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Unformatted text preview: cent o f China’s co llege students. China is pro ving a particularly dif f icult market f o r f o reign Internet f irms. Go o gle, eBay, Yaho o !
and MySpace have all struggled there. And do n’t be surprised to see so me o f these wellcapitalized o verseas inno vato rs making a mo ve o n U.S. markets to o . While glo bal gro wth can seem like a go o d thing, acquiring glo bal users isn’t the same as making
mo ney f ro m them. Free sites with large amo unts o f users f ro m develo ping natio ns f ace real
co st/ revenue challenges. As the New Yo rk Times po ints o ut, there are 1.6 billio n Internet users
wo rldwide, but f ewer than half o f them have dispo sable inco mes high eno ugh to interest majo r
advertisers, meaning that in terms o f average revenue per user (ARP U), these new so cial
netwo rking recruits are likely to be f ar less lucrative in the near f uture than the f irm’s current
users.B. Sto ne and M. Helf t, “In Develo ping Co untries, Web Gro ws witho ut P ro f it,” New Yo rk
Times, April 27, 2009. Wo rse still, teleco mmunicatio ns co sts in these markets are also o f ten
higher, to o . Bandwidth co sts and dim revenue o ptio ns caused video site Veo h to blo ck access
co ming f ro m Af rica, Eastern Euro pe, Latin America, and so me parts o f Asia. MySpace already o f f ers a stripped-do wn Lite o ptio n as its def ault in India. And execs at Yo uTube and Facebo o k
haven’t ruled o ut lo wering the quality o f streaming media, f ile size, o r o ther o ptio ns,
discriminating by regio n o r even by user. Making mo ney in the f ace o f this so -called “Internatio nal P arado x” requires an awareness o f
“f ast and cheap” tech trends highlighted in Chapter 5 "Mo o re’s Law: Fast, Cheap Co mputing
and What It Means f o r the Manager", as well as an ability to make accurate predictio ns
regarding regio nal macro eco no mic trends. Igno re a market that’s unpro f itable to day and a
rival co uld swo o p in and establish netwo rk ef...
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This document was uploaded on 01/31/2014.
- Winter '14