Bill Gates said the following to a group of European journalists late last week: "We're back kind of in an Internet-bubble era in terms of people thinking: 'O.K., traffic. We want traffic. We want traffic. There are still some areas where it is unclear what's going to come out of that."
It is a tempting, but inaccurate conclusion. Sure, Google just agreed to pay nearly $1.65 billion for You Tube, a company that didn’t exist a year and a half ago. Sure, every week for the past month there has been talk about Facebook getting acquired for a similar sum.
But beneath all the hype there are some really important and fundamental changes going on in high tech.
*PC’s are as cheap as TVs – less than $400. This means that they are truly mass market items.
*Storage is virtually free and creating its own innovation cycle. The price plunge here is even more astounding than the impact of Moore's Law. A 60 GB Ipod - retail price $350 - would have cost about $85,000 a decade ago. Storage innovation used to be shackled to chip and software innovation. Now, flash drives and hard drives are in almost every piece of electronics we use.
*Broadband and fast wireless connections are increasingly ubiquitous. Scott McNealy has been preaching the network as the computer for 20 years. Now, thanks to fast, always on connections, it is coming true.
*Everyone wants to advertise online. Why else would Google pay so much for You Tube? Why else would Gates have paid some $400 million for Massive earlier this year. The company has technology that will allow Microsoft to put online advertising into Xbox video games.
*And as Rob Guth at the Wall Street Journal reminds us today www.wsj.com, the Internet browser has become a critical platform for software innovation. Google and Microsoft may debate how much of what we do will be on servers elsewhere and how much will be done on our own computers. But compared to 10 years ago, when Netscape acolytes first surfaced this idea, everyone agrees on the direction things are going.
Essentially every business and technology trend that Valleyites have been dreaming about for the last decade is coming true at once. And I know from talking to Gates that he understands all of these things better than anyone. So why the contradiction? In my opinion, it's a head fake. Gates is one of the smartest and saviest businessmen and technologists I've ever met, and he didn't get that way by telling his competitors what was really on his mind.
Scoble has an interesting take on it too. http://scobleizer.com/2006/11/13/bill-gates-says-w...