Om Malik writes Growth is slowing for US centric Internet business models. After years of high double digit growth, the "US" sales of many large Internet companies are showing a gradual plateau.The Internet is morphing from a mostly US-centric phenomenon to a truly global phenomenon. EBay and Amazon’s examples show that there is a momentum shift happening – the power of the Internet is moving away from US to the new comers – China, South Korea and soon India. In case of Amazon, international segment sales accounted for 44% of worldwide net sales in 2004, up from 38% in 2003.
Om Points to Erik Schonfeld's article
EBay for instance has realized that and has moved quickly to snap up overseas auction sites and that the world according to EBay points out that soon global sales will outpace US sales. EBay spent $1.6 billion and bought its way into large and fast growing markets. The company has 31 sites straddling the globe, from Brazil to Germany to China. They generated an estimated $1.1 billion in 2004 sales — 46 percent of eBay’s overall trading revenues — and are growing twice as fast as the company’s domestic operations. International trading revenues are likely to surpass US revenue in 2005 . Om cautions, analysts need to figure out the outer threshold of growth and need to start questioning the valuations being put on Internet companies. Among other issues one has to worry about is if the US centric models translate into opportunities worldwide. Om also adds that there is going to be a new resurgence in the local entrepreneurship in those high-Internet growth countries.
My Take: Om Malik is undoubtedly the authority on spotting trends and his power of inference is indeed amazing.Asia represent 250M Internet Users or 32% of the internet population with huge room for growth with 60% of the world population.Asia also have some highest Broadband pentration countries in the world. Broadband is one of the basic requirement for applied services like ebusiness,IP Telephony service etc to boom and so this represents an immediate market for one willing to explore. However, a few things to get the complete perspective correctly:
A. Whats Europe's share in the international business outside of US. Om had earlier pointed out Asia - US internet traffic exceeding that of Europe -US internet traffic , but we may be better off knowing the volume of business transacted by international online firms.In the software field - both products and services, which I am intimately involved with - generally the share of european business exceeds tat of Asia - I must however say that few enteprises are beginning to say - Asian share of business has nearly matched or about to catch up with european level of business.
B. Asia's adoption of leading edge service offerings - for example - Amazaon AWS users, Flickr users - I guess may be pretty low than what we see in the US. Its always competition between the fast and the slow ( even in the digital world)
c.Very specific net centered initiatives first coming out of Asia is few and far beween - A.K.A ohmynews.org in citizen journalism.
D. What if we take the case of 10% retail sale happening through online in Korea and expect to see this threshold happening in the US.
E. Asian ability to innovate new service offerings extendable across the region leaves a few things to be desired - see my article "Where's the asian equivalent of Vonage?"for instance.