Shakeouts in Digital Markets: LESSONS FROM B2B EXCHANGES

摘要

Shakeouts loom large in the landscape of all fast-growing markets. During the boom period, an unsustainable glut of competitors is attracted by forecasts of high growth and promises of exceptional returns. Even when the market is already crowded, more entrants keep arriving. These followers are often naive about the barriers to entry and don't realize how many others are also poised to enter at the same time. Reality intrudes with a bust that precipitates the exit of more than 80 percent of the players through failure or acquisition. This shakeout is triggered by some combination of disappointing growth, pricing pressures that degrade profit prospects, or shortages of crucial people and financial resources. Only the strongest and most resilient firms can survive a shakeout. This is a pattern that was played out as long ago as the genesis of the railroad, telephone, and automobile industries and as recently as software and personal computers. Consider that fifteen years ago there were 832 PC makers; now there are arguably eight to ten viable survivors. That history is now being repeated in virtually every Internet-enabled market. By the end of 2000, collapsing equity prices and catchy headlines such as "The Dot-corns Are Falling to Earth" and "Is That E-Commerce Roadkill I See?" confirmed the onset of a bust in digital markets. Since the shakeout has happened at an unprecedented pace, the question is whether it was like those in the past or did it create new rules.