Daily Deal Market Ripe For Consolidation

2 Replies Angeline

According to Yipit, there are 384 daily deal websites operating in North America that it knows about. This number is almost certainly far higher once you consider all the smaller sites that are not able to run deals each and every day.

So is the market too saturated? Is the industry doomed to fail because there are too many competitors competing for an ever shrinking supply of customers?

In 1876 Alexander Graham Bell demonstrated the telephone and one of the biggest communications companies of the time immediately dismissed it with the famous quote:

“This ‘telephone’ has too many shortcomings to be seriously considered as a means of communication. The device is inherently of no value to us.”

That company was Western Union and the lack of foresight for this new technology meant they were never able to compete in the profitable telecommunications industry – an industry which they had previously dominated with their telegram service.

Between 1894 and 1904 over six thousand telephone companies went in to business and from there mergers, acquisitions and closures happened to consolidate the industry to just a handful of companies today.

In 1939 there were 132 railroads in America, today that number is just seven as mergers, acquisitions and closures meant huge consolidation in that industry.

An early 1900's American train

The sort of train that powered America in the early 1900’s

In 2005 there were a huge number of social networks available, Myspace, Orkut, Bebo, Friendster and Classmates to name but a few. Today? We have one site, Facebook as the market consolidated.

In 2007 there was just one daily deal website worth mentioning which was Woot, a hugely popular and profitable website that continues to grow and increase its revenues. After the launch of Groupon it spawned off thousands of clones around the world, over 400 of them in American alone.

Since 2009 there have been 72 acquisitions in the daily deal industry, 44 coming in the last 6 months alone. Groupon have gone for an expansion by acquisition business model with at least 8 buys under its belt, Google too is eyeing up the industry with several acquisitions in the daily deal market to expand its Google Offers programme.

There are plenty of other acquisitions too, LivingSocial have bought at least seven daily deal sites and BuyWithMe have purchased 6 daily deal sites before they too have been purchased.

So just like other new inventions and markets spawned hundreds of clones, it might look like the daily deal market is in decline as the number of sites decreases but there is still a very healthy merger and acquisition process taking place as the deal market looks to consolidate and become profitable.

Why Is Cloud Computing So Important?

17 Replies victor

Cloud computing has a lot of hype surrounding it. More than a few observers have wondered what is so important about this new internet phenomenon. The truth is cloud computing is leading to a rethinking of the internet’s capability. Cloud computing promises to completely delocalise computing power and technology. Users will be able to access and manipulate files, images, videos and other data remotely. Cloud computing promises the ability to keep networks and mobile devices synchronised at all times.

Infrastructure

A bank of sophisticated computers host operating systems and data for hundreds, if not thousands, of customers. internet search engine giant Google pioneered the use of data centers to store clients’ personal data safely. The same principle is being extended to cloud computing. Huge data centers will act as remote desktop computers. These centers will be able to store every file a user would need. All the user needs is a counterpart machine that can be as small as a conventional laptop with much less weight. These so-called “netbooks” serve only to connect the user to the internet so he can access his files.

A cloud computing network

An example of how cloud computing works – every device synchronises with the cloud, meaning that your data can be accessed anywhere!

A single data center can offer multiple services and applications. Theoretically, a cloud computing system could perform almost any function or task the user desires. In a typical system, each application will have its own dedicated server combined with multiple iterations to create redundancy and prevent sudden malfunctions. The whole center is managed by a central server that constantly monitors the traffic and load volumes. Balancing the differences between machines, it seeks to maintain the harmony of the system and prevent crashes.

Business Advantages

The advent of cloud computing is actually forcing businesses to change their strategies. Previously, hiring a new employee meant providing him with a desk, computer equipment and various other hardware or software. Cloud computing allows them to reduce these capital expenditures significantly. Now all an employee needs is a computer with an internet connection to access his work data. Desks and office equipment may still be necessary, but the investment in computer hardware can be outsourced to cloud computing companies.

The hardware and software demands on the business’s side decrease dramatically. Labor costs per individual employees go down, enabling a company to hire more workers. Productivity increases, raising the efficiency and profits of the business.

