Ever since Chris Anderson coined the term "the long tail," the business world has been abuzz about what the Wired editor managed to uncover. As with Malcolm Gladwell’s "tipping point" before him, the truths that Anderson revealed have taken the conference room by storm–particularly within the tech industry.
That’s because at its core, Anderson’s thesis is about our changing markets and how consumers have reacted to them. Status-quo markets based upon scarcity, Anderson says, have been overturned by markets of abundance using the power of the Internet.
It is a world, he says, where not only is everything and anything suddenly available to everyone, but also one where actually offering this abundance is now practically free.
And as a result, the market that we have always viewed as a huge monolith has now been shattered into thousands of much smaller pieces, with consumers chasing their desires and interests across every corner of the Net.
"The era of the one-size-fits all is ending," writes Anderson, "and in its place is something new, a market of multitudes." In short, niche markets now rule in ways that they never have before.
It is the explosion of these niches, Anderson says, that has unearthed a hidden majority and revealed a larger market picture where "popularity no longer has a monopoly on profit."
An abundance of choice, in other words, that has uncovered a much larger overall market and the opportunity to profit from it.
This new net-centric model of abundance, of course, hasn’t gone unnoticed by networking giant Cisco Systems. Not only has the explosion in online content boosted their bottom line with new gear sales, but it has also changed the way they partner with their customers.
Cisco, it seems, is now not just about hardware, but also about software and business counseling, too.
In fact, in a web-based interview, senior VP Mike Volpi practically read from the "long tail" playbook when he said, "What we tell customers, particularly the content companies, is that they need to think of the world in different ways. For example, rather than collecting a lot of money from a few people, they need to think about collecting a little money from many people."
To this end, Cisco is now working to create an array business services that will help its various big-media customers move more and more of their content onto the Web and into the long-tail marketplace of niches. Social networking, Cisco believes, will become the new corporate marketplace.
"Part of our job," says Dan Schienman, senior VP of the Cisco Media Solutions Group, "is to form a relationship with media companies and deliver technologies and services to them, so consumers can consume what they want online."
As with most of its growth, acquisitions have been key in allowing Cisco to stake its claim in the fast-growing online content space.
Yesterday, in fact, the company announced that it had acquired Utah Street Networks Inc., a small privately held company specializing in software to create and maintain online communities. It is more commonly known as the owner of the Tribe.net site.
The move came only a month after Cisco acquired Five Across, another startup in the social networking space that markets a system allowing corporations to interact with online communities. Its "Connect Community Builder" lets companies easily develop and augment their sites with the blogs, podcasts, and other user-generated content that is sweeping the market.
These two moves, needless to say, have been a radical departure from Cisco’s equipment-based roots. After all, of the 110 acquisitions the company has made over last ten years, nearly all have been related to hardware.
By becoming more involved in helping their customers to create and move their products online, Cisco will now also grab a share of the long-tail market and its abundance of customers and their niches.
All of which will undoubtedly end up driving more gear sales.
It is, of course, a neat little circle–one that will end up with a positive effect on the bottom line.
And it all began with the idea of "the long tail."
Wishing you happiness, health, and wealth,
Steve Christ, Editor
