Network Effect

How the Internet Is Wreaking Havoc on Media Companies

@rrtzmd - I agree with you in theory, but not in practice (and I definitely don't think most of us will survive unscathed if it is left unregulated - we will survive but not unscathed). The difference between this evolution and prior ones is that this evolution is creating consolidation in all industries, and all geographies, all at the same time. Very few business models are not impacted by the Internet at this point. So, consolidation is occuring at a pace and breadth that has never been seen before - on a global macroeconomic level. The short term impact was growth of jobs and unique revenue streams which is what occurred this past decade. However, we have crossed the inflection point at which the number of jobs and unique revenue streams that it is creating are less than the ones that it is destroying and that trend will continue to get worse unless regulation comes into play. Think about why the government doesn't let two big companies merge - because it would be bad for the consumer in the long run because there would be too much consolidation and power. This is what the Internet is doing in most industries and geographies - it is creating massive consolidation. You need competition in a capitalist economy. Consolidation kills competition. And that's why I think the Internet will be regulated so that this trend doesn't continue and things won't end badly for the consumer in the long run.

How the Internet Is Wreaking Havoc on Media Companies

The Internet is wreaking havoc on just about everything. Jobs are being lost to productivity increases caused by the Internet. This doesn't end well for a lot of companies if you play it out long enough. Left unbridled, the Internet will cut out all middle men, and it will create perfect information for the consumer. Both are very bad for many businesses, and therefore bad for the consumer in the long run because consumers need to be employed. The Internet needed to be "protected" this past decade. The next decade it will be regulated and taxed so that many businesses can make a profit, not just a few, and so that people start going into malls again (for example) and therefore there is a reason to have malls with paying jobs, real estate to be rented, construction to be done ... etc etc etc. I hate to say it because I'm an Internet guy, but the Internet has increased our productivity too much and it is now hurting our economy rather than helping it because it is killing and consolidating more revenue streams and jobs than it is creating new ones.

Apple, Amazon on to Something Big

Apple has the moat, Amazon does not. It takes a customer base inside your ecosystem to build a moat. Amazon doesn't have one in their ecosystem (I realize that there are manipulators out there predicting Amazon's Kindle sales, but it will be clear in the next year or so that Amazon's Kindle isn't selling). Amazon will lose the hardware game quickly for the eBook industry. You can't be a one product consumer electronics company. Apple will win the hardware side of the eBooks game because they have the biggest ecosystem. Amazon may have the ability to carve out a short term win (3-5 years) on the software side, but eventually they will be squeezed out of that as well because content providers will be connected directly to the customer through the ecosystem (Apple's App Store). Google and Microsoft will also go after this space but eventually, there can only be one middle man - all other middle men get squeezed out. And that middle man is the one who owns the ecosystem - and that is Apple.

Amazon has the ability to win the logistics game. They should focus on being a service provider to the ecommerce industry and start going after companies like FedEx and other logistics players. Retail, in the long run, will only be a loss leader for them, but they can have a great business as a service provider to other retailers. But this will take quite a long time.

Google, I'm afraid, is on the downside of the mountain. They don't control any relationship between the buyer and the seller. They just help them find each other, which is not a business model that has a moat around it. A lead generation business model will always lose to a transaction processing one. If Google's business model required from the beginning that you become a Google customer to use its services, then they might be able to win quite a few games over the long run (eBay, Paypal, etc). But, unfortunately for them, they didn't. Their business model is not a walled garden, so there is no moat around it.

