RIDING THE INTERNET TIDAL WAVE
On January 5th 2005, an article appeared on this website entitled 2020 Hindsight on Y2K. This described the transition that had occurred over the previous decade from 1995 to 2005. The world had moved from the Before-Internet era to the After-Internet era. In this 10-year transition, there had been significant changes in technologies and in societies as a result of the Internet.
Only 10 days prior to that on December 26, 2004, a massive tsunami wreaked havoc on many parts of South-eastern Asia. Many lives in many countries were completely disrupted. It was devastating for those affected. In the eleven months since then it has become clear that the rapid evolution of the Internet will affect in a major way the lives and livelihoods of many more people than were affected by the great tsunami. This is not a new concept. Vint Cerf who joined Google in September of this year as Chief Internet Evangelist has described it as The 21st Century Internet Tidal Wave.
In this article, there are occasional in-line notes within the text. These can be opened and closed by clicking on the that precedes each such in-line note.
THE INTERNET EXPLODES
One signal of the explosive Internet growth is provided by the Google share price on the New York Stock Exchange. Google went public in August 2004 at a share price of $ 85. At the time of writing, the Google share price has been over $ 400 for the past week. It could be that a share price increase of almost 400% in 15 months could be ascribed to shareholder euphoria. Undoubtedly Google has done a number of things right. However its performance is also indicative of the immense potential created by the Internet.
To put this into perspective, TheMotleyFool had this market capitalization data in a November 23rd item:
|General Electric||$381 B|
|Cisco Systems||$110 B|
This vault by Google into the major ranks of American business confirms that something very dramatic is occurring.
One of the principal reasons for this Internet related growth is that the Internet is all about people and interconnections. These can grow like the spread of a viral infection around the world. Another dramatic indicator of this interconnection push is the growth of Craigslist. As explained in a little more detail in the in-line note, early in 1995 Craig Newmark wanted to help the members of the San Francisco community have a low cost way of knowing everything that was going on. Over the years, this simple way of connecting has grown and is now spreading to other cities in the USA.
Craig Newmark observed people on the Net, on the WELL and in Usenet, helping one another out. In early '95, he decided to help out, in a very small way, telling people about cool events around San Francisco like the Anon Salon and Joe's Digital Diner. It spread through word of mouth, and became large enough to demand the use of a list server, majordomo, which required a name.
Craig wanted to call it "sf-events", but more knowledgeable friends suggested calling it "craigslist" to reinforce its personal and down-to-earth nature. He still finds it awkward that such a visible site is named after him, but he'll get over it.
craigslist is about:
* giving each other a break, getting the word out about everyday, real-world stuff.
* restoring the human voice to the Internet, in a humane, non-commercial environment.
* keeping things simple, common-sense, down-to-earth, honest, very real.
* providing an alternative to impersonal, big-media sites.
* being inclusive, giving a voice to the disenfranchised, democratizing ...
* being a collection of communities with similar spirit, not a single monolithic entity.
This democratization of the Internet has become increasingly clear over the past decade. The Cluetrain Manifesto in April 1999 was another account of some of the power that is unleashed to individuals through the Internet. At the same time, Seth Godin in his book, Permission Marketing, described this in terms of the change in power between buyers and sellers. That is what is inherent in the Internet: a much freer and more rapid exchange of information and ideas around the world, a greater transparency on what is happening and much more level playing fields that often reduce or eliminate traditional power structures.
The Internet changes the information and knowledge infrastructure within which life goes on. Many companies should be considering this within their business strategies. An often used approach is SWOT analysis. This examines the company strengths and weaknesses. It also examines the opportunities and threats from external forces that may be foreseeable and that may dramatically change historical strengths and weaknesses. The Internet is a cataclysmic happening that forces a rethinking of traditional strategies and ways of doing things. It cuts away at some companies' strengths. It allows others to overcome previous weaknesses. It presents new opportunities for some but it also brings along attendant threats for others.
This Internet explosive growth is now being leveraged by the changes in technology. Miniaturization of the hardware and the whole WiFi growth means that Internet access is easily available almost anywhere.
THE INTERNET EFFECT ON SOME COMPANIES' STRENGTHS AND WEAKNESSES
This aspect of the Internet wave will not be treated in any detail in this article, since it could be the basis of a whole series of articles. Any industry that is involved with the communication of information is likely to be seriously affected, either positively or negatively. Two industries will be briefly reviewed to illustrate the turmoil that is occurring.
