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|A large part of this issue (points 3, 4 and 6) is specifically about Italy; maybe not
very interesting for international readers. But I think it's important to understand that
there are substantial differences in the state of development of the net, and generally in
the market environment, in different parts of the world.
While the "glitz" and exaggerated forecasts are losing their shine, the internet seems to be really penetrating in almost every household and office in the United States (and in a few other countries). The American experience is point of reference for all; but it needs to be examined and understood carefully.
It's important to learn from advanced countries. But it could be ineffective to "copy" or try to duplicate their experience literally. For several reasons.
This are only a few of many reasons why environments in different countries are not the same. The basic principles don't change, but the pace an manner of development can be quite different.
I believe that there are many opportunities for companies with drive and imagination, even in less developed markets. There are three ways in which they can gain a competitive edge:
It's often said that problems can be turned into opportunities. Even people and organizations from backward countries, such as Italy, can become leaders. But that can't be done by following any repetitive formula. It takes imagination, flexibility and patience; a dedication to exploring and learning along the way.
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|Some time in February we should have new worldwide figures; we shall see if there are
any relevant changes. In the meantime, let's take a look at year-end hostcount data, as
reported by RIPE.
Internet hosts in 18 countries in the Europe-Mediterranean area
The green slice of the bars is growth in the second half of 1997. Differences are increasing rather than decreasing; the stronger countries are getting even stronger. No visible effects, yet, of the commitment by the French government to encourage a shift from the minitel to the internet.
Let's look, as usual, to per-capita density
Internet hosts per 1000 inhabitants
Finland holds its world leadership; Scandinavia as a whole is well ahead of the rest of Europe. Density in Germany is increasing, but the UK remains ahead. The only country in the Mediterranean area above European average is Israel. Southern Europe remains weak; Greece is the only country in the European Union with density below 3.
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|RIPE data show a 10 percent decrease of Italian hosts in December 1997, while in that
month Europe as a whole grew 2.5 percent. There is no reason to over-dramatize such a
short-term adjustment; but if we look at the trend over the last five years the picture is
Almost everyone in the market is expecting Italy to have a fast increase, to "catch up" with at least the European average. So far, it isn't happening.
At first glance, looking at "absolute" data, we see a relatively strong growth also in Italy, especially in 1995-96 and in the first half of 1997.
Internet hosts in Italy 1991-1997
The growth rate is decreasing. In the second half of 1997 the average monthly increase in Italy was 1 percent, while for Europe as a whole it was almost 4 percent.
This is even more obvious if we look at the variation of growth percentages over time.
Internet hosts in Italy: quarterly growth percentages 1991-1997
Of course percentages were less relevant in the earlier years, when figures were very small. There was sustained growth in 1995, probably because of wider availability of internet services and the development of the World Wide Web - but that impulse has lost momentum. Since the beginning of 1996 (except for an isolated "leap" in January, 1997) percentages are constantly declining.
Let's look at the Italian hostcount as a percentage of the European total
Internet hosts in Italy as a percentage of RIPE area (Europe and Mediterranean)
Italy's share increased gradually, from 2 percent in 1990-92 to 3 in 1993-95 and 5 in 1997, but now it's decreasing. Even at 5 percent it's very low. For instance the UK, with comparable population and economy, has 18 percent of the European hostcount.
There is an improvement compared to four or five years ago, but that's not enough. Italy has 12 percent of Europe's GNP, 10 percent of telephones, 14 percent of cars, but only 4 percent of the net.
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|According to trade "rumors", advertising income (essentially, banners) in
Italian websites in 1997 was abut half a million dollars. The same "rumors"
indicate that expenditure on net "ads" by Italian companies was twice as much.
That makes sense, if we assume that a substantial part of that small amount went to
foreign sites, such as big US search engines.
These are very small figures. Not enough money to satisfy hundreds of contenders for "ad" income. One tenth of one per thousand of total advertising expenditure in Italy.
The same "rumors" indicate that in 1998 the amount will grow to five or ten million dollars. Still a tiny figure compared to advertising in traditional media. But is such a leap possible? Maybe. However... the way in which it could happen is quite peculiar.
We can easily assume that large newspapers, looking for income to support their online editions, have asked their advertising brokers to collect some money. That's not a bad idea, because publishers deserve some support in their effort to develop online newspapers. But let's try to imagine the consequences.
The salesman of a big broker visits one of his customers. A large advertiser, an ad agency or one of the big media buying systems. They discuss large contracts; several hundred thousand dollars apiece, if not millions. At the end he says "well, there is also the internet...". His sales folder projects unrealistic "user" figures (in one lump, as though they were a "mass" audience) with some quality statistics: active people with high income, high education, etc.
Both people in the room are trained to think about broadcast media. Neither of them has the time or the desire to look into the peculiarities of interactive communication. The amount involved is very small, compared to the contract being discussed. The salesman may be willing to give away a few banners, as a little incentive to close the contract (this is not an assumption, I know it's happening). So "something" (roughly one thousandth of the total amount) is invested in banners or some other form of "advertising" on the net.
A few days later, someone (probably a product manager in a marketing company and an account executive in an ad agency) is landed with a few crumbs invested in this new unknown medium. The task gets handed around carelessly, winds up on the desk of some junior assistant.
Eventually a deluge of poorly planned and poorly executed banners descends on the net.
The glitz crowd will acclaim: tenfold growth! Hardly anyone will bother to look into what is really happening. We shall be, once again, in the delusion-disappointment vicious circle.
I've said many times that I don't believe in forecasts. I am not attempting any "prophecy". We shall see what will really happen. But unfortunately this is a high-probability scenario.
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|A very interesting article by Gerry McGovern was published on January 6 in NUA's Year in Review
. The title is Don't Believe the Image Makers . It's short and clear; here it
is, in full:
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|The first issue of a new Italian monthly magazine, Web
Marketing Tools, was published on January 9. I must admit that I am not totally
objective, as they have been kind enough to ask me to write a column (starting in the
February issue). But I honestly believe it's a good idea.
There are dozens of magazines abut computers and about the net. Only a few are worth reading. But this one is the first of its kind. And it's about internet marketing , not just "electronic commerce". Time (and content) will tell. But their basic philosophy is right: look for real interactivity, don't follow the traditional logic of one-way media. I think they deserve to be successful.
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|There's a lot of discussion about the millennium bug: are there
real problems that may come from the clocks in some software in some large computers that
can't handle dates beyond 1999?
There doesn't seem to be any problem for our PCs, or any of the standard software we are using. But if a few big systems, in large public or private organizations, get into trouble, that could harm people who have never touched a computer but depend on some form of electronic service. That's practically everybody.
The origin of the problem was in the Sixties. Data storage was scarce and expensive; some programmers found it convenient to save space by reducing dates to two digits. That such an obvious problem has remained unsolved for over thirty years is just another example of the staggering power of human stupidity.
It's not easy to understand which systems may be hit. But the problem is already here. Thousands of credit cards with expiration dates beyond '99 were refused by "millennium bugged" checking systems.
This bizarre situation can also have legal implications. An article by Daniel R. Mummery and Thomas A. Unger in the National Law Journal of November 3 points to the liabilities that may be caused by a computing malfunction. And warns that the "debugging" devices offered may not be as effective or safe as they claim. That's too complex a matter to be explained here (and by someone, like me, with no legal expertise) but an example of the problems that the "bug" could cause. I don't think there are reasons for major alarm, but many companies and organizations should check the systems they are using to avoid consequences that could be quite unpredictable.