Ecom,
To me the most interesting part of the E*Trade story is the cost of new account acquisition for the industry as a whole. At the end of 1998 E*Trade had 676,000 accounts, which was up 132,000 for the quarter (as publicly reported). According to an article on MarketWatch, they spent $310 per new account in that quarter. As the cost to acquire new accounts rises, the advantage swings decisively to those firms that can pay the marketing costs, such as E*Trade, Schwab and, perhaps, DLJ and Fidelity. The MarketWatch article mentions that "Some industry watchers note that it may be cheaper for the leading brokerages to buy others than try to grow internally." I've always thought of E*Trade as a takeover target, but now it might actually become a buyer one of these days. But regardless of that, this competition will go to those with the big marketing budgets and E*Trade will be a big winner (in my humble opinion).
Till later,
E |
