Prediction: Dotcoms will eat lunch this time around — the Reversal of the Internet Business Timeline. Part I
By Tom Foremski - December 9, 2004
Around about middle of 2003 something interesting happened. I can't quite put my finger on what exactly it was, or what caused it, but the internet business timeline started reversing.
Maybe it was talk about the Salesforce.com IPO that signaled the reversal. Anyway, it started to be increasingly clear we were going to re-run the last seven to nine years in reverse with a few twists.
I've dubbed what's coming as the Greenfield Enterprise Economy. The following will happen:
--Dotcoms will slowly start coming back into vogue, eat the lunch of the established companies, and go on to eat the companies themselves while spitting out the crunchy infrastructure legacy costs and sucking out the fatty stuff-- the IP and brands.
Some of the new Dotcoms will be web services vendors, currently acting in the traditional enterprise software model of "arms dealers," selling their technology to others. And some of these web services companies, while selling their technology to others, will begin using it themselves in new markets and in regional applications. Sometimes this will occur in partnership with other web services companies. For example, suppliers of say, e-commerce ASP services, will establish a regional shopping mall.
The logic will be clear: why spend millions marketing technology, trying to convince potential customers of the gain of large operational efficiencies when instead they can invest that money into establishing new ventures that take full advantage of the technology.
Such ventures would not necessarily compete with potential customers because they will be focused on specific regions or used to develop new types of services. The focus of most of the new Dotcoms will be on cracking the regional business market - currently the single largest commercial online opportunity.
With this strategy, sales to customers will be boosted because those ventures will serve as technology showcases, demonstrating how to combine technologies and business models to recreate profitable ventures in other regions or niches.
Also, those ventures can be flipped -- sold to customers. This generates new capital and sales at the same time.
The best business opportunities will come from the emergence of Greenfield Enterprises -- these will become the true new Dotcoms of the new economy (yes, the term new economy will return).
The Greenfield Enterprises will be absent most of the legacy costs of competitors. The correct application of technology combined with business model innovation will mark the successful Greenfield Enterprise.
The Greenfield Enterprise Economy Dotcoms will then eat lunch. I will explain how in Part II of the Reversal of the Internet Timeline...
cd1050
By Tom Foremski - December 9, 2004 | Permalink | Comment
| Category: New Rules
| SVW Toolbar | SVW Newsletter | SVW Mobile
- NEW STORIES:
- Intel Experiment Could Save Millions in Data Center Power Costs
- Will East Coast Flood West Coast in Search of Jobs?
- GOOG Founders Could Buy All US Newspapers and Still Have $12bn
- Microsoft in Bay Area Recruiting Blog Sites for AdCenter Ad Network
- Silicon Valley Rocks! Charity Event for Local Schools
- Fishwrap: Changing Media and PR . . . Plus a Great Pep Talk
- Top of my 2008 Watch: Berlin Based Plista . . . and Online Dopplegangers
- The "Experiential Gap" . . . and the Growing Cosmos of Twitter Applications
- FT Anger on AIG Bailout
- Shift Happens . . . A Visit With One of My Favorite PR Companies
Comments (6)
You are forever the optimist, Tom. And, you do love your sucking marrow / eating cookie analogy.
I agree that Web services are going to be a major force to be reckoned with - I work with one such company that I think has the capability to change its industry as it gains more traction (nope, not in the Valley, sorry Tom).
As for the rebirth of the dot-com, just the title itself makes me itchy. How about the advent of Web-based services? Doesn't have as much of a dot-com stigma.
Let me know when you'll be in my neck of the woods.
Posted: December 9, 2004 11:29 PM
I don't think you could be more wrong - we're entering a period where venture-backed firms and dotcoms, particularly on the technology side, have less and less power in the face of old-world names and powerful brands. The dot.commers aren't going to "eat the lunch" of established businesses - that road is closed and there are a handful of companies which survived to dominate: EBay, Amazon, Yahoo. These companies are the real thing - Google is likely to be there as well.
Where are the opportunities you are talking about? Can you name one example of this happening?
Posted: December 11, 2004 9:30 AM
Damian, I don't have any examples of dotcoms eating lunch just yet--it's my prediction :-)
The old, powerful, established companies/brands are formoidable competitors. But, I think that they are vulnerable to new, greenfield competitors that do not have the legacy costs/infrastructure of the established companies. I'll explain more in future articles...
Posted: December 12, 2004 6:06 PM
Jeremy, yes, a new name for dotcoms without the stigma would be nice! I think the next round will be less to do with the internet than with using all the best practices and efficiencies available, combined with business model innovation.
I think web services will enable a whole new breed of new companies to be formed with much lower cost structures. This is what will challenge the (very smug) established companies.
Posted: December 12, 2004 6:25 PM
Just a quick follow-up Tom: just came back from the Majestic Internet conference and here's the most interesting thing I learned: shopping is up big, big, big time at the big-box retailers - including Walmart.com and Costco. Contrast this with the sales at Amazon, which, while up, are not growing at anywhere near the same rate. It's "revenge of the large companies" time....
Posted: December 14, 2004 8:15 PM
Damian, that's interesting. Also, I wonder how the internet retailers will fare once they lose the advantage of not having to collect sales tax in many states. I can't remember when the moratorium on internet sales taxes runs out...?
Also, online prices are not much cheaper than retail. I sometimes reseach online shops then go buy retail because I want it today, I'm sure many others do that too. Also, I can create my own Amazon today. With all the affiliate relationships on offer, I can set up a decent looking shopping mall in no time.
Posted: December 16, 2004 3:53 PM