Juniper Networks (JNPR), Alcatel-Lucent (ALU), or Ciena (CIEN).
