August 2005

What happened to the information economy?

Posted by Grant Brewer on 01 Aug 2005 | Comments (0)

This year marks a e-business milestone that many people never thought would be reached – the tenth anniversary of Amazon. Other industry veterans such as Yahoo! are also demonstrating that they can survive for the long term – and survive profitably. When all these organisations burst onto the scene in the heady days of the nineties, there was a real sense that the economics of the internet enabled world were changing forever.

The recent surge in Google's share price making it the most valuable media organisation in the world would suggest that the speculative expectations of investors hasn't changed! Google's market capitalisation is about US$80bn making it more valuable than traditional media giants such as Time Warner.

But has the world, or at least the economic rules that govern it, changed at all over the last fifteen years? It has changed, but perhaps not in the ways that we all thought it would ten years ago. For example, the outsourcing of manufacturing and business services, in particular, to emerging markets is a direct outcome of the information age. And this trend hasn't yet run its full course since a very small share of the services market has been outsourced to date. Interestingly, Amazon has opened an outsourced development centred in South Africa. Browse za.amazon.com.

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