The crash test
"By all appearances, the internet industry is now in the early years of the long boom. The companies that survived the bust (Yahoo, eBay, Amazon, Google et al) should be able to enjoy several decades of above-average growth. Whether they capitalise on this depends on them - being at the right place at the right time with the right assets is a major advantage but doesn't guarantee a thing - and the industry's development will likely be far from smooth. The roughest part of the ride, though, should be over.
"The opportunity, moreover, seems as big or bigger than it did in the late 90s. The growth and profitability of Yahoo, eBay, and Amazon are the envy of most traditional media and retailing companies, and they have achieved their profits with a tiny fraction of the usual invested capital (it costs more to make a movie, print a newspaper, or open a store than to record mouse clicks). Given the dynamic evolution of the industry, all three companies face continual challenges, but the growth of the medium relative to that of traditional communications, media, and commerce channels gives them a leg up.
"And then there is Google, whose development has been so dissimilar to that of the average media and communications company that it belongs in a freak show. A mere seven years old, Google is on track to book about $6bn of revenue this year. More impressively, the company is so profitable that it already generates almost half as much cash as Time Warner, a global media conglomerate with online, cable, film, TV, and magazine divisions and some 85,000 employees (Google has 5,000). And unlike Time Warner and other traditional competitors, Google is still growing at a rate of nearly 100% a year."
Although the snippet above might lead you to believe that the entire article seems focused on Google/GOOG, such is not the case. And, as mentioned, it is worth your time. Continue reading...