The first is the traditional media industry and particularly Print media. As many people rely on electronic information channels, their usage of traditional printed information sources is in major decline. Some of the majors are developing their Internet presence to compensate, but their previous strength does not necessarily translate into strengths for the Internet. One US news item reports that more than 1,900 people have been dropped from large and midsized newspaper payrolls in 2005, according to the industry trade journal Editor & Publisher. Another asks Is Craigslist Killing Off Newspaper Classifieds? There are many more items like that every week.
The second industry that is being disturbed by the Internet wave is banking. Once banks were repositories where your valuables and your money could be stored for safe keeping and retrieved when you wished. Now banks are in the information business. The storage and the transport of tangible assets is now a miniscule part of their activities. More and more of their activities are concerned with electronic data transfer, where there are many potential competitors. Government and state regulations may often limit the speed at which these competitors can make inroads but often, quietly, a large number of jobs are being lost in the banking industry. A BBC article is just one typical news item describing the scope of these staff cuts.
Any industry that involves information and its transmission will find that the Internet requires a major re-evaluation of strategy. However all industries will find that the Internet creates opportunities and it creates threats. It is important to stay vigilant on both aspects.
INTERNET OPPORTUNITIES - GOOGLE EXPLOITS THEM
During 2005, Google has grown and evolved in terms of what it offers. This could be seen as a sign of an astute and energetic management group. However equally, it can be seen as a response to the multiple opportunities inherent in the workings of the Internet. Here are some of the more significant Google initiatives that demonstrate this, several of which were launched in 2005.
Google, cataloguer of Global Knowledge - Search
At the start of the year, the Google search engine suggested it would find answers from a database of 8.06 billion web pages. Six months earlier, Google had been working with a database of 4.29 billion web pages. By mid year, Google had moved beyond 11 billion web pages and gave up putting any indication of the size of the mountain of knowledge it now searches. Google now delivers answers with almost no limitation on the source of knowledge that may be used. The list of sources is long: Scholar, Maps, Book Search, Froogle, Groups, News, Images, Movies, Numbers (patents, package tracking, etc.), Stock Quotes and on and on.
Google, enhancing Internet information - Sitemaps
Much of the knowledge on the Internet is provided by webmasters. At the start of the year, Google like the other search engines seemed to be distrustful of webmasters and in conflict with them. A much more cooperative atmosphere has developed during the year typified by the launch of Google Sitemaps. As Google says, Google Sitemaps is an easy way for you to help improve your coverage in the Google index. It's a collaborative crawling system that enables you to communicate directly with Google to keep us informed of all your web pages, and when you make changes to these pages.
Google, supporting the Blogging explosion - Blog Search
Blog Search is Google search technology focused on blogs. Google is a strong believer in the self-publishing phenomenon represented by blogging. We hope Blog Search will help our users to explore the blogging universe more effectively, and perhaps inspire many to join the revolution themselves. Whether you're looking for Harry Potter reviews, political commentary, summer salad recipes or anything else, Blog Search enables you to find out what people are saying on any subject of your choice.
Google, helping individuals have greater visibility - Base
Matching the Internet visibility provided by Craigslist, Google Base provides similar functionality for free. Google Base is a place where you can add all types of information that we'll host and make searchable online. Based on the relevance of your items, they may also be included in the main Google search index and other Google products such as Froogle and Google Local. Learn more.
Google, a major advertising force - Adwords, Adsense
The economic driver of all this for Google is of course the advertising revenues they are able to generate through the ads that appear on their various offerings to their audiences. The following are quotes from Mr. Noto of Goldman Sachs in an article in the International Herald Tribune: In 2005, Google will sell $6.1 billion in ads, nearly double what it sold last year. By next year, Mr. Noto expects Google to have advertising revenue of $9.5 billion. That would place it fourth among American media companies in total ad sales after, the News Corporation and the Walt Disney Company, but ahead of other giants including NBC Universal and Time Warner.
Google seems to be introducing a new service or tool almost every week. Some of them have occasional bugs, but perhaps it is demand from the Internet tidal wave that is creating the expanding needs, rather than some product-driven frenzy within Google.
