The Internet Is Dead (As An Investment)

I expected better from the WSJ. Even if what the author says is true, he supports his assertion with blanket statements and anecdotes.

Some problems with his argument: Time Warner may own AOL, but it also costs them heavily. Most of their network is Roadrunner/Earthlink before AOL as an ISP.

Microsoft is spending tons of money on online marketing to ensure that they're not a moot point. They are trying to make "Bing" valuable and thus their ad market valuable.

Myspace was pretty much doomed from the start. The underlying software was pretty shitty.

Cisco - what? +/- 10% is STEADY in this market. The market crashed and cisco went down. Duh?

To paraphrase Clayton Christensen's "The law of conservation of attractive profits":

"When attractive profits disappear at one stage in the value chain because a product becomes modular and commoditized, the opportunity to earn attractive profits with proprietary products will usually emerge at an adjacent stage. That is, the location in the value chain where attractive profits can be earned shifts in a predictable way over time."

Companies make attractive money when they solve the hardest problems.

Read his book, "Seeing What's Next"

Also: http://eser.org/oil-and-gas/The_law_of_conservation_of_attra...

Just because it's true that many internet businesses have become modular, commoditized, and marginally profitable, does not mean that there is a shortage of difficult and highly valuable problems to solve.

The companies the author listed are "component manufacturers". Future profits will be created by combining those components in creative ways to solve new problems.

Quoting Economist Paul Romer: “Economic growth occurs whenever people take resources and rearrange them in ways that are more valuable." see: http://eser.org/oil-and-gas/Eser_Corporation%27s_Business_Ph...

Really? I've found them to be better than the vast majority of publications. But, I guess you could argue that's being the best of the worst.

He's talking about "the internet" as the companies that built the physical infrastructure of the internet. That is largely in place now and is a steady, mature business, not a high flying investment opportunity.