Trend 1: People Power and Web 2.0:
The web has entered its second generation. As a manifestation of this second-generation Web, today we are witnessing the spawning of user-generated, controlled, and validated Web content. Content production tools, from blogs to video sharing, are completely democratized, and the engine for growth is the talent and ability of ordinary people, who together are creating a distributed workforce of a unprecedented scale.
Each of us has knowledge that is valuable to someone, somewhere.
What does all this mean for Portals and Corporations?
Today’s most successful web companies are building business models around or based on user-generated content.
From Amazon.com to MySpace.com to Craigslist to Wikipedia to Flickr, the most successful companies on the Web today belong to the second generation Web.
Even for regular veterans like Amazon.com and even companies like NetFlix.com, much of the value comes from their tens of millions of customer reviews. Tracking user clicks on Amazon is used to create better recommendations for those who follow them. A query on Google and the pages that one finds relevant give feedback that refines the search algorithms. These companies have found ways to harness the wisdom of the crowd, extracting information that was there all along, latent and lost.
Indian portals have started to catch on and take notice of this trend, but have yet to realize the full potential of leveraging the 2nd Generation Web on their portals. The pace of adoption on these portals is currently quite slow. Successful verticals like travel, jobs and marriage in India are also slow moving in this context.
Successful market portals will have an advantage in this regard. But most portals are still trying to figure out the problem of the Second Generation Web and how to make the most of this latest trend of user-generated content.
They cannot ignore it and they are quite sure of it, but how quickly they adapt to this trend remains to be seen in the Indian context.
Trend 2: Anytime, anywhere, in any format, on any screen: A show is always on
In 2004, viewers tuned in to 2.9 billion music videos streamed from the Yahoo Music site.
In 2005, nearly 25 million unique viewers visited Yahoo Music and viewed 4 billion clips. But it wasn’t until 2006 that record labels began to see Yahoo as an indispensable part of their marketing strategy.
This multi-screen video trend is rapidly catching up in all the nations of the world and India is no exception to this trend. All the major telecom and internet players in India have seen promising growth in the mobile download and internet download market in the last 2-3 years.
The demand for content has driven portals like Yahoo to create content tailored to all kinds of different screens: first-run TV shows, original content like online soap opera webisodes, and time-sensitive sports and news segments. Once posted, such content takes on a viral life of its own. Recently, STAR India released India’s first webisode for “Pyaar Ke Do Naam”. On March 31, 2006, STAR’s official website, Indya.com, premiered the channel’s next show, ‘Pyaar Ke Do Naam… Ek Radha, Ek Shyaam’ on Indya Tube.
As content companies struggle, hardware manufacturers are also responding to the demand for multiple screens with their own offerings. Apple’s video iPod and Samsung’s video cell phones are just the beginning.
Portals like Indiatimes.com in India are well positioned to benefit from this trend. They have the advantage of being pioneers in this category of business model and expect an increase in their download services based on the short code 8888 in the coming months.
Many other portals in the new segments and travel segments have been quick to adopt this latest trend. Recently, irctc.co.in launched a mobile-based train ticket booking feature to facilitate booking across all kinds of devices and login screens.
However, the portals in India still have time to catch up with this new trend. One reason is that leading corporations around the world are still working on trying to figure out the details related to the demand patterns of these new multi-screen consumers.
This move to anytime, any screen content will also drive portal gamers and other creators to post their wares on third-party sites like Yahoo, Google and iTunes.
Trend 3: Personalize it
Amazon.com uses purchase histories and page views to create a unique web page that includes recommendations tailored to your taste. Netflix analyzes previous DVD rentals and suggests future options. Apple’s iTunes and Google Video are bringing radio and television out of the age of broadcast and into the age of the dawn of individualized media.
Today, whether it is to buy jeans, shoes, cosmetics, or book an online travel service, the era of consumer products tailored to personal tastes is rapidly catching up.
Personalization remains the exception in durable goods, but it has become the rule online.
This trend has driven the adoption of various types of personalization techniques in portals. Techniques such as collaborative filtering, choice matrix, and fuzzy set matching have become more of a necessity than a fad in portals.
