by Andrew Starling
Now that January is over and most industry pundits have made their predictions for 2001, Andrew Starling is able to steal their ideas and present them as his own.
February 7, 2001
Is there any good news on the horizon? No, not a lot. This will be a year of consolidation and eradication of the weak. The scale will be big. Something like one third of all pure dotcoms will go to the wall or sell out to their competitors. The figure may be even greater, depending on whether you're measuring the failures by number of names (higher) or profile and influence (lower). The operating environment for pure dotcoms will remain fierce and unforgiving throughout the year.
That means less originality and fewer let's-give-it-a-go ideas. Most of the big failures will occur in business-to-consumer ecommerce. Sites relying on advertising revenue will also struggle as ad rates continue to go down throughout the year, possibly stabilising towards the end. Many small sites of the lone-geek-in-a-bedroom variety will go into hibernation, with little new content or plain abandonment. That's been happening since last summer and will continue throughout this year.
As a result, less new information will be added to the Web in 2001 than in 2000. It will be the first year the Web information flow has slowed rather than speeded up. Use of the Web in developed countries will slightly decline, partly because it's becoming passé and partly due to the decline in original material.
Is that enough doom and gloom? More to come, but in the meantime here's the silver lining. By the end of the year the Internet industry will be stronger and better focused. Last year and the year before saw too much technology push - stuff like small-time convergence of email, fax, Web sites and mobile phones. The "this can be done so I'm going to do it" approach. Problem was, many of these ideas were of no interest to Internet users. Or even if they were of mild interest, few people wanted to pay for them, which amounts to the same thing.
By the end of the year, most of these ideas will have been weeded out, so we're left with stuff that people want, and in some cases may even be prepared to pay for. Hey, how about that? A medium that provides people with what they want rather than what it's capable of providing? In the long term, that's good news. Also, a lot of copycat sites will close or be absorbed, allowing the market leaders to become profitable.
Now let's look at some individual sectors:
WAP
In a word, No. It's going nowhere. The Japanese experience of i-mode shows the possibilities are there, especially if the price is right, but WAP isn't destined to fulfil its early promise. The only services that work well on WAP are those that return a tiny amount of text, such as football scores, stock quotes and addresses. Anything that returns long text is clumsy and not something many consumers are looking for.
By the end of the year, Europe's big telecom companies may have woken up to the notion that 3G is going to prove troublesome too. It retains all the problems of WAP except the bandwidth limitation. It will have to be expensive because all those 3G licenses were so costly, not to mention the infrastructure that's going to be needed. Meanwhile i-mode will grow in markets that haven't locked themselves into the 3G nightmare.
In the long term, 3G might work out well, but in 2001 it's going to look like a costly mistake.
Business-to-Business
It's a better sector than B2C, but not growing at high speed. If you look at figures for B2B saying it will be ten times greater than B2C in a few years' time, you have to take into account the large scale of individual B2B transactions. One single order of 100 commercial jet engines is the equivalent of a hell of a lot of books and CDs sold by B2C sites. So although the amounts of money in B2B seem large, the amount of activity remains small. It's already a crowded marketplace and due for consolidation (the nice way of saying lots of business failures) during 2001.
Application Service Providers
See WAP. This is another technology-push idea that's going nowhere in a hurry. You need a big pipe to make ASP work, and if you've got a big pipe you can probably afford to pay for lots of software licenses and take care of the technology yourself. So why entrust your sensitive business transactions and company computing to a distant ASP? Instead of losing control over your servers, simply run your own network/client system instead. That's what everybody does now and there's no reason to suppose they're going to change their minds in a hurry. If ASP is going to be a success, it's a few years down the line. 2001 will be a tough year for ASPs. One they'll prefer to forget.
Technology
There are two big changes that can be foreseen in 2001, both from Microsoft. There are plenty of unforeseen changes likely too, but by definition I can't talk about those. One change we can expect will come from the introduction of Internet Explorer version 6. Since IE5 is already dominant, maybe the new browser won't have a big impact. But there's always a chance that Microsoft will incorporate some political/marketing gambit with the new version. For example, will it continue to run Java - or run it without a plug-in? The answer may be tied in with Microsoft's second change - its own programming initiatives such as C# and .NET coming fully onstream. These will definitely have some impact during 2001, but my prediction is that they won't become dominant in any way. They're doing battle with Java, and Java is now too strong - at the server end at least - for it to be overwhelmed. And there lies another technology prediction for 2001 - a huge increase in server-side Java. No big surprises there.
Security
More virus attacks, more hacks, more tales of breached companies. We need improved Internet security and it's something that companies and individuals are prepared to pay for. There's a good chance that during 2001 new initiatives will be forthcoming and that by the end of the year we'll be in better shape than we are now. One possibility is client-side communication software. If you want to do Internet business with your bank, you must install their software on your PC first, giving them greater control over security at both ends.
I also wonder when the first cracks (or should that be hacks?) will appear in our current security mainstay - Secure Socket Layers. It could be 2001. Could be 2002. Can't be too far off now.
Finally, the Good News
At last! A handful of growth areas. Customer Relationship Management will be one of the biggest of 2001. It will finally come of age as a science and more companies will recognise its supreme value. Peer to Peer networking over the Internet will also grow, perhaps accelerated by the struggles of dotcoms on the regular Web. Gaming will continue to be a driving force and won't be disturbed by the US recession. Distance learning is another fine area for expansion, with individuals happy to pay money to increase their education, at their own pace, over the Internet. It's a sector that's still in first gear, and should be travelling at high speed by the end of the year.
And that's it for 2001. A year to batten down the hatches or abandon ship. Rough seas ahead, Captain!
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