Yeah, I know, more dumb acronyms. (Can you say MoDuAcs? MoDACRONS? MorDumA?)
Three newish terms, the meanings of which are not necessarily self-evident, are going to be at the heart of some big Web plays this year. You can keep your money in your pocket for now, but it's not too early to start thinking about these market opportunities.
As some investors' ardor for e-commerce and its poster child
has cooled -- but not too much (with a market cap of $20 billion-plus based on sales of less than $150 million, Amazon still carries one heck of a premium) -- look for these three areas to get very hot over the next six months.
B2B stands, improbably, for "business to business," and it's the new qualifier for
Web companies. The notion is that we're growing the business-to-consumer e-commerce business about as fast as we can, so the new front on which to attack is businesses' sales to other businesses.
The assumptions driving this are pretty simple:
- Businesses buy a lot of stuff.
Businesses increasingly like to buy stuff just in time, in smaller quantities, drop-shipped to the facilities where the product will actually be used, rather than warehousing millions of pencils, Post-It pads, etc., for months or years.
Businesses have pretty good purchasing technology in place ... or like to think they do.
All purchasing managers, whether they hold that title or merely function in that role, would like to simplify their lives by automating as much of this glop as possible.
Enter B2B companies, some of which were highlighted
(VERT:Nasdaq), for example, which tripled last Wednesday from its IPO price of 16 and was up Tuesday another 6 1/2 to 56. VerticalNet forms virtual online purchasing communities, joining participating buyers and sellers by identifying each group and providing enough value-add through editorial content to keep buyers coming back, whether they're buying that day or not. The orientation of these communities is rigorously vertical -- such as Electronics, Communications, Food and Packaging -- hence the name VerticalNet.
Or consider companies such as
, which move an enormous amount of goods online, primarily or exclusively to business customers. Dell is now up to $14 million a day in sales from its Web site, much of that from its "Premier Pages," custom minisites set up for more than 10,000 of its best corporate customers, allowing their workers to buy approved-configuration PCs at prenegotiated prices. Cisco sells half again as much on its Web site every day -- $22 million at last count -- and of course, that's all B2B. (Who buys a nice Cisco router for his or her home PC?)
Clearly business-to-consumer Web sales have more appeal and get more press coverage. But B2B companies -- those who facilitate, manage or exploit the process -- are going to be very hot targets this year as their IPOs come to market.
Call 'em "eeps." EIPs are the latest wrinkle in corporate use of the Web: custom "enterprise information portals,"
search engines and "guided search" pages for a company's employees.
Your boss and his boss and her boss are not, you see, all that excited by the idea of you going out to
(one of my favorites) or Yahoo! to search for something. While you're wandering around out there in Searchland, you're exposed to all sorts of ads from other companies, to all sorts of temptations to peek into places your company never mentioned in your employment agreement.
So EIPs are in part an effort to keep workers on the ranch. But the best ones go a lot further, providing company information and dipping into the treacherous waters of one of 1997's jargon all-stars, "data mining."
The best EIPs I've seen (closed to outsiders, I'm afraid) combine such common intranet "editorial" features as a running ticker on the company's stock price, the latest pronouncements from the human resources department and new-product announcements, plus an embedded search engine. Searches are usually tiered -- looking, for example, first in otherwise-closed corporate databases (think "brute-force data mining"). Indeed, the easy mixing of internal and external information is becoming a hallmark of EIPs. (I've been arguing, so far without much success, that "enterprise intranet portal" is a better term.)
Very often, unannounced exclusions are also hidden in the engine -- for example, to keep users away from checking sports scores, dog-track odds and porno material.
Does this sound like a big market to you?
thinks so: It predicts in a new research report that EIP will be a bigger market than ERP (enterprise resource planning) software by 2002, with sales topping $14 billion annually.
for one. (You get information "via" its "dor" -- get it? Didn't think so. Me neither.) This privately held company, formerly known as
, has developed and is now installing very good EIP-building systems for customers like
Viador delivers a centralized Java-based server,
Viador Information Center
, and a variety of user-side browser tools under the rubric
. There are also gateway, security and admin tools packages.
