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Strategies & Market Trends : Galapagos Islands -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (16627)	12/14/2002 4:07:47 PM
From: Lizzie Tudor	Respond to of 57110

And what beauty is that? You have a job so who cares about everyone else? Just kidding. LOL- you know what mish, I'm unemployed right now!! I am working with some friends on new biz plans though. I worked with some tech startups in the 90s and based on the quality of the output of these upstanding firms... I have to say this recession is a good thing at least for software. Ariba was the classic case of overpromising and underdelivering. You can't do that for many years without destroying yourself, I'm glad a lot of the companies from then are gone. OK let's assume the end result is we sell more goods to China than we buy from them. I do not believe this (at least in any kind of reasonable timeframe) but I will accept it for the sake of argument. I didn't say that (or at least I didn't mean it if I said it). I think we will sell a lot to china going forward but the margins (profit) in items we sell to them will be more than their profit from items they sell to us. That is the crux of my argument. The problem with trade deficit figures is they don't talk profitability, just volume. Chinese contract manufacturers are operating at 1% margins in some cases. The question remains where will those good be produced? I believe production will go to China and IP stays in the US for the forseeable future. IP is where the profit margins are... production is merely overhead to sell more IP with many products. My argument is, if you sell 100 million xbox's- and the production for those units is totally outsourced at 1% margin... you can lower the price on the xbox and sell more, therefore increasing the return on the IP which is where the profit is anyway and is a onetime fixed cost upfront, just simple leverage. That begs the software question... software btw I believe will continue to be dominated by US companies... cheaper hardware means more software IP. Thats my overall view and is shared by some economists but not all. As far as labor, I agree production workers are going to be "downsized" as well as some service jobs and maintenance programming. Where will those people go... not sure, production workers maybe somewhere in the service industry... other tech workers like DBAs and programmers shifted from maintenance/IT to real R&D as the industry improves. I don't think theres any inherent beauty in people losing their jobs btw... but what really scares me is not employment shifts, it is stagnation which I see as much more deadly... the dockworkers for example or some telecom companies creating artificial limitations on bandwidth in order to charge more... this is a sort of rehash of planned obsolesence that is the type of thing I don't believe economies can recover from. This is all just blue sky long term stuff btw, not something I am trading on in the near term. Terrible storm here today! Lizzie