<<>I would argue that new technology can only survive if old technology
> remains vibrant
... not really. Just look at the recent deal between SUNW, INKT and ISLD. SUNW and INKT converted their cash to revenue + asset in a single deal. As long as the barter system is well and alive we will see a continued growth in revenue and assets --- vibrant economy....>>
Suresh.. What I was trying to imply was that internet companies are not secondary companies as far a product cycle is concerned, the huge infra-structure and inter-connectivity is aimed at selling finished goods, communications or knowledge. Now if we continue to see a decline in assets of airlines where their survival becomes and issue or if entire retail sector disappears or if all financial transactions become on line only, we would certainly see ourselves in grip of new recession as major sectors of economy would require readjustment and downsizing. PCLN can get you a discounted ticket only if airlines selling these tickets survive and are healthy and viable, until they have ability to transport us in cyber space through routers this dependency would remain intact.
Similarly newspapers and magazines are all available on internet, if the present pace continues we may also see huge decline in commodities as paper and other commodities demand shrink,(IP is one such company) online newspapers may lead to death of industry, it is here I see a problem in my opinion you can be on internet but these time tested avenues will continue to survive, we will not give up our habit of reading news papers or bedside reading inspite of what is available on the net.
I this age to expect that our living areas would be littered with computer images of our kin?s instead of photographs is stretching limits too far, transition as you highlighted is necessary but in this transition we will see the best to survive. We will still need cars we get more affluent, still need CAT to provide construction equipment and we will still drink fuzzy Coke. After all with these advances if we are left with more time on hand therefore it will be services, holidays and other cement and mortar businesses that will flourish too. Internet is a medium and its capacity to grow is limited by the sales it can capture from the retailers or ad revenue it can steal plus many other innovations and applications in the huge communication sector.
On the retail sales side the jury is still out we still like to go outdoors although we shop on internet regularly so I would assume in 10 years 20 % of all the sales will be on line, however that will certainly increase a lot of business for airline cargo carriers firms like UPS FEDEX DHL. On ad rev even if it steals the entire rev, the moment certain threshold is taken out we will see declining ad rev momentum as increasing cyber ad rev would reduce corporate profitability of many sectors like magazines, newspapers and books. Reduce profitability would result in reduced outlays and that would translate to declining returns. Internets will survive on growth, take the growth out of the total 200 billion $ US ad outlay, if internets takes all ad revenue 100%, without growth in the ad outlay if the major sectors of economy stall, the total market cap of these companies at 8% cap rate would not exceed 2.5 trillion $. The reason I use 8% is that without growth these companies would act like utilities.(G)
At every step I find fortunes of virtual economy tied up with important elements of cement and mortar economy, health, education and living the future of two sectors are interlined, the innovations in one would not be at the expense of others. It is not a zero sum game rather win win for all. Non-inflationary growth associated with best model of free trade will work out wonders for traditional sectors of economy and virtual economy, therefore sometime Buffet assets will do well. That is the pick and reason for initiating the dialogue.
NOK money making ability is dependent on global affluence, it is not the internet that makes money for most of the people on the earth, it is their occupation and actual tangible manufacturing skills. Internet is a facilitator not an alternate, it cannot produce Versace designs. I would agree with you that companies that fail will not be able to make to the next tier of existence for any corporation to survive it is important for them to be futuristic. The impact of inter-connectivity on the GDP and macro-economics are area that needs a lot more input from big company this is a Grey area and they need to understand it well. For me my interest is to identify areas where we I should be concentrating and I hope these dialogues would help me as much futile they may sound to the daily chores of market trading.
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