With regard to the article from BusinessWire concerning the impact of Internet traffic on future Internet revenues: it's good to see that this subject continues to receive national exposure. However, I feel that there are important aspects of this growing traffic that were not mentioned in this article that, in my opinion, make the prognosis much more bullish:
1) How fast is/was the Internet traffic? There is heavy automobile traffic outside of every major metropolitan city during morning and evening rush hours, but none of it is going anywhere fast. The same used to be true for Internet traffic in the not-so-distant past. Today, computers have faster processors and modems, and high-speed Internet service providers with broadband cable/fiber optic transmission lines that can surf the web 50 times faster than a 28.8K modem are rapidly increasing their customer pools. When people can get online and surf the Internet faster, surfing becomes less of a chore and they will tend to surf longer and download more material. I personally started out with a 28.8K phone modem connection to the Internet. In those days, I usually had to wait to get online. Once online, surfing was slow, and downloading was a time-consuming process that I avoided whenever possible. Now I have a MediaOne broadband cable connection; I surf longer, faster, and can download a 12 Mb file in a little over 4 minutes, with the download rate approaching 150 kb/s at times. As high-speed carriers increase in prevalence, Internet hits and downloads per unit time will skyrocket. Additionally, new users will continue to get online, learn the basics, get impatient, and then improve their connections.
2) Who are the new users? Senior citizens, many of whom are on fixed incomes, will probably represent an increasing proportion of new users that will go online in 1999 as the cost of new and used computers decreases. Many of these potential users are intimidated by computers and their normally hefty price tags, but the recent explosive, well-publicized growth in Internet stock values and abundant bargains on new and used computers that are Internet-functional and have relatively fast processors will likely draw many onto the Internet as new users. Once online, they have more available time to increase business transactions on the Internet just as they've helped boost business for cable TV retailers like QVC for a number of years now.
The portion of the article which states that investors will have to use historical precursors such as sound management, good business strategy and good marketing to decide where to invest bodes positively for Internet companies like GNET, which have all of the bases covered well. |
