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Likely Success of Internet-Related Business Models? 384

Posted by Cliff from the as-long-as-you-don't-stake-your-rep-on-it dept.
guess-for-success asks: "In Lester Thurow's latest book, published by HarperBusiness Books (Fall 2003), Fortune Favors the Bold: What We Must Do to Build a New and Lasting Global Prosperity, there is a chapter which discusses the beginning of new industries. During this time, several business models are introduced and only a few will survive. Looking at the PC industry, Commodore was the industry leader in the 1980's, but ultimately failed and went bankrupt in 1994. Successful business models such as Dell were not introduced until years after the industry began. I now ask the Slashdot community: which internet business models they believe are going to succeed? Which companies will rise to the top? Will they be infrastructure related companies such as Cisco and even FedEx, or will they be true dot.com's such as eBay or Amazon?"

"You can find out more about Lester Thurow here. He is a professor of economics and management at the Massachusetts Institute of Technology and has been the Dean of the Sloan School of Business at MIT. He has three New York Times best selling books to his credit and consults widely around the globe."
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Likely Success of Internet-Related Business Models? More

Likely Success of Internet-Related Business Models?

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  • Google has the right idea (Score:5, Insightful)

    by Anonymous Coward on Friday January 02, 2004 @04:14PM (#7862515)
    You do one thing (in their case) and you do it well. Then you use that one thing to make money.
    • I would happen to agree. Business is business. New Technology or new markets open up, if only on a small scale, all the time. The dot-coms, Commodores, etc., of the world have all made mistakes along the same general lines. They overestimated or underestimated the market, their own expenditures, etc. That being said, companies have only been around for about 200 years. Before that there were independent employers who would sometimes hire journeymen or join guilds. The American Corporation will someda
    • Folks don't want to waste time looking for the best deal - that's why Amazon and Ebay have done so well (Wal-mart too for that matter). However, I think with both companies expanding into the same territory, one will eventually fall, although it will take a while. Probably amazon.
      • I think this is very insightful - I think that it does make sense that Ebay will increasingly encroach on Amazon's territory. There is a certain hurdle of trust that you have to cross - the first when you start using Amazon, the second when you start using Ebay. Amazon will find it harder to persuade its users, who are probably more timid to use its auctions. On the other hand, Ebay users have overcome more trust barriers, so they won't have any problems in buying online from publishers, and big companies.
    • Google's search results for some searches are awful. I believe that google will fail utimately just like Yahoo, altavista, hotbot, excite. Making money and sucking are inverse qualities. Once they start to fiddle with the results to make $, people will get turned off and leave.

      I've already started to use Teoma.
      • Teoma's [teoma.com] a great backup search engine, but it's missing Google's usenet groups, image search, and the cache. I use those things daily.

        The only way I can envision using Teoma, or some other SE as my primary, would be if Google has an IPO this year (please, no!) and self-destructs because of short-sighted shareholder greed.

        --

    • Comment removed (Score:5, Insightful)

      by account_deleted ( 4530225 ) on Friday January 02, 2004 @05:19PM (#7863099)
      Comment removed based on user account deletion
    • >You do one thing (in their case) and you do it well. Then you use that one thing to make money.

      Amen.

      >Will they be infrastructure related companies such as Cisco and even FedEx, or will they be true dot.com's such as eBay or Amazon?

      It doesn't matter, so long as they fulfil the Golden Rule:

      You have to have a real product or service to sell (ie not vaporware), which people really want to buy, and you have to deliver on your sale. It doesn't matter whether you have 10 customers or 10M, because t

  • In good times advertising will do well obviously, but in bad times, people will want to advertise for bankruptcy lawyers, credit consolidation, etc.

    Already many succesful internet-only advertising firms have become profitable after many have failed. The smarter firms have figured out how to make a buck.
    • I think "Internet companies" and the attempted commercialization of the Internet has really ruined it in many ways. So I'm not so sure I really want such commercialized ventures to work, particularly "Internet-only advertising firms," which usually equates to godawful banner ads and spam. I miss the old days of the net when it was almost purely information in nature.
  • boo.com was the biggest failure ever, in the 1st dot com era. However, they were right. However, they were just too early, with too little feeling/touch for the hardware reality at the time. Java sucked then, as it does to a large extent today.

    (Will they never learn? ;)

    Sens moral? Do what hardware can do for you today, not when you release; the masses don't have the latest and greatest.
    • How about mentioning what the heck boo.com did? If they are dead how are we to know what you are talking about? I did a google and went to boo.com and the only info is some fashion mall. (I assume that is not what you are talking about)
      • boo.com made their own clothing and sold it at ridiculously high prices.

        their style was their logo. i have no idea what their selling point was, but i did get a free fold-up boo.com hat at a nightclub once.

