12/20/99 Fortune 288+ (See Bold for Digimarc)
1999 WL 27633243
Fortune Magazine
Copyright 1999
Monday, December 20, 1999
Issue: December 20, 1999 Vol. 140 No. 12/Investor's Guide 2000/ Special Year-
End Double Issue
E-Company/The Web Page
Will the Have-Nots Always Be With Us? The Internet may seem destined to become
as universal and all-American as cars, telephones, or color TV. But it's not
there yet.
Greg Lindsay Contributors Margaret Boitano, Greg Lindsay
Henry Ford opened our industrial century by making the automobile-
-a means of transportation for the elite--so commonplace that it was
absorbed into the mainstream of American culture. As the century
ends, we wonder whether the computer and communications industries
will be able to do with their info-highway vehicles what Ford did
with his black Model T. Media like the telephone, radio, and TV
started life in mansions and presently made their way into the all-
American home. Digital media like Internet-enabled PCs and wireless
telephony aren't there yet: We are still a nation with more gun
owners than Internet users.
So, questions: If digital technology has sparked, in the words of
John Doerr, Silicon Valley's supremo VC, "the greatest period of
wealth creation in history," will this wealth trickle down to the
digital era's have-nots? Or will digital have-nots swell the ranks of
the poor? Will progress narrow the gap that separates them from the
digital haves, or will a growing class of technocrats exploit it?
Perhaps the market will take care of digital have-nots just as it
provided for analog ones. Business helped make radio and TV
universal, the better to sell advertising. Will it give us all
Internet connections, the better to serve up e-commerce and banner
ads? Or will only people with enough e-cash be invited online to
spend it?
--Greg Lindsay
[BOX]
Penetration in U.S. households
[90-100%]
Radio
Television
Corded telephone
[80-90%]
Household income above $16,530 (poverty line*)
Health insurance
Car
[70-80%]
Cordless phone
Telephone answering machine
[60-70%]
Home ownership
Cable television
[50-60%]
Personal computer
[40-50%]
Stock ownership
Wireless phone
[30-40%]
Gun ownership
Internet access
Pager
[10-20%]
Fax
PDA
*For a four-person household.
SOURCES: CONSUMER ELECTRONICS MANUFACTURERS ASSOCIATION;
COMMUNICATIONS ENTERTAINMENT & TECHNOLOGY RESEARCH & INFORMATION
SERVICES; FORRESTER RESEARCH; U.S. CENSUS BUREAU; U.S. DEPT. OF
COMMERCE; NIELSEN MEDIA RESEARCH; INVESTMENT COMPANY INSTITUTE;
THE CENTER TO PREVENT HANDGUN VIOLENCE
[BOX]
hype is not forever
Gartner's e-Ferno
What do Dante and e-commerce have in common? A descent into hell,
according to the Gartner Group, which predicts that "the end of e-business" will begin right about now as "brick-and-mortar
failures" and "dot-com share fallout" drop investors into "a
trough of disillusionment." What Gartner means by the end of
e-business is less dire than it sounds. It just means that
e-business will ultimately become business as usual.
Gartner is probably right that most of today's large e-commerce
projects won't finish on time or on budget, and will
underdeliver based on the hype that surrounds them. But we've
heard doom forecasts before--when executives at big companies
realized that the first wave of corporate "brochure" Websites
weren't helping the bottom line. Their response was a second
wave of investment, which the e-commerce industry is riding
right now. Who says they're not up for a third?
[BOX]
The Wired Piper
If you were marooned on a desert island and could have one thing
with you, what would it be? A wired PC! So say two-thirds of
U.S. 9- to 17-year-olds in a Roper Starch survey. And why not?
Kids in wired households spend more time in front of the PC than
the TV.
[BOX]
keyword search
Finding the Facts
A little data mining applied to the findings of fact in the
Microsoft trial lays bare some telltale nuggets. The first is
Judge Jackson's intense focus on Netscape Navigator--mentions of
the browser overwhelm those of software for or by traditional
Microsoft rival Apple. More surprising is the abundance of
allusions to Microsoft's other rivals and allies. America Online
finishes ahead of even Netscape, mostly because of the judge's
in-depth discussion of a deal that kept Netscape browsers from
AOL subscribers. Astonishingly, the judge barely mentions Linux
or other operating systems that threaten Windows. No problem: The
soaring stock of Red Hat and the upcoming IPO of VA Linux systems
pretty much guarantee that Linux will get ample attention
elsewhere.
Number of times these words appear in the Microsoft finding
Software
Navigator 414
Mac Office 20
QuickTime 9
Competitors
AOL 286
Netscape 223
Apple 128
Sun 93
Compaq 64
Operating systems
Macintosh 9
Linux 9
BeOS 8
SOURCE: DEPARTMENT OF JUSTICE
[BOX]
amazing facts
Anonyboxes
Generic beer was a staple in our college dorm because it
supplied the most cost-effective buzz. So it goes for small
businesses, which use no-name computers, or white boxes, the way
we gulped no-name booze. White-box suppliers--typically
systems-integration firms that cater to small and mid-sized
businesses--collectively hold the largest share of the PC market
in the U.S., according to research by IDC. We didn't need
Heineken; do you really need a Dell? PC Market Share
Generic PCs 18.0%
Dell 16.6%
Compaq 16.5%
Gateway 7.8%
Other 41.1%
SOURCE: IDC
Lambs to the Slaughter
Is being tortured more fun when you're allowed to choose the
method? A survey of Web surfers says yes, at least to the
question of whether they would supply personal information to
help advertisers tailor ads to their interests. The survey's
sponsor is online-ad juggernaut DoubleClick. Not mentioned in the
report is whether participants were asked which they'd prefer:
tailor-made ads or no ads at all.
