Big changes coming

While most of the financial media focuses on the price of oil and what it will do to consumer spending in the next few months, a tectonic shift in technology is underway that will have enormous consequences over the next several years. Investors who are myopically focused on the short-term, speculative, sector-timing or cycle-timing schemes that dominate much of what passes for "investment" these days seem to be blind to this major development and will only notice it after it is too close to ignore.

We have written in previous posts about the impact that the ability to move exponentially larger amounts of data -- including video data -- will have in the next several years, including fundamental changes in computing and television.

Now, Sony (a major television manufacturer) has announced an agreement with cable companies by which new televisions can have internal hardware and software that enable features that currently require an external set-top box -- including "two-way" features. In other words, "smart" features which currently are an option for those who choose to purchase additional services are likely to become standard features in future televisions.

But this is only the beginning of a wave of changes which will be enabled by the rapidly expanding ability to easily send and receive huge amounts of data, including video data, over the internet.

As George Gilder foresaw in Life After Television in the early 1990s: "What is driving the 'telefuture' is not any convergence of films and TVs, consumer electronics and publishing, computers and games. What is driving the change is the onrush of computer technology invading and conquering all these domains. The computer industry is converging with the television in the same sense that the automobile converged with the horse [. . .]".

The ramifications of this shift will not be limited to how the average individual consumes video entertainment (although that will also be significant). It will enable valuable new possibilities in medicine, in business consulting, in the creation of wider markets for all kinds of specialized goods and services, in education, in defense, in transportation, in logistics -- in short, it could conceivably impact virtually every aspect of life.

Small news items largely ignored by the headlines today continue to indicate that this major shift will indeed take place. Investors who are pursuing longer-term fields of growth, rather than calling the next short-term move of this sector or that sector, should take note of these indicators.

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For later posts on this same subject, see also:


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