      • Re:boo.com (Score:3, Funny)

        by Andy_R ( 114137 )
        yep, that's boo.com, a fashion store on the net, the advantage of the net over traditional bricks and mortar clothes shops is clear:

        Customers cannot
        see,
        feel,
        or try on the products
        they need to pay postage
        they have to wait for the clothers to arrive

        couple that with a multi-million dollar marketing campaign that was so good that you can't even find out about them with google.

        pure genius!

  • Get in? (Score:3, Insightful)

    by groves ( 584036 ) on Friday January 02, 2004 @04:20PM (#7862566)
    Get in or be left in the dust? You mean follow suit like all the other dotcoms did in the late 90's?

    Gold rushes without stopping to evaluate the true ROI rarely yield results. Better off buying lottery tickets w/ next week's payroll.

  • Roku is a good example of a "new economy" business (Score:5, Interesting)

    by klipsch_gmx ( 737375 ) on Friday January 02, 2004 @04:20PM (#7862567)
    Roku is the high-end digital media player for HDTV buyers with money to burn. Roku was founded and financed by Anthony Wood, who made out well when he sold ReplayTV to SonicBlue. He's a rich guy selling gizmos to other rich guys, but not all startups have Anthony's resources. Here is a success story from one resource-challenged startup. Wallflower, which is also in the digital photograph display business, managed to get itself off the ground with a strategy I've seen only once before: dumpster diving.

    The company makes (expensive) digital picture frames that compete with Ceiva, Digiframe, and Pacific Digital. Nothing special there. But Wallflower's startup plan was based around building its high-end products with pieces from recycled computers. To get started, Wallflower founders Mitch Kahn and Gordon Clyne bought 150 old but unused laptops from liquidators and via eBay, for $25 to $150 each. They were obsolete as workstations (most had 133MHz CPUs and smallish hard drives) but had the right pieces to make nice picture frames--most importantly, working 12" LCD panels.

    Mitch and Gordon's small team disassembled the machines, mounted the displays in handmade wood frames with the motherboard and hard disk, and added Wi-Fi and their own Linux-based software. Basically, the Wallflower displays are Web servers that appear on a Windows desktop as disk drives--you put one on your network and you can just drag pictures onto it, and call up its internal home page to manage its settings. Now you have a nice big electronic photo frame to show your digital pictures, and changing the display is as easy as typing a URL into your home computer.

    Frankly I can't see spending $500 for one of these things--but what do I know? Shortly after Forbes ran an article about the product, Wallflower sold out of its inventory of Frankensteined picture frames. Left with nice cashflow from its rising order volume, and needing more certainty in its supply chain than Weird Stuff Warehouse could provide, Wallflower recently gave up on the whole recycled kick and started buying components from manufacturers, the way most computer companies do.

    With the new manufacturing strategy, the company is able to offer more features and bigger screens, but it had to raise its prices since these components are more expensive. Although I imagine they save a fortune in assembly costs, since they no longer have to dismantle laptops to get their parts.

    There is a thriving economy in the leftover computer business. Lots of old equipment ready to be used in new and exciting ways.

  • The internet and business model are no different.. (Score:5, Informative)

    by ducomputergeek ( 595742 ) on Friday January 02, 2004 @04:21PM (#7862573)
    than traditional models. Frankly Amazon.com is nothing more than a large catalog mail order store. Its just that the catalog and much of the ordering process has been automated by computers.

    Ebay has just taken the traditional auction and used the internet to automate much of the process.

    Really, most internet businesses are just innovations, taking a new technology and using it to replace or suppliment an existing medium. The problem with most internet businesses in the dot com era was they didn't understand this and/or fell into the trap of "This is compeltely different" and it wasn't.

    Now the internet has helped reduce cost in industries like mail order because it is possible to reach billons with one site unlike say a traditional catalog that would have to be mailed out which costs a lot of money in print and postage. However, there is no secert method to business models. Its still breaks down to: provide a product or service to fulfill a need. Do it well, keep down costs, and hopefully make a profit.

    • "Ebay has just taken the traditional auction and used the internet to automate much of the process."

      Actually - that's only a small part of it.
      The REAL economic factor going on with eBay, once we get over the gee-whiz factor of the Internet and it's ability to touch such a wide market, while targeting small, specific interests - it's all about the shipping. Fed Ex and UPS are the REAL winners with the eBay and Amazon story.

