Cisco (CSCO) sees an explosion of online video use. Most analysts think that this has already happened, but the router company says otherwise. Since they make their money from hardware which manages much of the internet, the prediction may be self-serving.
According to The Wall Street Journal, Cisco "is projecting a sixfold jump in Internet traffic between 2007 and 2012, as online video becomes the biggest driver of global data communications."
The prediction is flawed in several respects. First among them is that YouTube and its video-sharing peers are not growing as fast as they once were. Watching user-created content of babies throwing food across the room and Ronald Reagan singing "America The Beautiful" has lost some of its charm. Major media companies are still having trouble figuring out how to make money online, so that source of video content may not grow much either.
The other roadblock to Cisco’s (CSCO) wild dream is the broadband carriers, most of them humongous phone and cable companies. They are sick of 20-year-old shut-ins using file-sharing programs to download scores of movies at a time. The carriers claim this overtaxes their capacities, slowing down the internet for everyone else and costing them millions of dollars. Almost all of the firms in this business plan to limit the amount of bandwidth people can use, or charge the heavy consumer. Either way, this will encourage less video viewing, not more.
Otherwise, the Cisco projections are just fine.
Douglas A. McIntyre
Top Gaining Stocks
Top Losing Stocks