Lower Cost + Better Service = BOOM!

Sprint has announced that it will demand that its suppliers include WIFI in handsets. This is one of those inevitable, forced moves that lower the price of technology to consumers. The public often thinks that businesses set the price for goods and services. In reality, if consumers will not pay the price, the good or service is discontinued or the price comes down to what the consumer will pay. More frequently, some consumers pay the high price but others balk until a competitor offers a better deal and then the whole industry must adopt the lower price. Yes, the price for mobile Internet service is coming down. T-Mobil is offering their high usage plans for $30 per month less than AT&T iPhone plans. It has to be that some of the extra charge by At&T is extra profit for having a lock on iPhones. As other phones approch or pass the quality of the iPhone the price spread will narrow by the lowering of the AT&T price.

Verizon's initial response to the announcement was that they already offer numerous handsets with built-in WIFI. This is kind of like a car dealer saying I can sell you a Cadillac or a Buick but I'll charge you a big premium for the Cadillac because it has power windows. There was a time when power windows only came on luxury cars. It was amazing how much higher the price of the luxury cars; a price that had little to do with the actual cost of adding features such as power windows. Sooner or later, the dam broke, power windows were added as a feature on lower priced cars and they consistently outsold those without, until such windows were added to other low priced autos as well. Dealers contniue to offer high priced luxury cars but power windows is no longer the excuse for any part of the price difference. Today most cars have power windows as standard equipment and the cost, including installation of power windows is less than the cost of the old hand cranked windows. (Most consumers do not realize how much the price of a new car has tumbled over the past 20 years. The hours of work needed to buy the average new car continues to fall.)

Within a sort time, perhaps only 2 or 3 years, most cell phone traffic will be going through WiFi Routers and high speed land lines. This will allow cell phone companies to handle the huge surge in volume that is coming while selling all the more cell phones.

Many services that most of us currently access through our personal computers are rapidly being moved to cell phones. Things like an Internet search is not a new service but it will be new to billions of cell phone users over the next few years. Dramatic advances in computer translation of text to speech and vice versa will also dramatically increase traffic. The settlement reached between the music industry and providers of Internet music streams will dramatically increase the amount of time consumers listen to "their private Internet radio stations". The resolution of the settlement between Google and book publishers will mean that many hours will be spent reading books, magazines and newsletters that have been transmitted to "cell phones". It seems unreal but under the developing pricing plans, consumers will listen to a wide variety of music free of charge but will pay a few cents extra per minute after they max out their data plan.

After the Internet 1.0 bubble popped, there were hundreds of thousands of miles of "dark cable" stretched around the globe. By selling cell phones that look for the nearest WiFi connection in lieu of the nearest cell phone tower, fewer launches of very expensive satellites will be made and thousands of miles of dark cable will be lit. Cell phone companies will initially get the same price from the customer for sending the call, even though the expensive tower and satellite is not used. Don't take the point of the tower wrong, the demand for towers does not go away. Indeed, in many instances, the addition of a WiFi compatible antennae on a tower will make that tower all the more important. Still, much of the tremendous growth in traffic is going to hit a home based, work based or Starbucks based WiFi reciever and zoom out to a transmitter in another home, restaurant or work place. In other words, cell phones are being made with two modes, similar to having a car equipped with both an FM radio and an AM radio. AM radios were once the only game in town, but over the years, FM took the greater market share. In like manner, cell radios are going to be partially replaced by WiFi radios. WiFi radios (and the coming enhanced versions) are cheaper, faster and can carry much more traffic!

If you have not gotten your Google Voice free phone number, you should apply now. Google Voice is offering a significant productivity enhancement to billions of people. Companies, such as Cisco, have worked on unified message services for many years, as has Google and Grand Central before the Google purchase, but this work is just now ready for a huge global payoff. The serice is much more than a sophisticated call screening, call routing and call answering machine. It is also a text to voice translator and more. Never before has it been routine for words spoken in English to be heard in another language and for the hearer to respond in his language while being heard in English. Biblical radicals will see this as another sign that Armageddon is upon us but the savings to consumers will be enormous because the lowest cost producer of goods will be more easily found.

How about GOOGLE WAVE for disruptive technology! If you have not watched the developers video about Google Wave you should do so (http://wave.google.com/). It will be months before Google Wave is available to the public but adoption rates will be rapid once it is available. Why not? Instead of sending your family and friends something similar to a telegram, you will invite them to come sit down in your living room to have a chat or to play a card game with other invited friends. Email is old, 40-year old technology; in a few years, those who use email will be the equivalent of those who still drove horses in the 1930's or model T in the 1940's.

