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Wednesday, 15 March, 2000, 13:06 GMT
Are we dotty?

Are dot-com companies over-rated, or will they change the shape of business forever?

We took your phone-calls and emails on the future of e-commerce LIVE in our weekly debate.

Commonwealth Secretary-General Chief Emeka Anyaoku also answered your questions on the workings of the Commonwealth.

Select the link below to watch Talking Point On Air

  • Your comments since the programme
  • Your comments during the programme
  • Your comments before we went ON AIR

    Your comments since the programme It seems to me that it is the owners of dot.coms that get rich on the back of the private investors in IPOs. Take the recent IPO. While private shareholders are expected to "lend" up to 3000 interest free while subscriptions are filled, they receive a mere 35 shares. At current price levels, investors will lose money in brokers fees etc. To add insult to injury, investors must wait a further 3 weeks to have the remainder of their money returned. What is the incentive to apply for the full allocation (3000) rather than the minimum when you get a minute allotment anyway. It seems to me that the private investor is powerless to complain or be heard by the greedy banks and dot.coms. Perhaps if all investors were to stop their cheques in protest before the money had been withdrawn it would make the banks stand up and listen and make them think a little more of the private investor next time.
    Niall, England

    The stockbrokers have seized the moment and are playing to the naivete of the market player. Valuations are not backed by gold. They crash just as fast given changes in "market thinking".
    Ed Edet, USA via Nigeria

    The unprecedented growth of the Internet is not just a fad. E-commerce is an inevitable consequence of the advance in global communications. As for the over-rating of .com companies, that is just a sign of cultural impact that the Internet is beginning to have. Once business people realise the potential of new technology they spend a lot of money on it. The present situation is probably a distortion of the longer term outcome, but make no mistake, this mode of business will become very much the norm.
    Phil Hall, UK

    It is one thing to float a company that has an intrinsic value, but when a company floats on 'good will' alone surely this can only do damage to future dot com floatations even though they may be based on economic principles and not hype...
    Stephen Glenn, London, UK

    Martha Lane Fox et al may be getting all the accolades but how much HTML does she know?

    L. Porter, UK

    The people who are getting the credit for the .com boom seem to be the marketing and sales people - but without the techies to back them up, they'd be nowhere. My point is not that the sales/marketing/ideas people don't deserve the accolades - I'm sure they do - but how about some accolades for the technical people who make it all happen? It seems to me that people are dismissive of, or perhaps too mystified by it all to praise, the people who actually sit and write the code.
    Let's put it this way: say Mr X is hailed as a great marketing director, the saviour of XYZ Magazine, and who's made millions for his shareholders. Great. But Mr X can't read or write. Does it matter? After all, Mr X isn't reading or writing XYZ magazine, he's just marketing it, he doesn't need to read it or understand it, does he?
    L. Porter, UK

    I cannot see how can possibly be worth the money being offered. My company runs a travel web site - we have more content, a higher turnover in our first year on-line, are actually making money, have half the visitor levels of, and yet have not spent a bean on promoting our site off-line! Does this mean our site is worth the same or more than 0.5bn? What makes such a company that valuable?
    Alan Kersley, England

    The boom in the internet as a medium for advertising products and services is one that may be exploited by any company that has the financial backing. We are at a point in time where web site design, construction and maintenance is performed by a professional internet company on behalf of a client company. One would not expect a retail company to design, shoot and edit a television advert for themselves and web pages are no different in that respect. People see isolated cases widely publicised where people like have made a lot of money, but in most cases capital had to be available to launch the company and pay a body to create and maintain a web site.
    Richard Harrison, UK

    Selling products online does not remove the need to get physical products into the hands of customers, and this seems to me to be the big failing of Internet businesses. I'm surprised that the bubble hasn't burst yet, but when you have a situation as currently exists where stock prices cannot be analysed rationally, a fall is inevitable. I'm surprised it hasn't already happened.
    Connie Fawcett, USA

    Very little analysis is done (especially in America) to actually determine an Internet company's value in technical terms. Informational technologies require knowledge and experience, which is the main difference between an online retailer and a real-life one. An online retailer requires both knowledge of the product that he's selling and the technology that's used to sell. Add the organisation and co-operation between the technological and the commercial divisions of the firm, and you have the base concept. From an IT professional's point of view, very few online retailers comply with the essential requirements - a technical base and co-operation between the commercial division and the technical division. So most internet companies' stock is overvalued. Only those firms that dedicate attention to the technical aspect and get the most efficient customer service thanks to technology will have revenues in the future, and will be the only ones to survive.
    Dmitryi S. Sizonenco, Mexico City

