On the middle of web 1.0

The markets dropped again today, effectively pricing a global depression into share values. Nobody really knows whether we are really at bottom although we are still above the level of March 2003 when the Iraq war began and we touched bottom last time. There are probably a few surprises to come and the markets seem ultra panicky so I would expect further falls before any rally begins. Selling shares in this market is about the stupidest thing you can do because the threat of bankruptcy is priced into everything. Some, like Yahoo, will go but most will survive.

The real economy

One effect of the global turmoil is that commodity prices, most importantly oil, are now falling. In addition central banks are acting to cut interest rates, beginning with a 0.5% cut this week. We can expect more in the coming months, I would say to between 3-3.5% in the UK. Both of these mean that the recent pressure on people’s finances will be reduced. This does not mean they will all start going out any buying gadgets again but it does mean that the real economy will start to get some relief.

The other thing is that this has been going on for a while. Stock markets have been falling since about this time last year since the collapse of Northern Rock. This has taken more time to unwind because of the huge amount of debt involved and markets are now overreacting because the panic is blinding people to consistent long term trends. One of those is the grand slam effect of technological advance. Now doom mongers like Jeff Randall are delighting in saying ‘I told you so’ but technology is humanity’s out shot. It always has been and anyone who bets against it will make a fool of themselves in the long run.

Internet maturing

It has been a feature of human life since the earliest days, whether we are talking about viaducts in Rome, the printing press, the combustion engine or nuclear power. The Internet is the latest of these and we are in its infancy. It still has enormous unrealised potential. Ideas and expectations ran ahead of reality which led to the crash in 2001 and though we are in another one now the technology is beginning to mature.

The funny thing is I and others are talking about the death of web 2.0 and I suspect when we look back this will be the middle of web 1.0. To a large extent we are still tethered to computers tethered to desks. Google is still a web page rendered in a browser for people looking for text pages. It’s not actually that different from 10 years ago. Yes we have video but it is fairly primitive at the moment and will always be a niche pursuit until viable services delivered direct to the TV take off. The biggest money maker on the web is still simple text ads.

Beyond the West

The other factor being ignored is the rise of the developing world. I made the mistake at Orange of assuming none of the African companies would make money. I was exactly wrong. The developing world is skipping generations of intermediate technology and going straight to mobile. Companies like Nokia are catering to this trend by building ultra simple handsets specifically for developing markets. My handset, the 1208, is primarily aimed at this market.

As you factor in Moore’s law increasing levels of sophistication will be available to the World’s poorest people and suddenly a market of 6 billion will open up. It is patronising to assume that everyone in the world does not understand technology and cannot benefit from it. My family lives in southern Somalia which is currently a war zone. Even still they have access to the Internet, email and mobile phones. It is what allows us to communicate with them and keep my Dad’s school project going. They are the most capable people I know and the idea that they and others like them are not able to get to grips with everything we do is ridiculous.

So yes this is a purge, and a necessary one, it will clear away a lot of businesses small and large but the ones that remain will prosper as the benefits of technology start to take hold far beyond the West.

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