Lower cost for better service means dramatic growth in use. Lower costs + Better service = BOOM!

Read more!

Strong Economy

As you can see from the posting found on the Philidelphia Fed web page, the economy is making a come back, after a "double dip".

Had our government officials not throw us into a ditch, we would not have needed housing and auto subidies to pull us out, but the car clunker and first home subsidies and others are kicking-in. The third quarter will be strong and the forth very strong.

Dramatic growth in the communications sector will continue.

Read more!

Double Dip Recession

One of the many fears currently held by more than a few is the proverbial fear of the "Double Dip Recession"; we just had it! Did you notice? This Bull Market, the one that began around March 9, 2009, just had its "correction".

No, the market will not go straight up from here and the economic recovery still has a lot of bumping and grinding to do, but the market will not give you much of a buying opportunity and the economic recovery is already underway. Indeed, we are very near the next market "jumping off point". Yes, based on the seasonal calendar, there is serious risk ahead. October bottoms are historic and the US Congress has much compromising to do in order to produce a budget. There is much talk suggesting the March 9 lows will be tested. There are still many old neighborhoods with lots of homes for sale.

However, the stimulus funds that were passed a long time ago are finally making their way into the economy, the "cash for clunker" car program is bringing traffic to auto dealers and the housing credit will expire in November. Many a buyer will be anxious to buy before this program expires. Many a housing deal will be made by September.

The market is already discounting the great potential harm that would be done by a federal take over of health care and the passage of an onerous cap and trade tax. Even with 60 democratic votes in the Senate, the Obama Health Care plan as proposed during the campaign has no chance. The irony is that the big unions don't want to lose one of their major member benefits. And the cap and trade garbage is pure foolishness. This week, the international community said yes, yes, yes, we need to STOP THE DREADED GLOBAL WARMING, and no, no, no, we not shut-up or put-up.

Folks, Global Warming is the biggest con ever. Power hungry politicians and even power hungry industry leaders are willing to play this magicians trick. The worst part of all is that it allows industry to continue to pollute. Right now, many lives could be saved by tightening the allowed sulfur compound emissions but instead we are focused on reducing carbon dioxide which is other wise know as plant food. The more plant food we produce the bigger the volume of ocean plankton.

Over the next 12 years, China will build 72 giga-watts of nuclear power and not millions or hundreds of millions but billions of consumers will substitute electricity for gasoline in quadrillions of instances. So far, about 6% of the words population has a broadband IP address. Forty-four % of Norwegians and 24% of Americans have IP addresses. Nuclear power plants can not be built fast enough to accommodate the current compounded growth in communications traffic.

The Internet is not in a recession. Advertising revenue growth has slowed but Internet usage is growing at 27% per year. No less than 4 trans-Atlantic communications cables to Africa are works in progress.

The 18.3 year real estate cycle is at its beginning point. For the next 15 years, real estate prices will with a dip about mid-way, soar! If you are ever going to own a deluxe ocean front beach property, you have already missed the deepest discounts but there are still many opportunities. Stocks are a lot like the wagging tail of a dog. Stocks tend to jump around more than real estate but the tail tends to go in the same general direction as the dog.

Read more!

Google Developments Are Huge!

Over the past couple of weeks, Google has made major announcements which have greeted with a bell curve of excitement, yawns and "pooh pooh". Many financial and IT "experts" have been among the "pooh pooh" crowd. Experts are often so deep in the forest that they can only see trees and not the big picture.

Google is not the only player in the new Internet 2.0, but Google is helping Internet 2.0 to climb up a new sigmoid growth curve. The acceleration stage has been reached, but few seem to recognize the significance of the break out. Significant change to the way you live your life is in the works. Your cost of living is headed down and the ease of getting stuff done is "going up". Here is a recap of some evolving events:

1) The cost of fully functional computers will fall rapidly over the next several years. By this fall, it is likely that the $200 price point will be broken for netbooks. In about 18 months the $100 price point will be broken. Today's $200 machines typically come loaded with a minimum of $250 of application software. Gradually consumers are learning that they really don't need the extra software. The $100 machines will do more than today's machines without the expense of the software.

