Internet technology is closer to Gutenberg than a tulip.

　　How does capitalism reproduce itself at ever-higher levels of technology? By gathering enough equity capital into developing technology companies to enable them to acquire mature technology companies in the same industry. In this manner the new highly capitalized technology companies, formerly empty of net earnings and puzzling to investors in the older generation companies, absorb the profit margins of the old order, disposes of what is now worthless, and create respectable price/earnings ratios for their growth stage. Those who took the risk of investment without earnings become the new rich. Those who were averse and bewildered by this risk retire from the scene, and a new economic order grows.

　　This is what happened with AOL's acquisition of Time Warner. It will happen to Disney, CBS Viacom, and Seagram, as Yahoo, Amazon, and other Internet channels buy up old channels and content. The same transformation will happen in each industry. Financial services will see Etrade buy up the likes of Legg Mason and other brokerages.

　　The reason why the new technology buys up the old, instead of the old buying up the new lies in three elements of marketing superiority. First, the Internet technology has the larger audience potential than the older technology. By 2005 Internet users will exceed the numbers of people reading print media, going to movies and watching television. Second, the new companies understand how to communicate interactively with this new audience, unlike the one-way communication of the older generation. Finally, the new companies know how to produce the new content that the new audience wants. Old companies cannot use new technology to recycle old content.

　　The next year will see continued capitalization of Internet channels enabling them to buy up mature companies that have some contemporary value. We will see vast growth in the Internet infrastructure to build its speed and power. We will see speculative investment in older generation companies which pundits think are good candidates for acquisition.

　　The job of strategic marketers will be to align their companies with Internet growth. Making money in current channels has become a tactical problem. The strategic issue is positioning the company in the Internet economy. This means investment in websites and web talent, strategic alliances for greater Internet presence, e-commerce, and customer Internet communications. We can sum up the new 3Cs: content, commerce, and communication. MK

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革命的诞生——谈美国在线与时代华纳合并案 （2001-04-16, 深圳市麦肯特企业顾问有限公司，作者：米尔顿·科特勒）