Outlook: Internet mania
Thursday 25 March 1999
Prospects for Dixons' core retailing business have improved a bit since then, but the bulk of this stellar performance is accounted for by Freeserve. Billions have been added to Dixons' market capitalisation courtesy of this new Internet service. Now WH Smith is hoping to repeat the trick. But as the stock market correctly surmised by marking the Dixons share price down by an equal and opposite amount in response to the WH Smith announcement, not everyone can win in this market.
Few people these days doubt the Internet's power to transform industry, or its vast commercial potential. But actually making money out of it is a different issue, and actually these British retailer based free Internet service providers seem rather less likely to make good profits out of the Web than most.
As Dixons has proved, retail networks provide a powerful motor for adding subscribers, but as the service is free, having more subscribers doesn't necessarily earn you more revenue. Nor does using the Net to flog your own products help the bottom line much, since the effect is merely to cannibalise existing sales.
WH Smith's Richard Handover was yesterday waxing lyrical about the importance of establishing his service as a fully fledged "portal". Certainly this offers the most likely pathway to profit, since the most successful portals ought eventually to be able to attract very considerable advertising revenue.
The trouble is that this is a fast moving industry and the competition - Yahoo!, Excite, and the like - have quite a heads start. Keeping the millions of non paying customers these new free services attract eyeballed to their own home pages is going to be a challenge most will fail to meet. As a consequence, it is hard to see how the valuations the stock market is attaching to these services can ever be justified.
- 1 The BBC has just done more to eradicate ‘terrorism’ than all our wars since 9/11
- 3 Mystery man who gave mum heart-warming note on train 'wanted to put a smile on her face'
King Salman: Just five days in, Saudi Arabia's new king has already overseen a beheading
Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
Mystery man who gave mum heart-warming note on train 'wanted to put a smile on her face'
Michelle Obama highlights harsh restrictions faced by Saudi women after meeting King Salman without wearing a headscarf
Chilling drone footage captures Auschwitz ahead of 70th anniversary of liberation
'We would evict Queen from Buckingham Palace and allocate her council house,' say Greens
French court convicts three over homophobic tweets, in case hailed as a 'significant victory' by LGBT rights campaigners
Greece elections: Syriza and EU on collision course after election win for left-wing party
British Muslim school children suffering a backlash of abuse following Paris attacks
British grandmother Lindsay Sandiford faces execution by firing squad in Indonesia
Liberal Democrat minister defends comments suggesting immigration causes pub closures
iJobs Money & Business
£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...
£25000 - £35000 per annum: Recruitment Genius: A Technical Report Writer is re...
Competitive salary & benefits!: MBDA UK Ltd: MBDA UK LTD Indirect Procurement...
£16500 - £16640 per annum: Recruitment Genius: This fast growing Finance compa...