BBC NEWS Americas Africa Europe Middle East South Asia Asia Pacific

BBC News World Edition
    You are in: Business  
News Front Page
Middle East
South Asia
Market Data
Talking Point
Country Profiles
In Depth
BBC Sport
BBC Weather
 Friday, 15 March, 2002, 09:28 GMT
Dot.coms - the next generation

In the last of a series of reports on dot.coms, BBC News Online meets web firm executives preparing to embrace new technologies and markets.
Brent Hoberman, internet entrepreneur, has a vision.

He sees, the UK flagship he runs, ranked in 10 years' time as a utility.

Brent Hoberman
Brent Hoberman: Bland ambitions
The company once symbolised the UK's new economic boom, breaking both new retail ground and shareholders' hearts. Now it is to adopt the blue overall trimmings of a London Electricity or Bristol Water.

"We will be, yes, a utility," Mr Hoberman affirms.

" will be a utility that customers will use to help them make last minute lifestyle decisions."

"You will be able to walk out of here, say 'I am hungry' and we can tell you there is a restaurant nearby where you can get a free bottle of wine if you turn up in the next 10 minutes.

"If our service is personalised, location based, time sensitive, then you can imagine people using it as a utility."

So fate will side with the sceptics, who long foresaw that the "revolution" would spawn but workaday companies.

"In the railways bubble of the last century, the iron road was meant to be the 'killer technology'," a former Nasdaq worker said.

"Dot.coms will end up as exciting as Railtrack."

They are already attracting similar levels of investor confidence.

Big mistake

Indeed, the bubble mentality of the late 1990s was replaced by an "irrational pessimism", says Mr Hoberman, who watched Lastminute shares drop from above 480p after launch to 17p in October.

Mobile telephones have a personal touch that puts the 'personal' in personal computer to shame

Fernando Suarez, London Business School

Greg Hadfield relates how three years ago he was able, on the basis of a four-paragraph letter, to raise 700,000 from venture capitalists to launch teachers' site Schoolsnet.

"Today you can't even get a meeting with a venture capitalist," he says.

"Yet Schoolsnet's prospects have never been better.

"The people who made a huge mistake backing ridiculous ideas two years ago are making an even bigger mistake now by missing out on a golden opportunity."

Poor record

A glance at the history of previous investment bubbles does support a certain caution.

Shares in radio firm RCA, one of the main drivers of the boom leading up to the Wall Street crash, would not recover their 1929 value for 35 years.

NTT Docomo 3G phone
3G: Coming, eventually

The new economy also has a poor record of delivering on both profit and technology forecasts.

Advanced "third generation" (3G) mobile services were originally scheduled to reach the UK last year.

Now they are not set to be widely available until at least early 2003.

And the long-heralded roll out of broadband, which allows high speed internet access to computers and TVs, has been long delayed.

When British Telecom in 1998 promised to be the UK's "leading provider of broadband services into the next millennium", it probably little thought that, four years on, it would claim that title through a roll of but 150,000 customers.

Ecstatic claims

But think you have heard the last claim of new technologies revolutionising the way we live, work and play?

When you see people are prepared to pay for content, it changes everything

Nick Evans, Framlington NetNet

Think again.

"Mobile telephones have a personal touch that puts the 'personal' in personal computer to shame," writes Fernando Suarez, an associate professor at London Business School, in the report Second Generation E-Business.

"Almost nobody carries their PC all day as they do their... mobile phones.

"This mindset is so powerful that m-commerce will probably be a sub-set of a whole m-lifestyle."

Levels of m-commerce - trade through advanced mobile devices - are forecast by Jupiter MMXI to be 5,000% higher in 2006 than they were last year.

At Framlington Net Net, a technology investment fund, Nick Evans sees mobile phone operators achieving higher returns per customer as increasing levels of data are channelled through handsets.

Prepared to pay

He also has high hopes for the long-awaited spread of high-speed broadband internet access.

"When BT starts making the right noises - as it is doing - about broadband, it is fair to say broadband is likely to happen", says Mr Evans.

"Over time that will have a tremendous effect. It is all about speed. When users can browse and download quickly they will be prepared to pay for content."

His conclusion: "And when you see people are prepared to pay for content, it changes everything,"

The fees levied in the real world which support, for instance, profitable survey or magazine publication will at last be easily enforceable online.

"As the user experience improves, so does online spending," says Framlington's Nick Evans, quoting the findings of McKinsey researchers.

And with higher online spending will come growing sales of related software improving, for example, web security.

Names saved

Broadband will also support the competitiveness of web services firms. Through internet connections they can carry out in a single office administration functions for dozens of firms.

Nigel Upton, London Business School
Nigel Upton: Potential for e-mail, for instance, handles from its London office change of address details for clients ranging from the government to utilities to charities like the NSPCC.

A market has also emerged in managing web addresses for which, in the case of, ownership must typically to be re-registered every two years.

"Unilever has probably got tens of thousands of domain names," says a spokeswoman for internet names firm NetBenefit.

"So we have started offering a service to manage these portfolios. In essence to protect intellectual property."

Mail dominant

But strangely it is one of the internet's most familiar trimmings, e-mail, which watchers mention most frequently as an area of promise.

It is inevitable there will be more bubbles. Politicians love it because everybody feels good and tax takings go up.

Tony Dye

Nigel Upton, at London Business School, says: "It is a mass communication medium. Potentially hugely powerful. But I do not believe anybody has worked out the trick of using it to increase sales.

"You have sites like Amazon using e-mail to suggest things you might like to buy. But I think somehow a lot more could be done."

Serial entrepreneur Ben Cohen foresees potential in e-mail marketing which his latest venture, Cyberbritain, has harnessed, charging advertisers typically 0.5p per address in mass e-mailouts.

"People are prepared to pay because it works," Mr Cohen says.

"We did a mail out for a betting company last week. It cost them 4,000 and they made 8,000 from it."

Even Lastminute has found its weekly e-mail newsletter, sent to 4.6 million addresses, a revenue source of growing importance.

"As we find out more and more about our customers, and segment our newsletters more and more, our advertisers are getting more and more excited," said Mr Hoberman.

"What we are increasingly able to do is put the right offer in the right place with the right type of customer."

Return of the boom?

So entrepreneurs are excited about e-mail, academics are waxing lyrical on new technologies, BT stating its commitment to broadband.

There is something of a back-to-the-future feel about March 2002 dot.coms.

Demand has even re-emerged for Lastminute shares, which have more than doubled in price this year.

Bubbles ahead

Indeed, if there is one thing economists have learned about the bubble mentality, it is its resilience.

"It is inevitable there will be more bubbles," says crash prophet Tony Dye.

"There is this whole industry that relies on a bull market. So they are going to try to create one.

"And politicians love it because everybody feels good and tax takings go up.

"Let's face it. Nobody is going to get a prize for preventing the bubble that would have happened in 2025."

As for what sector the next bubble is likely to inflate, Mr Dye, characteristically, declines to speculate.

See also:

27 Feb 02 | Business
26 Feb 02 | Business
13 Feb 02 | Entertainment
28 Jan 02 | Science/Nature
Internet links:

The BBC is not responsible for the content of external internet sites

Links to more Business stories are at the foot of the page.

E-mail this story to a friend

Links to more Business stories

© BBC ^^ Back to top

News Front Page | Africa | Americas | Asia-Pacific | Europe | Middle East |
South Asia | UK | Business | Entertainment | Science/Nature |
Technology | Health | Talking Point | Country Profiles | In Depth |