From: Roy T. Fielding (fielding@kiwi.ICS.UCI.EDU)
Date: Sat Apr 29 2000 - 02:55:08 PDT
>The total value of the U.S. equity markets - the stocks on the New
>York Stock Exchange, the Nasdaq and the Amex - is about $20 trillion.
>The pure-play Internet sector, therefore, accounts for approximately
>3 percent of the total. Although this is a big percentage, especially
>considering that we are only five years into the Internet boom, I
>believe that long-term, Internet-driven companies could account for
>10 percent to 15 percent of the total, or between $2 trillion and $3
He is nuts. In order to be counted as a "pure play", a firm cannot
be involved in the production of revenue outside the Internet. But
the real money is in the production and transport of goods and services,
not in the exchange of information about those goods and services.
The only companies making any profit are those that make their Internet
content magnify the advantages they have in traditional markets and
distribution channels, which by its very nature means "not a pure play".
The exceptions are the firms that create new markets on the Internet
itself, that derive profits from the advantage that they own a
distribution channel for other people's information. Akamai, and
Rohit's current venture, are two examples. There aren't that many.
The notion that 10 to 15 percent of the total US equity market will
be made up of firms that rarely make a profit is just goofy, even under
the market of two months ago. The only way that could happen is if
hundreds of early-IPO "pure plays" are introduced to the market and
sustain their hype-level value longer than the employee lock-out period,
while at the same time not having pre-IPO venture funding from all
of the non-pure-play companies that actually have money. That isn't
going to happen because the established huge companies (like Microsoft,
Intel, Sun and IBM) make more money from selling each new start-up
their infrastructure than is earned by the start-up itself.
Personally, I prefer the life of an impure-play.
This archive was generated by hypermail 2b29 : Sat Apr 29 2000 - 02:57:03 PDT