Nobody wants to sell PCs these days. Well, nobody except Dell. Gateway is on a layoff spree. HP and Compaq joined forces in order to slash costs. The merged company doesn’t even want to focus on the PC business. It’d much rather be like IBM, selling services at a real profit.
The PC is like a big elephant trying to wiggle its way through a tiny little pipe. It has all this potential for speed that can’t be tapped without a broadband-based Internet. The consumer looks at today’s PC and says: “Why buy a bigger elephant?” Speedy PCs are not interesting consumers; just what exactly are they going to do with all that speed? Type at 200 words per minute?
The consumer and business users are saying that they’re going to hold onto their PCs for at least another year. The marketplace for new PCs is all about price. People who haven’t bought PCs up until now are generally those who have lower incomes. They know that having a PC is a door to the information society, but they simply can’t afford a high price tag.
Bill Gates is concerned. He recently made a speech pointing out that the lack of bandwidth is smothering the high-tech industry. More precisely, he wanted to see broadband available to consumers at $30 a month, a price he thinks the average consumer is willing to pay.
We’re not likely to see that sort of price tag anytime soon. Broadband operators vastly underestimated the cost and complexity of developing broadband infrastructure. Wireless giant Vodafone, after spending billions on third-generation (3G) broadband licenses, admits that speeds may be much slower than initially predicted. Other companies that acquired 3G licenses are so crippled with debt that they don’t have any money to build infrastructure.
Interactive TV has its troubles, too. Statistical Research found that over 70 percent of American consumers had little interest in interactive TV. IDC got more positive results from a European study, predicting that over 50 percent of European homes would have interactive TV by 2005.
There’s little doubt that the problems facing the high-tech and telecommunications industries are deep rooted. But it would be a major mistake to write off the long-term impact of the Internet. Internet use is robust and growing. People see the Internet as a giant library, and there has never been a greater hunger for information.
The longer-term signs are positive for the information society and economy. The future consumers and influencers are using the Internet more than ever. Within universities, use of the Internet continues to grow at a tremendous pace. In fact, a number of American business schools, worried that students have become addicted to email and the Web, have taken to cutting off Internet access during class times.
Although e-commerce has certainly dipped from its dizzying highs, the demand for e-commerce courses is strong. A recent study by the Association to Advance Collegiate Schools of Business found that over 70 percent of respondents have or are planning to have classes in e-commerce.
We are in for a rough ride over the next 12-18 months, but after the shakeout and all the bloodletting, the Internet and new economy will emerge stronger than ever.
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