GE and Emerging Markets

WSJ writes that GE expects to get as much as 60% of its revenue growth from developing countries over the next decade.

Instead of counting on the U.S. and Europe, GE now is looking to China, India, the Middle East and Asia to buy its turbines, aircraft engines and medical devices. In addition, it expects to sell mortgages and credit cards to a growing middle class in Eastern Europe, including Russia, and Southeast Asia — and eventually China. Some developing countries, China in particular, are growing at rates high in the single digits, compared with 3% to 3.5% for the U.S., and half that for Europe and Japan.

Deane Dray, an analyst with Goldman Sachs, says, “It’s not by choice but by necessity. Developing countries are where the fastest growth is occurring and more sustainable growth.”

Banking on developing countries also means more outsourcing of back-office jobs, from processing paperwork to basic accounting, something that GE started doing in the 1990s in India. In another twist, to take further advantage of the outsourcing growth, GE sold 60% of its captive India business-processing operation last year to two private-equity firms to take the business commercial.

India, which has long disappointed GE in terms of industrial sales, is now at the beginning of its growth cycle, GE noted recently in a presentation on China and India. GE expects India’s services sector to grow as much as 8.3% by the end of the decade, and its industrial sector to grow by 6.7%.

Yahoo’s Media Ambitions

WSJ writes:

Ten years after it incorporated as a company, kicking off what became a multibillion-dollar business, Yahoo Inc. is pursuing a strategy that puts it at odds with its fiercest rival [Google]. These two divergent tacks highlight a debate about how best to capture a growing pool of online advertising.

Under the leadership of Terry Semel, a former movie executive, Yahoo is taking its cue from the entertainment industry. It believes its future largely lies in building the equivalent of online theme parks featuring fantasy sports leagues, music, sites for new TV shows such as “The Apprentice” and other branded content and services. Yahoo wants users to come often and stay a long time so it can put more and more ads on their screens.

More coverage on Yahoo: Wired and News.com. Yahoo celebrates its 10th anniversary.

NewsGator Platform Roadmap

Greg Reinacker looks ahead and shares what his company is doing. What I found most interesting was the Enterprise version.

Dino could be characterized as “NewsGator Enterprise Server”, for lack of a better name. Imagine NewsGator Online, picked up and installed on a server behind a corporate firewall. Imagine it also (optionally) connecting with Active Directory and Exchange server. No longer would a system administrator need to go install NewsGator Outlook edition on 3000 desktops; rather, with Dino, they could install a single server, make some configuration choices, and employees will just get “more stuff” somewhere in their Exchange mailbox without having to install anything on their own machines. Outlook; Outlook Web Access; Blackberry; Exchange ActiveSync; all of this is enabled by the Dino/Exchange integration.

Not using Exchange? Not a problem. Dino will have a version of NewsGator Online’s web-based aggregator (also also mobile edition, email edition, and media center edition). Many potential customers have asked us about an intranet-based aggregation solution, and Dino fills the bill for this as well.

And with sophisticated indexing capabilities, and integration points with other enterprise systems, Dino can become a central information distribution point for all kinds of content. All managed in one place, leveraging organizational structure in Active Directory (if available).

Dino of course will have extensive API support, to help customers and partners integrate it into their business systems. Some of these API’s will be unique to Dino, but the NewsGator Online API’s will be supported on Dino as well. So what this means is cool applications that are written to talk to NewsGator Online can also work inside the firewall against the Dino platform. Good stuff.

Google’s Story

[via John Battelle] Style.com has a fascianting story about Google: “The rise of Google is a tale often told as a Silicon Valley classic. Two precocious Stanford grad-student nerds swept up in the fever of the Internet boom invent technology that profoundly changes the experience of the Web; they drop out and start a company (in a garage) that achieves iconic status; they stage a historic public offering, achieving vast wealth and fame…But beneath these familiar surface details, the Google story is more nuanced and compelling. Its a story about the clash between youth and experience, more a messy ensemble drama than a simple buddy flickone whose main characters have persistently deviated from any script, resulting in unexpected twists and turns that havent come to light until now.”

