The Bursting of the .Com Bubble
Well, last month we engaged in a discussion surrounding the promises and pitfalls facing corporations and private citizens hoping to take advantage of emerging wireless technologies. This time around I'm sitting here in the Dunvegan Pub capitalizing on these facilities in order that I might mix a little business with pleasure. I'm telneted into my Linux box at home and simultaneously connected to the web – all by way of my cell phone which hums along at the blistering pace of 14.4bps... wow.
Actually, I'm surprised I can connect to home at all – my Rogers cable-modem service has been giving me nothing but grief over the past several months. It has been so bad that I actually went to Network Solutions' website to register "www.rogerssucks.com"; but can you believe it?... it was already taken. What a surprise. Actually the surprise really came when I discovered who beat me to the punch: Rogers themselves.
Apparently, they know they suck and are planning on exploiting the fact to their commercial advantage. I can see it now... a really amateurish web design effort in support of sundry content dunning the evil capitalist machinations of this Canadian corporate titan. It would inevitably be funded by banner advertising dollars gleaned from companies negatively affected by poor to non-existent ISP performance... further enabling Roger's frantic quest for sub-mediocrity. Of course, I could be mistaken...
This does however, raise a larger issue. Companies operating at "Internet speed" are bound to become ensnared in quagmire of their own design. In the rush to capitalize on the tremendous opportunities presented by the advent of this new medium, many sought category dominance yet relied on poorly laid implementation strategies or ill conceived business models.
Everyone jumped on the Internet bandwagon fuelled by boatloads of freely available venture capital - accessible by any start-up with even the hint of a business plan. Post IPO dot com CEOs stood before dazzled investors like the great and powerful Oz proclaiming the "new economy" model didn't actually demand profitability – just pay no attention to the man behind the curtain.
The eventual shakeout was as inevitable as rain in Vancouver. As of Nov. 15th 2000, in the United States alone, 22,155 workers had been laid off from 245 major dot com companies... 42 of which closed their doors for good. The latest casualty as of that date? Garden.com.
This web property was touted pre-IPO as a sure-fire category killer - and indeed on the surface seemed poised to reap the rewards everyone apparently thought were surely due it. The site won numerous awards (including best e-commerce site on the net), had an innovative supply chain management solution, plenty of talented people working for it and a seasoned, well educated management team.
I bought the hype and GDEN at $21US on the day after the IPO... today it closed at 9 cents.
So what went wrong?
Well, despite all the items in the plus column for Garden.com, it shares a fundamental flaw with a whole host of Internet properties. Why would I want to go online to purchase an item sight unseen, take a security risk with my credit card (whether real or perceived), pay often exorbitant shipping costs, ensure I'm available at whatever time the courier happens by, and wait "as little as three days" to receive it when I could just go to my local vendor and pick up the same or similar product for less today? This model isn't new – it's called mail order... and when was the last time you purchased anything that way?
The fact that these sites offer additional services such as detailed product information and virtual communities does little to augment their weak value proposition in light of the negatives; it merely enables the consumer to make more informed choices at their local retailer. If I need a bag of nails am I going to nails.com or taking a trip to the hardware store? If Spot's hungry am I off to the supermarket or visiting Pets.com? Well, as the sock puppet is on the auction block, I think the decision's been made for me.
Is Dot Com dead?
Hardly. There are still zillions of e-commerce dollars to be made out there. So who will be among those collecting? Companies that leverage the unique characteristics of the Internet will succeed while others which merely apply old business models to new technology will not. Sites which empower the consumer by pitting vendors against eachother to win the client's business, (lendingtree.com, priceline.com, quotesmith.com etc.) are a good example.
Corporations which actually deliver on the promise of instant gratification the Internet has enabled by way of electronic delivery of goods and services (time sensitive information providers, software vendors, Application Service Provides) should also enjoy increasing site popularity over the next few years. Sites which cater to the public's desire for privacy and discretion while making certain purchases or inquiries, (adult oriented product vendors, health related web properties etc.) should similarly do well. The bottom line? If the Internet doesn't exclusively enable, or fails to add significant value to the transactional process, perhaps your strategy might be better reconsidered.
Article originally published in HUB Magazine, Connected column, December, 2000, by technology columnist Ray Richards.
Heading Level 3
Sidebar
Article Index
- Digital New Year's Resolutions - January 2009
- Networking Basics - June 1996
- Networking Basics Part 2 - July 1996
- The Media PC - April 2005
- WiMax - Metropolitan Networks - May 2005
- Digital Rights Management - June 2005
- Digital Rights Management - Part 2 - July 2005
- Adobe Creative Suite 2 Review - August 2005
- Windows Rant, Alpha Rave - August 1998
- DEC AlphaServer Lineup - August 1998
- The Year in Retrospect, 1996-1997 - August 1997
- Bluetooth & Wireless Networking - Nov. 2000
- How to Win Government Contracts - Oct. 1999
- Mobile Phone Plans Comaprison - August 2005
- Clones Versus Brand Name PCs - June 1998
- Adobe Illustrator vs. Corel Draw - March 2000
- Illustrator vs. Draw - Part 2 - March 2000
- The Death of Customer Service - August 2000
- Customer Service Solutions - September 2001
- Data To Diamonds - February 1998
- Data To Diamonds - Part 2 - March 1998
- The End of the Internet? - December 2000
- Your Digital Legacy - March 2008
- Disaster Recovery Planning - September 1997
- Threat and Risk Assessments - October 1997
- Dr. Jeff Williams Interview - November 1997
- Jeff Williams Interview - Part 2 - December 1997
- Magma's Data Center - October 2000
- Magma's ADSL Service Interview - January 1999
- Magma's ADSL Interview - Part 2 - January 1999
- Distributed Computing - September 2001
- Distributed Computing - Part 2 - October 2001
- Gaining Internet Exposure - Part 2 - May 1999
- Enterprise Resource Planning - October 1998
- Powering ERP Applications - April 1999
- Flash Versus LiveMotion - April 2001
- FreeBalance Financials - March 1999
- Globalization - May 2001
- Barriers and Benefits of Globalization - June 2001
- Google Desktop Review - May 2006
- Graphic Design Fundamentals - February 2000
- IBM Plant & Headquarters Tour - January 1997
- IM's Effect on Society & Culture - September 2005
- Compaq Servers Review - May 1998
- Citrix Winframe Review - May 1997
- Smart Cards Overview - July 1997
- Online Anonymity - October 2008
- An Introduction to Java - December 1996
- ERP: PeopleSoft - December 1998
- Photopaint vs. Photoshop - May 2000
- Photopaint vs. Photoshop - Part 2 - June 2000
- Starting a Small Business - Admin - July 1999
- SOHO Accounting Software - August 1999
- Accpac, Simply Accounting Review - October 1999
- Rogers Rant, Quickbooks Rave - November 1999
- Intuit Quickbooks Pro Review - December 1999
- Quickbooks Pro Review - Part 2 - January 2000
- SAP R/3 Review - November 1998
- How Standards Affect Everything - March 2001
- Teleworking - Your Office at Home - April 1998
- The Ultimate Office - February 2008
- Unicenter TNG - June 1997
- Virtual Private Networking - November 1998
- Web 3.0, The Semantic Web - July 2008
- Basic Web Design Principles - February 1999
- Women in High Tech - September 1995
- Windows Driver Nightmares - January 2001
- Post Y2K Commentary - February 2001
- Bored With Technology - July 2001