Off-topic?
Gimme a break Al! We're not talking 1984 (Big Brother) here or
the number of the beast. It will be a horrible future for some,
that is true, namely mom and pop retailers and local stores
which can't compete with email order discount warehouses.
But we've seen this already haven't we? I quit paying list prices
for software a long time ago, thanks to mail order. Too bad for
the computer stores. Same thing goes for the hardware too. Do
you shop in a store for your computer, and take what you can
find? I'll bet you get a PC Magazine or Computer Shopper like
any informed buyer and scan the ads and reviews, and probably
end up ordering direct from the manufacturer, getting exactly
what you want.
In the past, the reason for the existence of local stores was
two-fold: (1) service (customer support and repairs) and (2) you
could get a first-hand look at the merchandise before buying.
Well, item (1) has been a joke right from the start with respect
to computers. You are just not going to find a highly competent
hardware and/or software engineer or technician working for crap
pay down at Joe's Computer Store. Sure some stores are reasonably
customer friendly, and will replace defective parts if you are
smart enough to locate them and bring them back, but that is
about the best you can hope for. Item (2) on the other hand, has
continued to play a significant role. The small type ads in PC
Magazine, with a few hundred products and prices shown on a page
are only useful if you know what you want. Advertising costs too
much, and there aren't enough pages, to show detailed pictures
and info about each product.
But disk space is cheap. The on-line stores on the Internet are
getting better all the time, and if they don't have the info
and pictures you want, you can check out the manufacturer's page.
A perfect example is the Kodak site, where I looked before buying
a digital camera from an on-line store. I was able to view a
detailed picture of the camera (a DC-120) from all sides, and
even pretend to take pictures with it. Then I search for sellers,
then I emailed them to find out who had the camera in stock, then
I ordered it.
I live in Zurich, but I'm an expatriate U.S. citizen. I can get
some English language paperbacks and computer books here, but
the price is typically jacked way up, and the selection is not
always good. On my occasional trips back to the U.S. I used to
spend a day or two going from one bookstore to the next, looking
to see if my favorite authors had published any new books, and
trying to find sequels to series in the making. I had to hit
many stores, because any given one might not have a given book on
the shelves. Then I would scrounge up a cardboard box and mail
50 books to Switzerland, paying another $50 $100 in postage.
Now I just go to barnesandnoble.com or amazon.com, search on
the author, get a comprehensive listing of everything they ever
published, view pictures of the book covers, read reviews or
other readers comments, select among issues (hard or softbound,
publisher, etc.), get a 20% discount, and for a modest fee of
$2 per book (for overseas) get the books delivered to my front
door in 2 or 3 weeks.
Stores aren't going to disappear, and I'm still going to go
shopping on occasion, but my time is going to be spent much more
efficiently. The work of the people who supply information to
the buyer is going to leveraged immensely. A single source of
accurate, up-to-date, and comprehensive information on a product
is available to everyone on the planet more or less immediately
at their request. Versus millions of people asking the same
questions to tens of thousands of not necessarily well-informed
sales clerks (I was nice there).
This is real the american dream, after (or even before?) owning
a house. You can get what you want, when you want it.
I know a woman who supplies clothes to retail stores. It is
enlightening to see the prices involved. She buys a truck load of
shirts, say, for $6 each. She sells them to a store for $10 each.
The store sells them retail for $19 each. I did not make these
prices up. The poor soul in a 3rd world country probably got way
less than $1 for making the shirt, and the factory which sold it
probably only got a couple. So for a shirt which cost say $3 to
make, the consumer ends up paying $19. Now there are certain
transport and distribution costs which are unavoidable, but I
sense that there are a number of middlemen here who are not
strictly necessary, and who are a lot richer than I can ever
dream of being. These middlemen are performing a service, but
the number of them, and the excessive amount of money they
extract mean that they are in a sense bloodsucking leeches.
They have not actually produced anything material, but they
consume plenty. I'd love to see these people out of the loop
and the worker and end-consumer (also a worker) keep a greater
share of the wealth.
As investors, we all worry about the "Asian Flu" don't we?
What is the ultimate cause of this problem? In a nutshell,
corruption: too many "middlemen" - friends of Suharto in
Indonesia and their like in other 3rd world countries - using
connections to get a big piece of everybody elses pie, getting
on the gravy train, and distorting the economy by looting it
until it collapses. Our middlemen on the other hand, play by
the rules, which means that like the Zulus, they only bleed
the cattle and drink their blood a little at a time.
The bane of the average human over the centuries has been
tyranny of one sort or another, right up through feudalism,
which always means a ruling class living off of the sweat of
others. Until last century, a significant middle class did
not exist. The industrial revolution freed workers to produce
more goods, and our modern more or less free economy and
democracy freed them to accumulate wealth and be consumers.
But some things never change, including human nature, and
the haves and have-nots still exist. And as before, among the
haves are those who still try to use power and influence of one
sort or another to accumulate wealth, as opposed to creating
it.
Before you get the idea that I'm a non-repentent socialist or
something, let me put this in perspective with some examples.
Even today, in Switzerland of all places, home to a democracy
since 700 years and predating the U.S.'s, I as a consumer am
getting ripped off by cartels and price-fixing by manufacturers.
A handful of people control the country's import channels for
cars, and you can't buy a new car here from a dealer without
these importers siphoning off a few thousand or tens thereof.
The dealers themselves are screwed - the factories won't sell
to them direct. A food store can't import potatoes from Germany
without buying an equal weight of home-grown potatoes. The
number of liters of wine which can be imported per year is fixed
and the lucky distributors who have the allotments can engage
in price-gouging. Until this year, retail sellers of Swiss
watches were not allowed by the manufacturers to give discounts.
(Well, at least that changed).
For some years here it was the same with computers. An IBM PC,
back when IBM was the leader, cost 2 or 3 times what it did in
the U.S. Mail order and gray market computer imports from the
U.S. finally put a stop to that.
The Internet revolution which is, according to your quote, going
to change everything is really only going to change the way we
communicate and the way we buy, and to a lesser extent how we
play and are entertained. Direct producer to consumer sales
are going to grow dramatically, cutting out a lot of middlemen.
I don't call that horrible.
I'm still going to be sleeping in a regular bed at night, with
my lover next to me, and my dogs lying contentedly next to the
bed (if not sneaking on it). And when I get up in the morning,
spoiled sought-after software engineer that I am, it is going
to be when I have slept enough, not when the alarm goes off.
And when I go to work, I'm going to work hard, but I'm not
going to be treated like a work-unit or put in a cubicle.
Just like now. I see the Internet helping me to live the
lifestyle I want in the future, not forcing me into another one.
Sorry for the length of this post! Sometimes the mood just
takes me to go off on a philosophical tangent, and we can only
rehash the same old stock news so much. |
