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May 15, 2006
The Four Horsemen of Web 2.0
Andrew at Nyquist Capital has up a thoughtful post on the four horsemen of Web 2.0. While their bubble counterparts were Cisco, Oracle, Sun, and EMC -- ooooh, CSCOORCLESUNWEMC! -- this time around, he argues, it's Google, Apple, HP, and AMD.I mostly agree, even if there is a bit of straw man argument in here. Few people, for example, think of HP when thinking Web 2.0, but that's okay, I take Andrew's point. Specifically, people vastly underestimate the risk in Apple, Google, and AMD, while forgetting about likely mean reversion in Microsoft, Dell, etc.
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As with anything, it depends on valuation. Xbox 360 is a killer platform that has multiple market growth paths.
Without taking issue with your main point, I would argue that in the coming few years we are likely to see Microsoft revert toward the median performance of its constituent business lines as the monopoly pricing power of the Windows/Office franchise steadily erodes.
And, seriously, who would consider Microsoft-ex-Windows/Office a compelling investment story?