2) Sales of Internet 2.0 phones and mini-computers, including Apple, Android and Palm machines will have changed the market place by this fall. Millions of people are going to save money by not buying "Microsoft smart phones". Consumers will initially spend more on service but their cost per minute will fall significantly. Apple just celebrated the one year anniversary of its application software store; software development will never be the same. Very personal and specific software is being purchased, leaving the howitzers for others.

3) Millions of people will sign-up to get their Google Voice phone number this year. They will acquire their phone number for life. Incoming and outgoing calls will be managed and personal time will be controlled like never before. The convergence of voice and text is a major development. "Speak and it shall be written" has been a long held dream. This technology is ready for prime time! Sure it is still in the "Model T work horse stage", but significant work will be accomplished long before the technology is perfected.

4) Late this year, consumers will sign-up for Google Wave. Even early adopters will enjoy a rich platform that will enhance their Internet experience. A friend might invite others to a Friday night Internet only party. He might post a few bridge tables, a few hearts tables, a movie and a game board or two. Attendees might find a seat at a card table while others might hang out or Kibitz. Attendees might leave and return or they might chit chat with players or non players in the Wave publicly or in separate private Wave's. Card players might play a card in mid sentence of a conversation with another attendee. Some attendees might speak their words and others might type their words. In like manner, business meetings will be held and work will get done. Those who have almost abandoned the use of their personal computer because they disliked the hassles of email will return to the Internet.

5) In 18 months, many consumers will flock to Google Chrome OS machines. These machines will boot in only seconds and will be ready to browse the Internet in something like 20% of the time it takes to boot a Windows based machine. The buyers of these machines will tend not to load them up like the "tanks" encouraged by Microsoft. Microsoft makes its money by selling consumers "tanks" loaded with very expensive "howitzers" that are almost never fully utilized by consumers. Google's goal of making the Internet easy, safe and comfortable is consistent with its goal of making money by advertising to users.

This ongoing process is similar to the conversion from the horse and buggy to the automobile. Only about 40% were willing to buy the old Model T. It took the addition of features to make the car easy, safe and comfortable before the second sigmoid curve of growth kicked-in. Features such as electric starters, safety glass, automatic transmissions and air conditioning were necessary. Think of Google Chrome OS as the automatic transmission of the Internet industry. Many people are not going to use a computer if they feel they must know how to down load software, run virus checkers and such. People can do the simple things, such as buy a tank of gas or click, drag and drop a photo, but they want to leave the heavy maintenance to the managers of the "cloud". While the Google Chrome OS will work off-line, most of the stuff that will make it easy to communicate with others will be hosted and maintained on Google "cloud servers".

READ THE HANDWRITING ON THE WALL!

After the hatchet job done by our powerful leaders, which has resulted in a major recession and the transfer of trillions of dollars of real property and other assets to the super wealthy, it is natural for the public to be in a state of discontinuity. The powerful have been playing the magicians trick of distracting the public with one hand while grabbing trillions of dollars of cheap assets with the other. The public has been sold on the idea that Global Warming and Health Care Reform are the big issues that if not "fixed" will lead to the end of civilization.

While Cap and Trade and Health Care battles make the news, the rapid progress being made to dramatically cut the cost of living is greeted with pooh poohs. Yet the "handwriting is on the wall".

Over the next 11 years, China expects to add 72 gig watts of nuclear electricity capacity. Russia just completed its first floating nuclear reactor. Weird seemingly impossible partnerships are being formed to produce nuclear power. China is mining for uranium in Jordan. South Korea is in partnership with several Middle Eastern countries. France has made deals with several countries that have huge amounts of hydro-carbons and with other that have little. Westinghouse and South Africa are in the midst of negotiations. There is even a race in progress in the USA to be build the first of new generations of nuclear power plants.

Why is the demand for nuclear power so great? For one and only one primary reason, the world wide growth of digital communications traffic is growing at the compounded annual rate of 27%! Why is this major industry growing so rapidly? Because each time a digital communication is substituted, an incredible and immediate rate of return is often the result. Each downloaded newspaper saves a relatively huge amount of resources.

Six or seven of the books on the New York Times best sellers list are available FREE of charge through Kindle! What an incredible situation?! Back in May, Amazon was selling 35% of its dual option books via the Kindle. That was before 6 or 7 of the top selling books were available for FREE. At the beach last week, I saw lots of people reading books; I saw no one reading via an electronic reader. This lack of use to date is not an indication that the technology is not catching on but an indication of how big this market is; the "handwriting is on the wall". The total price of a paper book is a good 200% more than the price of a digital book. Businesses around the world work hard to reduce costs by fractions of 1% but disruptive technologies such as this one saves 200%.

