||1. Editorial: The deflated bubble|
Its quite boring to go back to a subject that was
discussed several times in this newsletter (and in other
articles on this site). The hype and the bubble.
But its hard to ignore it when its still making front-page
headlines almost every day. The press is blaming the
analysts, the analysts are blaming the press, everyone is
trying to pass the buck and the whole mess is
quite ridiculous. It was pretty obvious year ago to anyone
looking at the realities that the bubble was filled with
hot air (or some smelly and not-so-wholesome gas). And that
there is no such thing as perennial, unlimited growth in the stock
market or anywhere else.
The bubble hasnt exploded completely; more downturns
will be necessary before investments can stand on any sort of
firm ground. This isnt a matter of bears and bulls. It has
been (and partly still is) simply a case of poor choice by
investors, managers, analysts, business advisors, and all
sorts of self-appointed experts.
It isnt even a problem of profit
multipliers. A pretty crude measurement in any case,
but especially with new technologies. The irony is that
conceptually its quite reasonable to assume that the
potential of a new venture can not be measured by short-term
income or profits. Investing in a company that is losing
money is not, per se, a mistake if that company has real
potential. The problem is that potential was
defined by very poor criteria. Now, while many poorly planned
ventures have failed (and others will fail in the future) the
dismal disappointment may deprive good companies of the
support they need.
The real question is: where do we go from here?
The answer isnt easy, but the basic concept is quite simple.
Most good ventures in the internet need consistency over time
more than they need large up-front investments. Forget haste.
Look for established or fledgling ventures with a genuine ability to
build sound relations with their customers and hold them
and grow them over time. Rewards may not be instant, but if
investments were more gradual and less hasty
there would be fewer failures.
back to top
||2. The internet and advertising|
Online advertising income has been disappointing in most
countries; and current expectations of growth are far behind
the hype projections that were so popular a while ago. That
isnt much of a problem, except for the (many) internet
ventures that based their business plans on enormously
unrealistic expectations of ad revenue.
On the other hand many dot coms spent (and
wasted) a great deal of money in traditional media. Not only
in the United States, but in several other places (including
my country). Thats another bubble and that, too, has
exploded. Mainstream media had a boom year 2000 when the
new economy advertisers spent so much money that
space and time were sold out at increasing prices. In the
last quarter of 2000 there were clear symptoms that the game was over.
Now the figures are published and we know that ad revenue growth
this year will be slower (one of the results is that prices are becoming
more negotiable). Mostly because many of last years new
advertisers wont be there.
What was the problem? In many cases the advertising
newcomers were more interested in impressing shareholders
and investors that in selling anything to customers. Or
if they thought that they could boost sales just by spending a
lot of money on (often nonsensical) advertising they were
bitterly disappointed. Once again, the origin of the failures
was haste. The solution lies in some very old, tried and
true, principles. Such as look before you leap, learn to walk
before you run. And if you really want to advertise... try to
say something that is meaningful to potential customers, even
if it wont entertain your board of directors or your friends
at cocktail parties.
back to top
||3. New data|
Data on the size and growth of the internet, worldwide and in Europe,
are no longer included in this newsletter. They are in a separate
section on this site. (It's in Italian,
but charts and graphs are understandable regardless of language).
Hosever, here is a short summary of a few basic developments
also for the sake of comparison in the future, when the data reports will
be upfìdated but this page will remain unchanged.
The new report on international
hostcount (updated to the end of year 2000) was published in March 14,
2001. These are the figures for the 17 countrties with over 500,000
||Number of host
in a year
The situation of the "ten nations" that we had seen in the
last issue has changed.
The red section of bars shows the increase in two years.
An analysis of the two large ethnic communities is available
in Italian and Spanish.
Here is an updated map of density in Europe
Internet hosts per 1000 inhabitants
For two more charts of the sitation at this time see the
Italian version of this issue.
For a more detailed updated analysis see the worldwide and European data reports (they are in Italian but data, charts and graphs are fairly clear regardless of language).