Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Pastimes : Home on the range where the buffalo roam -- Ignore unavailable to you. Want to Upgrade?

To: Boplicity who wrote (10444)	2/19/2001 2:29:05 PM
From: Raymond Duray	Read Replies (1) \| Respond to of 13572

Hi Greg, Re: things will not stay static, the bandwidth will be used I've no argument that there will be tremendous growth in bandwidth and in data traffic. This is not in dispute. What is paramount in my mind, thinking as an investor/speculator, is how does this work its way down to the bottom line. This is where I have a dispute with the pollyannas who feel that "supply creates its own demand", or that the basic laws of business have been repealed, i.e. this stuff eventually, and perhaps sooner than later, must generate profits. There is abundant evidence that the bandwidth revolution does no such thing. It is a technological advance, not a business advance. The nature of the application of the datacom system with supply chain management, B2B, B2C and all that is to destroy profitability. This ain't going to work, in the long run. At least not the way that investors would hope it might. You are not about to tell me the telecom sector has reached the same state the PC sector has and there is no point to increase bandwidth through the network? Excellent point, Greg! We are not there yet, but we certainly are poised to overbuild the Internet infrastructure in the next few years. Whenever I see projections for the growth of optical networks, I see a hockey stick, with the inflection point always somehow being "now" with whoever is providing the prognositication on the sell side, be it RHK, Cahners-In-Stat, or others. More sober views, such as CIR, were projecting last fall that there would be flat sales on WDM gear for 2001, for instance. This view wasn't what investors were placing there bets on, but, in the event, it seems to be exactly what is coming to pass as Capex for the carriers is curtailed for the sake of passing cash flow to the bottom line. do you believe what we have now (reached saturation), and there is no point to going forward? As investors, we need to get over the whizbang nature of these shiny new network elements and begin to look long and hard at the demand side of the equation. And what I see there is a mixed picture. Sure, there is going to be growth in the use of the datacom network in the future. But what is not clear to me is just how it is to be sustained at a rate of 30+% a year, which is what many investors were basing their PEG or ROV** valuations on. How about giving me your vision of what the next 10 years will look in the Telecom sector? Greg, I'm not much of a futurist. Others can do a better job at this task for you. My bias is to say that anything that anyone projects about the future beyond an 18 month time horizon is almost undoubtedly wrong. We can foresee what is coming down the standards bodies track that far ahead (UMTS starts to roll, IEEE 802.3ae becomes commonplace; 802.11b, HiperLAN and Bluetooth all crash each other, CORV comes clean on solitons and loses almost all value) But beyond 18 months, who can know? I mean, who would have projected the Napster phenomenon 18 months ago? And if you think there's a business case there, I'm all ears. I agree with the RIAA in the aspect that Napster is a pirate operation and isn't ever going to provide profits to anyone. It is destoying profit. So let me ask you a question. If the uses for massive bandwidth tend to destroy profitability, what businessman in his right mind wants to invest in it? Will what we have now be inadequate to handle our data needs 10 years from now? No, it will be as it has been since the birth of the commercial Internet. It will be a chicken and egg game with the system always being in rough balance with the demands on it. But I'm still wondering, "where's the money"? Best, Ray :)