Many years ago, a Harvard professor named Clayton Christensen wrote a book called The Innovator's Dilemma. What do you do when some upstart company comes along and upsets your business model with some innovation that is annoying and you don't understand why everybody is switching over? What do you do if you are Blockbuster, and you are competing against little red envelopes? What do you do if you are CarMax, and you notice these amazing car towers right down the street?
Historically what happens in a serious disruption is your corporation might go out of business and your investors won't get rich. If I were his agent, I would tell Mr. Christensen, let's call this book The Smith-Corona Problem or Kodak Dies a Slow Agonizing Death. But nobody really wants to read about Smith-Corona or Kodak, except shorts and day-traders. That's how bad it is. When a winning innovation comes along, you just don't want to be the other guy.
Of course, Dish Network has the opposite problem. Dish Network is an innovator who failed to disrupt the cable industry.
Image source: Getty Images.
Dish Network is the walking dead.
I am sure there are readers who like Dish Network (DISH) and are active subscribers to Dish Network. There's not a nice way to say this, so I'll just say it. You are not cool. And that dish on top of your house, or in your front yard, or wherever it is, that's not cool, either. How can I say this?
Your network was never that popular. There were some wild dreams of popularity back in the 20th century. I don't want to excite anybody, so I won't put up a chart of Dish Network (or Kodak, or Blockbuster) from the 20th century. Man, what a rocket ride. Satellites, man, and you have a dish that captures the signal from outer space!
Okay. All right. We're a couple of decades into the 21st century. And I don't know if you heard this. The Dish Network is not popular. And whatever popularity it had? It is losing that popularity, too. Sales of those dishes have been shrinking for years. That's bad. That's really bad. In stock investing, there's this really cool thing called the network effect. You really want to buy a stock that is rocking along with the network effect.
You, on the other hand, do not have that. Your network is shrinking. There's not even a phrase for what you have. You have the anti-network effect or maybe the Bizarro-Superman-network-effect. With every subscriber who drops out, your network is less and less valuable.
Did you know that Elon Musk is planning to circle the globe with tiny satellites so that everybody and his mother can get internet broadband? Now that's a cool guy. I don't know when that's going to happen, but when it does, your network is dead dead. Right now it's just shuffling along, zombie dead.
Your CEO is trying to shift the company into another industry, which is never a good sign.
I know we're supposed to believe that this shift into phone service is the emergence of a new telecom colossus that will kill Ma Bell once and for all. I'm just not seeing it. I'm like, "That's the plan? You want to shift into phone service?" It's like Smith-Corona shifting into refrigerators. "Man, that Whirlpool really has it going on."
It's good that you recognize you are not cool, Dish Network, but it's bad that you are dreaming of becoming AT&T (T -0.44%). How can I put this? AT&T is not scared of you. That is because you are not some disrupter that is shaking up the telecom market. I would invest in a disrupter that is shaking up the telecom market! I would definitely be excited. That is not the vibe I have from you. The vibe I have from you, is that this satellite thing didn't work out, and now you are trying to clone yourself into AT&T. You are a copycat. You are the Mini-Me of AT&T. "We're like AT&T except we are a lot smaller and we don't pay a dividend and we may or may not have nationwide coverage."
Don't get me wrong, I'm sure somebody will kill AT&T one day. It's just not going to be you.
At least you didn't try to morph into Disney (DIS -0.89%) and have giant cartoon satellites with hands and white gloves.
