Next generation markets

Well well i generally have lots of plans stored for the weekend. Watever fascinating that needs a call to be tried out is automatially pushed to the saturday night and sunday slot. However this weekend i simply grazed on my bed watching the 20-20 world cup and pondering over different thoughts that were crossing my mind. Sunday morning itself i went for a breakfast invitation to one of my neighbours home. The idea was to discuss the next steps for his budding son who is hardly 14 years old. Never could have imagined parents being so consious at such a tender age!! Quickly i felt the gap in this generation of parents and how kids are grown up amidst lots of tension and expectations from parents. The idea behind telling you all these prelude is to make you feel how i felt after meeting that kid and what thoughts ignited in my mind.

So.. he was a kid of average look and seemed very introvert when i first talked with him. He insisted that i make myself comfortable in his own room instead of sitting along with his parents. I accompanied him but what a scene i saw!! 2 computers placed side by side and CDs and DVDs lying rampant in the floor. I dwelved into what he normally does in his 2 computers after which i figured out that one computer was for his study related issues and the 2nd one was his other world. Loads of amazing softwares which even i was unaware of and collection of movies and songs for almost all types. I quicky considered myself as to how i was at his age!! perhaps only things that could found in my room apart from books and magazines was my cricket set (which i used to practice in front of the huge mirror to get my positions right). As i went ahead and discussed various softwares and games (i'm not a avid gamer though) i essentially disovered how things got changed in last couple of years. Although i had witnessed the days of pre and post internet never could i have thought that guys at such an age could build his own world in the virtual reality. I deduced two things very strongly:

a) The world is moving away and has moved away from the HITS phenomenon. What i meant to say is that at my age we friends used to watch the same channels, read the same newspapers , go through the same magazines and listen to the same radio station. Its not because they were superb but options were limited. With the advent of internet there are thousand sources which can be shared and with the boom of mass media options got still wider. But how do all such companies survive?? i questioned myself huge number of times and desparately tried to figure out probable answers. But then i discovered the plain law of economics doesn't hold anymore i.e law of scarcity which states that if you have limited space in your shelf you only dump it with the best CD or DVD collection so that it gets sold of quickly. So what is that's in? Its probably the 98% rule..

b) 80-20% rule is still getting teared apart from very few service structured companies and high end enterprise application development companies. Returning back home i researched a bit on this front and had a very critical look at the upcoming Web2.0 business models. Fortunately enough i came upon a research report published by frost and sullivan and the data there is truly amazing!! One of the survey question went as follows: How much of the total songs recorded in iTunes got sold atleast once in a quarter?? Honestly i thought it to be somewhere between 30-40% bcoz in our conventional industry never would you come across a company who has exhausted more than 20% of different product suite's inventory in a quarter. So optimistically coz of the internet i arrived logically at the figure of 30-40%. But the result truly made me interestered further. It says that almost 90% of all iTunes songs sold atleast once in a quarter. So probably my guess of 98% rule is true :)

I went ahead and did some study on Amazon further and there also i discovered the same phenomenon. Albums produced in 80's or 90's weren't made thereafter which includes hits like eagles, pink floyd, led zapplein etc. Most to my suprise the financial statistics of amazon itself stated that revenues gathered from one or two time sell of unknown (read lesser) known songs or artists amounted to almost 4 times the revenue they amassed from selling the HITS. Its good that now everybody has an audience and the very idea of "broadcast" is getting changed. Our days' radio station could play its song to 1 million listeners but it couldn't have brought 1 million songs to 1 listener. The internet is doing just that. Most importantly we are moving towards a market of "NICHE" products and such the traditional market of HITS is getting changed. Immediately i correlated these findings and thoughts to our start-up iViZ which deals in niche security product like an automated penetration testing tool. We were seldom asked by VCs and interested investors that whats the market size that we are trying to address. We substantiated that with data from research firms like Gartner and IDC but most importantly i found a different answer void of statistics.

Well very intersting isn't it?? Let me work a bit more and surely i will come up with further interesting findings and understanding. Thinking of the next big business idea?? keep these things in mind and you will cater well to this next generation market and hopefully own a private runway at NASA :)