Money from Today or Yesterday

[tw]

With so little news getting through convention hype (and yet traffic is moving just fine in Boston)-

Contrary to what is taught in business schools, the spread sheets are a summary of work mostly performed four to ten years ago. Apple's Sculley would intently study those spread sheets to learn where the future was in computing. In his biography, he admits, "Everytime I had the computer industry figured out, it had already changed". Of course. He was trying to manage a company using the latest spread sheets which meant he was working with obsolete information.

A reverse example is demonstrated by Comcast as reported from the NY Times:

from Cable Companies Profit From Demand for High-Speed Internet
Cable companies, which have been weighed down for years by heavy investments and sagging subscriber growth, are starting to turn the corner.

Comcast Corporation, the nation's biggest cable operator, said today that it earned $262 million in the second quarter, after losing $22 million in the same period last year, thanks to an increase in the number of customers signing up for high-speed Internet and digital video services.

[breakingnews]

Of course historical financials are obsolete, particularly in tech industries, where the marketplace changes almost monthly. But that's how businesses are run - managers and investors alike judge a company's performance based on ratios and percentages and moving averages. Yes, on the surface the bottom line is the bottom line - but it's tough to determine the condition of a business at a single point in time, for various external factors.

Past trends typically determine future growth - but that's only because analysts have been tracking so-called product lifecycles for what, a couple decades now. New fangled gadgets have extremely volatile lifecycles, so it's hard for a company like Apple or Microsoft to base their business models on the past five years. That's why companies pay obscene prices for crystal-ball research that's *supposedly* telling of upcoming shifts in the marketplace.

Maybe I am misunderstanding what you're saying. But in 3-4 years, there is going to be a VERY intense and complex battle when ISPs, cable cos and phone companies all converge in the broadband marketplace. Comcast is ahead of the game - they have plans to roll out their all-in-one (cable, internet and phone) by January (they already support those existing AT&T broadband customers who use VoIP). SBC Communications just released their all-in-one (phone, DSL and cable) in partnership with Cox cable (I think in Indiana or Illinois or some major market). And now Microsoft later this year will testing a cable-over-IP service with ... I forget which phone company. Might be Qwest. Companies like Earthlink also has potential, though they piggy back on phone networks, for the most part.

Still, that's the reason AT&T bailed - these companies already have or will soon have massive fiber-optic networks spanning on the country, which will basically eliminate the need for long-distance service (just as VoIP is eroding long-distance prices). Since AT&T no longer has any sort of infrastructure ... they're fucked, in short. I really don't know what they'll do, but I quoted an analyst in a story the other day who said he thinks AT&T will be sold off within 5 or 8 years.

[tw]

Originally Posted by breakingnews

Maybe I am misunderstanding what you're saying. But in 3-4 years, there is going to be a VERY intense and complex battle when ISPs, cable cos and phone companies all converge in the broadband marketplace. .... Still, that's the reason AT&T bailed - these companies already have or will soon have massive fiber-optic networks spanning on the country, which will basically eliminate the need for long-distance service (just as VoIP is eroding long-distance prices). Since AT&T no longer has any sort of infrastructure ... they're fucked, in short. I really don't know what they'll do, but I quoted an analyst in a story the other day who said he thinks AT&T will be sold off within 5 or 8 years.

Actually most of those cited companies don't have massive fiber networks. Most are leasing fiber (don't own a network) from network providers so overbuilt that something less than 5% of the network is being used. Even worse, it is estimated that most of the existing fiber network may never be used - probably never more than 10 or 20% - as technology keeps increasing the bandwidht of each fiber faster than demand.

The point is AT&T is screwed because - well lets take AT&T's earlier attempt at new technology networking. AT&T was going to provide customer phone service using Cable company networks. But packet switching involved developing many new technologies. MBAs routinely fear innnovation. AT&Ts solution to providing customer service using Comcast, et al cable? Circuit switch technology because AT&T management decided they had made good and substantcial investments in that technology.

Now anyone with even a college level understanding of packet switching verses circuit switching technology knows that circuit switching is a completely stupid solution. But you cannot tell that to management whose decisions are based upon principles taught in business schools. On the spread sheets and based upon the experience of AT&T management, then circuit switch technology was clearly the superior solution. Communism made decisions by the same methods.

Since this was discussed previously in the Cellar, AT&T bailed out the the cable business - selling their two cable companies for much less than they had paid. AT&T was clearly a dying company 20 years ago - to those who have dirt under their fingernails. (Long time Cellar dwellers will remember how long I have cited AT&T as a classic anti-American institution because top management cannot innovate - and therefore even created a nationwide, all afternoon, long distance crash and closed airports all day for multiple days because of MBA technology management).

The point is that AT&T is the classic example of what happens to America when business school concepts rather than product oriented thinking dominated top management. When the principles of business schools rather than the management techniques of William Edward Deming and Christen Clayton are applied, then America goes into recession.

The convergence of technology will not be a violent as suggested. For example, did you know that Verizon is currently rewiring their entire netwok from CO to home in fiber optic - making Comcast, et al the low technology alternative? When AT&T split, the MBA went with AT&T whereas the product people went with the Baby bells. Who is growing and who is anti-America? Only those who hate American bought AT&T service - be it long distance service, cell phones, or what ever. AT&T fears innovation as was taught in the business schools.

[xoxoxoBruce]

I think you're right about AT&T, TW. I get the same thing from friends inside the company. I'm afraid the same thing is going on at Boeing.
BTW, I posted something for you in Quality Images but I think it was lost. I'll repost it.