Turbulence and Competitive Dynamics in the Internet Services Industry

Abstract

This paper has two objectives. First, we seek to comprehend the overarching patterns of structural change underlying the hyper-dynamic processes shaping and reconfiguring the Internet services industry during both the Internet hype period in the late 1990s and the ""post-hype'' period after the turn of the millennium. This is done through an empirical account of the evolution in commercial customers' Internet use, the corresponding development of new Internet services, and through an analysis of the evolving competitive and cooperative dynamics in Internet services. This analysis encompasses an exposition of both the entry-based dynamics and the post-entry positioning dynamics of different strategic groups operating in Internet services--in particular ""old economy'' companies and their adaptation to Internet services. Secondly we try to answer the question whether Internet services is to be considered a complex value system of interrelated services provided by different types of firms in different industries, rather than a unitary industry of competing firms.