With increasing pressure on content creation, portals are increasingly differentiating their content based on various tools and techniques to personalize content.
Trend 4: Buy it now! Takeover is the new end game
The old school approach is to build a great R&D department and put smart minds at the helm and let them come up with something innovative. But today, more and more corporations around the world have realized that blue sky research is quickly becoming a drag on the bottom line. They are increasingly taking an alternative route that saves them money, saves them additional pain, and gets someone else to do the sweaty work for them.
And as a solution, more and more corporations around the world have started buying up small businesses that are already succeeding in a new market.
Cisco took this approach a long time ago, acquiring 107 companies over a 12-year period ending in 2005, becoming one of the world’s most valuable technology companies in the process. The network equipment manufacturer continues to make its way into new markets. To expand its presence in the digital living room, Cisco spent $6.9 billion last year, nearly double its total R&D budget, to buy cable box maker Scientific-Atlanta. This is R&D by M&A.
This trend is now evident across the globe in all industries, especially the online world. In 2005, News Corporation entered the social media fray by purchasing the parent company of MySpace for $580 million. In May this year, it bought the online karaoke player kSolo.com and the news aggregator Newroo. eBay last year spent $2.6 billion on the Skype voice-over-IP player. With ad revenue booming, Google and Yahoo have a combined $4.3 billion in cash and equivalents, and they’re not afraid to spend big. In the last 18 months, Google gobbled up Dodgeball, Urchin Software and Upstartle, entering mobile social networking, web analytics tools and web-based word processing. Yahoo went on its way gobbling up Konfabulator, Webjay, Upcoming.org, Flickr and del.icio.us. The company now offers interface widgets, online playlists, an event tracking service, and bookmarks and photo sharing. Microsoft, on the other hand, has extended its dominance by acquiring a staggering 24 companies in the last year or so, including bookmark startup Onfolio.
Meanwhile, small internet businesses are eager to get on the auction block. In the Indian Internet space, this trend will also gain momentum in the coming months. Consolidation will soon start to happen in verticals like online travel. This space is already being filled, with almost all new players offering the same service model. Soon, the big players will gobble up the small startups and the travel market will mature further in the coming months in India.
The IPO market has weakened since the bubble burst, and new regulations have made exit strategy a costly and cumbersome affair for new players. So the new endgame is full takeover and indeed it will be a win-win situation.
Trend 5: Open standards and open access technology are the order of the day
Today, openness has become a fundamental business principle, but its value has not always been so obvious. In the 1970s and 1980s, the favorites were companies like Oracle and Microsoft. They tried to turn their proprietary technologies into de facto standards. Owning the standard made a company dominant, allowing it to dictate how customers used its products. With each new product cycle, customers had to remove old apps and install new ones, and companies selling accessories had to struggle to update their products.
Then came the Internet, the apotheosis of open standards. Applications now didn’t need to be written with their own user interface to run locally on Windows, Mac OS, or Unix. The browser window became the default interface for everything from trading to network management to stock trading to email. Once installed on a provider’s server, updates were immediately available. And the open environment fostered competition, driving continuous improvements.
We now have Salesfore.com, which offers software through a browser window. The model has been so successful that salesforce.com has recently expanded its reach to offer its services on mobile devices as well. The company’s revenue is growing at more than 50 percent a year, and rivals such as Oracle and SAP are taking cues from its strategy.
Now companies are taking this software-as-a-service model to the next level by making public the instructions that control certain internal operations. For example, users can access the servers of Amazon.com or eBay to create their own store. Similarly, one can combine Google Maps with photos from Flickr. SOA, XML, web services are defining the winners in today’s web space.
Terminating ownership results in better and cheaper software for everyone, and the advantages of SOA (Service Oriented Architecture) are becoming more obvious to technology players around the world. While online providers open their servers for profit, programmers have embraced open source licenses for idealistic reasons.
However, closed systems are not obsolete yet. They still rule on gaming consoles and handheld devices. And the telecommunications and cable television industries seem reluctant to adapt to the changing technological environment.
Still, the power of openness is driving efficiency and improving outcomes across the business ecosystem. The way forward is clear: it begins with an open door.