A Second Opinion on Palm Pre's App Numbers

You may be right, for the small customer base that the Pre has, they may be downloading a lot. Who cares in my opinion. The reality is that Apple does have the largest mobile ecosystem and it is now growing itself. The self-perpetuating cycle between buyers and sellers is now in place with the iPhone/Pod/Touch/App Store and it cannot be beaten by anyone except Apple itself. The only thing that will tear this down is poor execution on Apple's part ... and we all know where Apple stands on execution. Unfortunately for a lot of companies and industries, this snowball is going to continue to roll down hill and no one can stop it. Even if Palm or RIMM or anyone for that matter comes out with better technology, it wont matter. The value lies in the ecosystem, and you can't build one when there is already a dominant player in the market. Someone might be able to carve out a niche in a vertical market if they beat Apple to the punch. This is the strategy all these other phones should be going after - build out a mini-ecosystem in as many small vertical segments as they can before Apple gets there.

Apple's Walmart Deal Will Effectively Kill Google's Android

Anyone who thinks that sitting and waiting in this game is an acceptable strategy is missing the point. The entire business model centers on the ecosystem around the phone. The cell phone itself is just the trojan horse to the customer, or gateway to the ecosystem. The key is to develop the self-perpetuating cycle between buyer and seller within the ecocystem. The more people that have these phones, the more companies need to sell / develop products and services for the ecosystem. If Android doesn't have any customers, why would people keep developing for it. Look at Google Base and Google Wallet. These are free - but no one buys through them so early adopters just give up and the spiral starts the other way. The whole key, as evidenced by Ma Bell, MSFT, eBay, PayPal and a whole host of other networks that dominate their industry is the network effect of the ecosystem around their business. Apple won this game a long time ago. This will be yet another area where Google tries to win against an 800 pound gorilla and fails miserably.

Exploiting the Downside of the Markets

he's short already, and he wants people to sell him the stock so he can buy it from them at these levels.

Should Apple Consider Buying Yahoo!?

how about Skype? makes sense on so many levels.

Good News For Google Investors: YouTube Click-To-Buy Feature

It makes sense to me that this is the way that you monetize it, but it's all in the numbers. If Google reports numbers regarding this feature then they will be good and they will have another potential home run on their hands. But if they don't report numbers on it (like Amazon has not reported numbers for Kindle, and Google will probably not report numbers for Android), then the numbers are not compelling. Every time another attempt at making money fails, Google slides further and further into yesterday's news. Google is a lot like Mike Tyson - Tyson was percieved to be unstoppable early on, until Buster Douglas knocked him out. He hasn't won a lot of fights since the Douglas knock out, and each loss since then has continued to deteriorate his reputation as unstoppable. Google was percieved to be unstoppable early on too, until they tried to make money at other things. They haven't won a lot of fights since that first knock out either. And if Android and this attempt to monetize YouTube don't work, Google's reputation will continue to deteriorate as anything more than a one-trick-pony.

Google Phone: "Dream Phone" Might Be a Little Strong

folks, take a cue from the Kindle hype, the Bold hype, and all the other iPhone Killers hype, if you don't see numbers, they're not selling. Android will be thrown into the war chest of things that Google tries and fails at because they think they can do anything. their hubris is their biggest achilles heel. but that's not just Google. all the titans failed when they got too big, because they were no longer nimble and they had been drinking their own KoolAid too long.

Google's G1: A Paradigm Shift in Mobile Phones

you are drinking too much of that google KoolAid buddy. the game you are talking about is more than likely going to be won by Apple. you are right, this is the future. but google will not win, and all signs point to that apple will. pretty soon, large companies are going to start partnering up to beat Apple because they are having so much success with the AppStore and all of its hardware. it will steamroll industries. i think EBAY, with Skype and PayPal, is ripe for the picking because it's cheap and they have all the tools for a mobile commerce platform. and so is RIMM because their management is top notch and they already have the base of users in the mobile space. one of these companies will be bought out in the next 1-2 years.

Is Apple a Better Stock Than Google?