[BOX]
top web sites
Logo Wars
GoTo.com is way behind go.com, but is winning a court battle over
their similar logos.
Rank in in Oct. Sept. Site thousands of visitors
1 1 AOL 42,089
2 2 Yahoo 40,134
3 3 Microsoft 37,737
4 4 Lycos 29,227
5 5 Go Network (go.com) 21,729
6 6 Excite@Home 15,021
7 7 Amazon 12,902
8 8 Time Warner Online 12,475
9 12 Go2Net Network 11,326
10 14 BlueMountainArt.com 10,961
11 10 AltaVista 10,263
12 11 eBay 9,740
13 17 CNET 9,598
14 9 RealSite Portfolio 9,571
15 13 LookSmart 9,330
16 18 Snap 8,953
17 16 About.com 8,768
18 19 Xoom.com 8,393
19 15 ZDNet 8,333
20 20 GoTo.com 7,221
SOURCE: MEDIA METRIX
[BOX]
vc climate
Top Five Deals in October
Zhone Technologies $500.0 million
Run by former executives from Ascend, which Lucent bought in the
summer, this telecom manufacturer has already used part of its
bankroll to buy another manufacturer.
Neoforma.com $70.5 million
One of those business-to-business ventures only its customers
ever hear about, Neoforma.com is an online marketplace for
medical supplies. What's a real business doing on this list?
NetLibrary $70.0 million
NetLibrary's information does not want to be free, ever. The
company encrypts books and offers online "checkouts." Publishers
love the idea; backers include Houghton Mifflin and McGraw-Hill.
Online Retail Partners $62.0 million
Now, this is more like it: a VC company in need of venture
capital. Online's business plan calls for helping retailers build
e-businesses in exchange for equity, no real money (or profits)
required. iMotors $57.7 million
This three-month-old company aims to be the Priceline of used-car
sales--name your model and price, and it will find the match. May
we suggest Leonard Nimoy as a celebrity spokesman?
SOURCE: TECHNOLOGIC PARTNERS
IPOs to Watch
Company Expected IPO date Est. price Expect to raise
Digimarc Nov. 29 $11-$13 $36.0 mil.
Digital document protection
The Knot Nov. 29 $8-$10 $31.5 mil.
Online bridal registry
VA Linux Dec. 6 $11-$13 $52.8 mil.
Leading Linux box maker
FreeMarkets Dec. 6 $14-$16 $54.0 mil.
Industrial materials Web auctions
SOURCE: IPO.COM
CONTRIBUTORS Margaret Boitano, Greg Lindsay
TABULAR OR GRAPHIC MATERIAL SET FORTH IN THIS DOCUMENT IS NOT DISPLAYABLE
THREE COLOR CHARTS: FORTUNE CHARTS BY ROBERT DOMINGUEZ COLOR CHART: FORTUNE CHARTS BY ROBERT DOMINGUEZ/SOURCE: GARTNER GROUP Hype-Cycle Phases Modified for E-Business COLOR PHOTO: BRAD MARKEL Judge Jackson: on Microsoft's case COLOR PHOTO Dot-com, shmot-com: UPS's $5.47 billion November IPO was the biggest ever.
---- INDEX REFERENCES ----
COMPANY (TICKER): Forrester Research Inc.; X.NMR; Vnu N.V.; Gartner Group Inc.; GOTO; At Home Corp. (Series A); Time Warner Inc.; BOUT; MMXI; X.NFM; Houghton Mifflin Co. (FORR X.NMR N.VNU IT GOTO ATHM TWX BOUT MMXI X.NFM HTN)
NAMED PERSON: LINDSAY, GREG
KEY WORDS: INTERNET; COMPUTERS; TECHNOLOGY; STATISTICS
NEWS SUBJECT: Internet; Science & Technology; World Equity Index; High- Yield Issuers; Internet: World Wide Web (NET SCN WEI HIY IWWW)
NEWS CATEGORY: RANKING
INDUSTRY: Computers; General Industrial & Commercial Services; All Industrial & Commercial Services; Industrial & Commercial Services, Other; Consulting Services; Information & On-Line Services; Publishing; Media; Consumer & Household Services; Consumer Products & Services; Film, Television & Music; All Entertainment & Leisure; Recreational Products & Services; Limited Product Specialty Retailers; All Specialty Retailers; Book Publishers (CPR ICS SVC ISO CLT IAS PUB MED CSV HOU MOV ENT REC OTS RTS BOK)
Word Count: 1206
12/20/99 FORTUNE 288+
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