      And since with Fed Ex and UPS, the profit all depends on Energy input for their tru
    • I wholeheartedly agree with you here. People went apeshit a few years ago in the dot com craze and thew money into companies that had no true business model. Where are those companies today? Gone. Yet the companies that had an actual business model and just used the Internet as their new source of distribution continued to survive and even prosper when other business (Internet and brick-and-mortar alike) were floundering.

      The key word here is "business". If you plan on running a business and using the Int
  • What makes a business work you ask? Well let's analyze some of these examples:
    • Amazon: Found a need for an online bookstore where there was none, and capitalized on it...
    • Fedex: Found a need for overnight delivery service where there was little, and capitalized on it...
    • Cisco: Regarded as the highest quality maker (tho some may contest but the reputation is there) of networking equipment, realizes the need for the best hardware for the best systems...
    • Ford Motor (my pick): Recognized a need for cheap automobiles and capitalized on it...
    Now the negatives:
    • Commodore: Entered an industry well penetrated by apple, IBM, Tandy (back then) and company and tried to play along, didn't make it....
    • Webvan (my personal pick): Tried to make it in an online grocery world where profits are slim and competition in related industry (traditional grocery) is fierce.
    See a pattern here?

    In short, to launch a successful business, you need to have a core competency in mind, that is an idea that is:
    • Rare
    • Unique
    • Hard to duplicate
    • Hard to substitute
    If you have that, and all the other elements of a proper business (good management, proper quality, good promotion, etc) fall together, I should see no reason why a business couldn't succeed. I'll defend this against any reply or email to the contrary.

    Anyways there's my 2 cents from a person who just graduated with a Bachelors in business, I'd love intelligent replies from people who think otherwise, thanks!
    • What about Dell and Walmart. They don't do anything
      rare, unique, hard to duplicate or hard to substitute but they are huge successes. Why?
      • Advertising, market penetration, competitive pricing and attrition.

      • Re:The old business rules still apply, more than e (Score:5, Informative)

        by rfischer ( 95276 ) on Friday January 02, 2004 @04:34PM (#7862712)
        ... Dell and Walmart. They don't do anything
        rare, unique, hard to duplicate or hard to substitute...

        Au contraire.

        Both companies are extremely adept at taking cost out of their respective supply chains. Consequently they are profitable at price points their competitors cannot easily match.
      • I'd argue both Dell and Walmart are hard to duplicate, because they charge much lower prices than their competitors. If anyone could afford to slash prices as much as either of those companies have, they wouldn't be in the positions they are today.

        Sometimes you don't have to have a brand new business idea to win, you just have to implement an old one better than anyone else has.
      • Dell was the first to use the Web as its main sales channel. It used just-in-time manufacturing practices to minimize inventory. By keeping its costs below that of the competition it was able to gain a large installed base. It leveraged its competitive advantage to provide even lower prices. It provided good enough support that it maintains customer loyalty. Its products are generally well made.

        You are correct that none of these is unique, but when you put them all altogether you get a very successful c

      • Dell is the worlds best and most efficient logistics company, it's barely a computer company.

        The skill competiting with them would be getting your suppliers to do the work, and you manage to survive (and prosper) on razor thin margins.

        Ewan
    • I'd hesitate before drawing on Ford as an example of a successful business model.

      Capital-intensive, non-existent margins, and bleeding money all come to mind with any Detroit manufacturer...

      In fact, the only division that is profitable in Ford is the car loan financing division. They don't make money from cars...
    • Actually, that is only one business model. Loosely stated from my operations management book:
      1. When a new idea is found, the initial companies need to move in fast and get name recognition. Sponsoring events, Charity work, etc. is the Advertising medium used here.
      2. Once a demand for a product has been started, companies need to provide quality, which they can charge more for. Word-of-Mouth is the advertising media here.
      3. Once the market has developed enough customers, companies need to provide low pri
    • Now the negatives:
      * Commodore: Entered an industry well penetrated by apple, IBM, Tandy (back then) and company and tried to play along, didn't make it...
      Commodore: Commodore was one of the early ones; they were out there with Radio Shack and Apple, long before IBM tried personal computers. In the mid-80's they sold over 14 million C-64's; at the time that was a stupendous number. Commodore's failing was of management and goals, mostly due to upper management who had no idea what a computer was (Mehdi Ali; a wall-street banker type) and insisted on micro-managing the company - tough when you don't understand the products.

      The final blow was when in fall of '93 Mehdi decided to build a few 10's of thousands of the new (AA/AGA) machines (A1200, etc), and 300,000+ of the old chipset-based machines (A600). Needless to say, the old machines didn't move off the shelves very fast at Xmas, and that was the final nail.

