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Monday, June 12, 2006

The Internet Industry As A Partnering Industry Sans Monopoly

Google's Eric Schmidt sees the internet industry as going to develop as a partnering industry, not as a monopoly industry. Predicting that it will not end up in a structure with one dominant company, he thinks that it won't be Google and it won't be Microsoft and it won't be Yahoo- It will be a collection of companies. His call - It's not going to end up in the PC model that everybody talks about. The reason is because the advertising industry, which monetizes it, is not a single-solution space. Highlighting that after a hundred years of consolidation, the media industries are down to five mega-media companies. It seems like every day you hear some component is sold or purchased or retargeted and transferred from one large company to another.That's the more normal structure of large industries and that over time that should be the eventual structure of this industry.He would like to think of Google as a technology company run by three computer scientists, and an innovator in technology in its space and operates in the the advertising business — 99% of the revenue is advertising-related but is shy of calling itself a media company as it does not develop its own content. John Battelle may have the right say here when he questions this rationale -he sees that as a staement made to keep valuations in a different quadrant. Eric's other observations are indeed insightful - Viz. All business growth rates eventually slow, The success model for Google is different from Microsoft and Yahoo and the other companies. While I fully agree with his perspective that Google may not know whether the griwth may slow down in a decade or more, I certainly beleive in equal measure, Google should be lot more forthcoming in terms of what their operational plans are for the next 2/3 years in reasonable detail, so that one need not go back to questioning what they are upto with the weekly lauch of a small product. Also supporting hundreds of billion dollar marketcap can't rest on counting adsense revenues - there needs to be more to show in terms of monetizing potential - after all in his own words the advertising industry is not a single solution space - potentially proximate spaces can get merged or players operating dominant in one space can move in easily to the proximate space and get strong as well.

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Sadagopan's Weblog on Emerging Technologies, Trends,Thoughts, Ideas & Cyberworld
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