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Monday, February 1, 1999 Published at 23:55 GMT

Business: The Economy

Internet a 'turbocharger for success'

Bill Gates: Government intervention will damage innovation

Industry leaders are predicting huge potential for business on the Internet.

Microsoft Chairman Bill Gates told an audience at the World Economic Forum in Davos, Switzerland, that the Internet allowed small companies to become global commercial players.

But he warned that government intervention could slow the pace of innovation.

[ image: More and more consumers are logging onto Internet shopping]
More and more consumers are logging onto Internet shopping
"I think it would be a tragedy if any government action held companies back in terms of doing more advanced products," said Mr Gates whose company is fighting anti-trust charges in the United States.

"Certainly in the case of my company, we are going to do everything to continue our culture, which is having these products with more integrated features, and trying to stay ahead of what is a very exciting business," he said.

"I think it is very important for companies - even successful companies - to keep driving the pace of innovation very rapidly."

Internet boom

Michael Dell, Chief Executive of the world's biggest direct seller of personal computers, called the Internet "a turbocharger for our success in our business."

A US Government report last week said 52,000 Americans log on to the Internet for the first time every day.

Companies across the economy are exploring sales and marketing on the Internet of products ranging from flowers to plane tickets.

Profit warnings

But Scott McNealy, Chief Executive of leading computer systems maker Sun Microsystems, said companies should look beyond Internet-based business to concentrate on their products.

[ image: Internet stocks
Internet stocks "are vulnerable"
He said: "I have a hard time with the concept of a virtual corporation because it might lead to virtual profits."

International President of the retail giant Wal-Mart Stores, Bob Martin, said Internet business was "at the threshold" of takeoff.

But he added: "Ultimately, you've got to come around to what is a viable business, what is going to work.

"I don't think that traditional business should be threatened by what's taking place. We've established the brand, we've established the trust."

Internet stocks 'volatile'

Jeff Bezos, Head of online bookseller, acknowledged that Internet stock prices, which have reached dizzying heights in recent months, are volatile.

He said: "It does not take much analysis to say that all Internet pure-play stocks, including, are extremely vulnerable - they can be up 20% a day and down 20% a day."

Kim Clark, Dean of the Harvard School of Business, said business through the Internet was a growing phenomenon.

"I think we are seeing something that people have likened to the California gold rush of 1848.

"Although some people today ... would also use the metaphor of the speculative bubble of Dutch tulips in the 17th century, in a day when a company like Yahoo has a market capitalisation greater than General Motors, something definitely is going on in the world economy that is different and interesting," he said.

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