The internet, but not as you know it
Kiwi businesses need to start thinking about life after mobile phones, how to gain from the global e-commerce battle, and the impact of artificial intelligence.
Winter has hit the rural valley I live in. The sheep are on hard feed, the horses are in insulated rugs and we’ve had regular power outages from the recent storms. The log burner at my place has been running pretty much continuously and the old green sofa in front of it is a great place to read or listen to the radio in the evenings.
This is best done with a hearty red wine. Not one of the arty pinot noirs that the Lingard brigade like, but something inky dark with gutsy tannins.
I’ve recently discovered one of the gutsiest wines around, the Brookfields Sun-Dried Malbec.
Hawke’s Bay winemaker Peter Robertson uses a 2500-year-old Italian technique that involves putting some of the grapes out to partially dry on beds of straw. This removes excess liquid prior to pressing, resulting in an intensely dark wine, with notes of ripe plum, liquorice and herbs.
Described by wine reviewers as ‘‘Malbec on steroids’’, it concentrates a lot of taste and palate information into each glass. Bring it out among wine snobs and it’s like bringing a gun to a knife fight.
An unassuming 59-year-old woman from Indiana has the same effect on the internet snobs of the world. Mary Meeker is a venture capitalist and shares analyst who has specialised in internet companies since the web was in short pants.
She’s known for analysing vast amounts of data then, like the Brookfields Malbec, condensing it into a glass or two of concentrated goodness.
Last week she released her 2018 Internet Trends report. It painted a picture of a world where more than half the population (3.6 billion) are now regular internet users.
A world where internet products and web usability are better than ever before, but where these innovations have been driven off the gathering of personal data, data users are less keen to have gathered. This in turn has created a privacy paradox.
It’s also a world where global mobile phone sales have stopped growing – for the first time this century. Further evidence that we are fast approaching peak phones, something that was flagged this year by the Future Today Institute at the SxSW conference in Austin, Texas.
In the United States, e-commerce continues to grow at record rates, but the driving force is Amazon, which now accounts for 28 per cent of online retail sales. Think about that for a moment. For every $100 spent on internet purchases, $28 of it goes to one company. Bad luck for the 500,000-odd other online stores.
And it’s not just e-commerce that’s being owned by Amazon, it’s search as well. More than 49 per cent of product searches now start at Amazon, way more than the 36 per cent that start on a search engine. Google will not be amused. Particularly not when Amazon offers oneclick purchasing while Google takes consumers away to other websites to fulfil the purchase.
Meanwhile, across the other side of the Pacific, the other e-commerce gorilla, Alibaba, is enjoying monster growth. It now has a gross market value of US$701 billion (NZ$1000 billion) – three times Amazon’s – and is growing into Singapore, India and Indonesia. So get ready for a worldwide showdown between these two online King Kongs – one with higher market value, the other with higher revenues.
More broadly, there’s a battle royal in play for the world’s internet. In 2013, the United States had nine companies (Microsoft, Google/Alphabet, Facebook, Netflix, eBay/PayPal, Booking Holdings, Apple, Amazon and Salesforce) in the top 20 global web companies while China had just two (Tencent and Baidu).
Today, the US has 11 and China has nine. The only thing that’s more striking than China’s rate of growth is the fact that just two countries account for the 20 largest tech companies on the planet.
Combine this with the land-grab going on for artificial intelligence companies (the Chinese government is one of the world’s largest AI patent acquirers) and it’s clear that there’s a technology arms race that the US may not win.
So what does all this mean for New Zealand businesses?
First, start thinking about the future after mobile phones, a world where you will connect with your customers via wearables, voice interface and augmented reality. And most likely a world where phone apps will be replaced with chatbots, messenger tools and spoken commands.
Retailers absolutely need to ensure that they stand to gain out of the global e-commerce battle. That means ensuring you sell your stuff on both the Amazon and Alibaba platforms.
You’d be a mug not to put your products in front of the 700 million monthly visitors to AliExpress, particularly the ones that harness the Kiwi brand.
Last, you need to consider what artificial intelligence and machine learning is going to do for your industry.
That could range from roboadvisers in professional services, to smart harvesters in agriculture, to fully virtual contact centres in customer support through to automated diagnosis and care in the health industry.
One of the best things about the Brookfields Malbec is the satisfied feeling you have after enjoying a bottle.
Sadly, you won’t feel the same way after digesting the latest Meeker report.
Mike ‘‘MOD’’ O’Donnell is a professional director, adviser and writer. His Twitter handle is @modsta and he reckons Brookfields’ winemakers are the bomb.
Get ready for a worldwide showdown between these two online King Kongs – Amazon and Alibaba.