[Chapter 869: The IT Ecosystem]
"Only when the tide goes out do you discover who's been swimming naked." This saying, popularized by Warren Buffett, seemed ill-suited for the internet; it fit the Federal Reserve much better.
"Warren, what do you think of the current market?" Alan Greenspan asked, a little miffed after missing a golf opportunity. For someone his age, such chances were becoming fewer and farther between.
"Alan, I just don't know what to say. If I had to, I'd refer back to what I said at last year's shareholder meeting," Buffett lamented, scratching his head as if immobilized by despair.
"Hahaha! With so many followers of yours, that's quite the reaction! Now that a profitable model has emerged, what are you saying?"
Buffett shrugged with indifference, "First off, that guy's company isn't even public yet, so I'm not talking about him. Secondly, I honestly don't understand these companies and wouldn't invest in them anyway."
With Buffett claiming ignorance, Greenspan felt even more lost. What was going on in the minds of today's investors?
Buffett, of course, was also observing. Just because he didn't understand or invest now didn't mean he wouldn't in the future.
At least one thing was clear: he had noticed that the investment prospects for Amazon and PayPal far exceeded those of Netscape.
Sure, operational costs were high and profitability seemed far off. But just look at their user numbers--over a million in just a few days! That was practically a miracle.
So, someone was saying Alibaba had hundreds of millions of users, but it didn't faze Buffett.
They just couldn't see eye to eye; if you had tens of millions of users in America, well, a valuation of a hundred billion was hardly a stretch. If there was even a hint of profitability, they could easily take it to the next level.
The Big Blue had hundreds of thousands of employees--high-tech industry standards for blue-chip stocks. Last year, when things were dire, it only had a market value of about twenty billion. And here was this internet company with just a handful of employees.
International capital was flowing back to America; everyone was looking to make a living. Value investors like Buffett obviously hoped these international funds would return to mainstream value systems.
Unfortunately, the rapid growth of the internet wasn't limited to just the U.S. Aside from a somewhat sluggish response in Europe, nearly the entire world was advancing swiftly.
This unexpected shift left even the U.S. feeling dizzy. How could there be such a massive demand?
Darn it, the semiconductor industry should never have moved overseas.
"Michael, your business seems to be doing well lately. My Windows 95 is about to launch, so get ready!"
"Damn it, Bill! The new setup looks like it's going to become standard with CD-ROMs now!"
"Cut it out! If users want to use the new system, they still need to buy new computers. You must be stealing smiles over there!"
"Prices are too steep! You know, now that even the Japanese are making computers, we're in a bit of a jam. How about giving us a bigger discount? Give it just three years, and you'll be the leading industry!"
"Puh-lease! That's something William White would say! How could that possibly be true?"
Michael Dell scoffed at his friend, skeptical about White's perspective but not willing to argue it.
There was no doubt about the software industry having rapid growth; whether people understood it or not, it wouldn't affect its booming development.
As for the silent battle between William White and Buffett, he found it quite ridiculous. It was as if two people from entirely different worlds were forcibly thrown into a conflict by the media.
From what was happening now, White held a clear advantage. After all, he was an entrepreneur, while Buffett was just a fund manager.
"Ha! You talk about value investing now? Those intangible items hold no value at all!"
If that was the case, why wouldn't Buffett focus on the real stuff? Stocks were just paper after all, far less significant than assembly lines.
Michael understood; neither of them was a saint. All their back-and-forth was purely for their own benefit. Clearly, Buffett had missed the mark.
"Impossible, huh? I heard White just increased his stake in Microsoft again!"
"That jerk! Where's he getting all that money?"
"Who cares? His shares only hold partial voting rights."
"If it weren't for that, I wouldn't be able to sit still," Bill Gates sighed, fearful of losing his stock to that guy's resurgence.
Just because they had been unable to oust the founder in the past didn't mean it wouldn't happen in the future. It was like a gladiatorial arena out there; morals didn't mean squat.
Lately, Gates had been busy, roaming around lobbying PC manufacturers. Only if those guys rolled out new computers would he have any business.
The situation in Europe wasn't looking great, much to Gates's dismay. Not only were they not upgrading, but some were still using the Apple II. He genuinely wasn't sure what else to say.
China had been doing well overall; unfortunately, in software, all he could do was complain. While White dared charge ten cents in royalties, Gates wouldn't dare do the same.
What's a movie? You could say it spread American culture.
What about software?
In America, it sold for hundreds of dollars, but in China, only for a few bucks?
If that's how it went down, American audiences would have to learn Chinese!
In truth, Gates had been getting quite irritated by Netscape recently. He had seriously underestimated the impact of Windows 95. Since then, no operating system had even threatened its position.
As for Netscape?
Once your new system was released, it would be the end of its good times. With everyone at a similar skill level, only a fool would choose to purchase a browser software.
Holding onto Windows 95, Gates was unstoppable. Lotus was easily taken down, and Netscape was kept on the ground.
Was Gates really that amazing?
Of course not.
The truth was, IBM, Intel, and Microsoft were in sync. Rather than saying Microsoft beat Netscape and Lotus, it was more accurate to say that the trio simply didn't let any other companies play along.
Look at it this way: Intel produced CPUs, IBM set PC standards, and Microsoft provided the operating systems. This was a complete industrial chain; companies outside of these three could participate but didn't have a head start.
Think about it--according to Moore's Law, a leap happens every eighteen months. If you can't get the hardware updates in time, what gives you the right to compete with others?
The competition in the IT industry was so fierce that it was unimaginable. Forget being delayed by months; even being late by a few days was a huge disadvantage.
Why didn't White pursue an operating system? The reason lay here. Those guys weren't just a clique; no matter what you tried, you'd always be outmatched.
American companies fared relatively better, but for foreign ones, they'd probably get picked up just for being that shameless.
To hold onto their technical advantages, no means were off the table.
HTC could be banned from selling, while Four Star could face antitrust investigations. As for Chinese companies, couldn't they use national security as an excuse?
Unfortunately, this kind of game couldn't be played too often. HTC and Four Star allowed themselves to be bullied because they weren't tough enough.
China didn't fear them; even if Americans wouldn't use their products, there was demand locally. If it came down to it, they could hit back with some eye-for-an-eye tactics.
*****
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