When I look around, I do not like what I see. My perception is that nothing is working the way it should be, and strong measures are long overdue if the malaise is to change. People seem to be living on entertainment and social media while waiting for things to improve. Hope and euphoria alternate with discouragement and despair. Neither is not the right answer; nor is procrastination and indecision. Disconnects cannot be resolved by throwing gasoline on a fire when less of something else would be more appropriate. It is time to face realities and stop rehashing the same things over and over again without providing answers. Desperate times require desperate, or at least innovative, measures. They also require a consensus.
For those who don’t get it, Main Street is in the toilet. Everywhere I look, I see businesses closed that I depended on for many years and their space vacant for months, if not years. One of my favorites had survived the Great Depression. At the same time, even with financing, new shops have difficulty opening due to bureaucratic red tape and difficulties getting services connected and equipment delivered and installed. They could be providing new jobs. It is also no wonder that large retailers are doing poorly and closing stores when consumers learn from them and then buy from competitors on the Internet. What are the limits to this punishment? What will the Internet sellers do when they drive everyone else out of business? Keep prices low? I doubt it! There needs to be a way to resolve these inequities.
As students get ready to go off to college and the unemployed ponder futures without jobs, I wonder what they are thinking. Are they prepared to add more debt with no hope of getting a job if they are studying the wrong things or don’t already have marketable skills and experience? Could it be that outdated teachers are passing along outdated information? What about all the technical wonders that sit idle or are underutilized because someone bought ahead of their needs or failed to understand how to get a reasonable return on their investment before obsolescence set in. Can we really afford to squander resources like that?
Could social media be the next bubble? Perhaps. Social media has probably been oversold, and now that there is so much competition, a major consolidation could occur anytime. For me, it is difficult to decide which horse to bet on after years of mixed results and false starts. Although lots of people use social media to share experiences, from a business perspective, I have not been satisfied. It is too difficult for small businesses with small marketing budgets to gain traction solely because a few people happen to “like” them on facebook. It is important to leverage new capabilities, but do so cautiously.
To put this subject in perspective, I have checked information about facebook on a financial website. Their Initial Public Offering (IPO) was in mid-May (2012). Price started about $42 and went as high as $45 soon after the IPO. The stock was as low as $25-3/4 in early June. Since then, there was a high about 33. Monday (7/23), it closed at $28.75. Today (Friday, July 27) it dropped to about 22-1/2, an all-time low, for a total loss from the high of 50 percent after disappointing estimates of future earnings before recovering to $23.71 at the closing.
With this in mind, I am more convinced than ever about social media being oversold. I believe that it is important to hedge bets in the stock market, but also for a business to diversify itself by creating a winning combination of social media, e-commerce and traditional marketing and sales.
For a new business with an innovative new product, my first challenge has been to convince customers that they need something they have not already considered. I look for a way to link what they already
know and accept to the new and different. An innovative solution that provides added value and benefits may be wonderful, but it still needs to compete against the tried and true. This provides a difficult challenge that many consumers and small businesses need to solve before committing too far, too fast to anything whether it is staying with the status quo or innovating. Careful deliberation will improve outcomes, avoiding disconnect and disappointment.
This warning was in a list of 10 predictions that a friend sent to me recently. The implication was that if a cloud provider’s business failed, users would lose digital images and other data. I did not believe that this was likely at first, but now I am not so sure. I have seen other concerns about bubbles bursting and started to connect some dots. Here are things to think about.
1. Benefits of Cloud Computing
Cloud computing involves shared services. Instead of everyone needing to have and maintain their own data and Internet services, a provider does it for them and it is much cheaper. The provider’s computer servers are divided up to provide small virtual servers for users on a shared machine. Smaller businesses find this especially attractive since they avoid the hassles of ownership and receive better service and support than they could afford for themselves. However, the downside is that this requires reliance on others.
2. Growth in Cloud Computing
A short article in a technical journal caught my eye. The writer reported that a major cloud computing provider had a standing order for truckloads of brand new computer servers delivered weekly to expand their data center. I was interested to learn that the servers were made in the United States by a little known company that made one of my own computers that I especially like. It takes lots of money to buy this many servers and to pay for all the infrastructure, installation and on-going service and support. Growth must be phenomenal to support this. I wonder how long demand for storage will continue at this rate. Is it really necessary to save all this data?
3. Underlying Business Models
I rely on a number of Internet Service Providers and e-Commerce vendors. Some of them provide free services including large amounts of on-line storage for photos and messaging. Although the cost of storage media has dropped considerably, someone still must pay for it and the related costs. Businesses certainly expect to eventually recover expenses and profit through fee-based services, but I wonder how long they can operate in the red without becoming profitable.
4. Level of Inactive Accounts
With all the competing products and services, no one has time to use them all. However, when a new one comes along, they probably want to try it out to see if it is better than what they already have, especially if there is no cost to sign up. I have several free accounts that I do not use regularly.
5. Growth of Built-in Waste
Although many aspects of the Internet are automated, the infrastructure must be maintained. The more e-mail and instant messages that are sent, the more server capacity that is required for logging, tracking and storage. Multiple copies add to waste as do trivial messages and spam.
6. Failed Business Models
What is troubling is how cloud computing and social networking compare to business models used by telephone companies in their heyday. Back then, high costs discouraged usage of services. Capacity was only added when revenue growth supported it. Now low costs attract users in the hope that they will buy value added services. If customers don’t rise to the bait, profitability goes out the window. If value is not there when something is free, no one will be able to start charging. At some point, too many players chasing too few paying customers will no longer be sustainable. What will happen then? The recourse will likely be to pull the plug.
Maybe some of us really will lose our data if we don’t back it up.