The Newer Economy

Michael Mandel has a reputation as something of a seer on the fortunes of the "New Economy." Mandel, the lead economics writer for Business Week, helped popularize the term in the mid-1990s. Then in mid-2000, he published "The Coming Internet Depression: Why the High-Tech Boom Will Go Bust, and Why the Crash Will Be Worse Than You Think." So, in the depths of the Internet Depression he foresaw, what does Mandel see now for the New Economy? "When people ask me what the hot industries will be, I say it could be telecom, or it could be publishing."

Rewind for a second. Did he say "telecom?" Indeed he did. Mandel, the keynote speaker at last Friday's Trenton Forum on Interactive Publishing presented by Tramp Steamer Media, believes that the plummeting price of information, along with a push for corporate productivity, will create opportunities.

"My personal view is that we'll see a steadily growing demand for good and branded information, and that will become a dynamic engine for growth," said Mandel. "The fact is that the forces that drive (telecom and publishing) forward are still present, only with the opportunity to do it rationally. Competition was too intense in the telecom industry to support the premium services to pay for the cost of the infrastructure. ... Now there's an air of pessimism, and I think you'll see a reversal."

Mandel foresees that the plunging price of all things telecom will stimulate demand - echoing the long-held position of Level 3 CEO Jim Crowe, among others. As businesses seek to take advantage of affordable data services, it may create other opportunities for data center service providers.

"We'll see a rise in profits and business' willingness or make changes without raising labor costs," said Mandel. "There's going to be much more willingness to invest if you can prove it will produce cost savings."

That should be music to the ears of managed hosting providers, who are actively trying to sell enterprise customers on the merits of outsourcing their web and IT operations. But make no mistake - Mandel isn't predicting rosy times ahead. He's predicting that there will be profits amid the pain.

"This will be an exceedingly difficult process," he said. "This is the nasty stage of the New Economy. This is where you actually replace people."

If other analysts and economists disagree with Mandel - and many of them do - he's accustomed to it.

"My stock in trade is saying things people didn't believe at the time," said Mandel.