    The frenzy has created a culture and a elite that looks down on the world. While helps in making it easy for the information savvy people, the majority of the world doesn't even own phones and never get to use them. Does the army care for them even a bit?
    AVR Rao, USA

    Whilst I would love to jump on the Internet bandwagon and make my fortune, I have difficulty in believing that a company doing 10m of business annually is worth up to 1/2 BILLION... still if they can do it why can't I? I'm off to start up and make my billion! I wish!
    Tony, United Kingdom

    This is all crazy, the marketing people have taken over the internet. How do you think the average citizen feels when they see bizarre adverts on TV saying visit a site to see more. Most people haven't got a PC let alone can connect to the internet. Also these web pages that use ASP scripts and shockwave effects, it usually takes 5mins to download and run splashscreen pages. This is totally unacceptable, and for a non techie user they must think the site has crashed because nothing is happening. We just want to get in and see the product we're looking for and not waste money on my phone bill waiting for bloody graphics to download!
    I Dave, Dorset, UK

    Surely not all of the dotcoms will survive - and there will be great shakeouts like those that took place in the electric lamp, motor car & computer industries. Surely, new countries will emerge as superpowers - much like after the sunset of the British Empire.
    Brian Papali, India

    What we should ask is, are we prepared for the social costs of the third wave technology revolution? The de-industrialisation of the Eighties will return, only this time affecting white-collar workers almost exclusively. This is extremely dangerous, because history teaches us that social dislocation occurs when the middle-classes feel threatened. Trust me, Austria's Haider will appear cuddly in a couple of years.
    Craig Harry, England

    The Internet Revolution should be known as "The New Renaissance". It is that important! This technology is still at the dawn of its development as far as e-commerce and networking is concerned. In the not too distant future operating systems and business suites will be given away free. These will be Linux based. This will most certainly pose a large problem for Microsoft who have a stranglehold on today's market share of desktop systems.
    Banking Institutions will also need to re-invent their thinking and global strategies for the immediate and short term future, not to mention the long term ones, otherwise they will cease to exist.
    Lou Parun, New Zealand

    The internet is a great invention. It can be used for fun as well as more serious purposes. But just two things that we should remember.
    One: 70% of all searches are sex orientated. Not a particularly virtuous use of such an amazing invention.
    Two: 75% of the worlds population have not even used a telephone. Therefore this wonderful revolution could seperate even more the have and have nots of this world
    Mr Sukhjit Singh, London (but currently Sydney)

    Like every other form of communication before it, the Internet will be A way of doing business, not THE way. It is certainly not the be all and end all!
    Zaki Moosa, South Africa

    The only people that will make serious money from the boom in e-commerce are the people with technical expertise

    Josh Harney, UK
    The only people that will make serious money from the boom in e-commerce are the people with technical expertise. Afterall, these systems are extreamly difficult to set up.
    Josh Harney, UK

    While many of these stories should be taken with a pinch of salt, there are companies of all sizes around the world that are recognising the need to get online to develop profitable new businesses. But to make use of the full potential of the internet, we all have to move away from the idea of blind commercialisation and focus more on non-commercial areas, such as education, training, information dissemination, etc. The internet may be used as a get rich scheme but not certainly as a get rich quick scheme.
    K Ravi, UK

    I am an African currently in Australia and while I cannot speculate on the potential of dot coms as viable stocks I can certainly appreciate the convenience they bring to our daily lives. Our residence for example receives a weekly delivery of shopping from an online green grocer that includes the freshest fruit and vegetables at very competitive prices. But I cannot see how developing nations in particular African nations can effectively participate in these new economies created by the dot coms given the difficulties with existing or non existent infrastructure.
    Wills Mkusa, Australia

    Internet companies are being made to feel guilty of their successes and value. Why? After all, companies like digital pages corp are floating and buying traditional businesses like Dixons and using their financial clout to bring us better value products and services. The owners deserve the rewards for their foresight. It is not easy to get the funding for these projects and most are self-started.
    Mike Silverstone, UK

