http://news.bbc.co.uk/2/hi/business/5235332.stm
The growth of outsourcing, which led to manufacturing
companies moving much of their production to cheaper, overseas
locations, could not have happened without the internet.
Indeed, almost every Silicon Valley firm – from Apple to
Cisco – outsourced their production to locations abroad, mainly in
Asia.
And many back-office service functions, from data
processing to personnel, were also moving offshore, particularly to
India, where new offshore business services centres were emerging in
Bangalore and Hyderabad.
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So how much does the internet benefit consumers as well as businesses?
One effect is increased competition, due to more effective price comparison.
Long Tail
This makes markets more efficient, and in the case of
online auction house eBay, creates a marketplace for some goods where
none existed before.
But the internet has another effect – increasing the range of goods available to consumers.
This is the “long tail” theory, which suggests that as
the internet lowers the cost of keeping inventory and storage, it
allows firms to keep in stock items that would not be available offline
(for example, the range of books available from Amazon.com).
This also benefits consumers who have access to niche products that would not otherwise be easily available.
Finally, the internet is also about time-saving for
consumers, where purchase and delivery – as well as information, is
more quickly available than ever before.
The internet has been a revolutionary technology, and
the speed by which it has transformed business has no real precedent in
history.
But after just a single decade of commercialisation, it is unlikely yet to have fully realised its full potential.
