An important issue regarding economic development and growth is that of the development of regions. In a world dominated by technological innovation and the notion of knowledge economy, the development of regions takes a particular meaning. Lets take the case of the Silicon Valley, where a great agglomeration of high technology companies are gathered. The fact that those companies are at proximity of each other gives place to the possibility of mutual learning by constant interaction. the more people working in companies will be in contact with each other, the more they will be able to profit from each others’ experiences, which will lead to increasing output in terms of improved products and processes.
However, after a few decades of offshoring jobs for the sake of short term gains, the American industrial sector was characterized by a long period of relative inactivity. If people don’t work, they don’t experiment new things and therefore don’t generate new knowledge with which they can improve products and processes. The result of these industrial policies of cost cutting can now be felt when foreigners registered more patent inside the US that American citizens.
While American firms where comfortably cashing on previous investments in developing American technological skills, Asian countries where keeping up with the hard work until now, where they have overtaken the American firms. Let’s take the new and emerging Nanotechnology industry. Asian countries like Japan, Korea and China own a great deal of patents in this sector. Basically, what this means is that those regional advantages that can be associated with a lot of people being very competent in nanotechnology is not inside the US. That increasing return associated with people learning from each other and continuously improving their products and processes is situated in Asia.
What is really striking is not that Asia has overcome a clear advantage owned by the US. What is really striking is that the general sentiment in the US is really not focused on these important issues. If we believe social media such as Facebook, Youtube and Twitter, what really draws popular attention is celebrity gossip rather than important issues. The ship is sinking and no one even seems to be aware!
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The age of privacy is over and Google is pushing for more personalization on the web. While the benefits of customization are great for productivity and user experience, there is always a trade off with privacy. In fact, customization cannot peacefully coexist with privacy because who ever want’s to offer it needs to kind of spy on every thing we do to understand what interests us. Since personalization is so useful and that privacy is also very important, we will have to ask a fundamental question about how much privacy we are going to give away for the sake of personalized information.
We could look at this problem from an extreme point of view: mobile dating services. These new services connect people based on geographical proximity. So if two users are in the same area they will both be notified of each other being around. But to deliver such a service, people need to give away their location and this is where problems start. Sociopaths could use this information about people whereabouts to target them and eventually threaten their security.
At another level, giving private information away can be dangerous in the age of identity theft. We saw that the Chinese government attacked Google with the intention of stealing private information on dissidents. Hopefully big firms will be able to provide good security protection but this is not going to be the case with smaller firms. Unless a government body puts security standards with tight control in place this kind of information theft is most likely going to plague the next years.
Finally, history has shown that corporations cannot really be trusted. The main issue with corporations is that shareholders often have needs that are diverging from the needs of society. Giving away information to big corporations means that something bad can happen in the near or mid term future. While we are good at evelising states like China, we tend to forget that corporations can sometimes be able to harm people.
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With evidence that Chinese hackers where behind Google attack and China denying involvement in the attack and important question is raised about security enforcement on the world-wide-web when computers are connected through an open standard, but that countries do not adhere to political standards!
Law enforcement for international cyber-crimes
Lets say some guy attacks Yahoo website from a MIT computer lab and that cybersecurity professionals trace the origin of the attack and find the perpetrator. What happens is that since the crime was committed in the US, law enforcement officers simply proceed with prescribed measures. This is a simple case where computers in a geographical region are connected and that the region is governed by the same legislation.
However, when cybercrimes are committed in geographical regions that are governed by different laws, then there needs to be protocol between those two countries to exchange proper information so that cyber-criminals get proper reprimand for their actions. This protocol is very much implicitly accepted between countries who’s computers are connected through open protocols. That’s because the protocol is designed to guarantee security, or at least guarantees that the origin of an attack can be traced. So when two people connect their computers together, they are saying: “We’ll do the necessary when someone uses one of our computers to attack the other computer”.
Now, if a cyber-crime happens and that the country from which it happened refuses to cooperate with the other country, then it is somehow saying that it does not want to have its computers connected with the other country anymore! So if we take the case of China here, it is saying that it cannot guarantee that proper measure will be taken to punish those who attacked Google. The funny thing is that by acting this way, China is somehow confessing that it has orchestrated the attack!
