Mark Anderson Interview

Business Week has an interview with Mark Anderson, who publishes a weekly newsletter, Strategic News Service (SNS). Excerpts:

Q: Do you see any new technologies that have been overhyped?
A: Right now, I see a dearth of innovation. The various innovations that I’ve mentioned are happening at the fringes.

One reason is, [as is the case with Wal-Mart suppliers,] companies’ margins are getting sucked up. Another reason is there are lots of dominant players — near-monopolists. There, the lack of innovation is natural. Areas that are more competitive are the areas of innovation.

Q: Do you expect this situation to change any time soon?
A: A lot of competition will arise. We haven’t yet seen an offering from the Linux crowd in terms of device drivers, [which help a particular device interact with an operating system,] or ease of installation. But if those two problems are fixed, I think you’ll see real competition to Windows.

Disruptive Innovation Methodology

Dave Pollard writes about Clay Christensen’s book: “The Innovator’s Solution tells you what you need to do to cannibalize the markets of incumbents and create entirely new markets, by focusing on the needs of over-served customers and non-customers. But it’s a lot harder in practice than in theory, and it needs some unique skills and hard-to-obtain knowledge.”

Yahoo, Alibaba and eBay

WSJ writes in the wake of the Yahoo-Alibaba deal in China:

Yahoo will pay $1 billion and hand over all of its Chinese operations to Alibaba in return for a 40% equity stake in the Chinese company. Yahoo will become Alibaba’s biggest outside shareholder, taking one seat on Alibaba’s four-person board, and will have 35% of the voting rights in the company. Part of the $1 billion will go to buy existing shares from current shareholders.

The deal marks a supreme vote of confidence in Mr. Ma, whose knack for bold statements and charismatic leadership has helped build his company but has rankled local and foreign competitors along the way. The Yahoo connection will cement the 40-year-old as one of the most prominent public faces of China’s new entrepreneurial culture and give him a much larger platform from which to pursue his ample aspirations.

The tie-up will create a company with a formidable presence across all major segments of the Internet industry in China, combining Alibaba’s existing business-to-business and consumer-auction sites with Yahoo’s stable of Chinese search engines and communications services. Executives said the transaction values closely held Alibaba, which reported revenue last year of $46 million, at more than $4 billion.

Another WSJ article writes about its challenges in China: “…in China — whose 100 million Internet users are second only to the U.S. — eBay officials have had to modify their expansion playbook to deal with unusual challenges. Chinese consumers are generally less affluent than eBay users elsewhere and have shown reluctance to buy items from strangers via computers, which is what eBay is all about. A relatively small 6% of Chinese have computers at home. That means many users log on at Internet cafes, where they are much less likely to launch a major shopping or selling spree. And now there is the suddenly more imposing Alibaba, based in Hangzhou and backed by Yahoo and Softbank.”

Also read what Bill Bishop has to say: “No question this creates a monster in the China Internet. It will have a powerful combination of search, communications, commerce and auctions. All they need is a game component and they could have a shot at becoming number one…This deal is potentially disastrous for Ebay in China.”