INTERNET THREATS - MICROSOFT PLAYS CATCH-UP
In a Business Week Archived Article, it is noted that by May, 1995, Gates was sounding the Internet alarm. He issued "The Internet Tidal Wave',' a memo that hit on the themes that had been reverberating throughout Silicon Valley. He declared that the Net was the "most important single development'' since the IBM PC. "I have gone through several stages of increasing my views of its importance. Now, I assign the Internet the highest level,'' he wrote.
One problem that Microsoft had in contemplating that tidal wave was that their thinking was too constrained by their own product range. As others have noted, Microsoft tends to be product-driven rather than customer-centric. Their strategic review seems to have focused on how to beat competitors with similar products. To be more aware of the implications of the Internet tidal wave, it required more consideration of market needs that would be met by expanding technologies.
One major threat of the Internet tidal wave is that, if your competitor gets ahead of you, it may be tough for you to catch up as they streak ahead. That is what has happened to Microsoft as a May 2005 article in Fortune describes.
From the May 2, 2005 Issue of Fortune
Simply put, Google has become a new kind of foe, and that's what has Gates so riled. It has combined software innovation with a brand-new Internet business model - and it wounds Gates' pride that he didn't get there first. Since Google doesn't sell its search products (it makes its money from the ads that accompany its search results), Microsoft can't muscle it out of the marketplace the way it did rivals like Netscape. But what really bothers Gates is that Google is gaining the ability to attack the very core of Microsoft's franchise - control over what users do first when they turn on their computers.
Gates signed off on one of the largest commitments for a new business in Microsoft history: Project Underdog was born. Christopher Payne, the project leader, could hardly contain himself. "I was very, like, God!" he says, pumping his fist. "I had done all this work, and then I'm like, 'He said yes!' Honestly, it was awesome."
It was the last easy win for Payne. Last November he released Microsoft's search engine, followed in December by a desktop-search tool (two months behind Google) and in March by a search-related advertising business. Microsoft supported the launches with a $150 million ad campaign and scores of other promotions. But the effort has generated little buzz so far, and Microsoft's global market share, at about 13% of search requests, remains puny.
Microsoft did not see the potential of the Internet particularly through search. So they're now playing catch-up to Google. Whether Microsoft can catch up is somewhat questionable. This is almost a personal affront to Bill Gates as is explained in a more recent BBC news item.
BBC News - Thursday, 27 October 2005
Microsoft aims to trounce Google
You can listen to an interview with Microsoft founder Bill Gates:
People are underestimating what Microsoft is doing with search technology, says Bill Gates. The head of the software giant told the BBC that its ambition is to be bigger than Google in search. He said that competition had ultimately been good for web users because it had pushed search technology. This meant search would be "far better" in a year.
Microsoft is used to markets where it has dominance and has some considerable control of the marketing process. This control can cause resentment among customers, particularly if the product and service quality occasionally leaves something to be desired. The Internet provides a much more level competitive playing field. The customer is much more in control. The Open Source movement for the Linux Operating System and the rapid growth of the Mozilla Firefox Internet browser show the power of these effects. Microsoft will need to adopt a much more customer-centric approach if it is to make up any ground against Google.
There is interesting confirmation of this in a Financial Times article that appeared on November 9th, entitled The Microsoft memos revealed. An October 28th 2005 memo from Ray Ozzie of Microsoft shows that some in Microsoft are beginning to smell the coffee and are understanding the important 'grassroots' dynamic of the Internet.
SO WHICH IS IT FOR YOU, INTERNET OPPORTUNITIES OR THREATS
The Google/Microsoft conflict provides an interesting case study for people in other industries to learn from. In your own industry, are you the one who is leading the pack in thinking about the opportunities that the Internet may provide for growth? Are you the Google of your industry?
Or are you using traditional product-driven selling methods for the moment? When a competitor starts using the Internet, then your own company will look into it. Like Microsoft, you may find it's too late once the competitor is visibly on the Internet. Developing an Internet presence is not achieved overnight. If they're ahead, then you may always be trying to catch up.
IT'S NOT TOO LATE
The year 2005 has already shown more striking changes in the Internet than have been seen over a number of prior years. The later you leave it, the tougher it will be.
SMM will be happy to help you figure out your best approach. Our help can be configured to meet exactly the needs you have. Our strengths, experience and creativity can complement those of your company. So write us a Message today on what you're looking for without obligation.
Added to site 1 December 2005
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