The Mother Of All Internet Wars

There have been quite a few wars in the history of the commercial Internet. But I think that we are gearing up for the start of the biggest one yet in 2011. Before I get to that a brief review of some of the past battles is needed.

The 1st Browser War
Perhaps the most infamous war of all. Netscape versus Microsoft. In 1996 Netscape Navigator dominated the Web. Over 80% of the browser market. Mark Andreessen was the poster child of the Internet. Microsoft’s launched Internet Explorer and offered it for free with marketing dollars available to companies that distributed it. They bundled IE with Windows. With the exception of a little anti-trust lawsuit the battle was over. Microsoft was the clear winner with over 90% market share by 2002.

The Retail War
About the time Andreessen was posing for magazine covers in his shorts, Jeff Bezos was founding Amazon. Not so much of a war as the execution of a Manifest Destiny. Amazon today is by far the largest online retailer.

The Access War
In the early days of the commercial Internet there was a land rush to get people online. America Online, now AOL, won this battle by spewing discs across America. At it’s apex AOL had a 34% market share, over four times that of EarthLink, it’s closest competitor.

The Search War
In 1998 while AOL, Excite, MSN, ! and a few others were battling the portal wars a company called was formed. While portals focused on content aggregation, communications (email and instant messaging), and search, just wanted to do one thing. Search. They win building to over 70% market share. AOL, MSN, and Yahoo! remain major traffic destinations.

The Social War.
Jonathan Abrams and Peter Chin of Friendster. Reid Hoffman of LinkedIn. Tom Anderson, Josh Berman, Chris Dewolfe, and Brad Greenspan of MySpace. Jack Dorsey, Biz Stone, and Evan Williams of Twitter. Have any of these guys been named Time Person of the Year? No. But Mark Zuckerberg has. He and Facebook have much more than our minimum amount of attention. And Facebook has over 60% market share.

The Mother Of All Internet Wars
Look at the companies that came out on top in these battles. Microsoft, Amazon, AOL, Google, and Facebook. These companies have a combined market capitalization of over $500 billion. And there is another little company out of Chicago called GroupOn with a $15 billion valuation that is in the scrap too. And they are all, along with every media company known to man, starting to turn their resources to one thing.

You can call it local. You can call it mobile. You can call it location. It does not really matter what you call it. All of these powerhouses are going there. Why? Because the the local daily deals market is projected to be over $10 billion in 2015 and the mobile advertising market is projected to be over $2.5 billion in 2014.

The Internet gorillas are marshaling their forces in preparation for this battle. Amazon invested $175 million in SocialLiving and did 1.3 million transaction in their first joint deal. AOL launched Wow. Google, who reportedly offered $6 billion for GroupOn and was told “no thank you”, to my thinking is willing to invest at least twice that amount in the space, and is creating Google Offers which in some way has to integrate Google Places in the future. Facebook has created its own Places and Deals, offering up the latter to retailers at no cost. GroupOn (and a big BTW, if someone offers you $6 billion for your startup, take it) is keeping pace with GroupOn Stores and DealFeed. Microsoft, rarely first to enter but always a major combatant before the dust settles, has yet to show its hand (beyond a little $240 investment in Facebook that seemed a little wacky until they agreed to make search social.)

This is going to be fun. But I am not sure, unless you already have some well established position to defend (good for you) or a new and step function better technology that can focus on a specific vertical (bring it on) that I would want to enter the battle at this point. It’s going to be a big one and a lot of startups are going to get killed.

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