I always like Andrew’s posts … they usually fit my view, and then sometimes they set me off. This does both 🙂
I don’t understand why he hates Cisco so much. There is no question that all Comm Semi guys have a love/hate relationship with Cisco, but really … this seems personal. In general, I have to admire how well Cisco is positioning itself as a supplier of end-services equipment vs. core switching/routing gear. The days of core/edge switching/routing being cool are numbered, if not over alreay. There is little money to be made in WAN connectivity. The future money is in applications & appliances. This is the real reason suppliers are getting crunched in connectivity gear-land. The WAN providers are beginning to purchase IP gear in the same way as Enterprises, few connectivity features can be turned into additional revenue. This is why there is a Net Neutrality debate, the wired Internet is a horizontal market & the middle sucks (when compared to the ends).
China the next investment meme? Isn’t this already happening?
Muni-Fi and Muni-Fiber … I think that they won’t die … mainly because I agree that Telco’s & Cable co’s will struggle and consumers won’t wait for them to build the new access networks.
Finally, Video over the Net is gonna become an order of magnitude bigger and better in 2007. This will be the big investment meme for 2007. I’d wrap his 3rd PC, High Def, AMD/ATI, Tivo, and Gaming all into this topic. There is a whole new food chain to be developed for Video – end appliances, home networks, access networks, servers networks, and server software. It is gonna be very exciting!
Andrew’s post follows
Prediction is an entertaining activity better suited for stimulating discussion than providing an absolute outlook on the future. Therefore, the bolder and more controversial, the better. Keep that in mind as you read and respond.
- Web 2.0’as an investment theme peaks.‘Equities like Akamai (AKAM), Google (GOOG),’suffer though their businesses continue to do well.
- Google (GOOG) makes a really big move into hardware. This is accomplished by’close partnership’with Samsung or Sony (SNE) who finally realizes it needs a software partner to sell hardware.
- The Third PC emerges, after the desktop and laptop in many homes, and its in the living room. This drives all sorts of new trends, from a focus on highly integrated chipsets to low power to new software companies.
- Sales of gaming’platforms explode though most aren’t used for gaming as the general public’recognizes that game machines serve additional purposes, particularly as a Third PC. They become the must-have high def accessory. The major players at the end of 2007 are Microsoft, Sony, Nintendo, and Apple (AAPL).
- AMD (AMD)’successfully integrates ATI and positions itself as the leading provider of silicon for The Third PC, using the Nintendo Wii as the flag bearer. Markets agree.
- High Def explodes.‘A perfect storm of cheap DVD hardware, content, and carriers finally make it accessible to mainstream consumers.”Service providers Verizon (VZ), Comcast (CMCSA), Cablevision (CVC), etc. figure out that High Def subscribers are profit centers and catalyze adoption.
- Muni-Fi loses it’s luster. After a year of really good publicity and some isolated deployments the public forgets about Muni-Fi and it enters the ‘Trough of Disillusionment‘. (Graphic Here)
- Cisco (CSCO) attracts negative publicity. People realize it’s lack of innovation and monopolistic behavior makes it the Microsoft of the communication hardware business. Market share peaks as customers purposely enable competition, and’Chinese suppliers like Huawei and 3Com (COMS) benefit.
- The luster comes off US Cable and Telecom stocks as investors realize they have only begun to beat the living shit out of each other. Cable fares worse.’Net Neutrality debates in the fall of 2006 turn into infrastructure subsidy debates by spring of 2008.
- Net Neutrality debates move to the wireless domain, which is where they should have started in the first place. Anti-trust rumblings are heard about Verizon and AT&T/Cingular (T )’locking hardware and complicating the use of unlocked phones. One of the Four cellcos’offers an ‘almost unlimited’ data plan for $9.99.
- Tivo (TIVO) becomes increasingly irrelevant.
- China becomes the next’investment meme‘as’retail investors’pour money into the country. Every company rushes to present their China strategy. Any investment with China attached to it get a premium. The 2008 Beijing Olympics become the must-have ticket for the glitterati.
- Medical Tech and Silicon Valley increasingly team up. Silicon medicine is the new buzzword.
- Lots of M&A in the Networking Component and Equipment business (Full disclosure: Key Nyquist investment theme)
And finally, the most useless prediction of all – the markets. I’m going to waffle here and say what they won’t do – The’S&P500 and Nasdaq’will close +/- 5% from where they are today. Key word- VOLATILITY.
If I missed a particular theme, let me know and I might’take a shot at it.
(Via Nyquist Capital.)