So why does China want to unplug from the World Wide Web?
If we take a look at the historical events that led to Google’s attack, it all started with China asking Google to filter-out improper content to which Google has complied. But it seems that Google’s compliance policies had its limits which was followed by a hack that was targeted at obtaining information about Chinese dissidents. Of course, Google has so much information that it is the target for those who want to terrorize populations.
Political reasons
Now, the situation has gone to the point where these computers connected through the HTTP protocols can be the bearers of ideological battles. People exchanging freely on the Internet could lead to people asking each others questions which could lead to people asking questions about themselves. And everybody knows what happens when a population becomes self-aware: revolution.
So the natural thing to do for China is to cut itself out from the Internet. Well, not the whole Internet, just the outside-of-China Internet. So the plan is to have a Nation Wide Web or Chinese Wide Web, which amazingly has the potential of having more surfers that the other World Wide Web!
Economic reasons
The other aim of the Chinese government in cutting itself from the Internet is in an attempt to slow down the growth of American web firms. American firms have a lead in Internet products and services. So as Chinese consumers get access to Internet connections, they will be better using American services like Facebook and Twitter because those are the platforms on which most people are connecting to.
But if China cuts itself off, then it can have a nation-wide program of services similar to Facebook and Twitter and wait that they get as big. So the idea is to not give business to the US and keep that business to itself. This makes a lot of sense for a country that has known tremendous growth from exports and that is struck with a global crisis that is leading to protectionist policies from its once major clients. China has to learn to have growth from within and it is taking draconian measure to achieve that.
At first sight, it seems that social media in China might have an adverse effect on Chinese people’s opinion about socialism, but the truth is that Chinese government is going to hire tons of ’social media gurus’ who in reality are going to push for socialist ideals. Instead of having bloggers praise Apple iPads and Google Android, they are going to have bloggers praise China’s greatness. After all, marketing is not only a matter of capitalism.
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In a previous post, I talked about the tragedy of foreign inventors being granted more patents that American residents for the first time in history. While those who claim that it is only natural that emerging economies gain ground in the US, things seem to be more troublesome. In another study, numbers show that in 2009 the US owns a lower percentage of international patents than what it did in 2005. However, this trend wasn’t observed for other advanced countries such as Japan, Germany, France and Britain. All these other countries have advanced their share of international patents. Therefore, saying that emerging countries are advancing as they should and that it is the main reason for foreigners being granted more patents doesn’t hold anymore.
Even more frightening, if it is true that other economies are emerging, then it is more important for American firms to go out there and get international patents, so they can own global markets who are now more attractive because of the said emerging economies. But what we observe here is the complete opposite and we see that America’s international position is weakening.
Now, like if all this wasn’t enough, American state universities will see their budgets shrink for around $3 billion. This is added to another $3 billion that was removed from budget last year. In other words, US administration is expecting a miracle since it is hoping that cutting costs will actually lead to more productivity from scientists. Now, taking into account that knowledge is created and transferred to firms from universities, investing less in universities will most likely lead to worse results in terms of innovation. Therefore, the only logical explanation to US administration’s cut in university endowment could come from it’s intention to offshore eve more of it’s innovative capabilities. Maybe the idea is to fight it’s own lack of innovation by bringing-in innovators from outside the country.
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Google can't be trusted with our personal data.
Google claims that Google Dashboard gives complete privacy choice and control. I guess this is good news for those who advocate for privacy on the Internet. The truth is that it is very much no news at all. The reason is simple: who says that what we see on Google Dashboard is all that data Google has on us?
It is only Google’s own claim that the dashboard is a direct access to its analytics infrastructure. Knowing how information is vital to Google who mainly lives out of information retrieval, I just have the feeling that it cannot be trusted with such claims.
Google is a big data center. Nothing more, nothing less. What makes the difference between Google and any other search engine that decides one day to imitate and compete with it is the big inimitable data center. If it flushes user’s personal data, it is gradually loosing competitive edge over other players (like Bing) who decide to keep information and can provide more personalized services.