    Valuing dotcoms is a pointless exercise using traditional "industrial" valuation techniques. This is not because there are new financial rules, but because the market has agreed to jointly speculate on the Internet sector. Perhaps only one out of ten dotcoms will ever succeed. If you back the right one you would have effectively bought a bargain. Meanwhile, nine will fail miserably, taking millions with them when they crash. The Net sector is ten times overvalued, and this will only unravel in the medium term. In the short term valuations will continue to explode. Get on for a short ride, but don't linger beyond the middle of 2001.
    Dimitri Lolas, Australia

    Your comments during the programme

    I recently tried to buy a cheap flight from WWW site. It took a long time to fill in all the forms and at the end of it, the 'server was down' and I had to try again. I tried several more times with no success. I then phoned a free number of another airline, spoke to someone who was very helpful and the booked my ticket. The whole experience was much more satisfying and completely successful.
    Robert Juritz, London

    There is no reason to believe that the advent of the internet has eliminated the inevitable ups and downs of capitalism

    Alexander Nowik, San Francisco
    There is no reason to believe that the advent of the internet has eliminated the inevitable ups and downs of capitalism. Furthermore, the so called information economy has not eliminated anybody's need for actual goods; it has merely facilitated the transfers of wealth which were already under way.
    Alexander Nowik, San Francisco

    There is a great deal of ignorance surrounding e-commerce. Dot-com companies exist everywhere and they exist nowhere and that is their strength. In the future we will steer away from physical products to software type products.
    Nigel Thorley, UK

    The internet is a revolution in democracy

    Barry Brennan
    If information is power then the internet will give millions of people power they would otherwise not have had. In other words the internet is a revolution in democracy.
    Barry Brennan, Brussels, Belgium

    There is a lot of hype surrounding these new companies - I'm an internet user and I use it as a source of information but not so much as a place to buy. It will make business more efficient but there are a lot of companies coming up which have no real way of making any money.
    Tridiv Borah, Germany

    I have a small business on the net, Mallorca Golf Connection As the name suggests we are involved in booking tee times and any other requirements for people intending to come to Mallorca to play golf. This service did not exist before and could not exist without the net, as using letter phone or fax is either too slow or too expensive so we are a true product of the internet age. I see the growth of e-commerce and therefore of . com companies as an unstoppable wave and in almost all aspects a good thing.
    John Little

    E-commerce is very convenient but it also possesses some potential "crisis". Nowadays there are so many dot coms. Some of them just follow the situation and not just to develop themselves. And it is dangerous. If they don't develop their sale concept to attract the consumers, they will definitely be beaten in this competitive society. Only by innovation can they be successful. Our world is now stepping into a wired century. The Internet must be the tool we use in the new millennium. Whatever the future maybe, I always hold an active opinion about Internet and e-commerce or something related to it. Look around this wired world, I just want to say: let it be!
    Wendy Hu, China

    Only the big companies will be left standing

    Mark Lee, Barbados
    I am trying to build up a Carabean Online company and am finding it very difficult because we don't own telecoms companies so we have to go through countries like the US. Not many companies survive the hype and only big companies will be left standing at the end.
    Mark Lee, Barbados

    Commonwealth Secretary-General, Chief Emeka Anyaoku answers your questions

    Why was the Commonwealth so silent about the floods in Mozambique, we only heard of British and South African aid to the disaster?
    Ann Andora Swame, India

    The Commonwealth wasn't silent, as soon as the tragedy occurred I made a public statement and appealed to all commonwealth governments to come and help and a good deal of them have been responding - including Australia, Malawi and a number of commonwealth countries so they have been responding.
    Commonwealth Secretary-General, Chief Emeka Anyaoku

    As a Nigerian, which was your worst moment, during your stewardship, as the Secretary-General. Is it true that , if Nigeria was expelled, you would have had to relinquish the post, since only members of the Commonwealth can be Secretary-General?
    Dr. S.S.O Akpata, New York, USA

    The greatest achievement of the Commonwealth in the 10 year period in which I was Secretary-General was the transformation of the commonwealth into a community of democracies. The Commonwealth used ot have countries within its fold that were in no sense democractic but now all commonwealth are plural democracies and it has become well established that any country that departs from that is automatically suspended as with the recent case of Pakistan. My lowest point was when my own country Nigeria violated the basic principal of the commonwealth and had to be suspended from membership.
    Commonwealth Secretary-General, Chief Emeka Anyaoku

