Who hasn't read the breathless predictions of Google building an
Internet operating system that will make old-fashioned PCs and Microsoft's desktop software irrelevant? I have no idea whether Google's cooking up their own browser or operating system, but it does seem that the desktop-centric world is becoming increasingly less relevant. And Google is well positioned to play a big part in delivering content on next-gen devices.
PCs have never "just worked," and they likely never will. They're big, bloated, expensive, noisy, fragile, slow and insecure. Their performance degrades over time. And most of the world can't afford them.
Telephones, televisions, DVD players and TiVo just work. Right out of the box. Plug them in, and turn them on. No need to load software, reboot, kill viruses, search and destroy spyware, or delete temporary files. Clean, simple, fast, and cheap.
It's a big world beyond the affluent technophiles who can afford these
balky and expensive PCs. To connect to the rest of the world, the issues of cost, complexity and reliability must be solved. And once these problems are solved for the rest of the world, who in Microsoft's current markets will continue to pay so much for so little?
We're beginning to see
devices that accomplish what most people need, simply, and at a
fraction of the cost. And there's
no Microsoft software or royalties on these devices, either. They're ideal platforms for Google's simple, free,
network-based, ad-supported services.
As long-term investors, we search for the sea changes or
inflection points that signal shifts in the assumptions underlying the status quo. I have no idea if Google today is worth $70 billion. But I am convinced that we're witnessing a dramatic change in how information will be stored, managed and delivered on many fronts, and the desktop PC will no longer be at the center of the information universe. As an investor, I'm placing my bets on companies best positioned to enable and exploit the new world, and reducing my bets on the companies still beholden to the old world.
