The Internet Impact

RECENT NEWS
Forbes  32 min ago  Comment 
The Internet of Things (IoT) is a new hot buzzword and like most buzzwords, its purpose and definition are grossly misunderstood. When some people hear the term IoT they immediately associate it with a refrigerator reminding us to order milk or...
Motley Fool  1 hr ago  Comment 
Will conflicting proposals for connecting the Internet of Things lead to an all-out standards war?
The Economist  3 hrs ago  Comment 
SO THE British government is setting up an advice service for retirees with a pension pot, now that they no longer need to buy an annuity with the money. The advice, which will be paid for by a levy on the finance industry, will be from...
The Economic Times  7 hrs ago  Comment 
Over 1.34 lakh internet enabled centres have been set up in rural areas to promote and develop information technology in rural areas of the country.
Cellular News  9 hrs ago  Comment 
The Internet of Things (IoT) market is expected to be one of the fastest growing segments in the Asia Pacific technology industry, Click here for more.
the Underground Investor  Jul 21  Comment 
Knowledge has always been power. That's why those in power in governments all over the world today are obsessed with obscuring real knowledge and the truth from its citizens. However the truth is out there, especially on the internet. Most people...
Wall Street Journal  Jul 21  Comment 
Verizon's FiOS TV and broadband service, grappling with slowing growth, is making a big push in an area where it has an edge over cable: Internet speeds.
TechCrunch  Jul 20  Comment 
 Pornographic media has existed since the dawn of time, but it has never been as widely available and accessible as it is today. That’s largely due to the internet, which provides a launch pad for our curiosity no matter the topic. But with...
Motley Fool  Jul 20  Comment 
Ford’s partnership with ADT is just one indicator of the massive growth potential of the connected home.
Financial Times  Jul 20  Comment 
Chinese telecoms group among investors taking strategic stake in Bristol-based semiconductor maker with expertise in the ‘internet of things’




 

This transformational medium impacts companies, culture, and individual lives with no less effect than the invention of the printing press and movable type. It heralds a sea change of no less significance than the Industrial Revolution. It affects companies and individuals in ways which increasingly permeate our lives. Most obviously it enables companies to conduct business directly with their customers and suppliers, often in a more streamlined, efficient manner. The evolution of the Internet has also created risks for businesses and even entire industries; companies have been caught off-guard as new internet-based business models have developed, and are unable or unwilling to adopt new business practices. This causes problems because the network effect of the Internet allows issues to evolve much faster than management are traditionally conditioned to react to.

Threats

Sector-wide threats

The Internet can destroy entire market sectors. For example, the local travel agency sector has been severely affected by the availability of online booking facilities, which have enabled airlines and hotels to easily do business direct with their customers. American Express Company (AXP) is an example of a major travel agency that has seen demand for their travel-related services decrease as more consumers and businesses rely on online travel portals.

Another example of a market sector facing rapid change is the Music and Video Store industry. Music stores have faced increasingly tough times as their primary demographic of customers have turned to obtaining music online, first through music-sharing portals such as Napster, as well as Usenet and various torrent portals. As the market for digital music has expanded and usage of digital music players has gained widespread adoption, customers of all demographics have turned to more mature, legal options for downloading music, such as Apple (AAPL) 's iTunes store. Music store stalwarts such as Tower Records went out of business; others, such as Virgin Megastores, embraced the new technologies and incorporated digital music as part of their online presences. (It should be noted that the music store industry also faced other pressures, particularly from chains such as Wal-Mart (WMT) and Best Buy (BBY), in terms of product pricing, which also contributed to some of the industry's troubles.) Similarly, the video store industry faced huge upheaval with the establishment of Netflix (NFLX), an internet-based video rental company whose monthly fees and convenient delivery to the home via U.S.P.S. caught on quickly with customers. Video store rental veteran Blockbuster Video (BBI) struggled for some time, but has revived itself over the past 2 years by providing similar delivery services to those of Netflix (NFLX) , as well as a retail storefront for customers less familiar with the Internet. However, both of these chains, as well as their smaller competitors, still face future changes as the concept of Video-on-Demand looms as a viable option for consumers in the not-too-distant future, and the entire Video Rental industry, both online and brick-and-mortar, will likely face significant competition from Cable Operators.

Yet another example of a sector-wide threat brought on by the Internet is the issue of piracy. For example, Microsoft (MSFT) loses $19 billion dollars in profits to software piracy alone. The Music and Motion Picture industry have also been negatively impacted by rampant piracy of their products. The RIAA (Recording Industry Association of America) reports that $12.5 billion dollars are lost each year to illicit music file sharing.[1]. Internet file sharing through various portals such as Bittorrent, IRC, and DC++ dramatically cut into profits of nearly every sector of the entertainment and software industry from Adobe Systems (ADBE) Photoshop to Activision Blizzard (ATVI) Call of Duty 4 and Warner Music Group (WMG) Atlantic Records sales. Many companies are now devoting significant amounts of their budgets to battling internet piracy, something unheard of just 10 years ago.

The 'abolition of geography'

While many would see the abolition of geography as an opportunity (see the section below) this eradication of boundaries can be a threat for many existing business models which have relied upon geographic diversity to fully exploit markets, reducing 'consumer profit'. For example, the motion picture industry has traditionally segmented its distribution by region, both in the timing of releases, and in pricing of DVD versions. However by allowing a much greater awareness of pricing levels in different regions, consumer disquiet creates pressure for a global pricing model. While there have been some technical attempts to fight this, for example by adding region-encoding to DVDs, consumer 'champions' respond by creating workarounds (Multi-region DVD players etc). Over time these forces unleashed by the Internet generate increasing pressure.

Company-specific threats

The Internet provides numerous communication vectors (like this very site) where information can be exchanged. Companies need to keep informed about the references being made to them on the Internet. The extent to which companies are Internet ‘savvy’ in reacting to references made to them on the Internet – for example in discussion forums, blogs, and protest sites - yields interesting clues as to how aware the management are of their actions on the ground, which can be particularly valuable insights for the investor. hi all day yeah

Opportunities

Sector-wide opportunities

it all.

The 'abolition of geography'

For the local entrepeneur, the Internet provides expanded opportunities primarily by enabling local organizations to reach out beyond their traditional geographic boundaries. This either allows them to reach more customers, or to reach their existing customers without the transaction costs involving intermediaries. See E-Commerce.

Reduced barriers to entry

The companies best placed to take advantage of this are those already involved with technology and Information Technology in particular, for example software companies such as Adobe Systems (ADBE) and Microsoft (MSFT) However they also need to react quickly to ensure they are not threatened by new-entrants to the market taking advantage of the reduced barriers to entry that the Internet affords.

Microsoft (MSFT) notably had pivotal moment in its history when it realised that the Internet would have an overwhelming impact on its hitherto non-networked software business, and vowed to re-focus around the Internet.

Outsourcing

The communications efficiencies also allow companies to more easily outsource their staff to regions where their costs are lower, however this must be done sensitively to avoid the threat of consumer backlash if the service quality is lowered, or if it is perceived that the company is adversely affecting the communities in which they previously operated.

Thank you for including me. Your list is cresomhenpive, so comprehenshive that it includes two men. They both have female staff writers, but you might want to point that out. Five Cent Nickel is defintely a man. At least that's what he told me when I met him in person. Debt Kid was also started by a man, but he's brought on a few other bloggers (male and female). Perhaps a little asterisk is a good way to go?I miss English Major Money. Do you?

Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki