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The development and integration stage

Updated: Dec 25, 2018 en.internet.cn Print
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2006

In 2006, Internet was popularized in China. The number of netizens registered 137 million, 26 million more than the previous year, which represented the fastest growth ever. Also, the average daily time of Internet use grew significantly to 137.8 minutes.

In contrast to the rapid growth of netizens, the Internet developed in a featureless way. After Baidu went public in the United States in 2005, no other Chinese Internet company followed. This huge gap caused uneasiness among venture capital companies in the Internet industry. They've made unrealistic investment earlier due to the rise of the concept of Web 2.0, but now no company could be listed in the US. This fell hugely short of their expectations.

In 2006, the development of Internet products encountered a bottleneck in innovation. Companies were all upgrading existing products, and making business adjustments or integration; no major innovation or reform was seen. Lack of innovation means regression in the Internet industry, and simply copying from others leads only to more homogenization instead of success. The lack of product innovation brought about a shortage of business models. Since Web 2.0 found no clear business model and failed to bring returns to VC, investors gradually turned away under the "funneling effect". Depending mainly on online games and value-added mobile services for revenues, Internet enterprises had no more core products for additional revenues. Thus, as innovation in products halted, clear business models were absent, and capital investment expected immediate returns, Web 2.0 was forced into a period of adjustment.

In 2006, Internet security incidents were frequent. People realized that technology was a "double-edged sword" and that the Internet had its dark side too.

However, the faltering of Internet development and the "assault" on Web 2.0 may as well be regarded as an opportunity for the industry as a whole in the long run. While the industry was engaged in painstaking exploration, the authorities issued a series of policies and plans, and progresses were made in infrastructural construction.

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