Roger McNamee Says the Consumer Tech Will Remain King in 2003

The simple thing to do is look at the industries were the distribution channel is completely screwed up. Nowhere is this more screwed up than in electronics, PCs. PCs are over-distributed, there's no margin for the channel, no product differentiation. It's a mess.

How do you fix that? I'm not sure. And I don't see it happening next year. But that one's poised for change. Guys like Best Buy(BBY - Cramer's Take - Stockpickr) and Circuit City have a chance to be very innovative if they choose to be.

A couple of the vendors, like Apple and Dell(DELL - Cramer's Take - Stockpickr), are benefiting enormously for very different reasons. Apple because it has its small number of stores, which it uses both to build its brand and to educate the 97% of the market that doesn't use Macintosh. And Dell just because they don't have storage and everyone else does.

10. Any other thoughts on the consumer side of technology?

The key is: You're going to see an endless flow of new products. I don't know if you've seen this thing called the Roomba, the robotic vacuum cleaner. That product really got me thinking. I mean, holy moly, I never thought about robots as being a real category.

But this is a $200 item that vacuums your house without any human interference. That's a really useful product for $200!

Who owns the product?

It's a company called iRobot -- a venture-backed company on the East Coast. It's a little venture-backed company!

By the way, these are the same guys who made the robots they used in Afghanistan to go in all the tunnels. They got started doing government stuff and now they're doing consumer stuff.

My brother's involved in this thing. I called one of the guys up and I said, "Make me one that cleans my bathroom!" And they're saying, "We're all over it!"

Will they be going public anytime soon?

I don't know how big they are. But eventually, sure.

But the point is, Moore's Law has accelerated this stuff so much. That was the first-generation product, it's not the segue. I mean, it's 200 bucks!

The stuff that they can do with this is just breathtaking.

Tune in tomorrow for the second half of the interview with Roger McNamee, in which the tech investor discusses the continuing troubles in the enterprise side of technology, why he owns Cisco and Microsoft, why he doesn't own Oracle and SAP, and why he expects the S&P 500 -- not the Nasdaq -- to post a double-digit return for 2003.