Thursday, August 25, 2005


TIVO has great potential. However, TIVO is up against the biggest and the best.

INTC is going after the "media" market like a duck after a crawfish. This major chip maker is going all-in (Did you notice the poker humor?). It's latest computer chip is designed to make it easy to move media files from one computer to the other. In other words, if you record a TV show on a hard drive, it becomes easy to transfer it to another computer, TV, DVD or other device. Ones ability to manipulate video in a computer will be superior to ones ability to do so in a TIVO box. INTC will also produce a low power chip for mobile devices. The juice required to play a full length movie is falling like a hot meteor.

GOOG is going after the "media" market like a 1,000 ducks after a crawfish. This company is offering services for free that Microsoft sells for billions. This afternoon, Jones and I each downloaded the TO DO plug-in for our Google Sidebar. This free to-do list manager is far more convenient and therefore useful than the outlook to-do list. Jones pointed out that many a company, after purchasing very expensive CRM software, has found that the employees do not make the effort to key in the info. The Google Desk Top captures all kinds of info automatically. The automatic nature of the sidebar makes it very helpful. This first edition is a great tool; I can't wait to see what is added next. Jones thinks a full scale CRM program would be nice.

GOOG will offer many of the same services offered by TIVO. Both will offer systems to store video content. Why buy a box if INTC sells a cheap computer that will do all the same "stuff" and why pay for a large storage drive when GOOG will store the "stuff" for "free".

In one account today, we sold TIVO and purchased more GOOG! DOING THE GOOGLE GULP! GOOG ; a high priced company that is dramatically changing the world for the better. Do more work in less time with Gmail and other productivity enhancements. Never lose a file again!

GOOG shares will be dead in the water until after the secondary offering is complete. I have absolutely no good idea what GOOG will buy. It is clear that the company plans to take over the number one spot in computer software. Maybe GOOG does not need to buy any major company. If GOOG is preparing to offer free web sites to all comers, it may simply need to buy 40 million new servers. I am sure DELL and INTCwould offer them a good deal.

How many copies of MSFT Front Page will be sold to publish web sites if Google offers free web sites with built-in software? How many copies of MSFT Word will be sold if Google offers a free good quality word processor?

As a former owner of a $500 Lotus spread sheet program ($500 was a lot of money for a desk top computer program in 1985), I can appreciate just how MSFT must feel (in case you weren't aware, MSFT gave away spreadsheets, browsers and other programs to kill break the knees of competitors. Is Google going to take MSFT out to the wood shed for a spanking or is MSFT going to fight the good fight?

I wonder just how happy SBC, VZ, BLS and other big phone companies are this week. Yahoo and others have been offering "IM Talk" for a while. GOOG's program will force AIM and others to open up their systems. When we can all talk to each other over the internet, why will any of us pay for long distance telephone service.

I don't count YHOO out as a major player. Yahoo has deals with SBC,VZ and many other phone companies. Time will tell if GOOG can get the same kind of revenues off communications as it has gotten off of search.

MSFT has a market cap of almost 4 times that of GOOG. In 2003, MSFT had revenues 20 times that of GOOG. In 2004, MSFT had revenues of 13 times that of GOOG. In 2005, MSFT will have revenues in the neighborhood of 7 times that of GOOG. It is conceivable that GOOG will catch-up with MSFT's revenues in 6 or 7 years. Assuming the P/E shrinks to 20 in 7 years, the price of GOOG could easily be over $1,800 per share.

MSFT has been a phenomenal company. Not many would bet that GOOG will produce wealth equal to what MSFT has done. It is fascinating to speculate about the possibilities.

At current high valuations, GOOG should not be more than a relatively small portion of ones net worth. DO THE GOOGLE GULP BUT DON'T SWALLOW SO MUCH THAT YOU MIGHT DROWN!