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Politics : Idea Of The Day -- Ignore unavailable to you. Want to Upgrade?

To: Stephen who wrote (28639)	9/7/1999 8:50:00 AM
From: MeDroogies	Respond to of 50167

The underlying business model is actually sound in the long term for a FEW companies. On the whole, you are correct, it IS NOT sound. The "happy ending" does NOT exist for over 60% of all new Internet start ups. The best example of this is looking at something like the McLellan Oscillator. I read an interview w/him where he discusses the role of the Oscillator and how it functions. Basically, it measures new highs vs. new lows in all stocks on an exchange. The NASDAQ (home of the vast majority of new issues) has NEVER had a new high. It has been in perpetual decline. Why is that? Because the vast majority of new issues fail over time. That is standard business practice. Nothing is new on the net, it is just happening at light speed. As a result, these huge successes are really just successes in capitalization. As business models, most will fail. I agree about the concept of inefficiencies being a good thing. They are. Optimal performance isn't perfection, but something like 90-95% perfection. After that, you lose more than you gain. I disagree about the monopolization. One thing the net WILL allow is greater choice. Whereas in the bricks and mortar world, only 3 or 4 companies could become dominant, in cyberspace many more can be "dominant" (read successful) due to reduced costs. This is, as you point out, offset by greater cost consciousness (and capability of performing price comparison) on the part of the consumer. HOWEVER, what you DIDN'T account for is BRAND DEVELOPMENT. Witness the rebirth of Apple in the last 2 years (my happiest holding that I unfortunately sold recently to buy my wife a kitchen). They are more expensive than most PCs. What do they have that makes them so successful? 2 things - ease of use (yes, Apples are more reliable and easier), and brand recognition (even after years of MSFT dominance, the Apple logo was in the top 5 of recognizable logos in the US). By using these to promote brand differentiation, Jobs rebuilt a moribund company. The Web will allow this times 5. It is the ultimate commercial promotional tool. Even today, when you ask someone if they know of any online companies, they will reply AOL. This is what I use as the barometer of success. AOL has 1/2 the online subscribers, and the highest level of brand recognition. It is very hard to take that away, and AOL are brand masters. Amazon has brand recognition, but for different reasons - because of their amazing stock performance. That's it. They offer nothing that differentiates themselves in the manner of AOL. That is where they are doomed.