Think technology. Think about what John Chambers (Cisco CEO) told us the day before he announced the new, faster router Cisco is bringing to market. CEO Chambers told us the router would change the Internet as we know it. Hyperbole? Of course, but does hyperbole necessarily mean the underlying facts are untrue?
One thing for certain these days is that both the Internet and the wireless infrastructures are overburdened and strained. Consider the new applications arriving on the market – music, TV, and movie downloads, as well as cell phones that are now mini computers offering upwards of a million applications. Consider as well that Web 2.0, a new infrastructure designed to supply the huge bandwidth necessary for the coming usage, has been around for a while, but has yet to be implemented. Why? Because implementation would require a major transition from where we are to where we need to go and this transition would cause huge disruptions in both availability and speed. This brings us back to Cisco and technology in general.
When you look at the big picture, the tech sector has done quite well in the last year and telecom industry has lagged far behind. When you consider the primary reason for this (no faith that the wireless revenue streams will grow– market saturation), you understand the lag. Now, again, think technology.
Cisco has fired the first salvo in the coming competition to increase speed and bandwidth on the Internet, which will directly lead to a new boom in the wireless industry. Since radically transitioning from our current Internet infrastructure to a new Internet infrastructure is not practical, the only answer to our burgeoning problem is to rebuild the Internet piece by piece through both software and hardware. Thus, the new, high-speed Cisco router is symbolic of a new technology boom in just this arena alone. Add to this accelerating area other major advances in biotechnology, computer/software technology, and energy technology, and you have a coming boom of epic proportions. The question is: When will the boom become apparent? The answer is it already has.
Tracking the technology sector over the last year, one should be impressed with its forward movement. This past week, the tech sector bounced around somewhat, but the reality is we are in a trader’s market, and this creates the choppy ebb and flow. Get past it. The time will soon come when the economy settles down and we move into a long-term up-trend. One big driver of that trend will be the technology sector.
Understand that the U.S. government has, in the last year, awarded unprecedented amounts of grants, stimulus money, and guaranteed loans to both private companies and public institutions for research in the technology arena. In fact, this administration has made more research money available than any other in history. The floodgates to innovation are now open. The times seem much like those heady days back in the mid-nineties when the U.S. government opened the floodgates with the Telecommunications Act of 1994 and tax breaks for technological innovation. We all remember the frenzy and the “irrational exuberance,” but we should remember as well that the result of that wildly innovative era is what we all rely on today – a stable and reliable Internet.
When Chambers suggested the Cisco’s new router would change the Internet as we know it many laughed and dismissed his statements as hyperbole. Okay, but I remember starting an Internet company back in 1992 (web sites for businesses) when all of what we know today was just “pie-in-the-sky” to most everyone. I remember traveling around my state making speeches to business groups and government organizations. I would tell them, “You might not see it now, but what is coming will change the way we all do business. The Internet will change everything, including how we communicate, how we socialize, how we learn, and how we market our goods and services. New markets will emerge and new customers will demand new products and new services. Be ready.”
My then remarks turned out to be quite prescient for those times. I now say we are there again, in that place where new markets are emerging (think emerging economies) and new customers will demand new products and new services, which brings us back to the wireless industry. Cisco’s new router, and all of the other innovations coming, will make the ubiquitous Internet faster with more bandwidth than ever before. For wireless companies, this means wireless devices can reasonably become more than just phones or texting devices. It means that as the Internet’s ability to support more people using more bandwidth downloading everything from TV shows to movies, more people will buy wireless products and services related to this. This, my friends, is not pie-in-the-sky. This is today’s reality, and as we move further into this reality day by day, look to the technology stocks to make some serious money. Keep your eyes open and you will soon see where to get your money into the game.