Thursday, December 08, 2005

Internet Bubble 2 - Is it here already? Passing through...

The internet market today is acting as in the good old days, and in some cases even better. Big Internet companies already show profits, whilst traditional companies increasingly invest in the Internet and relying on it in their core businesses. New internet bazzwords are getting into our life, this year it was the word 'podcast' who won the 'word of the year' of Oxford's dictionary. Earlier we 'googled' the net while we searched for new stuff, and during all that time the market value of Google's stock (NASDAQ: GOOG) soared to levels that does not put to shame any company that has been with us in the 'bubble 1' days. Podcasting raised the demand for flash memories, increasing interests in companies such as M-System (NASDAQ: FLSH), SANDISK (NASDAQ: SNDK) and lately also from Intel (NASDAQ: INTC) and others. Apple computers (NASDAQ: AAPL) revived due to the success of their iPod devices and their music commerce methods. This is only a portion of this evolving industry, but put it all together you will see the re-shaping of this industry, which urge new companies to enter with little barriers. For this particular supply-chain, iPod deamnds increases flash memory production and presents new challanges for innovation. It brings more vendors to the market either for production or to the development of new accesories. These Companies better learnt than before to collaborate in order to stay focused and in order to stay together in the market. Globalization causes for movement of compnaies and development into new countries. This by itself causes for a knowledge spreading all over the world. Companies need to better integrate their systems, and for that reason they are more opened than before.... This scenario, although being more hardware oriented, influences on the whole hi-tech market, among many other factors and samples.

You might be asking yourself 'what is the result of all this?' - this is simple: people are getting used to collaboration in business and therefore are able to produce better products. As a result, productivity increases and the good companies benefits by rapid growth. Investment companies looking to put their hands inside new deals and Suddenly, it is not forbiden to get into a VC hall and talk about new innovation strategies. Suddenly, the VCs are even willing to hear you even if you have only an idea (hmmmm...), and yes - suddenly they are not alone. The bubble days have been characterized by both software and hardware expensions. This is also the case now.
The price tags for some of the companies are again seems to be out of proportion, at some point (maybe even now?) Baidu china which develops a chineese platform for searching was valued at more than $5B with an earning of $1.4 million a year, that is right, amazingly non-realistic, or at least might seems so.

So what am I saying actually? Nothing really. I just wanted to point out that we are already in the next bubble. I didn't even mentioned the gllobalization transformations that involves India and China, maybe in a future post.


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