Net Revolutions Make for Strange Bedfellows

Apple taking market share helps Microsoft, and other competitive oddities.
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This column was originally published on RealMoney on June 2 at 9:59 a.m. EDT. It's being republished as a bonus for TheStreet.com readers.

I believe

Apple's

(AAPL) - Get Report

going to take all kinds of market share from its biggest competitors, putting a serious crimp in its competitors' ability to make any money at all, much less grow.

I also expect that

Google

(GOOG) - Get Report

will take all kinds of market share from its biggest competitors, putting a serious crimp in its competitors' ability to make any money at all, much less grow.

And I happen to believe that

Microsoft

(MSFT) - Get Report

is going to take all kinds of market share from its biggest competitors, putting a serious crimp in its competitors' ability to make any money at all, much less grow.

YouTube.com? Huge market-share taker.

Yahoo!

(YHOO)

? Yup, gonna take market share.

P2P distribution? Yet another huge market share taker.

You see, Wall Street's got this Internet competition thing all wrong.

Apple, Google and Microsoft are not each other's most important competitors.

YouTube.com's success isn't zero-sum with Yahoo's new user-generated video outlet.

And it's not as if Apple's biggest concern in growing its iTunes outlet is whether Yahoo! and Napster ever figure out that nobody wants to rent music -- they want to own it.

GoogleTalk vs. Skype vs.

Vonage

(VG) - Get Report

? All are going to take huge market share and the first two will probably make their shareholders a lot of money.

So who exactly are the losers?

In video, the cable and satellite companies are going to lose huge chunks of viewership as their nearly 100% market share in video content distribution for the home has nowhere to go but down. I know I watch a little bit less TV these days, as I watch a little bit more video on iTunes and YouTube and elsewhere on the Net.

Music?

Well, I've been writing for more than two years that Apple is on its way to becoming the world's biggest vendor of music. It should pass

Wal-Mart

this year. Wait, did that prior sentence just outline how Apple's biggest competitor in music is ... Wal-Mart?! Yes, it did. That's who all of these Internet music distributors are competing against: the physical-world retailers that still dominate music sales. But those retailers won't be a factor in music sales at all in 10 years.

Voice? The Bell companies and other originally tax-funded incumbents in this country still have more than 95% of the market.

That'll be closer to 50% in 10 years, as I have written about before.

I was shocked to realize the other day, as I paid Microsoft for three sets of software at 99% gross margins for my new Apple computer that is running on

Intel

chips, that revolutions make for strange bedfellows. Apple taking share from the Wintel monopoly is actually a positive for Microsoft and Intel. Talk about "Flipping It!"

At the time of publication, the firm in which Willard is a partner was net long GOOG, AAPL and MSFT, although positions can change at any time and without notice

Cody Willard is the manager of a hedge fund, author of

The Telecom Connection

, a newsletter published by

TheStreet.com

and a contributor to the

Financial Times

and

VON Magazine

. He is also a regular guest on CNBC's

Kudlow & Company

and an adjunct professor at Seton Hall.

He earned a bachelor's degree in economics at the University of New Mexico. Willard appreciates your feedback --

click here

to send him an email.