Viador scored a $3.5 million initial investment from customer-to-be
, then added another $8.5 million in venture money in January. You can't buy Viador yet, of course, but the chances are very good that you'll be able to sometime in 1999.
is just beginning to offer its
service to corporations, a kind of EIP-in-a-box toolkit, for those of the Erector Set persuasion. You can cobble together your own EIP from elements available on Netscape's own
site -- for example, newsfeeds -- plus your own site-specific services for workers, such as shared personal calendars and, of course, searching.
As opposed to Viador's approach, which sells software that a company sets up and runs on its own systems. Netscape charges companies a $3 to $10 monthly charge per employee, functioning as an outsourced provider.
Other software and services companies showed their take on EIPs at the
conference in early February, including
Seems to me this market naturally lends itself to an outsourced model, perfect for large companies that wish to move such background services, including email, off-premises to another provider. Corporations will then pay a big tab to set up the service, then a few bucks per employee per month. My guess: Viador wins in the own-your-own-systems category, with the winner still to be decided in the outsourcing derby.
You should consider whether -- especially if Merrill's call on the likely size of the EIP market is right -- this shift will be an important drag on the growth of Yahoo! and other broadly focused portals. (Or whether, with smart guys like Yahoo!'s Tim Koogle constantly trying to stay ahead of the market, the general-purpose portals quickly add EIP services akin to Netscape's offering, probably through buying up the Epicentrics and Porteras of the world.)
Talk to savvy Web entrepreneurs, and they nearly froth at the mouth when they talk about the about-to-emerge "Web services" market. Again, the idea is simple: Stop adding more applications to your PC and instead start using Web sites, usually free ones, to do the job.
Take a look at
www.when.com, and you'll get the idea. This beautifully designed site lets you create and store your schedule online and also provides access to a long list of upcoming events in your area -- for example, concerts, football games, movies about to open -- which you can easily add to your calendar. You can also create a group calendar for your family, Scout troop, workgroup, professional association, whatever. And it's all free.
has offered a similar service for some time, of course, and when.com is going to have a
of other competition as well, including the
, whose new
online service just opened.
Or look at
Sky Desk service at
www.backup.com, a much-improved version of earlier Web-based backups for your PC. For $10 a month, you can back up 100MB of data from your PC's hard disk to Sky Desk. A bargain, especially for notebook travelers who may need to retrieve an erased file -- or worse -- on the road.
want to sell you postage over the Web;
to hold your calendar and email and serve as a repository for your family photos;
wants to work with your existing calendar and contact list. And many, many more WebServs are in the wings, nearly ready for 1999 rollouts.
Should mainstream PC applications software vendors -- the
of the world -- be worried about this trend? Move enough apps off your desktop and onto your "Webtop," and app-software sales will crumble?
Not yet and probably never. While accessing apps across the Web plays into several trends in computing -- from the increasing use of notebooks to faster Web connections to (maybe) something like network computers (NCs) -- the mainstream apps we rely on most are likely to stay right where they are today, on the hard disks in our computers.
We'll see a ton of Web-services companies hanging out their shingles -- and not long after, their
registrations -- this year and next. I agree wholeheartedly that "WebServs" are going to be very big. Investor alert!
Finally, it's obvious that many of this year's hottest Web-related plays are likely to be cross-pollinations among these three categories. Me, I'm watching for companies that combine a vital Web service with a business-to-business focus -- delivered via an outsourced enterprise information portal.
Jim Seymour is president of Seymour Group, an information-strategies consulting firm working with corporate clients in the U.S., Europe and Asia, and a longtime columnist for PC Magazine. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. At the time of publication, neither Seymour nor Seymour Group held positions in the companies discussed in this column, though positions can change at any time. While Seymour cannot provide investment advice or recommendations, he invites your feedback.