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 Cyclist who knocked down three-year-old girl says his life has been 'destroyed'
- 2 Chelsea victory parade: Chelsea mocked on Twitter as 'tens of fans' pack the streets of London
- 3 US warned by Chinese media to stop meddling or 'war will be inevitable'
- 4 Woman, 21, dies after taking contraceptive pill that 'caused fatal blood clot'
- 5 Isis burns woman alive for refusing to engage in 'extreme' sex act, UN says
Cyclist who knocked down three-year-old girl says his life has been 'destroyed'
US warned by Chinese media to stop meddling or 'war will be inevitable'
How China's richest man Li Hejun lost $15bn in an hour - and made a fortune
Isis burns woman alive for refusing to engage in 'extreme' sex act, UN says
Snoop Dogg on why he doesn't regret displaying misogyny towards women
As a white man, I'm surprised more women aren't tweeting the hashtag #KillAllWhiteMen
Scotland may have to leave the EU even if it votes to stay in, David Cameron confirms
The day that Britain resigned as a global power
SNP fury as HS2 finds 'no business case' for taking fast train service to Scotland
EU referendum: David Cameron's rules are a 'democratic disgrace', says French-born Scottish politician set to be denied a vote
A nation of inequality: How the UK is failing to feed its most vulnerable people
iJobs Money & Business
£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...
£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...
£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...
£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...