Speed Trap: Risks and Rewards of Rapid Growth for Internet Businesses by Eisenmann Thomas

Author:Eisenmann, Thomas [Eisenmann, Thomas]
Language: eng
Format: epub
Publisher: Hydraulic Press
Published: 2016-05-29T16:00:00+00:00

Part III: Manifest Destiny

In the introduction to Part II, I likened the Internet to a tsunami, and maintained that more big waves will follow as broadband and wireless technologies are deployed. For the infrastructure companies engineering the Evernet — access providers, portals, and networked utility providers — this implies a rapidly evolving and risky competitive landscape. Facing the constant threat of “creative destruction,” infrastructure companies must race to reinvent themselves. Even market leaders should sleep with one eye open.

You might expect that the tireless tumult in infrastructure businesses would spill over into the markets served by destination websites — the online content providers, retailers, brokers, and market makers that consumers and businesses visit to retrieve information and conduct commerce. However, the emergence of new access technologies seems unlikely to have much impact on the competitive position of most companies that operate destination sites.

That’s doesn’t mean that destination sites will ignore new technologies. Quite the contrary: content providers like CNET, retailers like Amazon, brokers like Schwab, and market makers like eBay already offer wireless versions of their websites. Furthermore, these firms can be expected to embrace interactive TV when it is more widely deployed. Precisely because they are already experimenting with broadband and wireless technologies, the narrowband Web’s leading destinations are unlikely to be unseated by competitors that leverage new technologies in a preemptive manner. Although they still shouldn’t sleep too soundly, most market leaders are well positioned to extend their dominance “anytime, anywhere.” Indeed, they feel it is their Manifest Destiny to do so.

Of course, there are some markets where the proliferation of broadband and wireless technologies could have a revolutionary impact on existing destination sites or could spawn a swarm of startups. For example, it’s easy to download music through high speed Internet connections, but it’s still not clear whether music labels will view this as a threat or an opportunity, and what role intermediaries like Napster will play in this market. Likewise, as wireless carriers deploy Global Positioning System (GPS) and other technologies that can pinpoint a subscriber’s location, we can expect to see a host of new content and brokerage businesses exploiting that data.

Childhood’s End

For the most part, destination markets are maturing. Based on seven years of trial and error by a myriad of content providers, retailers, and information intermediaries, we’ve got a pretty good sense of what works online and what doesn’t. And, in categories where online destinations create enough value to fund their ongoing operations, we’ve had enough time for leaders to emerge and for losers to exit. It’s childhood’s end for companies like Schwab and eBay. Niche players might fill the interstices they ignore, but it’s unlikely that these leaders will be usurped.

Maturity is most apparent among online content providers, retailers, and market makers that target individual Internet users. As we’ll see in the next two chapters, online content providers and retailers conspicuously lack the structural characteristics that improve the odds of success for accelerated growth strategies. Yet many pure play startups that employed these business models tried to Get Big Fast.

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