Thursday, June 29, 2006

Wired: Six Trends Driving The Global Economy

According to Wired, these are the six big trends driving the global economy:

People Power
From to MySpace to craigslist, the most successful Web companies are building business models based on user-generated content. This is perhaps the most dramatic manifestation of the second-generation Web. The tools of production, from blogging to video-sharing, are fully democratized, and the engine for growth is the spare cycles, talent, and capacity of regular folks, who are, in aggregate, creating a distributed labor force of unprecedented scale.

Video Unlimited
Unlike the first days of online music downloads, more content on more screens now means more revenue. At a recent shareholder meeting, GE announced that NBC Universal's digital video offerings had already generated $300 million. More tantalizing still, says NBC Universal digital media president Beth Comstock, NBC has noticed that the new pipelines are actually expanding -- rather than cannibalizing -- the network's audience. "It's increasing the size of the pie," she says.

Personalize It
...Personalization remains the exception in hard goods. But it has become the rule online. uses your purchase and pageview histories to create a unique Web page that includes recommendations tuned to your taste. Netflix looks at past DVD rentals and suggests future choices. Apple's iTunes and Google Video are prodding radio and television out of the broadcast era and into the dawning age of individualized media.

Now the trend toward personalized products is moving into a new arena: pharmaceuticals. Allen Roses, senior VP of gen­etics at GlaxoSmithKline, made headlines in late 2003 when he said, "The vast majority of drugs -- more than 90 percent -- only work in 30 or 50 percent of the people." Most observers thought he was admitting failure. Actually, he was identifying a vast opportunity: the use of genetic profiles to ensure that ailing individuals receive treatments that work for them.

Carbon Killers
The global market is especially hungry for green technology. Most US multinationals do business in Europe and Asia -- regions that have accepted, and are beginning to enforce, the limits on greenhouse gases imposed by the Kyoto Protocol. Even if the US never ratifies the relatively stringent treaty, US products will soon be competing abroad in markets that are on a low-carbon diet.

Buy It Now
Think of it as R&D by M&A. Corporations are always trying to grow -- creating new products, developing new features, expanding into new markets. The old-school approach is to build a big R&D department. Put smart minds on long leashes, the thinking goes, and perhaps they'll come up with something innovative. But blue-sky research is a drag on the bottom line. Even the most pedestrian form of R&D, product development, requires dedicated staff and a fair amount of experimentation.

What a bother! Why not just buy a smaller firm that's already succeeding in a new market? Cisco long ago adopted this approach -- acquiring 107 companies over a 12-year period ending in 2005 -- and along the way became one of the most valuable tech companies in the world.

All-Access Economy
In the 1970s and '80s, front-runners like Oracle and Microsoft tried to make their proprietary technologies into de facto standards. Owning the standard made a company dominant, allowing it to dictate how customers used its products. Sure, there were drawbacks: With each new product cycle, customers had to tear out the old apps and install the new, and companies selling accessories had to scramble to update their wares. But that was how the tech game was played.

Then along came the Internet -- the apotheosis of open standards. Suddenly, apps didn't need to be written with their own idiosyncratic user interface to run locally on Windows, Mac OS, or Unix. The browser window became the default interface for all kinds of things, from commerce to network administration to stock trading to email. Once installed on a vendor's server, updates were available immediately. And the open environment encouraged competition, driving continual improvements.

Fascinating stuff... and on-target, I believe.

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