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Irony, Agony at Spring Internet World 2000
Wednesday, April 5, 2000
By Jon Swartz

Forbes.com – Information For the World’s Business Leaders

America Online introduced Netscape 6, a faster and easier-to-customize Web browser, two days after a federal judge found Microsoft guilty of, among other things, monopolizing the market for browsers and effectively crippling Netscape Communications.

Microsoft’s bullying tactics led to AOL’s $10 billion acquisition of Netscape in late 1998, prompting Netscape to undertake an antitrust jihad against the software giant.

On the expansive floors of the trade show, meanwhile, giddy Netrepreneurs are coming to grips with some ominous signs in the once-lucrative world of digital commerce.

Netscape 6 features “Gecko,” which speedily renders text, images and other Web data on computer screens, making it ideally suited for use in cellular phones, television set-top boxes and other Internet appliances. It also makes it easier to connect to AOL’s popular instant-messaging chat service.

The new browser will be included in products from Sun Microsystems, IBM, Nokia and others. Meanwhile, industry experts expect AOL to dump Microsoft’s Internet Explorer from its service for 22 million subscribers. A browser-distribution agreement between AOL and Microsoft expires at the end of the year.

If only things on the bustling show floor were as clear-cut. Underlying the enthusiasm of 20- and 30-somethings reveling in all things e-commerce were some grave misgivings. Namely, e-tailing is being gutted.

Losses throughout the industry are widening. CDNow and Value America face dire forecasts, and executives at both companies have warned they may go belly up. Shares in Pets.com, eToys and Egghead.com are swooning. Venture capital and stock offerings are drying up.

Indeed, for every well-financed dot-com, such as Amazon.com, there are scores of operations bleeding cash. Many simply have no choice but to offer
products at noodle-thin margins, or risk losing business to one of several competitors peddling the same goods.

Compounding matters, jittery e-tailers have encountered rising costs–ranging from building warehouses and adding service staff to costly advertising campaigns to build brand awareness. Ironically, about the only industry turning a profit during this withering spiral is traditional media, which is gladly reaping billions in dot-com advertising.

Still, the warning signs hardly douse the enthusiasm of industry insiders.

“It’s a bit unfair to highlight the few failures in the dot-com world,” says John Patrick, IBM’s vice president of Internet technology, noting that more than 1,000 U.S. businesses fail every week. “That’s not alarming. If we were not reading about failures, then there is not enough risk taking.”

In fact, online sales will vault 53% to $23 billion this year, according to Jupiter Communications, a New York-based market researcher.

For now, in the land of Disney, it’s a Web world after all.