Good list, I'd agree with most of them,
except......
the "monopolist telecom service suppliers". IMO, wireless and cable are going to provide competition in the Last Mile, and (eventually), the RBOCs will be where WCOM and T are today. Another example where consumers win, and investors lose. Right now, because the RBOCs are monopolists, it's the other way around. I must admit, I've been wrong so far, on this.
That's unkind, dissing "CSCO, IBM, SUNW, LU, NT, NOK" as "boxmakers." You're showing your bias toward chipmakers. NOK, I agree, is a boxmaker. IBM is a services company, and too big to ever grow fast. LU and NT, I think, are going to steadily lose to CSCO, which will dominate telecom equip. Not now, not next year, but eventually. SUNW is, I think, seeing it's market commoditized. So the only "boxmaker" I like in that group is CSCO, who, I think, adds a non-negligible and sustainable amount of value to the components they "box".
Oh, you forgot EMC, :) I know your opinion of them, you think they just "box" commodity disc drives.
Not-young markets, markets that are out of their infancy/childhood, and into their adolescence/young-adulthood, always consolidate. Industries have a Life Cycle, analogous to living things. And, at the stage where the pace of change in the underlying technology slows down from it's initial burst, consolidation into a handful of dominant companies happens, because:
1. economies of scale become important
2. margins fall, so only the most efficient can make profits
3. brand name becomes important, customers get steadily less willing to buy from "no-name" companies.
4. barriers to entry get higher, as the amount of capital needed to seriously challenge the leader, gets steadily bigger.
In the first decades of the 20th Century, there were several hundred auto manufacturers in the U.S. The lucky ones got absorbed into GM, as they consolidated the industry. The unlucky ones (the vast majority) saw their stock prices go to zero.
The series of steps I listed, are not a disaster (although it looks that way to investors at the time). In the long run, the collapse and consolidation after the initial mass-adoption, is seen as just a bump in the road.
And, yes, there are many examples of where it happened with less pain than we see with telecom/internet currently.
The internet allows me to plan next summer's raft trip down the Snake, and talk about investments, while I'm at home, building wooden airplane models with my boys. Amazing.
All IMO. |