Concerns

The primary reason why cloud computing is getting so much attention is its effect on business strategies. The sheer cost pressure alone is forcing industry after industry to adapt to the new reality. The advantages notwithstanding, several valid concerns about cloud computing exist, namely having to do with privacy and security.

Business owners and executives may hesitate to turn over their sensitive data to a third-party system with good reason. Losing access to their own data or having it compromised is unacceptable in a ruthlessly competitive private sector. One major argument against this fear is the fact that cloud computing companies survive based on their reputations. This gives them a huge incentive not to lose their clients data or compromise accessibility. Despite the power of this incentive, regulations may still be required to ensure safety.

As for privacy, the obvious concern is the connection between the user’s computer and the cloud system. Privacy could easily be compromised by unscrupulous individuals who could access personal information like credit card numbers. A solution to this problem is to use authentication and encryption like regular secure connections.

These practical concerns are somewhat overshadowed by a number of philosophical and legal questions. For instance, who owns the data stored by the cloud computing system? While it is held in the client’s name, a case could conceivably be made that the cloud computing system is the actual owner and therefore has a right to it. These technicalities are still under debate, and no resolution has yet been achieved.

Conclusion

Cloud computing holds great promise for upending things as they are currently done in the business world. The practical effects on information technology jobs will likely be profound. These and other challenges must be met because cloud computing will continue to change the nature of the internet.

The State of the Blogosphere

13 Replies Jonny Hankins

Technocrati.com have recently published their State of the Bolgosphere 2011 report and it raises some interesting questions. The report is based upon a survey of 4114 bloggers around the world, and presents various statistics in easily readable graph format explaining who blogs and their stated reasons why and purposes.
A chalkboard expression of what a blog might be
I am one of the 30% over 44 year olds, with the majority being considerably younger than me and much more experienced. A small percentage treat blogging as their job, make an income from their posts or run a blog for their own business or employer. The vast majority do it as a hobby, in the main to express their expertise or interests. A major sector say that they just blog in order to speak their mind freely.
I am most interested in the professional category, and I in fact find myself somewhere within that group. I am not however paid to promote something, but to provoke discussion about the ethical implications and responsibility issues brought about by technological development, and one of my tools is blogging. My employer is also a non-profit research foundation, so the aim of making money is out of the equation.

Blogging is generally perceived as a pier to pier action, and the report cited above demonstrates that people trust blogs and bloggers, in many cases more that they trust other publishers. But what if we find people publishing reviews about services or products that they have a vested interest in? If I am paid by a company to review or promote their products can I be really honest in my views? And what about the breech of trust implied?

In the US the FTC (Federal Trade Commission) made a ruling in 2009 determining that bloggers have to state if they are paid for posts by an interested third party. If a blogger in the US does not state that they either receive the product to keep or are paid by someone to write the review they risk an 11000 dollar fine. In the UK the Office of Fair Trading also has extensive blogging disclosure rules. All well and good, but the report above states however that only 60% of people that find themselves in this position actually adhere to the rules, and the statistics are very likely to be skewed, as when a person is asked if they have respected the rules that almost always say yes.

How could this problem be addressed? The Technology Bloggers site refuses to publish anything that may be deemed promotion, the author guidelines are clear. But would it be possible for all blogs make this statement and enforce it, and if it were possible would they do it? The implications for trust and the spreading of reliable information are obvious.

Another issue I wish to raise involves advertising. The report offers various statistics about how many blogs have advertisement placings, before going on to analyze the reasons given either for not carrying or carrying advertising, the issue of control over who advertises and the possible financial rewards.

Here again we step into the issue of trust. If a blog has a reputation as offering reliable and quality information this reflects upon the company advertising. The placing is a two way endorsement. If advertising is not offered (as some may feel that it affects independent status or may not reflect the blogger’s ideals), how can a blog not only make money (if that is the aim) or even cover its expenses? Most bloggers sink their own money into setting up and running their blog, and if you add up the time spent in maintenance (and the administrators are undoubtedly experts in their field) each blog should be seen as a real investment in terms of many different forms of capital. You pay $120 an hour for such expertise in other fields!