Trends I'm Watching

Sony PSP Becomes Media Reader

Trend: Handheld devices are leading the move to thousands of channels for getting information, music, and video.

Source: PSP Becomes Media Reader

With its recent software update, the Sony PlayStation Portable is becoming more of an all around media device. In addition to the primary functions of game play, movie viewing, and web browsing, you can now use the PSP to listen to podcasts and Windows Media Audio files.

Globalization isn't what's killing GM

Trend: Ineffective management uses globalization as an excure for poor performance.

Jim Jubak says management at many poorly performing large companies uses globalization as an cover up for their inept leadership.

Source: MSN Money - Globalization isn't what's killing GM - Jubak's Journal

...I think globalization is just a comfortable excuse that lets management off the hook for its own failures of vision, strategy and execution.

Some managements seem genuinely afraid of trying to compete in a globalizing world. It's just too hard. Baloney. If Nucor can succeed against foreign competitors with cheap government-subsidized capital and cheaper labor, so can U.S. auto makers or U.S. airlines.

There's a common thread that unites this proposal from Northwest Airlines to the cost-cutting at GM and Delphi. It's a short-term fix designed to dress up the bottom line. But it doesn't do anything to grow the airline, just as the cost cuts at General Motors or Delphi don't do anything to grow the car company or the parts maker.

Can companies such as General Motors and Delphi and even Northwest Airlines be saved? Even in this age of tough, tougher, toughest global competition, I think the answer is yes. What these companies lack is great management with a commitment to beating the competition and the ability to deliver on that goal. That's always in short supply, of course.

And unfortunately, right now it's more needed than ever.

ETFs: An Approaching Paradigm Shift For Wealth Management

Trend: Shift to ETFs threatens mutual funds.

Link: ETF Investor ? ETFs: An Approaching Paradigm Shift For Wealth Management.

It’s always difficult to recognize the beginnings of a revolutionary shift when in its infancy. Often, only when accompanied by hindsight can we be certain that a fundamental change has in fact occurred. Fortunately, when discussing the impact of exchange-traded funds (ETFs) on the wealth management industry, both individual investors and institutional money managers have been given more than one reason to acknowledge the colossal shift underway.

While not heralding the end of active management, the arrival of ETFs argues enthusiastically for avoiding high-priced stock selection fees and embracing active strategies only where it counts most: asset allocation. If the wealth management industry has only one reason to fear ETFs, it is that they can supply the lowest cost pure exposure to most investment categories. Lower investing costs equate to lower revenues and profits for the typical financial services firm.

Further, ETF suppliers, highlighting the low costs associated with ETFs, tend to illuminate the fees other management approaches are charging for their services. Many fee schedules, not readily disclosing total costs, have been extracted for public examination. Wealth managers ideally are in the business of stewardship – safeguarding and growing client capital using the best available tools at acceptable risks. Higher fees can only frustrate this objective.

ETF Advantages over Mutual Funds

Using ETFs, astute investors and professional managers alike can achieve an active asset mix with widely-diversified investments that have transparent holdings, no specific equity or corporate fixedincome risk, intra-day pricing and greater tax efficiency. Unlike pooled funds or mutual funds, ETFs can insulate portfolios against the activities of other unit holders. Since these listed securities are held directly by the client, capital-gain or loss events are usually only triggered when a position is sold, and not by outside unit holders, as may be the case with mutual funds. ETFs also eliminate some of the uncertainties inherent in mutual funds. While mutual funds usually release security holdings quarterly with a substantial delay, ETF holdings are revealed daily.

Source: Tyler Mordy, a Research Analyst with Hahn Investment Stewards

Platform companies are the wave of the future

Trend: Post-industrial countries can offload manufacturing to other countries and rely upon more flexible companies that design, market, and sell high-end products and services.

Link: Thoughts from the Frontline - John Mauldin

John Mauldin discusses the book Our Brave New World by Gave, Gave,and Kaletsky:

..."platform companies" are the wave of the future. These are companies which design and market, but let someone else manufacture. Thus they have lower capital costs and are less subject to economic downturns, as they have no factories to shut down or workers to lay off. There are no legacy costs and no unions to fight.

...GaveKal argues that [manufacturing] jobs are not economically important (except, of course, if it is your job). Other jobs will replace them. An analogy would be the farm jobs in the late 1800s, as machines, both labor saving and transportation meant more production at ever lower costs. It also meant the price of food dropped in a slow inexorable rate for almost four decades, as production of food did not have to be within a short distance from the markets.

Quoting from GaveKal's newsletter written this morning,

"But platform companies don't have to sell a special product whose price is insulated from the broad economy. They can sell anything. In fact, if anything, given the nature of the global economy, there aren't going to be many products insulated from the global pricing structure - even services. So, platform companies are the new growth companies - not by virtue of what they sell, but by virtue of how they are organized.

Mauldin quotes from Dennis Gartman's daily commentary:

...upon reading Gave, Gave & Kaletsky's book Our Brave New World we have come to the simple understanding that, in the words of Lord Keynes, 'The facts have changed, and when the facts change, we change.' The 'facts' of the world have indeed changed, and we want to own design firms, software firms, pharmaceutical firms, firms that sell high end services, companies like IKEA (if it were public) that sell high end goods but have all of the manufacturing hoved off to the cheapest place of manufacture and can drive costs down while holding margins high. The facts have changed and we need to understand that."

Controlling the Internet

Trend: The companies that own the Internet pipes want to control what goes through.

Source: Renewed Warning of Bandwidth Hoarding.

