i don't know if tomorrow will be a downer or not but i have the feeling that the days following tomorrow will better and better. but i've been wrong before so don't use me as anything more than a one person investor sentiment gauge.
the "new problem"
something dawned on me today at work. i work in tv production and also in web development; fairly high tech fields. we've been anticipating this technology revolution for a long time so we can do more work for less money. well... a lot of the anticipated hardware and software is now available and we're trying to analyze what is the best for us but we've run into an unexpected "new problem" inherent in rapid tech growth. by the time we can research our options and engineer a solution for hardware and software deployment - IT'S OBSOLETE and we feel like we'll have made a bad decision because something more efficient and less costly will be available.
i'm sure that almost all businesses are running into this "new problem". that tends to make me think that our entire economy may very well be suffering from this "new problem"... temporarily sluggish or paralyzed as they learn how to make effective capital improvements in such a rapidly changing environment.
a good example of this is china. it's easy to see how china has struggled with it's wireless communications solution... which technology to deploy, how long to wait before beginning deployment, etc.
on the other hand, another aspect of this "new problem" is that those who WAIT to deploy capital improvements end up leapfrogging the technology of their competitors AT LESS COST, mind you. obviously, china will end up having a more advanced, more efficient telecommunications network (CDMA) than europe, at a much reduced deployment cost.
i think it's important for us as investors to be aware of this "new problem" brought about by rapid tech growth because it is going to affect every company we invest in. take rambus for example, they have a new memory technology that outperforms everything else... they have patent protection and are trying to suck up as much licensing revenue as they can, while they can, because you know, i know and THEY know that something else is going to materialize that will surpass that technology soon.
for a company to succeed in the long haul they need to be quick. quick to develop new technology, quick to change direction, quick to make decisions and they need to recognize and find the most appropriate way to deal with the "new problem" of quick obsolescence and being "leapfrogged" by competitors.
a couple of years ago i thought that the "old economy, bricks and mortar" businesses were foolish in being so slow to recognize and participate quickly in the new tech revolution and the new economy but now i'm not so sure. as long as they still have capital preserved, they can take advantage of the rapid innovation in technology by deploying newer, more efficient, less costly solutions to e-business, thereby leapfrogging the so called "information technology pioneers" by a generation or two of technology improvements.
the game is NOT OVER for the dow jones industrials.
i think one of the most valuable assets a company can have, as far as future successful growth goes, is smart, quick personnel with the right attitude and the ability to see and effectively deal with the "new problem". they need to be lean, they need to be small enough to deploy whole new systems quickly and affordably, and they need to have a constant supply of new capital.
perhaps in the future, instead of seeing huge companies increasingly growing larger and larger, we'll see huge companies becoming leaner, spinning out semi-independent "offspring". the large lean company will act as the "umbrella" company providing capital, research and development for the "offspring" to "leapfrog" each other with newer technologies in exchange for profit sharing back to the "umbrella", thereby averaging out the disadvantages of the "new problem".
a couple of dow jones, huge companies that are beginning to look like the above model are...
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INTC
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MSFT
-polvie |
