An interesting article in the NYT about how internet users in "developing countries" are harming profits and increasing costs of web companies...
Essentially, Web companies that rely on advertising are enjoying some of their most vibrant growth in developing countries. But those are also the same places where it can be the most expensive to operate, since Web companies often need more servers to make content available to parts of the world with limited bandwidth. And in those countries, online display advertising is least likely to translate into results. Perhaps no company is more in the grip of the international paradox than YouTube, which a Credit Suisse analyst, Spencer Wang, recently estimated could lose $470 million in 2009, in part because of the high cost of delivering billions of videos each month. Hence some web companies are taking the drastic step of cutting of services to these countries! Smarter companies are "effectively managing bandwidth" by making sites lighter, less features etc to reduce bandwidth costs
The recession has brought in a lot of prudent measures that were never thought of in the heady days of the boom where more users meant higher valuations.
I think this unique situation might be relevant to the Mobile Internet too very soon. More page views = more profits? Time will tell.
Article here courtesy NYT.
Saturday, May 2, 2009
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