Why this Internet Thing is just Starting

Seth Godin identifies 10 reasons:

1. Penetration. There are 50 times as many people using the Net as there were then. 50x is a multiple you don’t see every day.

2. Bandwidth. It’s easy to forget how horrible modem surfing was. The prevalence of high bandwidth connectivity means that surfing is far more natural, more frequent and that the experience is better as well.

3. Tools. You can launch most any online service with almost no custom programming.

4. Servers. When google can offer a gig of storage for free, it’s proof that server space is essentially free.

5. Wifi. The next generation of wifi will be faster, but more important, have a vastly improved range.

6. Multimedia. The web is still stuck in ASCII world, but not for long. Add a few million video cameras, fifty million cell phone cameras, every song ever recorded, every TV show and movie ever made and the contents of most any scholarly book and it gets interesting fast.

7. Grandmothers. It is no longer necessary to explain to the average American (of any generation) what this “Internet thing” is. Google has made the world safe for entrepreneurs. Don’t underestimate how important this is.

8. Teenagers. The Yahoo generation is now getting driver’s licenses!! These are kids who have grown up without encyclopedias or videocassettes or lps. These are kids who have completely and permanently integrated the Net into their lives and are about to go to work and to college.

9. VC. Fred Wilson has more than a hundred million dollars to invest in great Net companies. So do a dozen or more other (less talented) venture capitalists.

10. The death of TV. You know what killed the first crop of stupid $100 million Internet consumer service startups? Advertising. They all believed that they need to spend millions to build a brand. Today, we’ve got proof–every single (no exceptions!) Internet success is a success because of Unleashing the ideavirus. It’s not TV ads. It’s word of mouse.

TECH TALK: The Future of Search: Advertising and Innovations

One of the by-products of the search frenzy is that an interesting new advertising model has developed. Advertising is becoming a service with the pay-per-click model. Advertisers can decide their budgets and the keywords they want to link their ad to, and they only pay for the ad when someone actually clicks on it. This makes advertising response much more measurable. The New York Times wrote in a story recently:

“In the past, advertising has been hard to track and hard to make accountable,” said Tim Armstrong, Google’s vice president for advertising sales. Now, he said, advertising has become a dialogue with the consumer.

A TV ad can put the company’s name and brand before millions of viewers, said Richard Castellini, the vice president for consumer marketing at CareerBuilder.com. But Google can direct prospective customers to his business by placing a CareerBuilder.com link on the screen of anyone using Google as part of a job hunt.

As for local advertising on radio and television and in newspapers, those media can still be effective ways to blanket large portions of the hometown audience with a uniform message. But individually focused Internet ads are already siphoning business away from locally oriented classified advertising and yellow pages directories – whether in their offline or online forms.

“You’re seeing advertising move into advertising that people can seek out, and moving away from mass advertising,” said Peter Sealey, a former Coca-Cola marketing executive who now teaches at the Haas School of Business at the University of California, Berkeley. “In the context of that shift, this little niche of Internet search will be a huge beneficiary.”

David Jackson: Microsoft and AOL both underestimated the importance and profitability of search. Search benefits from the natural growth of the Internet. One way of looking at this: the search business is the ultimate “user generated content” business. At the same time, the price of pay-per-click (PPC) ads is rising as more businesses establish an online presence, and improved conversion rates boost the return on investment for paid ads. Combine the two, and you find that PPC ad prices are steadily rising, and Google and Overture are sitting on remarkably profitable businesses.

Charlene Li: I believe that in five years time that marketers will be buying search and display ads in very similar ways. Marketers will be able to target display ads based on a combination of audience demographics and implied, contextual keywords. They will also be able to buy text ads that appear next to search results based on a combination of keyword search but targeted with different creative for men versus women, or customers versus non-customers.

Next Week: The Future of Search (continued)

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