Can Mobility Drive the NASDAQ to a New Bull Market?


(B) This week on CBNC, our hyper-energetic investor guru Jim Cramer made on his show Mad Money a wild prediction: the 12 day winning days that the Nasdaq had until it came to an end late last week is the prelude to its next bull market. Yes, its next bull market! Jim argues that it was the longest since 1993 and that it is a very bullish sign for tech stocks. The last times that the NASDAQ had a similar run were in 1992 when the PC revolution exploded and in 1996 when the Internet revolution exploded. And, both in 1992 and in 1996 the NASDAQ started some long-term bull market cycles. Since the explosion of the Internet bubble in 2001 where the NASDAQ reached 5,000, the NASDAQ has roughly moved ONLY between 2,750 and 1,250.

This time, Jim believes that this new NASDAQ bull market will be driven by the Mobile Internet. It goes without saying that Jim has the instincts of a top money manager and the true courage to defend his convictions even his most daring ones.

I let you decide if you agree or disagree with Jim’s prediction of the NASDAQ starting its next bull market. But what I would certainly agree with Jim is that the growth in the NASDAQ will unequivocally come from the Mobile Internet. And, following is why – based on some of my thoughts that I have already mostly expressed in some previous articles.

The history of the computing industry can be summarized in five architecture phases: the Mainframe, the Mini-Computer, the PC and Client/Server, the Internet and today the Mobile Internet. During each phase, the computing industry delivered more with less. Today, the new client is any mobile device. The new computing architecture is Cloud Computing. And, the new applications are the iPhone Apps and any Web-based service.

The Mobile Internet is mostly driven by the new generation of mobile devices, faster wireless networks, and all the Web services, that we are using every day without paying attention, enabled by cloud computing.

The iPhone or the new generation of handsets with laptop capabilities

The iPhone, the BlackBerry, and the Android are the new generation of notebooks, where the phone is one of many features. Mobile devices are today more powerful than desktop PCs were 8 or 10 years ago. Their successes rely on a combination of new operating systems, processors, memory and displays. And, when you get mobile computing power, new applications are spreading at the speed of light. Many kids all over the world are developing iPhone applications every day. And, the 17 millions of iPhones users have thousands of applications to choose from.

Faster 4G and WiFi Wireless Networks

The existing 3G cellular networks will move soon into 4G technology based on LTE (Long Term Evolution). LTE is an all-IP (Internet Protocol) technology based on orthogonal frequency division multiplexing (OFDM) – or in plain English – meaning it can deliver more bits per Hertz. Similarly, Wi-Fi networks are moving to 802.11n that has the potential to displace wired networks to enable a completely all-wireless workplace. 802.11n embedded now in a number of switches can support data rates of 300 Mbps (Megabit per seconds) while common Ethernet connections are 100 Mbps.

Web Services and Cloud Computing

We get our music from iTunes, we connect with friends through Facebook, we find our directions through Google Maps, we share our videos on YouTube, we…

Welcome to the world of Cloud Computing where information and applications are on-demand! Web Services for consumers or Software as a Service (SaaS) for enterprises will have to be provided from the “cloud” as a utility service. It is the most efficient way to deliver, update and tailor any product and service offering. The cloud resources are distributed data centers that can be accessed through any wireless networks and the Internet.

But the Mobile Internet will not create as many start-ups as in the 80s and in the 90s

While I cannot agree more with Jim that the Mobile Internet will certainly drive the growth of the NASDAQ, I do not believe that the Mobile Internet will lead to the infrastructure build-ups that we had in particular in Silicon Valley during the 80s and the 90s.

The Mobile Internet is an incremental evolution to the present computing infrastructure but it will not require a complete new computing and networking infrastructure such as the ones built in the 80s and the 90s where silicon, storage, networking and software start-ups could in a few years reach several hundred million in revenues.

As a consequence, I am not expecting that the Mobile Internet will significantly be the next growth opportunity for Silicon Valley.

The Mobile Internet will have a bigger impact in Africa than in Silicon Valley

But following is my final note on the Mobile Internet: do you know what is the most lucrative business right now in the streets of Douala in Cameroon or in Abidjan in Ivory Coast? Repairing cell phones. Yes, in the streets of the most populated cities in Africa – repairing cell phones is the best business for young entrepreneurs. For many kids in poor countries, the cell phone is the only access to the Internet and to Facebook.

The Mobile Internet will have a much bigger impact on developing countries than in Silicon Valley.

But again I would agree with Jim Cramer, the Mobile Internet is the only next big thing for the NASDAQ right now.

Note: The picture above is one of my favorite cafes in Wall Street.

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