Stay Ahead of the Curve on Mobile Internet

The release for the Cisco (CSCO - commentary - Trade Now) purchase of Starent (STAR - commentary - Trade Now) for $35 a share says it all: "The mobile Internet is at an inflection point as IP-enabled smartphones and other connected mobile devices gain rapid acceptance. Service providers have been actively investing in this market as global mobile data traffic is expected to more than double every year through 2013."

I think Cisco is being very conservative. I think the ramp is bigger. Moreover, I think this whole trend has been completely lost on people, just like the Web was in 1995 and the PC was in 1989.

Just like both of those, the Street was fractured and didn't view the moves as a whole.

In the early 1990s, the disk drive analysts didn't understand the revolutions in substrates and styluses that made the memory deep and expanded the value of a PC. They didn't understand the processing power of an Intel 286 chip and they didn't understand Moore's Law from the great Gordon Moore, then chairman, that made the path for the forthcoming processors so powerful. They didn't understand the spreadsheet revolution or the progress toward Windows. They didn't see that the whole world of hardware was about to be upended.

In the mid-1990s, the Web was perceived as a way to get email. We didn't understand the power of it, the replacement power of it, the tsunami value of it. Nobody really got search. They didn't get speed. We dialed up and it was farcical. We paid up for T1 lines that allowed for speed. We didn't have any vision of what could happen and how quick adoption would be.

Now we don't see the same thing happening. Apple (AAPL - commentary - Trade Now) is 3% of the cell phone market. The question is how quickly it can go to 30%. Can BlackBerry (by Research In Motion (RIMM - commentary - Trade Now)) stop it? Palm (PALM - commentary - Trade Now)? If you are a carrier, you need Starent to handle the traffic and scale, which the carriers cannot do themselves.

When the Web took off, Cisco was duking it out with Nortel and Lucent to give carriers the infrastructure they needed for the revolution. There was a vast land grab and an actual war to handle the infrastructure needs.

This time it is just Cisco locking the carrier business up.

More important, the revolution is on and happening fast, and the analysts who are upgrading and raising Apple numbers are not looking at it (forgive me) holistically. There are combinations occurring right now -- 3G, 4G, cloud computing, Apple apps that are exploding (you have to read MainStreet to stay up with them), and we are still early with the equivalents of the search engine companies, like Inktomi of old, and drives, a la Seagate (STX - commentary - Trade Now) and Connor (to really date myself). The move is on: Cash in. Cisco is. Starent is. You should, too.

Random musings: I'm taking lots of heat for picking on Meredith Whitney for her great call on Goldman, both ways. I am simply saying this: If you listened to Whitney, she repeatedly denied being bullish about the group. The Goldman move was part and parcel with the group move, even though Goldman exceeded the others. I would not feel strongly about this if Goldman were the only one that moved up. But I want to emphasize that if I had listened to Whitney, I would have shorted the group all the way up, even if some think that's a wrong way to interpret her moves. I also defer to an excellent flagship piece about the confusion that this downgrade will spread among retail investors, which I care about. ... Hats off to the Financial Times for really nailing the banking crisis with a series of trenchant interviews with top dogs both here and Europe. They're really coming on strong with the coverage. Just total top-drawer stuff.

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At the time of publication, Cramer was long Cisco and Goldman Sachs.

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