Networker: Plenty of shovels, not much gold
Spare a thought for the world's billionaires. They can't make much money from the internet. While those who control the world's phone and broadcasting companies are doing very well, the majority of the world's capitalists are feeling left out.
The success of the internet have spurred new "internets". These include:
Private data networks distributing content via satellite or other high speed connections. These are described as "overnets" and are used to distribute volumes of content to computers around the world which can then be accessed by local internet users, such as sporting events or pop concerts;
Wireless networks. The most enthusiastically hyped use WAP technology, providing internet-style access from a mobile phone. The most successful has been the Japanese iMode service from NTT DoKoMo, which has attracted 10 million subscribers over the 18 months; and
Interactive digital television. Digital television is an alternative to existing "analog" television services. Just as digital CDs replaced analog vinyl records and cassette tapes, and digital mobile phones replaced analog ones, digital television is set to replace existing television broadcasting over the next decade.
While far more complex, it is also more versatile. It provides the possibility for interactive television. The focus of interactive television at the moment is to encourage viewers to buy products advertised without picking up a phone — you just click directly on the TV screen.
On the face of it, these new technologies should provide the basis for huge profits across the board, as people with disposable income become more and more addicted to constant consuming. For this reason every major company is currently being encouraged by business consultancy firms to develop mobile and interactive television marketing "channels".
The companies that supply the equipment, communication lines, software and services to "enable" the new technologies are doing rather well. There are some glitches, such as the $30 billion drop in the share value suffered by Lucent on July 20 after it announced it was having trouble. Lucent, the largest telecommunications equipment company in the world, is still valued at more than a quarter of a trillion dollars.
To use an analogy common in the IT industry, these are the companies making the shovels for the internet gold rush (based on the idea that you make more money from selling equipment to others digging for gold than trying to dig for gold yourself). The companies trying to sell things to consumers are yet to strike it rich. Well known internet companies such as bookseller Amazon.com are still losing a lot of money, and their backers are getting scared. At the beginning of August, Amazon.com had lost nearly 75% of the value its shares commanded last December.
The 10 million Japanese iMode subscribers are sending lots of chat messages to each other but they are not shopping. That makes lots of money for NTT, but it leaves all the other corporate hopefuls in the cold.
The gold rush has not produced any gold, just huge shovel-making companies. The population is refusing to consume on schedule.
BY GREG HARRIS