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Find this article at: http://www.business2.com/content/magazine/indepth/1999/05/01/19649 | |
What's NextWhen You're on Top?From the May 01, 1999 issueThe poster children of the Web - Amazon.com, Dell Computer, Cisco Systems, Travelocity, Charles Schwab, Yahoo!, America Online, and eBay - combine powerful branding and a keen understanding of technology with offerings tailored to fit the needs of individuals. But in an economy moving at light speed, even that may not be enough to keep these hotshots in the lead. - With the Netscape Communications acquisition now given the government's blessing, America Online must make the $10 billion bicoastal marriage work, particularly in generating significant ecommerce revenue. AOL also faces competition from the Baby Bells, long-distance carriers, and ISPs providing cheaper Net access. Broadband efforts, such as cable and DSL, are also worrisome. For it to remain competitive, says Mark Mooradian, senior analyst at Jupiter Communications, AOL must be aggressive in carving out a place in broadband navigation and, eventually, digital TV, an area where merged companies like Excite/@Home already have a foothold. - "Amazon.com has absolutely no distractions in the brick and mortar world," says Forrester Research's Kate Delhagen. Still, the Web's biggest bookseller has yet to make a profit. To find it, Amazon is taking advantage of its vast customer database, and its trusted brand, to form referral alliances with partners such as Dell Computer, which bring in new and "productless" revenue. Look to see cars, computers, even furniture on Amazon. Just don't expect to see them in its warehouse. Amazon needs to beware too much cross marketing, warns Delhagen, which could offend core customers. "There will be a lot of incentives from others, like Barnes&Noble and Wal-Mart, to switch." - In order for Cisco Systems to keep expanding its revenue at its typical 30 percent-plus annual rate, the company will have to exploit its enterprise networking experience to take advantage of voice-data convergence, according to the GartnerGroup's Mark Fabbi, and that's an area of stiff competition from deep-pocket players such as Lucent Technologies and Nortel Networks. "Despite some of the Cisco hype that they alone understand data networking," says Fabbi, "the big telecom players are not just going to lie down and play dead." - After building a name by eliminating the intermediary through its direct-to-customer ecommerce model, Dell Computer is poised to become the Web's newest intermediary itself. In March, Dell announced Gigabuys.com, offering consumer electronics products. Threatening Dell are traditional manufacturing competitors, such as Compaq and IBM, who have moved aggressively onto Dell's turf. (IBM has already brought down higher Web-related revenue in 1998 than Dell.) To remain competitive, says analyst Melissa Bane of The Yankee Group, Dell must continue to play on its core strengths: innovation, customer service, and cost-cutting, with an even more vigorous emphasis on understanding customer needs. - eBay , last year's Wunderkind of ecommerce, now faces a tough adolescence. The site must overcome some serious infrastructure and credibility problems; it is notorious for its downtime and recent allegations of fraud by bidders against sellers have made headlines. Sort these out, and eBay is sitting pretty. In the next few years, according to Evie Black Dykema of Forrester, the Web is going to see a lot of experimentation in business-to-consumer auctions. "And nobody is as well suited as eBay is to provide that," she says. - Discount broker Charles Schwab has raced ahead of Internet-only brokerage players, such as E*Trade and Ameritrade, claiming 5.7 million active accounts. But Schwab has more important things to do than squash upstarts. Instead, Schwab needs "to get itself in the middle of this massive transfer of wealth that's going to happen when baby boomers inherit trillions of dollars from their parents," says analyst Marc Johnson of Jupiter Communications. To do that, look for Schwab to continue to roll out offerings outside discount brokering, such as long-term investment and banking services. - As AOL'S travel agent, easySabre - Travelocity 's predecessor - was online in 1996. When the Web exploded, Travelocity already had the infrastructure and experience to make an easy transition. To stay on top, says Forrester analyst Seema Williams, Travelocity has to maintain its commitment to the consumer market, and not get distracted by its push into the corporate space. Travelocity could also be early to market online cruise ship and other big ticket bookings. "For Travelocity that would be a big win," notes Williams, "but I'm not sure they're focused on doing that." - Yahoo !'s positioning as the lead horizontal portal also leaves it open to threats from vertical portals, niche services aimed at just about every market, from sports fans to hypochondriacs. Yahoo! needs to continue to expand its already comprehensive package of online services and offer increased personalization while maintaining its bleeding-edge street cred. In the wake of the Lycos/USA Networks deal, Yahoo! should be aggressive in nailing down a major media partnership, alliance, or buyout. | |
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