    Having gathered all this experience, do you have any ambition to get involved in Nigerian politics?
    Christopher Olayha, Belgium

    I plan to go home at the end of my term of office and I do not plan to enter Nigerian politics but I do intend to make my experience available to whoever wins the vote of the people of Nigeria.
    Commonwealth Secretary-General, Chief Emeka Anyaoku

    Your comments before we went ON AIR

    If I stood out on the street selling 5 notes for 50 each I doubt anyone would buy any from me. I suspect the police would take an interest. So why do apparently rational people appear happy with a price tag of 800,000,000 for a company that doesn't even make any money at all? It all smacks of the assorted market bubbles that burst, eg Wall Street 1929. It can't possibly last
    John, UK

    Sooner or later there will be consolidation in this market place and only those e-businesses successful enough to lure and keep people glued to their sites will survive.

    Naveed Ahmed, UK
    E-business is not all a bubble but some of the market valuations are questionable . Internet revenue models have yet to be clearly defined and little information has been filtering out to the general public. Sooner or later there is bound to be consolidation in this market place. Only those e-businesses successful enough to lure and keep people glued to their sites will survive. I know from experience that few companies have an e-business infrastructure in place to retain customers.
    Naveed Ahmed, UK

    Yes, "information" products are being revolutionised by the dot coms - in other words, anything that can be digitised (news, music and video, great literature, good advice, market data) - but at the end of the day most products are objects which still need to be manufactured and delivered. Seems to me the next wave of winners will be the people who can work out new ways to deliver things speedily and efficiently across the globe.
    Angus Macdonald, France

    E-Commerce is the way of the future. but the sudden interest in it has brought its own problems

    Dr Riz Rahim, USA
    E-Commerce is the way of the future. The sudden interest in it, like any other brand new venture, has brought along its own set of problems (e.g. of security, confidentiality, etc.) which will be resolved over time. Companies that sprang up out of nowhere would undergo the good old 'survival of the fittest' and the hype of today will turn into a drab routine of tomorrow. Just like the telephone we use today to do business, the Internet is the next logical step up in efficiency.
    Dr Riz Rahim, USA

    I would like to put the record straight to those people who think that they can not trust the internet for shopping. Believe it or not shopping on the internet is actually safer than shopping at the supermarket. Discarded till receipts provide theives with all the information they need to order goods over the phone or on the internet. Whereas the details you use to shop on-line are kept extremely safe and confidential. The internet, although not without security concerns, is not as dangerous as you have been made to think. In statistical terms you may be suprised to know that it is easier for theives to get you card details outside of the internet than in it.
    Matthew Gaffney, UK

    The dot come bubble will not burst completely. However, there will be a limit to shopping sites online that can be profitable. The companies that can create new industries will never have their bubble burst, but most of the companies which are just online stores will find that they created an oversaturated marketplace.
    Sam , USA

    The Internet industry won't replace the traditional because we still can't trust the web.
    Leonardo Abrantes, Brazil

    What will happen to Shopping Malls in the future - close down or become smaller because we are all shopping through the 'net?' And will folk spend weekends clogging up as being the alternative to shopping? I look forward to seeing shorter queues at Supermarket tills or alternatively to enjoying cheaper home delivery through!
    Bridget Walton, South Africa

    I don't believe the 'dot com bubble' can't burst, simply because it isn't a bubble. When traditional industry has seen vast rises in stock price it has always been due to artificial economic factors, not increases in revenue or size of a particular company.
    The dot com sector is different, because it growing extremely fast in real, measurable terms. There is a vast amount of money to be made in this sector, because there is also a vast amount of money to be saved. Although e-commerce has been incredibly financially successful in its own right, it has brought tremendous benefits to traditional businesses, by reducing their purchasing and administration costs by billions. This is not an artificial situation.
    Phil Saum, UK

    The plain fact is that very few of them will make the sorts of profits that their share prices imply.

