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Follow UsTerra Networks who? A Spanish company paying $12.5 billion for Lycos? Are there $12.5 billion in all of Spain?
America and the highly US-centric Internet community got a rude awakening
last week when a tiny subsidiary of a Spanish telecommunications company agreed
to pay $12.5 billion for Lycos, the Internet portal, the fourth most visited
portal in Cyberspace.
Instantly, Terra became a major force in Cyberspace with a strong presence in
Europe and Latin America, markets that have been largely ignored by the American
online business. This week, much of the US dotcom industry has been trying to
figure out what it all means and how they should adjust to a market in which
they will have to deal with foreign competitors with solid positions in large
international markets that are culturally beyond their reach.
The trouble for Yahoo, America Online and other early dotcom leaders may have
only just begun. With the high saturation in the US, the majority of new online
users will be based outside America, and few will be English-speaking, creating
vast new business opportunities for local companies and services.
Currently, more than half of all Internet connections are with American-based
users. That will drop to less than a third over the next three years. And with
it, two thirds of all online purchases will soon be made by non-American
surfers.
Of course, all of this was quite predictable. What is less certain is whether
the current generation of dotcom industry leaders such as Amazon.com will be
able to duplicate their initial success in the American market elsewhere.
Chances are some will become the Fords and Coca-Colas of the global dotcom
economy. But many others will not be able to overcome the innumerable cultural
differences and nuances that can make or break the fortunes of any company
moving beyond its borders. The Internet may be a global community, but its
citizens are no less tolerant of cultural indifference than they have
traditionally been to other imported goods.
Hampering any efforts to do a good job marketing their dotcom business
internationally is the mounting competitive pressures from within the home
market in America. For every good dotcom idea, two or more copycats have come
along to grab a piece of the pie. Early dotcom leaders are spending heavy to
maintain US market positions, often at the expense of resources needed to
develop promising overseas business opportunities.
In the meantime, start-ups around the world are duplicating online services
that have shown early success in the US, making it increasingly difficult for US
firms, especially those who have been slow to leverage their success in
international markets. All of this, of course, is good news for the global
online economy where the low cost to market entry is creating an unprecedented
equal-business-opportunity climate.