Wednesday, July 08, 2009

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".


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!