Roger McNamee Says the Consumer Tech Will Remain King in 2003

Brokerages are totally transformed. The online brokers have been great for consumers because it turns out that human brokers are part of the problem. So what you're able to do online is offer a higher service level, because people could execute trades 24 hours a day without any human intervention and without a sales pitch at a lower cost.

Just as in travel, the guys who do online brokerages are incredibly profitable. We happen to be very focused on one of them, which is Ameritrade(AMTD). It is the most profitable, the fastest growing and the largest of the online brokers.

It's funny, everybody said when the bear market comes, these guys will blow away. Wrong! They've gained market share every month. They did a big merger with Datek. They're going to have to show that they can execute that merger. But if they do, boy, you got a really cool situation.

Why did you think people sold these companies short?

Because the big guys all tell you it's not real, and you believe them. They said the same thing about discount brokers when Schwab(SCH) was getting started. People said, when the bear market hits, they're toast. Bear market hit in the 1970s, they gained a boatload of market share. Today, Schwab's one of the most important brokers in the business. Same thing's going on here.

It's been very hard for the industry to admit that the so-called full service brokerage is a broken model.

How about books and music?

Yes, where Amazon's(AMZN) done its thing.

The Amazon thing is subtly different because Amazon's really the only guy in that category.

9. What industries do you expect to be transformed by the Web in the coming years?

What's going on in retailing is really cool. Traditional retailers have done a tremendous job on balance, especially the specialty and catalog retailers. The experience of buying from LL Bean or Harry & David is just great.

Some of the physical retailers have done well. What Circuit City(CC) has done, where you can pick up goods ordered online at the store is very cool. You avoid the lines and dealing with those stupid sales guys. That's just really smart.