      There were other instances like that too. Mostly it was caused by not following up on successful products (C64, A500, to some extent A3000) and trying to milk them for too long. The A1200 was the right machine; it was just too late by a year or two. Engineering had it's issues too, in particular biting off more than we could chew on the total redesign of the chipset which was never quite finished ("AAA"), and not giving enough attention to the potential high-volume products, though in general engineering was pretty focused on them.

      It's tough when the CEO won't let marketing talk to engineering directly, and insists all contact go through him and his cronies... Disclaimer: I'm an ex-Commodore engineer from these times, and after bankruptcy was declared, we burnt Mehdi Ali in effigy in my backyard (literally).

  • Look to the past for examples of future success. (Score:3, Interesting)

    by Sheetrock ( 152993 ) on Friday January 02, 2004 @04:21PM (#7862584) Homepage Journal
    There is a reason that The Book Of Four Rings and The Art Of War are recommended reading for any entrepeneur: the fundamentals never change.

    You need a solid plan, a solid product, and a company that can be successfully run by idiots (because sooner or later it will be). And you can't discount the role of serendipity -- for it was she that made successes out of the unlikeliest things. Take chopsticks, for example; who would have thought that a pair of wooden twigs would have caught on here in the U.S. mining colonies in 1800s (where they were invented by immigrants seeking to differentiate their new and tasty cuisine) to the point where they've actually spread across Asia and now account for 3% of our lumber exports! Or the success of the Post-It note: once thought to be entirely useless outside of the labs in which it was developed, it created a whole new 'need' in society for these notes that could be attached to things without paperclips.

    At the end of the day, sometimes you just can't predict what'll be wildly successful and what will fall by the wayside. But I think if you find something unique and stick with it you've got a good shot.

    • Take chopsticks, for example; who would have thought that a pair of wooden twigs would have caught on here in the U.S. mining colonies in 1800s (where they were invented by immigrants seeking to differentiate their new and tasty cuisine) to the point where they've actually spread across Asia and now account for 3% of our lumber exports!

      Chopsticks have been found in the tombs of Chinese emperors who ruled thousands of years ago. How exactly do you explain that, if they weren't even invented until 200 years
    • Uhm. How did Asia of ancient times eat noodles without chopsticks...?

      Forks are an Italian invention - Marco Polo brought noodles back so they could develop spaghetti, but forgot the necessary eating utensils....
    • While you do have a point about luck, you're info on chopsticks is so wrong it's funny. From EverythingChopsticks.com:

      "For those really interested in chopsticks visit the Kuaizi Museum in Shanghai. The museum has collected over 1,000 pairs of chopsticks. The oldest pair is from the Tang Dynasty (618 - 907 AD)."

      From chinavista.com:

      "When the Chinese began to use chopsticks as an eating instrument is anybody's guess. They were first mentioned in writing in Liji (The Book of rites), a work compiled some 2,0

  • You're asking Slashdot this? (Score:5, Funny)

    by Temporal ( 96070 ) on Friday January 02, 2004 @04:23PM (#7862596) Journal
    I think the underpants gnome business model is the best!
    1. Collect underpants.
    2. ???
    3. Profit!

  • Both will be necessary, for a while. (Score:5, Interesting)

    by ActionPlant ( 721843 ) on Friday January 02, 2004 @04:24PM (#7862609) Homepage
    Being a FedEx employee I think it's obvious which one I hope will survive.

    However, massive restructuring will have to occur if this is to happen. Sure we are a market leader in margins and, as a cargo airline we have a good record of adapting new technologies, but we're still running on a heirarchy reminiscent of the generation that brought us Fred Smith. Reworking our buildings from warehouses to more dynamically creativity-inspiring circular buildings would be a decent start. We work on a hub concept. We need more creativity and flexibility in on-road route planning, more power taken from beaurocrats in Memphis who really don't get a good picture of on-road day to day activity other than pages full of numbers at the end of the day and share that power in the form of actual couriers and managers being able to make more broad decisions based on their locality. We have our own form of standards. The point is that practices that work in an inner city (which spawns the greatest density of deliveries and pickups) are completely wrong for people out in the country who may have ten to twenty stops a day.

    And I'm not saying this as a courier. I'm an administrator, but I think it's very important to put more faith in our frontline employees. Unfortunately not all of the higher-ups share that point of view.

    Dotcom ventures, all negative late-nineties stigma aside, are still in the realm of providing virtual services. Even if those are for real products, people will STILL want to feel like they're interacting with other people. Make it too impersonal, and you'll ultimately lose touch with your customers (and their reality). It'll be interesting to see what "they" do to reverse the trend.

    Not to mention there will, in the forseable future, be a consistent and even increasing demand for companies like FedEx. As more people migrate to do their shopping online, they'll need companies like us to deliver the goods.