Unless governments step in and impose regulations and audits concerning privacy, claims such as the one with Google Dashboard are going to be nothing more than marketing campaigns aiming at giving a more humane face to an increasingly feared corporation.
]]>The cloud
With today’s industry focus on the cloud and web-based applications, it is important for big players to have a product-line that offers a whole set of tools for everyday Internet users. In other words, the search engine as a single product will not be enough to give a competitive edge to anybody, let it be Google. For example, Google search engine users have access to Maps, Gmail, Reader, Docs, Calendar and a whole bunch of applications that will answer day-to-day needs. Microsoft is trying something similar with Bing Maps as a competition to Google’s.
Mobile computing platform
Today, a third of Internet users come from mobile phones. This trend will only keep on growing in the future as better products will be released for the mobile market. It is only a matter of time before the mainstream Internet completely switches to the mobile platform. With forecasts showing Android as potentially surpassing iPhone sales by 2012, both Apple and Microsoft have no other choice than to put their efforts together in a fight for their life.
What it means to the iPhone users
Well, this is good news and bad news for the iPhone consumer. On one hand they will be exposed to a potentially worse and less mature product. On the other hand, it will bring more balance to the search engine market, forcing Google to work on it’s competitive edge by releasing better products. Of course, things could balance towards a bipolar market where both Bing and Google will be better of with what they have rather than trying to take away market share from the other player.
]]>What is the CTR?
Click-through rate is defined as the percentage of clicks per impression of an ad. This means that, in average, people will click twice on AdSense ads for every 100 impressions. My opinion is that Google’s announcement is not really accurate and that average CTR is somewhere around 1%. But for the purpose of this post, I will stick to the official Google answer to CTR.
How much traffic is needed to make a living?
Now that we know how many clicks to expect from users, lets suppose that every ad click will bring in 25 cents. Let’s also suppose that the website owner needs $3K per month for a living. This means that the website needs 12k ad clicks per month for the owner to pay his bills. Since data shows that CPM is lower on social media, it isn’t wrong to say that new visitors will have higher CTR than returning visitors as the chance for the former to accidentally click on ads is higher. Let’s take the 20-80 rule and suppose that new visitors will represent 80% of ad clicks. In other words, new visitors will generate 9600 clicks that represents 480k ad impressions at 2% CTR. Finally, if we suppose that new visitors view 1.5 pages per visit, 320k new visitors are needed for the website every month.
How to get 320k visitors per month?
New visitors will most likely come from the search engine. Again, we can use the 20-80 rule to expect 256k organic visits. Let’s say the blog is targeting long tail keyword. Every blog post targets one keyword that will bring 10 visits per day. This means that the blog post needs to have around 853 blog posts to generate 256k organic visits per month.
To generate a blog post that can reach 10 visitors per day, the blog owner needs to perform 4 hours of reading, keyword search and writing. To reach the 853 number of posts, it will take more than 20 months of full time searching, reading and writing!
]]>Taking into account that Germany was until last year world’s number one exporter, this kind of attitude towards Google/Microsoft is very alarming. German administrations have a strong record for balanced view of economic affairs and their economic prowess is a sign of good economic management. Their position against certain corporations or products is most likely going to be justified by rational analysis rather than political motivation.
The bad news is the Google taking over the search engine market is going to be as bad as Microsoft’s dominance of the desktop market. I would agree with the conclusions of the German justice ministry since not forcing Google to have competitive behavior will end-up as being very costly for the search engine and maybe the Internet industry.
]]>So what happens here is that Google is using not only using it’s influence to get content producers and bloggers of all kind to write about the Nexus One, but it is using it’s huge network of AdSense partners for the purpose of pushing for more ads. And guess what, all this extra traffic is free!
Of course, Google still has to pay when people click on those Nexus One AdSense links. However, when these ads it shows on irrelevant pages, chances of people clicking on them are lower. However, people are still exposed to the ad. Meaning that people are heavily exposed to the message of ‘Nexus One is out there, buy one!’ for a fraction of the price if Google paid for had it dealt with high traffic websites.
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