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Technology Stocks : Broadcom (BRCM) -- Ignore unavailable to you. Want to Upgrade?

To: DOUG H who wrote (3125)	11/16/1999 2:49:00 PM
From: Brian Malloy	Read Replies (1) \| Respond to of 6531

From Jubak today-BRCM portion paste Jubak's Journal Tech picks for the revolution We're about to enter a period when disruptive new technologies drastically alter the sector's landscape. Here's how to put together a long-term strategy for investing in technology over the next decade. By Jim Jubak ... Tomorrow's commodities It's not too hard to spot the emerging technologies that will become tomorrow's commodities. For example, it's clear to me that broadband Internet access is headed for commodity status within the next five years. Right now competition isn't on price, it's on qualities such as innovation, superior engineering and ease of use. A company like Broadcom (BRCM) is a star in this emerging commodity stage because it can push out an incredible stream of new products, each making the last one (and those of its competitors) obsolete in a matter of months. But I think we can see what's coming. Someday not too far off, a consumer will be able to walk into a store, pick up a fast Internet connection in a box -- maybe DSL or cable modem -- take it home and install it with no more difficulty than installing a modem today. The name of the game then will be brand and price, just like it is in the commodity market of today. Companies that are the leaders in an emerging commodity market will show faster growth than companies in a mature commodity business. They'll show bigger profit margins since competition isn't on price. And the few that manage to break out of the pack and come to dominate their sector as it reaches maturity will generate well-above-average returns for themselves and for investors. The stocks of these companies are clearly riskier, but they also could be extremely profitable for investors. And finally, investors can see the companies with disruptive technologies. Often, more than one disruptive technology threatens the mature and emerging commodity companies in a single sector. For example, in the Internet-access sector, designed appliances that don't use a PC at all to connect to the Internet might use a non-Intel chip. They might need to be produced so cheaply that manufacturers would start giving design wins to a system-on-a-chip house like LSI Logic (LSI) over a Broadcom. Or they could be sold with Internet access service built in so that the consumer wouldn't even need to think about America Online. Most of the companies that attempt to sell products based on disruptive technologies will go out of business. The count of companies that have tried to produce some kind of handheld computer runs upward of a score, for example, and new contenders pop up every day. It's not even certain that the leader in this sector, the PalmPilot, will turn into a successful mass-market consumer product. Deciding which early stage company will emerge from the pack to become the next Broadcom, let alone the next Intel, is an extremely difficult task. Very rewarding if you get it right; very expensive if you get it wrong. I'm going to put off trying to get it right in the three sectors I mentioned above -- optical networking, broadband wireless and distributed application software -- until my next column. But I am going to give you a couple of my favorites in one other fast-moving field. ... moneycentral.msn.com