    Damon,
    • Being a FedEx employee I think it's obvious which one I hope will survive.

      What do you think of the Kinko's buyout? As a former Kinko's employee who still owns 53 shares of stock, I'm hoping to profit from it... but I don't know if it's going to be good for FedEx or not.
    • Maybe your stocks will split?

      I'm hoping for a profit too, naturally. I think it is something of a positive direction, and actually a smart wait. Some people may think that FedEx is just being a copycat (after UPS buying out Mailboxes, Etc.) but FedEx and Kinkos have had a close relationship for years. I sincerely doubt the buyout was a recent idea. We simply wanted to see if it could work and what mistakes UPS made that we can avoid. By doing so we stand to improve our margins beyond those of UPS sim
      • Just in case you don't know: FedEx has laid off people. Over 150 IT personnel in Memphis were laid off a couple years ago. It's just a guideline, not actually a policy. There was no offer to let them move or anything. Really sucks to be them.

        However, FedEx is great for providing part-time jobs for college kids. Caveat, though, even though it's a part-time job, it comes with full-time job responsibilities, but the compensation and benefits package more than makes up for it. :)
    • As an ex-FedEx employee (Memphis, TN - HUB), I can attest that the "beaurocratic" nature of not knowing its ass from its head was not always the case. I spent 9 years in the Hub where I witnessed the transformation from a company that listened to its employees, where ideas were greeted with optimism and were actually appreciated, where employees actively worked to improve processes, to a company that now basically says "Hey, you're going to do it this way, whether you like it or not." Gone is the arena of

      • Re:Both will be necessary, for a while. (Score:4, Interesting)

        by ActionPlant ( 721843 ) on Friday January 02, 2004 @05:19PM (#7863106) Homepage
        I'm very interested in your story and history with the company. In my position there'd be very little I could do to recompensate, but I came on only a few years ago and to my knowledge there have been no true layoffs since. I was under the impression our IT was, for the most part, outsourced, but of course I could be wrong (considering they operate now out of a completely different department and cost center than my own).

        Our current upper management has made an attempt to put on a face to the frontline employees of consideration and a promotion of customer service; however, I have seen customer service be put aside time and again in favor of padding our numbers in order to gain a higher "service level" average within the company. I think I'm one of the only administrators who sees the irony.

        Finally, we've had to do a lot of cut-backs of management itself, as well as collapse a lot of routes in order to save hours and, ultimately, lose less money over the past two years. What is interesting is that FedEx, while still maintaining that they will by no means lay off anybody, has been eliminating positions left and right. However, in order to maintain, they have kept those employees in the ledger, pointed them to our internal open-position postings, converted them to "casual employees" and told them that when anything comes up they're welcome to take it. Many of these employees have opted to resign because most of the open positions were on a lower pay-scale and often only part-time. I do admire the company's efforts though, considering that we HAVE gone through hard times (I've watched the numbers myself). They've made a stringent effort to "promote from within" even if the shuffling really isn't promotion at all, as opposed to hiring and training new employees. I know it's been tough and we've lost some people, but the truth is that we've not gone out and hired a bunch of new people (company-wide, anyway). It doesn't make your situation better, but it doesn't look as bad.

  • bad example and poor question (Score:2, Insightful)

    by Anonymous Coward
    Commodore went out of business because the people running the company were corrupt and stealing from it - ask any Amiga fan ;)

    The internet is just a thing , you know? If you have a product/content people want, they will buy it.
  • Everytime there is a earth shattering technology that represents "the future", money floods into the market, companies are born in droves and then the implosion comes.

    After that the new golden age begins with the survivors. Amazon and eBay are the cornerstones of the industry.

    It's happened previous times in the American economy with car companies being the best example. There were several in it's "bubble" period, much like there were scores of internet companies during the tech bubble.

  • Gold Rush (Score:5, Insightful)

    by core plexus ( 599119 ) on Friday January 02, 2004 @04:28PM (#7862642) Homepage
    Take a lesson from any Gold Rush in history: the people supplying the shovels, sex, and other services were the ones who really got the gold. Let that guide your business model.

    -cp-

    President Bush to Liberate Alaska! [alaska-freegold.com]

  • Which internet business models they believe are going to succeed?

    The Slashdot subscription model will undoubtedly rise to the top, generating billions of dollars for CowboyNeal and his comrades.

  • FedEx is mentioned in the original question. I thought it was interesting that they just bought [reuters.com] Kinkos (the copy company, not the clown [2famouslyrics.com]) for 2.4 gigabucks.

