I'm awash in great reader mail in response to recent columns. Well, nearly great: The occasional myopic crank comes through, too, with an always inventive range of invective and personal insults. But those aren't the interesting letters. Here's a sample of recent reader missives, beginning with some responses to my column last week about upcoming revenue problems for Microsoft (MSFT) - Get Microsoft Corporation Report if my guess about a slow adoption rate on Office 2000 and Windows 2000 proves true.
My favorite letter of late, from the always prolific
I always thought you were one of those Microsoft-butt-kissers from PC Magazine. So I was glad to see your column today about their sales about to collapse. I misjudged you. You obviously hate them, so welcome to the good side ... but it's clear from your story that you don't hate them enough. Work on it.
Hate 'em? No way. But I shouldn't tell him or her that.
Several readers pointed out that business results, especially with a longtime high-growth tech company such as Microsoft, don't necessarily correlate, at least with any concurrency, to stock prices. Thus, even assuming my data on a slow uptake of its new versions of its most important products is correct, that still might not dissuade investors who want to get on, or stay on, the Redmond Gravy Train. Good point.
also thinks he sees financial gamesmanship under way:
While your analysis is perfect, I am not sure it will correlate to stock price. I never thought the stock market game was about showing profit or revenue growth; I thought it's all about saying "we are comfortable with EPS of 9 cents" ... and then coming out with earnings of 10 cents. I have shares in Microsoft and have absolutely no doubt it will beat the earnings estimates from now to eternity every time because it can always fill up the shortfall in revenues by selling some of its Internet holdings to make up for the real revenues... I am concerned that lot of big companies like Intel (INTC) - Get Intel Corporation Report, Microsoft and Cisco (CSCO) - Get Cisco Systems Inc. Report are using their investment income to beat the earnings. Recently Intel sold a large chunk of USWeb (USWB) stock. ... I am sure they will use that income to mask any summer slowdown in chip sales.
also thinks he knows what's up: Microsoft is getting ready for the decline of its software business, big-time.
One thing you didn't mention in your Microsoft article is its emerging presence as a media company. If Microsoft is good at anything, it has to be refocusing when needed. All of the cable and wireless deals, plus the collaborations with other media companies are what I find interesting. So, I'm long the stock.
, a computer consultant whose name and company references I'll delete in the interest of his future employability, figures he knows what's waiting in the wings to seize this opportunity:
Compliments on your well-written, insightful and balanced article. As a computer consultant (and Microsoft Certified Systems Engineer who does not preach Microsoft) working for large clients in the blank area, I can tell you that blank and blank (note: both Fortune 500 companies) do not have Office 2000 or Windows 2000 on their sites yet, and at one, we are talking about 2Q 2000 plans right now. Heck, we just got all of our NT 3.51 servers upgraded three months ago. Windows 2000 will be Microsoft's undoing. I hear the reason for the rewrite (80% new) was partially to eliminate the royalty checks it pays to IBM (IBM) - Get International Business Machines Corporation Report for cowriting the kernel. Linux is nice, but users won't have it on their desktops, nor could it be deployed by corporate desktop folks. Look for IBM to give away, or at the very least open-source, OS/2 next year. It's the only viable competitor for the Windows Whatever desktop. It already gives away Notes with its Netfinity servers.
OS/2?!?!? Boy, hope dies hard. Then again, IBM just released a (free) upgrade to OS/2, long after most of us thought it was truly dead and buried...
columns on MP3 pulled several hundred emails, mainly from investors to whom all this was news and from MP3 buffs wanting to know if I'd share with them my (presumed) secret list of great MP3 download sites. And a few readers (after some bulletin-board discussions and semi-organized efforts to persuade me) wondered why I didn't address the
alliance, which also looks like a major Secure Music Download possibility. Simple: I was saving it for another column, coming soon, which will look at other MP3-and-beyond industry players.
Several readers, including
, asked what I know about using MP3 files in their cars:
How do products like the Rio fit in with MP3's future? The car audio industry is starting to push out MP3 players for the car. Having played with a Rio, there would be a sizable market for such devices. What's your take?
Good question. The best prototypes I've seen so far involve small, dockable MP3 players about the size of the
Rio. You pop 'em into a slot in a dashboard device about the size of a cassette deck, and they play back through the car's sound system. When you want to go for a jog or take the player to your home or office PC to dump some new tunes into it, just push a button and it pops out. This is an elegant idea, and I think it'll be popular -- so popular, especially given our obsession with auto-sound systems, that it'll be yet another accelerator for the burgeoning MP3 market and, eventually, for secure-download-standard files. Whatever that standard is.
asked what I think MP3 means for traditional music retailers, such as
, which operates almost a thousand retail stores under the names
and more, and
, which has more than 1,300 stores under the names
Simple answer: It ain't good news. Though record stores are going to be with us for some time to come, they'll hold a far smaller share of the market for popular music five years from now than today. Actually, the damage will appear long before then. For these storefront operators, the double whammy of MP3 and whatever legitimized secure-download system emerges as its legal analog is that first, they'll undercut today's pricing, and second, they'll appeal most to precisely those customers the retailers rely upon: the frequent-buyer under-30 crowd. Not a pretty picture, I'm afraid.
No doubt both Transworld and Musicland will be among the players selling pop-music downloads online, once a viable industry standard for secure downloads is apparent, but their world will never be the same. Their huge retail presences are a fearsome ball and chain in a more nimble world with no existing retail distribution to protect.
Finally, speaking of pricing,
and a number of other
readers think today's outrageous prices for CDs are ripe for a well-deserved tumble, and MP3 may bring some rough justice to the record companies that used the transition from cassettes to CDs as an opportunity to triple prices and set up one of the century's biggest, longest-running consumer gouges:
Perhaps another option for the music industry would be to take a cue from the commercial software industry and drastically cut the price of their products. CD production costs are considerably lower than the old vinyl LPs, and even less than cassette tape. It will still be hard to compete with "free" MP3, but $4.99 current-release CDs may help stem the tide. (But will the music industry abandon its margins?)
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Jim Seymour is president of Seymour Group, an information-strategies consulting firm working with corporate clients in the U.S., Europe and Asia, and a longtime columnist for PC Magazine. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. At time of publication, neither Seymour nor Seymour Group held positions in the companies discussed in this column, although positions can change at any time. Seymour does not write about companies that are consulting clients of Seymour Group, or have been in recent years. While Seymour cannot provide investment advice or recommendations, he invites your feedback at