The business cycle surges when there is opportunity for high rates of return. Businesses will spend not millions or billions but trillions of dollars year after year over the next decade because the available returns are extremely high. Individuals have the same opportunity. By buying a web connected pocket computer, consumers will save themselves minutes and even hours per day. They will "waste" much of the time saved "surfing the net" but they will buy the hand held devices .

A Major Investment Cycle is Underway!

Read more!

New Posting PI = PS + CS + GS

I posted a new note on Facebook about how Private Investment must equal the sum of private, corporate and government savings. The catch is that government savings is potentially headed to the negative one trillion dollar mark. More importantly, the savings will largely be spent on the "wrong" goods.


To read more, visit my Facebook page. If you would like a special invitation to join Facebook, send an email to jack.miller@gmail.com. The many charts and the comments made by Bob Dodd and Al Miles are a bonus.


Jack

Read more!

The Move Continues

Here is a link to a chart posted on Facebook. http://www.facebook.com/photo.php?pid=1180475&l=b0f02&id=777298257


If you would like an invitation to join Facebook, send me an email at jack.miller@gmail.com.


Jack

Read more!

More Economic Charts

Last night, I posted several more economic charts to my Facebook wall. Here is a link to one of them.


http://www.facebook.com/photo.php?pid=1179585&l=69f3a&id=777298257



If you would like an invitation to view my facebook wall, please send an email to jack.miller@gmail.com. Thanks.


Jack

Read more!

Housing Turned 7 Years Ago?

This morning, I posted a chart to my facebook wall that shows the turn in UK home mortgages that occurred about 7 years ago! The spreads between US government paper and Euro paper are falling again. Lower prices and the lower cost of money have once again made UK homes very affordable. The good folk who produced the chart, Oracle.com, predict another 15 months of recession in the home building industry. The estimate could be accurate even while trillions of dollars worth of excess supply is scooped up at low prices. At least one of my poker buddies believes there is no money available to buy real estate if one wanted. The numbers for the Saint Louis Federal Reserve tell a different story. Loan production in the USA is currently running at about 10% above last year! Those with the wherewithal to buy are quietly buying trillions of dollars worth.


You can access my facebook wall free of charge. If you would like a direct invitation to join facebook, send a request to jack.miller@gmail.com.

Read more!

Dramatic Loan Growth

I posted a couple more charts this morning showing the dramatic loan growth that is taking place. One part of the business loan growth involves corporate bond redemptions. If a company can borrow at prime + to save 20+ then why not? As the charts show, corporate loan demand does not tend to drop off after recessions until after there has been a massive rally in corporate bonds.

It is surprising to see such strength in consumer and real estate lending. The "news story" does not fit the data.

The reason the congress is in such a rush to pass an economic stimulus package is to be able to take credit for the economic recovery that is on the way.

By the way, welcome to Bob Dodd and Al Miles to Facebook. I suspect Al, in particular, will post a lot of "stuff".

Read more!

CAL up 178% in 6 months

People will tell you that airlines are economically sensitive; they are right. The good news is that CAL has gone up during the recession, just like the price of oil went up during the 2000 recession. Like they say, buy relative strength. Those who bought oil at $12 per barrel in 1999 made out like bandits, as did those who saw the trend and hopped on board by 2002 at $20 per barrel.

By the way, while only about 12 of my regular readers have joined me in the "rich media" environment of Facebook, I am confident that many others will join soon. The Star Trek era has arrived! We can't transport ourselves as fully as Captain Kirk, but we certainly can add dimension beyond the flatness of email.

I just read "The Last Lecture" by Randy Pausch; the Carnegie Mellon Professor, Father of Three, who lived life to the fullest, even after contracting terminal cancer. I saw the video late in 2007, but procrastinated on reading the book because I knew it would shred my heart. It was worse and better than I imagined. I cried buckets and highly recommend this quick read. There was good humor too. Randy was a huge fan of Star Trek. When I was young, I enjoyed seeing Captain Kirk whip out his communicator. Today, 10 year old kids use "Star Trek Communicators" daily. They call them cell phones.

I will post a more complete review as a note on Facebook. If you would like to look me up, my profile is open and easy to find. If you search for Jack Miller, you will find dozens but at the bottom of the page you can add West Forsyth High to single me out. If you would like me to send you a specific and direct invitation, please let me know.

Read more!