    It would be easy for FedEx to sit on its laurels and continue to scrape more bucks out of the traditional shipping market. This purchase, while risky, shows that they've got management that can think outside the box. Granted, UPS is a step ahead with their UPS Store [upsstore.com] locations (formerly Mail Boxes Etc.). But as several articles have already pointed ou

  • What business model is "right" changes. One business model may be the right thing to do initially, but, down the road, a slightly different (or a radically different) business model may become the right one. The companies that survive are the ones that can successfully change their business model as the situation changes.

    For example, take GE. Initial business was build lightbulbs and things involving electricity (motors and such). If GE had only continued to build lightbulbs and electrical motors, it


  • Companies that have a business that Microsoft approves of will succeed. Companies that have a business that Microsoft disapproves of will fail.

    Commodore failed because Microsoft wanted it dead. Dell succeeded (suck-seeded?) because Mikey Dell wore out the knees of his pants for Billy-boy. Monopolies get to pick the winners and losers. That's the way it works in the laissez-faire world.
    • Companies that have a business that Microsoft approves of will succeed.

      They are not that powerful. If they were, there would be no unix, no Oracle, no Intuit, no sun Java, no choice.

      They are a tough competitor, though.

  • voluntary compensation model for content (Score:3, Interesting)

    by rjnagle ( 122374 ) on Friday January 02, 2004 @04:39PM (#7862759) Homepage
    I'm speaking only of creative content, but I believe the a voluntary compensation method (i.e., tipping) is the only model that will compensate creative artists (without worrying about the problems of piracy, drm, etc).

    I've cited this here already several times, but I wrote an essay for sharethemusicday.com [sharethemusicday.com] that describes why a voluntary compensation model would work.

  • Remember when... (Score:3, Insightful)

    by sparklingfruit ( 736978 ) on Friday January 02, 2004 @04:40PM (#7862774)
    yahoo, excite and hotbot were called search engines?
    And Amazon sold books, and did it well?


    Then somebody said "Portals" and they became "portals".
    Then somebody said "Auction" and they all followed e-bay.
    Then somebody said "e-commerce" and they all started selling everything.

    And books became Amazon's sideline to their patents on everything but the color of money. And their site became a Navigational Nightmare(TM) (patent pending).

    Now everybody wants to be a search engine again.

    The reason Google is succesful is because it does it gives people the information they want, and stays the hell out of their way.
  • yahoo, excite and hotbot were called search engines? And Amazon sold books, and did it well? Then somebody said "Portals" and they became "portals". Then somebody said "Auction" and they all followed e-bay. Then somebody said "e-commerce" and they all started selling everything. And books became Amazon's sideline to their patents on everything but the color of money. And their site became a Navigational Nightmare(TM) (patent pending). Now everybody wants to be a search engine again. The reason Google i
  • Amazon is still a balance-sheet disaster regardless of their stock price. Mountains of debt and questionable profitability.

    EBay, Google and Yahoo are more obviously and sustainably profitable.

  • I don't see how Fed Ex and Dell, Cisco and eBay are very different. It could be argued that they they are brick vs web companies but the fact remains that all are breakthrough comapnies that were based on fundamnetally different ideas. It doesn't matter that their origin is from a web based orientation.

    Using airplanes to deliver packages sounds normal and trivial today but remember, FedEx shipped thousands of empty boxes around for two weeks because they had to know that their infastructure worked. That's

  • Depends on how you define "Internet Business" (Score:3, Interesting)

    by chia_monkey ( 593501 ) on Friday January 02, 2004 @04:55PM (#7862887) Journal
    I now ask the Slashdot community: which internet business models they believe are going to succeed?

    It's an interesting question but we need to know exactly what the business model entails. Is it PURELY Internet? If this was the case, I would say Google has a good model. They managed to stand above when there were a huge number of search engines available for users. They managed to find the righ mix of algorithm coding, marketing, and selling adwords.

    Same goes with eBay. Remember when there were a few different auction sites available to users? Yet eBay managed to differentiate themselves and move to prosperity.

    When we define "Internet business" though, do we mean only "Internet"? No brick-and-mortar ties at all? Meaning we exclude entities such as Dell?

    I think the basic formula for a successful Internet business has these following traits:
    1) Be the first to gain as much market share as possible. This includes Amazon, eBay, iTunes. In eBay and Amazon's case, they gobbled up the share and let the other's die out. iTunes happened to do it by providing the most viable and easy to use music download service. Others are finally getting on the bandwagon but have to play catch up with them now.
    2) Differentiate yourself. When you can stand out from the crowd, people use you. Dozens of booksellers, everyone uses Amazon because of their mix of ratings, price, one-click buying, etc. Google differentiated themselves in the beginning when they claimed to have indexed over 1 million pages. iTunes by being amazingly easy to use and by getting major labels to jump on board.
    3) Ease of use. Google is damn easy. Amazon is easy. eBay is easy. iTunes is easy. Sure you can use other services, but Amazon has spent a lot of time, money, and research on ways to make their user experience easy and enjoyable.
    4) Act like a normal business. Gone are the days of getting $4.4 billion for an idea with no real business sense. If you want to have a successful BUSINESS model, act like a business.

