In recent years, mergers and acquisitions (M&As) in the Internet industry have become frequent and high-profile affairs, with "Web 2.0" service providers being the most-watched targets of the trend. Yahoo's purchase of photo-sharing site Flickr in March 2005 and Google's buyout of the popular video sharing site YouTube in October last year have created a huge media buzz.
The M&A binge has finally reached Taiwan, as last month's heavily-covered acquisition of the nation's largest photo-sharing and blog service portal Wretch Co (無名小站) by Yahoo-Kimo Inc (雅虎奇摩), the nation's largest Internet portal illustrates.
According to a survey conducted in November of last year by the online market research firm InsightXplorer Ltd (
According to Chou Wen-ching (
Internet traffic is the most important indicator of success for commercial Web sites, which is why Yahoo-Kimo is expanding its variety of services with features such as auctions, shopping, community, stock quotes and news -- all of which increase traffic.
Chou points out that while Wretch can bring more users and advertisements to Yahoo-Kimo, Yahoo-Kimo's strong research and marketing teams are able to create a business model for Wretch to remain competitive in the swiftly changing business.
With online users providing content, Web 2.0 sites are now being considered the saviors of the Internet industry, which had a serious meltdown in the fall of 2001.
But the problem, according to Chou, is that many of these Web 2.0-concept sites have relied largely on advertisement revenues or subscription fees as their major income instead of creating profits that are consistent with their high traffic.
Moreover, since many founders of Web 2.0 sites are mostly young creative types instead of astute business people, many of these sites as businesses may be short-lived without sufficient funding and a meticulous operation model.
As a result, many young Web entrepreneurs chose to sell their companies to industry giants for a quick buck before they are dethroned by the large number of startups that spring to life everyday. Chou points out that Wretch is a good example of how to further explore the business potential of a site by managing human resources, maneuvering finance and advancing technology, while waiting to decide on whether or not to create an independent operation.
A potential traffic boom for Yahoo-Kimo has local competitors worried, prompting three Internet heavyweights to hold a press gathering on Jan. 23 with a joint statement that voiced their concerns over possible industry monopoly by Yahoo-Kimo.
In the statement, the three Taiwanese giants Webs-tv.net (
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