Is There Anything Left To Play For?

The Internet has not gone away – in fact it is still growing like crazy. Did you know that? Let us look at just a few statistics. During the year 2000 when the blood was dripping all over the dot com carpet, the number of web sites grew from 9.95 million to over 25 million (according to NetCraft). That’s a growth rate of 250 percent – no less. The population of Internet users was also growing from 196 million to over 300 million (according to IDC), which is over 50 percent. As for B2C e-retail, a September 2000 forecast by Forrester Research was predicting above 50 percent growth for 2001 and a similar level of growth for the following year.

In line with these forecasts, the successful Internet companies are showing rising revenues. The last set of results from Amazon, the flagship e-retail site, showed 44 percent growth – and it is, at last moving into profit. Consider even a pure web site play, for example, Internet.com. Recent figures for 2000 showed revenues of $52.1 million, a 224% increase over the previous year and the company has moved into profitability. The dot coms that survived the cull are fast growing and most of them are moving into profitability, even if the share prices no longer shine with such extraordinary brilliance.

So the question arises: Is there anything left to play for?

Is it not simply the case that the dot coms that could have made their land grab and the clicks and mortar companies are now taking their rightful place in the scheme of things.
Such a conclusion might be realistic if the web was a static network. Even if it were not growing any more, and it is still growing dramatically, the fact is that the remorseless advance of technology is slowly morphing it in various ways. Rather than discuss them in any depth, let me just list them with a few notes:

1. Market Making. Despite the early hype about the B2B market, which now provokes skepticism rather than enthusiasm, electronic markets are in their infancy and will make an impact in the medium term. They will make their presence felt where standardized product and volatile pricing co-exist and in many cases will supersede other modes of buying and selling.
2. The ASP Market. The Internet is gradually absorbing the software market to the point where most software will eventually be sold as a service rather than a product. This is the ASP market and it will help companies establish themselves quickly and grow quickly.
3. Voice over IP. This has been a long time coming and the lack of reliable circuits within the Internet has held it up, but its time is coming. Ultimately it means that the web and the telephone network will unite to become the same thing.
4. Profiling. Profiling software that predicts user preferences has been around for some time, but only recently has it become interactive. InterX Technologies has some very promising software in this area and it is probably not the only player in the game.
5. Streaming Video. It is already a factor, but it will be an increasing one with time as bandwidth grows and the slow lines disappear.
6. Video Conferencing. This is in its infancy, but there are a number of sites, most notably Webex, which had a successful IPO in the darker days of last year, that provide a comprehensive service. This development heralds a revolution in distance learning as well as enabling world-wide business meetings.
7. Electronic Money. This is in its infancy and there are few very successful schemes. But it will flower.
8. Now if these 7 points were not enough, we can add the fact that the whole of mobile technology is going to stand the web on its head and beyond that pervasive computing (embedded chips) will have a similar impact.

Many of the technologies mentioned above have the creeping effect of undermining existing business models – at least those that cannot adapt. They can, on their own create new entry points into a market that now looks a little moribund.

However even if they did not exist we would see developments in the market. All that I have mentioned above is technology change, which can lead to business change. But business itself is no stranger to innovation. In the old economy new manufacturers or distributors or financial service companies or retailers or publishers or media companies evolved all the time and many became seriously large companies. Some did it by the simple strategy of looking at what was successful and doing it better.
Nobody that surfs the web to any great extent believes that many web sites and services cannot be improved upon. They can be and they surely will be.

The game is not over at all – indeed it has only just begun.