    Steven Landers, England
    The internet will undoubtedly change our lives in many ways that we cannot begin to imagine. However, at the end of the day, so long as we live in a fundamentally capitalist based society dot coms will eventually have to obey the basic rules of economics.
    The plain fact is that very few of them will make the sorts of profits that their share prices imply. It is understandable for the man or woman in the street with little understanding of economics to be sold over easily, but it is sad to see the 'City' repeat history yet again and fail to rationally examine the facts and true potential, and so allow yet another bubble to grow with its inevitable conclusion.
    Steven Landers, England

    I am completely at a loss as to how a .com company like, for example, can achieve a pre-launch valuation of some 800 million when a) it's not expected to make a profit until 2002 and b) only TURNED OVER 409,000 in its last financial year.
    How is this company going to pay dividends to its shareholders? If their principal revenue will come from advertising, how will they compete with the countless thousands of other similar companies all vying for slice of the same pie, many offering a damn sight more than eleventh hour flights, gifts and theatre tickets.
    Raymond Saint-Ville, UK

    I go to the shops to find the product I want - then buy it on the internet much cheaper. Rip-off merchants beware!
    Robin Clark, UK

    Dotcom businesses are the way forward. Not because they ought to be but simply because of the sheer momentum of innovation and the desire for more and more convenience.
    We must, however, be SO careful. Internet security is becoming one of the most lucrative aspects of e-commerce because for every security measure installed, there are 3 counter-measures that will let the more unscrupulous avoid detection. This kind of crime could theoretically cost billions in fraud, lost business and downright piracy. We must all change to embrace the freedom of choice and infinite convenience that this medium offers but we must not run before we can walk.
    Ray Saint, UK

    The internet is the world's first interactive media and because this is a first its value is difficult to determine.
    Matthew Coles, Australia

    I think .com industry is the future of our economy and that of any other nation. At the moment we are seeing the birth, but from here on it's only going to get bigger. In the future we won't even think about .com industry it will seamlessly flow through our lives. It is not just "hype and no substance" it is the way things will go. More are more trade will be done on the Internet. Virgin is already launching a 160 million project for it's e-business. Companies who don't get involved WILL fall behind.
    Nigel Thorley, England

    Mark these words - we have just scratched the surface of's. there are still so many possibilities out there and are happening. The World will never be the same again.
    Anil, Hong Kong

    I can see a scenario within a few years where massive unemployment occurs

    Joseph Hart, Australia
    We can't even begin to comprehend the change that is going to occur with the internet. We are only at the horse and stagecoach phase, on our way to Concorde and travelling to the moon. Yes, many businesses are extremely overvalued in this gold rush, and yes, the bubble will burst one day but this is to be expected as there are only so many good names available. I think these are very exciting times at the moment, however I think there is a darker side to all of this. I can see a scenario within a few years where massive unemployment occurs because we will not need distributors, resellers, middle men, or any data entry clerks or any kind.
    Joseph Hart, Australia

    When 80% of the world population don't even have access to a basic telephone line, how can we talk about an internet revolution? The medium has already been turned into a rush for the gold-pot.
    Moris Ciprut, UK

    We can draw a parallel between the internet and the human brain. We are going to be neurons in the internet nervous system. How the internet mind will evolve is anybody's guess. Hopefully, we can support a healthy mind (internet) in a healthy body (earth).
    Mathew Veedon, India

    In the new economy, bricks and mortar assets become unnecessary overheads

    Phil Cooper, UK
    The main opposition to the valuation assumptions of the internet is coming from the Old School. Who can blame them, in the new economy, bricks and mortar assets become unnecessary overheads. Of course, not all .Coms will succeed, but if you have ever tried building a traditional business you will find success rates comparable. The internet is here to stay, and will soon take over your TV, Mobile Phone and Computer. The market will increase to non-computer literate users. Please stop worrying about .Coms and start worrying about the large dinosaurs of the old economy. I'm quite enjoying watching them fall!!
    Phil Cooper, UK

    dot.coms - definitely overrated! When you sit back and think about the possibility that Yahoo might buy Disney, or troubled online auctioneers eBay might buy Sothebys, it can be quite a shock. These companies are extremely young, fragile pioneers in a new business arena, and an arena that has risks. For instance, the AOL - Time Warner merger had an unexpected side effect - the instant slowdown of AOL's stock value. Why? Because as soon as the dot.coms buy into real-world valued companies, they instantly become tied to a real-world value. Essentially, by trying to be real players in the business world, many may end up killing themselves off.
    David W, UK

    It's like television, which you have control over. People are hungry for fast food; they want to 'swallow' breaking news, colourful headlines, pictures. They need to fill their emptiness. The internet will become, yet, another tool for business to capitalise, for people to temporarily ease the pain of existence.
    Marek Wiszniewski, Poland

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