Billions of Internet users means billions potential customers. And you say the Internet is dead as an investment? Is it?

As you probably know, Wall Street Journal’s columnist James Altucher wrote an article about his perception of the Internet as a business medium and, most important, as an investment option. According to Altucher, the Internet is dead. And he gives examples like AOL, Microsoft, MySpace and even Google. His advice? Don’t throw your money out in the internet. Well, I disagree. If you want to win, you have to risk. But most of all, you have to be smart. And the main question remains: Are you smart enough to invest in the Internet? You decide.

As a managing partner of Formula Capital, “an alternative asset management firm“, and an author on investment strategies, James Altucher probably knows better than me where to spend his money. I know how I’d spend his money. But enough with the jokes, we’re being serious.

Altucher’s examples are poor

Formula Capital’s manager has really poor examples, and that’s not because the brands he named aren’t popular enough, but because he’s talking about companies that acquired online services or invested without having a real online strategy. Why? Well, here’s why.

“Time Warner would rather keep their legacy old-media businesses like People magazine than hold onto one of the biggest Internet companies out there, AOL“, says Altucher. But he forgets that once AOL was acquired by Time Warner, and once you become part of a big corporation, you have to answer to new chiefs, managers, whatever.

So, suddenly, you’re not your own boss anymore and you have to addopt new strategies, according to the corporate criteria. The point is, after being acquired, new people got involved, some probably without the slightest idea about the online industry. I guess we can all see the results, can’t we?

What about MySpace?

Here’s another one of Altucher’s example: MySpace getting under the News Corp. umbrella. After being acquired, MySpace didn’t use a good strategy for development. I’m not a big fan or some great user of their services, but I can see one thing: instead of keeping it as a social network, News Corp. should have invested in additional paid services. Don’t forget that the company is involved in the music industry. Why not use MySpace to promote its artists on a brand new level? Why not sell music cheaper using MySpace?

And that’s not everything. It’s true, they launched a video service. But News Corp. is involved in cinema just as well. Why not include a movie service? I wrote much more about this idea a few weeks ago. There are plenty of opportunities. But where’s the strategy?

Microsoft is the worst example ever!

James Altucher points the finger at Microsoft: “Look, the suckers that invested millions in the Internet and got nothing!“. That’s only half true. The problem with Microsoft though is that they have a very lousy image in the online medium. And that’s mostly because they’re that big corporation that created Internet Explorer 6, the browser we still use at the office and we all love to hate. OK, maybe it’s an exaggerated, but Microsoft didn’t really show any real interest in gaining something from online.

Microsoft’s core business is still Windows and Office, that’s what they sell and that’s their main revenue source. Despite they’re involvement during the ages, Microsoft is a newbie in online. And that’s because their PR policy was to sit tight and shut up. No communication, no cool stuff to launch, same old websites using a crappy nineties’ design. Microsoft just isn’t a good example.

No, the Internet is not a dead end for investors

Internet is actually a good market to bet on. The only thing investors should keep in mind is to double-check the business plan and to be creative. Any idea might become an innovation if there’s enough creativity and desire. And it’s not the big guys like News Corp. that you should have in mind as examples, but the little ones who grew to become big shots. That’s where investors should look for opportunities.