The Fed's move to add liquidity to the market drops a prop out from under the coming recession, but only one. (Lowering the price of money means more money becomes available.)
Two props remain. The impact of the fall's energy price spike must still filter through the economy, and prices will spike again if Israelis and Palestinians go back to war. (That now seems likely.) More important is a technology recession now rippling through the economy, something that hasn't been seen since the mid-1980s.
By 1986 the PC had become a mass-market item and there was excitement over the new niches of desktop publishing and multimedia (remember Hypercard?) but the mass market slowed anyway. The benefits of automation weren't yet apparent on the bottom line - they certainly weren't apparent in offices. The dance between IBM and Microsoft over what would become Windows was keeping the new niches from the mass market. Comdex had a "seen it, wouldn't want to be it" quality that allowed Japanese manufacturers to catch up, despite distance and a slow sales channel.
The introduction of Windows 3.0 in 1990 brought multimedia to the masses, and excitement returned. Hardware and software sales soared. That was followed by the CD-ROM business and then (wonder of wonders) the World Wide Web. The resulting wild ride brought sales, profits and productivity to dizzying heights.
But now those gains must be sustained, even enhanced. That requires a wholesale technology upgrade. But today's upgrade won't come in hardware or software - those applications have reached their limits. It will come from mass-market broadband.
There is demand for new broadband capacity now, from hobbyists, teleworkers and early adopters of technology. But the mass market needs a reason, a killer application that unlocks their wallets. Optimists thought they had something in downloaded music. But a negotiation between record companies and music consumers over terms and conditions for digital music will take years to reach fruition. Meanwhile the market waits.
Forget TV. We have lots of TV. There's no need for TV to come through the computer when it comes very well over the air, through cable, and through dish antennas. Movie companies would love to turn the DVD revolution into a demand for letterbox formats and HDTV, but that game has been blown so many times no one is interested anymore.
Waiting for Hollywood is like waiting for the Bell companies. You bet on quick movement and you'll lose more than the bet - you'll lose your shirt. These changes can only take place at their own pace. There are gatekeepers who must be satisfied and sales channels to be filled.
That still leaves the rest of us waiting for a killer app. The wait will take some time. There are some possibilities - home networks (combining the workplace, schoolroom, and entertainment into one integrated solution) are just one of many candidates. But real growth demands a market that's big enough and grand enough to fuel speculation, and until something develops the doldrums are likely to continue.
What can you do about it? Keep up with the discussions so you can take advantage of what works. Don't place big bets you can't win. Look for sure winners, professional niches, and opportunities to increase your technology expertise. It's the mid-80s all over again.
The future will be slightly delayed. I don't want to send A-Clue.Com daily if it increases the workload on Audettemedia, which has hosted our e-mail deliveries since way back in the 20th century. When I get the power, we'll increase our frequency.
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Takes on the News
Amazon Survival Update
It does seem sometimes that Amazon.Com is as endangered as the rain forest it's named for. The company is facing the daunting task of either quickly scaling-up sales or scaling down fulfillment in a down market. Recessions keep everyone's hands in their pockets, and cooperation is lacking on every front.
Among the solutions now being tried are an "outlet" store (I got a spam on this direct from Amazon, which has also switched to HTML mailings) and a used bookshop. Publishers are already protesting the latter , as though Powell's and others haven't been selling used books for years.
What else might Amazon do? Remember the capital markets are out. Alliances will cost Bezos his soul. This is getting interesting.
Kill the Piano Player
I look to the porn market for new trends for two reasons. First, it's a market that has an ample supply of moneyed, motivated buyers, the kind of people who will spring for new technologies. Second, it's a highly competitive market, and competition spurs innovation.
Now we're getting a view of the protracted Internet recession, and it's not pretty. A major porn provider has issued public death threats against a prominent critic .
You wonder how this can be relevant, but it can. Even in good times big companies could intimidate media outlets by threatening to withdraw advertising or refuse interviews. The point is that in bad times it can get even nastier. It's true that "legitimate" companies (and whatever else you think of porn it's not considered legitimate) seldom turn to violence, but anyone who has been on the receiving end of a lawyer letter understands the pen can be mightier than the sword.
One man's censorship is another man's law enforcement, so don't get in an uproar over the headline. But a move to control what people write, say, and do online continues to gain momentum, and now has entered the commercial space.
The focus today is on auctions, where until now companies have been reluctant to act simply because enforcement has cost money. Yahoo has decided to basically charge for enforcement , imposing a fee on all those who start auctions to pay for its monitoring of those goods for content.
A less efficient method of policing is vigilantism, but that's spreading as well. Ron Smith , a photographer fortunate enough in this life to have befriended actress Julie Newmar is on the march against faked porn of aging stars . He's adding his voice to the growing chorus of those trying to fight the growing online sex trade .
In all these areas the result isn't an actual ban, but an increase in the cost of goods. As was the case for those who trade in drugs, so it will be for those trading in online porn. Those who are willing to pay the price and take the risks will still get the goods. The sad news is the price and risks are lower in the online world than in the world it's replacing.
Clued-in is CBS.Sportsline , which got in bed with rival ESPN to do some work for NBA.Com, the league's Web site. The search for survival calls for an end to overweening pride.
Clueless is Reuters , for swallowing whole an AOL press release bragging its users spent $4.6 billion online as good news. With 26 million members, that $4.6 b figure comes to less than $200 per head. We did more than that on Amazon alone.
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