    I'm sure there are more, but these four basic rules will be seen in all successful Internet businesses.

  • That's a no-brainer (Score:4, Funny)

    by r_j_prahad ( 309298 ) <r_j_prahad AT hotmail DOT com> on Friday January 02, 2004 @04:58PM (#7862917)
    Litigation. Obviously.

  • Business Models and Reality (Score:4, Insightful)

    by salesgeek ( 263995 ) on Friday January 02, 2004 @05:00PM (#7862938) Homepage
    I've owned three companies, so I'm no master of the art of building businesses. What I can tell you from my experience is The "Business Model" rarely is responsible for success or failure. Blaming failure on "the model" is about as accurate as say, blaming the OS for a complile time error in your code. Reality is there are very few business models. Here are some examples:

    * Comodity service, periodic (annuity) style bill.
    * Distributor
    * Reseller (buy, markup, market, resell)
    * Service - flat fee (I'll do that website for $50K)
    * Service - hourly rate (I'll bill you $150/hr)

    The top causes of business failure are well documented. If memory serves correctly here are five top business killers:

    * Undercapitalization - Not enough jack, jack.
    * Demand Over/Under estimation - Build it they don't come... or too many crash your party
    * Fraud & Embezzlement - Where did the money go?
    * Cost overruns - 50% of the budget on furniture? Eghad!
    * Poor sales - We're a ____ company. Our product is 733t. We don't need to sell anything.

    Most of these mistakes are fairly easy to make and usually gang rape the business owner - as in you are undercapitalized because you underestimated the demand, cant produce enough widgets to fill orders and are experiencing legal expenses because you overpromised and underdelivered.
  • I don't know what works but I know what doesn't work [fuckedcompany.com].
  • I'm sure it's been said, but there's always people willing to pay for premium adult content. The company I work at (NationalNet) makes it's money off of hosting primarily adult sites (although the company cut it's teeth and started off as porn sites like everyone else). Now we have two full datacenters in the fiber alley of Atlanta and are doing about three mid-size acquisitions a year.

    This is a year of growth and expansion for hosts with solid businesses.

  • Providing services instead of goods (Score:5, Informative)

    by hellfire ( 86129 ) <deviladvNO@SPAMgmail.com> on Friday January 02, 2004 @05:10PM (#7863018) Homepage
    In the 70's, 80's and early 90's, we had a proprietary unix system which we sold to a customer that was about 80% of their business system. This system wasn't too flexible but it was the defacto business model for centralized order and business transaction processing. We had to provide the user everything from the hardware to the network to the software. It was a turnkey solution for the most part but it wasn't as flexible in providing revenue streams.

    In the mid 90's we developed a windows application solution. Now we provide the application CD and tell them the requirements (SQL server, windows network, recommended hardware requirements). Everything except our software is a commodity on their network now and so we extract ourselves from the costs of having to work on buying it. We allow the customer to pick their own or they can pay our consultants to help them out. We negotiate contracts for how much an hour they would have to pay for consulting. Everything is driven by consulting, custom work, training, services. Our software is the only hard good we produce any more, and its questionable if you want to call that a hard good these days. In fact we aren't worried too much about piracy, because our main source of income is the customer paying on the contracts we sign for purchasing the software (which requires a huge amount of setup) and for supporting the software, which is a percentage of their initial purchase contract.

    Expertise is never a commodity and as companies find a way to make hardware construction cheaper, people move to providing quality by just having a bunch of knowledgable people sitting around who know how to provide some kind of technological help (read: billable consulting, not tech support) to a specific market space.

    I also see the tech support outsource trend swinging back to the US a bit as US companies demand better quality of support. Between the cookie cutter, script reading mentality of overseas operations and some unintelligible accents, customers, especially businesses, will demand a change. They already are.

  • I conceive of cyberspace in a fashion where there are at least 3 independent time frames, and there is constant interaction between the physical and abstract. A schematic showing the conception is here [hypermart.net]

    From here we can now see different levels in which economic activity can be generated.

    1. a) person to person
    2. b) person to document
    3. c) person observing person-to-person, i.e. person observing a)
    4. d) person observing person-to-document, i.e. person observing b)
    5. e) person oberving c) or d), and so on.
    6. f) pers
  • are things that exhibit network effect, meaning increased utility that is non-linear with respect to connectivity. Ebay wins because of the network effect; the "virtuous circle" of the windows march to hegemony was a network effect.

