With big portal websites covering blog one by one, search engines inclining to be communitilized, endless models in sharing video/audio resources and the innovative Internet advertisements - Web2.0 (the second generation of the internet service) has become the core drive power for the innovation and development of the Internet in China.

The theme of the recently held Internet Conference 2006 was "Innovation - Opportunity brought by the Internet", which echoed each other with the "Bleak Winter - Internet Application Calls for Innovation", the theme of the initial conference held in 2002. It clearly demonstrates that the innovation of technique and service models had once again become to be a sticking point to the Internet development in future in China.

Can innovation of Web2.0 create an effective business model? Can innovation of technology and service bring value to us? Insiders indicate that the internet innovation in China is turning to be rational.

Be aware of over-entertainment

Entertainment had been all long one of keywords of the Internet development in China. After the bleak winter for the Internet, big portal websites dug their "first barrel of gold"- radio value-added services majoring in download of Coloring Rings and Multimedia Messages, which was followed by the blooming online games. By analyzing the main successful companies over past 10 years in China, a conclusion can be drawn that a majority of income directly from consumers was brought by entertainments. Take online games for example, the statistics data made by Analysys International, a marketing research agency, revealed that in the second quarter of 2006, the market scale of online games in China reached RMB1.78 billion Yuan, up by 19.02 percent compared with the first quarter in the same year.

The development direction to entertainment related to the frame of netizen. The updated statistics data from China Internet Network Information Center (CNNIC) showed that by June 30, 2006, the total netizen population was 123 million with a rate of access to internet only 10 percent, while over 70 percent of netizens are younger than 30 years old. Mr. Ji Weidong, vice president in charge of worldwide business of Morgan Stanley said this is different from that in Europe and America. In the US, the rate had exceeded 60 percent and netizens who were beyond 30 years old grasped the main shares.

Rather young netizens make "being enjoyable" the direction for innovative service models of the Internet in China, of which contents of both post.baidu.com and www.mop.com are good examples. Mr. Zhou Shaoning, Google's Greater China Co-President, expressed that the fact that rather young netizens make entertainment the main content of Internet services actually illustrated that Internet applications were far from maturity, which would become a major problem for the future development of the Internet in China. In addition, he said that google.com had not decided whether it would develop its community by combining with its search engine technology. At present, search engine community mainly provides entertaining services.

On one hand, entertainment services get the Internet sector vitalized; on the other hand, it also holds back the Internet from playing a more important role in social economy and everyday life. Li Yanhong, Chairman and CEO of baidu.com, believed that "Decision makers of enterprises must know the Internet well, get familiar with the Internet, and know what advantages it will bring. Then, it will be possible to better promote the economic growth and social progress." Putting undue stress on entertaining Internet service will make it difficult for Internet beginners to realize the value of the Internet.

Innovation emphasizing information integration

While providing individual users with entertainments, Web2.0 websites are searching for a new business model that can create values. The essential thinking for such a thinking is the effective integration of massive information. Vertical portal websites become an effective channel for Web2.0 websites to penetrate into traditional sectors and service fields. Xu Dongying, President of ccidnet.com, believed that such a fact presented that the second round of innovations in China's Internet industry is prone to be rational. Web2.0 websites are making efforts to search for a point to combine commercial values with demands of users.

The development of vertical portal websites based on such sectors as the information technology, real estate and the automotive industry just presents such a tendency. With a view on users' demands, the Internet provides massive information to users but requires users of higher and higher capabilities to distinguish and screen information. Internet users start to raise their requirement on the speed in obtaining information while hoping that they can spend least time getting the most accurate information. As vertical portal websites in specific industries can process information in depth, for example, websites of digital products provide abundant test reports and something learned by netizens in utilization; such a demand from users can be met.

Another important reason for the development of vertical portal websites is Internet advertising, the role of which in the promotion of global Internet economy seems to be increasingly obvious. AOL's transition from a service provider to a content provider has demonstrated the huge impact of Internet advertising. From the perspective of current development trends, Internet advertisers attach more and more importance to the accuracy in advertising. "If only one person is willing to buy our product in the world, we hope to know who he is." Internet advertising begins to be put in from comprehensive portal websites to segmented vertical portal websites. Take real estate websites as a good example. At present, real estate ads in real estate websites account for 30 percent of all ads in the whole real estate industry. Xiao Yong, a vice-President of soufun.com, confirmed that 80 percent of soufun.com's total incomes came from its Internet advertising.

Editor: Yan