Article on tech recovery:
thestreet.com
IMO, he's right, that there won't be a big PC replacement cycle. PCs are becoming dumb terminals, commodities, used mainly for network access. But he's wrong, about generalizing that idea to the entire tech sector. I think the growth will happen, but in different areas.
He says it himself: "IT managers......want company data stored on their network servers, not on local machines". When IT spending picks up, sometime in 2002, I'm betting it will be concentrated in:
1. wireless, because the network is becoming mobile, and wireless has won over satellite.
2. storage, because the amount of data stored on the network is continuing its exponential growth. Data storage and the movement of data, that's the bottleneck, the place where profits will be made. Raw computing power, and the dumb terminals where data is accessed, is the place where profits will NOT be made.
The next tech capital spending boom will not look like the last (1995-1999) one. Some Gorillas&Kings will be sitting in places where margins are high and sales are growing.....and some won't. In this downturn, we have seen companies that have very strong franchises, like EMC, competing on price to hold onto market share. That's been an ugly process to watch, almost as ugly as the stock chart. Just about everyone (except MSFT) has lost pricing power. On the upturn, some companies will regain pricing power, and see profits increase just as sharply as they fell in 2000-2001. But some won't.
So, I'm betting on QCOM and NTAP and EMC and TXN and AMAT, and not on INTC or MSFT. And not yet on CSCO.
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UF: thanks for welcoming me back on this thread. |