On Sept. 15, the first major draft of proposed changes in the nation's telecommunication's laws was circulated by the House Energy and Commerce Committee. The draft said Internet service providers must not "block, impair, interfere with the offering of, access to, or the use of such content, applications or services."

On Nov. 2, another draft of the bill came out, with language specifically addressing the Internet video services that are proliferating as connection speeds increase and the phone companies get into the digital television business. In this draft, the prohibition on blocking or impeding content was gone.

If the bill passes as is, tech companies say, the Internet could be forever compromised.

"Enshrining a rule that broadly permits network operators to discriminate in favor of certain kinds of services and to potentially interfere with others would place broadband operators in control of online activity," Vinton G. Cerf, a founding father of the Internet who now works for Google Inc., wrote in a letter to Congress.

The phone companies argue that with their new fiber-optic systems capable of handling huge amounts of bandwidth, they simply want the ability to set aside some of it for their own services, be it television, gaming or anything else.

Unfortunately for them, the head of phone giant SBC Communications Inc., Edward E. Whitacre Jr., was a little more plain-spoken in an interview in Business Week.

"Now what they [Google, Yahoo, MSN] would like to do is use my pipes free, but I ain't going to let them do that because we have spent this capital and we have to have a return on it," Whitacre said. "So there's going to have to be some mechanism for these people who use these pipes to pay for the portion they're using."

via Isen

Who's Afraid of Google? Everyone.

Trend: Google is expanding beyond search into a number of markets leveraging the Internet.

Wired magazine provides an interesting analysis of all the markets that Google wants to dominate.

Source: Wired 13.12: Who's Afraid of Google? Everyone..

Google has gone from guerrilla startup to 800-pound gorilla. In some ways, the company is a gentle giant. Whereas Microsoft infamously smothered new and open standards, Google is famous for supporting them. And the firm is softening its image, launching a philanthropic arm, Google.org, with nearly $1 billion earmarked for social causes. But that doesn't reduce the fear factor, and Google knows it. Omid Kordestani, the company's global sales guru, said at a recent conference, "We're trying to find ways so we are not viewed as a gorilla." Given its outsize ambitions, that's one search Google might not be able to handle.

VIDEO
CLASSIFIEDS
TELECOM
OPERATING SYSTEMS
PRINT
PRODUCTIVITY PROGRAMS
ECOMMERCE

via Basement.org blog

The Cluetrain Manifesto's 95 Theses: 91 - 95

Trend: Networked customers, employees, and investors communicate. Companies should listen.

Source: the cluetrain manifesto

The cluetrain manifesto was created in April, 1999 and released on the Internet at Cluetrain.com.

It was subtitled

The end of business as usual

The premise:

A powerful global conversation has begun. Through the Internet, people are discovering and inventing new ways to share relevant knowledge with blinding speed. As a direct result, markets are getting smarter—and getting smarter faster than most companies.

Here are theses 91 - 95:

iTunes outselling music stores

Trend: Internet downloads are a rapidly growing source of legal music sales.

Source: Investor's Business Daily stock analysis and business news.

Apple Computer's (AAPL) online music store is now among the U.S.' top 10 retail music stores, NPD Group reported. Using a musical album as a sales benchmark, iTunes outsold Tower Records, Borders and Sam Goody. It still lags behind Wal-Mart, (WMT) Best Buy, (BBY) Target, (TGT) Amazon (AMZN) and Circuit City. (CC) Digital music sales account for a little more than 4% of the music market; iTunes has 70% of the music download market. Apple rose 2.5% to 66.52.

Intel Teaming Up With Micron To Form Flash Memory Venture

Trend: Flash memory is essential to the growing number of small, hand-held devices.

Source: Investor's Business Daily: Intel Teaming Up With Micron To Form Flash Memory Venture

Intel (INTC) and Micron Technology, (MU) longtime partners in the realm of PC memory chips, are betting big on a different kind of storage: flash.

The companies on Monday announced a new joint venture called IM Flash Technologies. It will sell Nand flash memory chips — a popular means of storing data on portable electronic devices. Apple Computer, (AAPL) maker of the iPod music player, will be a major customer.

Intel and Micron will initially invest $1.2 billion each in cash, bonds and facilities. Micron will own 51% of the venture, while Intel will own 49%. In what could be a boon to chip equipment makers, the two companies have pledged to spend $1.4 billion apiece over the next three years to outfit IM Flash's plants.

The Nand market is booming, says the research firm iSuppli.

Sales are expected to grow from $6.6 billion last year to $10.8 billion this year and $15.4 billion in 2006. By 2009, Nand sales will hit $26.2 billion, iSuppli says.

Until now, Intel only made Nor flash — a market it leads. Micron, meanwhile, has been selling Nand flash since December of last year.

Micron also makes dynamic random access memory chips, or DRAMs, the top type of memory for personal computers. Intel and Micron work together closely to ensure Intel's PC processors fit seamlessly with Micron's DRAMs.

The new deal could bring relief to makers of portable electronics, says iSuppli analyst Nam Kim. Apple and others are struggling to get enough Nand chips to meet demand. With Intel and Micron joining the market, that could change.

The Cluetrain Manifesto's 95 Theses: 81 - 90

Trend: Pay attention to online conversations about your company. They tell the truth.

Source: the cluetrain manifesto

The cluetrain manifesto was created in April, 1999 and released on the Internet at Cluetrain.com.

It was subtitled

The end of business as usual

The premise:

A powerful global conversation has begun. Through the Internet, people are discovering and inventing new ways to share relevant knowledge with blinding speed. As a direct result, markets are getting smarter—and getting smarter faster than most companies.

Here are theses 81 - 90: