There is some talk these days, if the recent high evaluations of Internet companies like Facebook are realistic or indeed if this could turn out to be a bubble similar to the Dotcom Boom and Bust at the beginning of this century. I remember the time in early 2000 well, as I worked in a corporate business development capacity then, specially focused on supporting these burgeoning internet start-ups by selling services and consulting to them – mostly design and development, some business consulting. I also remember that many of these start-ups just had an ‘e-business’ idea, but often the management team had little real technical background or understanding and indeed sometimes possibly even less business background, judging by some of their business plans, which did not go much beyond the idea itself. And didn’t have to, as there was money and excitement in abundance! There were exceptions of course, some very notable and very interesting exceptions, but this is beside the point here.
The point I am leading up to is the statistics on Internet users published by Internet World Stats (http://www.internetworldstats.com/ and Nua Ltd. These go back as far as 1995 and show the massive increase in Internet users that has taken place over that period and as depicted in the Figure below.
And once again, I divert, as I remember the early 1990s equally well and the role that the Internet played then: I was in my final year for my BSc (Hons) in IT in London and surely as an IT student should have been one of these early users. But I was not: the Internet did not show up in those IT lectures, indeed, got even less of a mention than object-oriented programming and C++, another yet to be discovered area at the time, and it was a German journalist friend of mine, visiting London, who raised my awareness when I had to accompany her to the first (?) Internet Cafe in London, a place she had heard about and wanted to write about. Well, as I said, different times...
But let’s come back to the chart with the history of Internet users: The data underlying the chart show, that in December 2000, there were 361 M Internet users worldwide, corresponding to a penetration rate of 5.8%. Fast-forward eleven years to June 2011 and the numbers have dramatically changed: There are now 2,110 M Internet Users worldwide and penetration, worldwide and including many developing countries, has reached 30.4 %.
As is to be expected, penetration rates between regions and countries vary considerably. But even Africa, the region with the lowest penetration rate today, due an Internet growth of a staggering 2527.4 % (!) in this period, in 2011 has an Internet penetration rate of 11.4%, which is virtually double of what the global penetration rate was in 2000.
Of course, this does not protect from over-evaluation of Internet companies, just as over-evaluation of anything, be it bank shares or the housing market – as we have had to learn in the last few years – does happen in all sectors and probably will happen again. However, as far as Internet companies go, it is worth taking note that we do live in a different world today than we did in 2000: The Internet has become part of the daily diet for most of us, especially in developed countries. Not all of what is on offer on the Internet is needed for the daily diet; some parts are fads, others quirky snacks, others probably downright unhealthy, and a great many only relevant for subsets of Internet users.
Which of the more recent trends and fads will be added to our staple diet is yet to be seen and I think there are interesting times ahead. As they say (and finally say loudly) in the financial world: “Past performance is not indicative of future results”.
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