Apple's historical earnings have nothing to do with their future value. That's the point - people realize that the iPhone is yet another monster revenue and profit generator for Apple that is another inflection point in the companies growth. The trend line is not straight, it is turning upwards. With Google, it's the opposite. This is why Apple is worth more, a better company, a better business model, just about a better everything than Google. Google is turning out to be the one trick pony that many feared, and the metrics in that stellar business are headed in the wrong direction. Average cost per click should drop quite a bit over the next couple years. Click through rates should drop. There are chinks in their armor. Apple is just the opposite - they are firing on unprecedented cylindars.

Google Hasn't Won the Search Game Yet

I was wondering when the media would start to talk about this. This phenomenon has been going on for quite some time. The loophole has always been there in Google's lead generation model, but Wall Street and the media has a blind eye to anything bad about one of their darlings. Investors, listed hard to what this author is saying. LEAD GENERATION BUSINESS MODELS HAVE A FATAL FLAW. THERE IS A LOOPHOLE BECAUSE TRANSACTIONS ARE NOT PROCESSED THROUGH THE LEAD GENERATOR. This is why eBay, PayPal, and Skype is a far superior business model and if they can reignite a culture of innovation inside the company, they will definitely not lose the stranglehold they have on commerce, payments and communication. And, because of the compounding network effect of their three customer bases, they will eventually win search and social networking as well. But, if they don't reignite innovation inside the company, they may lose their grip on their current businesses and don't have a shot at winning the next game. And more than likely Google will win if that's the case. But it's eBay's to lose.

Could eBay Be a Microsoft Takeover Target?

@ Deep Value - the value of Microsoft technology does not lie in the technology itself. it lies in the network around it. Microsoft has had inferior technology for years, but everyone continues to use it because everyone continues to use it. i realize that there may be free technology and better technology out there, but this has nothing to do with Microsoft's stranglehold on its market. It has to do with the network effect and it is almost impossible to unravel. Additionally, regarding eBay's eyeballs, I think you have been misinformed - there are more searches are done on eBay every day than on Google. And everyone searching on eBay is actually thinking about buying something so the value of their customer base is far greater than the value of a search engine's customer base. Additionally, most "customers" who use search engines are not actually customers of the search engine. Search engines are open networks which many believe is superior. however, I disagree. I think the walled garden will prevail in this race because processing transactions is a far superior business model to generating leads. This is why Google is trying to do things like Google Wallet and Google Base. They are trying to process transactions rather than generate leads because the vast majority of people who went and sold on Google are starting to go away because 90% of all clicks are on the top two spots. So, if you are not one of those two spots, it has minimal value to any individual merchant. So, as a result, they are all starting to go away. Ask any search engine marketer about it and they will tell you it is getting harder and harder to get clicks out of Google because they are all going to a smaller and smaller % of the merchant base.

Microsoft buying eBay never made sense before because eBay had a culture of innovation inside the company and Microsoft would have killed it. However, that culture of innovation is gone at eBay, and therefore an acquisition by Microsoft makes a lot of sense now. I just don't think the gov't would allow it.

Google's App Engine: The Cutting Edge of Near-Real Time Collaboration Tools

Google, as the darling of wall street, no longer exists. the ride is over. not saying they're not a great company that has done some of the greatest things on the Internet, and their profit producing abilities and stock performance has no parallels. (although I do think their lead gen business model is flawed and ultimately will loose to a transaction processing one unless they build it themselves). however, we're no longer at the base of the hockey stick - the stock has already hit $750 - they've already been to the mountaintop. They may find a higher mountain some day, but their stock will be in the valley for a while.

Wireless Auction: Google Playing Chess Ten Moves Ahead

the story is over. the google that everybody knew no longer exists. look at the history of the Internet - AOL, Yahoo, eBay, Amazon - all kings of the hill one day like Google is now. but watch their stock price history as the bloom came off the rose as it just did for Google as it went from $750 - $400 and people started to realize that they can't keep that growth pace up. as a result, disappointments start to be the story for a while rather than huge outperformance and P/E starts to come in b/c growth is slowing. The great Google story is over - they're still a great company and will do great things - but it's no longer the Google that we once knew.