    Things that scale effectiveness by bodies or trucks or physical widgets are less clearcut -- they are extensions of the old models with new efficiency, e.g, Amazon.

    This is why peer to peer is so seductive a technology. Everyone knows it offers the payback of the network ef

  • Local networks and content (Score:3, Interesting)

    by michael_cain ( 66650 ) on Friday January 02, 2004 @05:12PM (#7863045) Journal
    Two areas where I think there will success are local networks and compelling content.

    When I say local networks, I mean last-mile solutions. Of course, some of the technologies involve longer distances than that -- up to the last 22,500 miles if you happen to own a geosynchronous bird. There will be opportunities outside of the areas served by the big players -- telcos and cable companies. This is a business where there are significant economies of scale, so small guys will have to win on the basis of superior service. Wireless technology is probably important, since wired solutions are CAPITAL-INTENSIVE, and will generally require permission from local regulatory agencies. Building the devices used in such networks doesn't seem like a particularly profitable business -- if there's a significant market, there's going to be lots of competition and the profit margins are probably quite thin.

    There are opportunities to make money if you can provide some form of compelling content. I've always thought there were opportunities in almost any small city with a university. There are dozens/hundreds of music majors with performance requirements -- can you create and distribute a library of performances? Can you design and implement a multimedia tutoring system that connects students and tutors? Can you make deals with the local last-mile providers so your servers are close to the end user, rather than having to trust the Internet for performance and/or reliability?

  • Ya know, food, clothing, shelter, books, lamps, toys, etc.

    Property.

    People aren't interested in an internet economy. They're interested in stuff. If you can find a way to use the internet as a leg up supplying stuff to customers, well, there ya go.

    But anyone who thinks of the internet as a way to get people to just send them money isn't going to go anyplace.

    People are also interested in certain services, like having their pool cleaned and the oil in their car changed. Ain't gonna happen over the internet
  • reading through the posts all I see are "dot-com bubble this.." and "dot-com bubble that"..

    dude.. face it, there never was a "bubble" it was called "you got screwed over by some savy businessmen who have now moved on" and sitting around lamenting that fact is just plain sad.

    The real businesses that had actual products made it through that time and the guys who didn't, are gone and in my eye "good riddance to them"

    The next "bubble" that you guys are going to sit around and babble about for years will be

  • Opportunity exists in aggregation (Score:4, Interesting)

    by amichalo ( 132545 ) on Friday January 02, 2004 @05:34PM (#7863226)
    Ultimately what the Internet has provided us is communication beyond the wildest dreams of telephpony, wired or not.

    A look at the big winners:

    * e-Bay - Started as a way to buy and sell collectibles - now an aggregation of small vendors and casual shoppers selling 1.7 million items a DAY!

    * Amazon - Started as an on-line book store with the content of your local shop - now an aggregation of just about any book in (and sometimes out of) print and available to you in a few days (or for pickup at Borders).

    * Google - An index of all this Internet stuff - now an index with so much info that it has made itself a household word.

    * /. - Started as News for Nerds, Stuff That Matters - even our beloved(hated) /. is an aggregation - a community for those who (sometimes) have no community. Without an aggregator like /. how would nerds from around the world find one another to discus important topics of the day?

    * iTunes Music Store - the next great aggregator - they have found a way to BROWSE music and sell it legally. A creative mix of low-tech product, high-tech delivery, on-line shopping, and off-line use (iPod).

    So yeah Dell can make a few bucks on a commodity product, but the real winners are the ones who make a new market space by putting people in touch with the products or information that is more valuebale to them than what's in their wallets.

  • Amazon (Score:4, Insightful)

    by WatertonMan ( 550706 ) on Friday January 02, 2004 @06:28PM (#7863651)
    I'm truly impressed with how Amazon has improved over the years. I actually did something like 90% of my Christmas shopping through Amazon buying sheets, books, bathroom stuff, lingerie, winter coats and more. It was very convenient, somewhat like a shopping mall experience without the crowds and with very good information online. Now I'm rather spoiled by brick and mortar experiendes (although clearly they are important for some products).

    The thing about Amazon is that they haven't sat on their laurels. Digitizing whole books and making them searchable is invaluable and basically mimicks that old ability to browse books.

    I worry though that we'll end up with these large super-conglomerates who hold whole market segments, somewhat like Microsoft achieved in computers in the 90's. The only real competitor to Amazon for books is Barnes and Nobel, but Amazon's really beating them in many ways.

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