Internet business news and analysis by Dylan Tweney

Welcome to the future

The widely dreaded and much-hyped Y2K collapse vanished like so much smoke on Friday night, as the clocks hit 12:00 a.m. 01/01/2000 and -- surprise -- nothing much happened. Fireworks went off as planned, balloons dropped as expected, Russian missiles stayed in their silos, and terrorists seem to have stayed home. There weren't even any champagne shortages or ATM glitches to speak of.

After a weekend of reflection (read: drinking, reading, and lazing about) I have to say I'm relieved about the arrival of the year 2000. It's not that I was so worried about Y2K bugs (I figure a few minor Y2K-related annoyances will be hounding us during the coming months) or widespread millennial rioting (though I did, overcautiously, stay out of any major cities on New Year's Eve). But somehow, watching the year's odometer click over all four digits has given me a sense of optimism, kind of like when my car hit 100,000 miles last fall and kept on running. The 1900's -- we've gotten past all that. Now: On to the future!

So without further ado, here are the top Net trends you'll be hearing about in 2000:

• The wireless Internet. Like the maddeningly vague term "broadband," the wireless Internet actually encompasses a wide variety of technologies: Internet-enabled cell phones, network-connected handheld devices like the Palm VII, wireless LANs, satellite technologies, and more. What they all have in common is the elimination of restrictive network cables and telephone wires.
  
  I, for one, applaud any technology that reduces the tangle of cords and cables stuffed roiling behind my desk and snaking throughout my home office. But wireless networking isn't just about tripping less: It will enable the Internet to become truly pervasive.
  
  Wireless technologies will help integrate the Internet into our lives in obvious, in-your-face ways: The Web browser on your handheld, the GPS and mapping device in your car, the ability to trade stocks on your cell phone. But they will also affect us in subtler, under-the-hood ways: The Web server in your car's engine that sends information to your mechanic. The IP network that lets your home appliances communicate with one another and with central control systems. The office network that doesn't require you to pull cable through the whole building.
  
  Many of these technologies are already here, in rudimentary form or as proposed standards, and they'll really start to take off in 2000. Watch developments around the Wireless Application Protocol (WAP) and Bluetooth standards in particular.
  
  
• Sustainable e-business models. The bloom is already starting to fade from many recently IPO-ed dot coms. It's no longer enough to spend tens of millions on advertising to attract a transitory audience. In 2000, the online companies with the biggest valuations will be those that are really generating revenues and that have a foreseeable shot at generating profits, through business models that can be sustained over the long term. Sure, you can generate short-term traffic, and even some revenues, by selling goods for less than it costs you to buy them, by offering free shipping to all comers, or by giving away goodies and incentives to entice visitors. But to build a company that will last, you need something more substantial and more sustainable. People will wake up to this reality in 2000.
  
  
• "Open source" marketing. Chris Locke coined this term to describe the way online markets can self-organize into interest groups that have more power and cohesion than artificially created market segments defined by marketing directors.
  
  Open-source marketing isn't going to replace traditional, top-down marketing by any means. But it's going to become an increasingly important component of any online company's marketing strategy. Bottom line: You can't just tell customers what they need. Sometimes you have to listen to what they want. And on the Net, customers have the ability to band together for their own benefit, whether you want them to or not. Watch sites like ActBIG.com to see what kinds of self-organizing consumer communities pop up this year.
  
  
• Distributed merchandising. Longtime readers of the Tweney Report know I've been banging on the advertising-is-dead drum for years now. Of course, online advertising is not only still with us, it's bigger than ever. No matter: Once again, I predict that this year, online advertising will die.
  
  It's not that banner ads will go away. Nor will those annoying pop-up boxes that get in the way of you actually seeing the page you requested -- in fact, more and more ads will be popping up like this. But the "advertising" that is most successful in 2000 will cease to be old-style, interrupting, brand-oriented ads. Instead, the most successful ads won't really be ads at all -- they'll become remote points of sale, through which the "advertiser" provides useful product information, a convenient and easy-to-use interface for ordering, and in general something relevant and interesting to you at that moment.
  
  As online retailers get more sophisticated, they will spend more and more on distributed merchandising, and less and less on advertising per se. Watch for the beginnings of this trend this year.
  
  
• Home networking. It's still a nightmare. The equipment is difficult to set up, the software doesn't work as advertised, and there are few reliable sources of information. (Did I mention the tangle of cables?) But more and more people are doing it. The benefits of having a home network, especially once you've got a high-bandwidth and persistent connection to the Internet, are simply too great to be ignored. Forget the tiny cell phone, the Palm V, the super-compact Vaio laptop: The index of geek chic in 2000 will be a home network.

If you're like me, you're sick of hearing HOLIDAY E-COMMERCE WRAP-UPS by now. So I'll cut to the chase: Lots of people shopped online [1]. E-commerce revenues were big, as predicted [2]. Most online retailers' sites performed well, and the companies even did pretty well at delivering the goods on time (except the toy companies, which got clobbered) [3].

But more trouble may be afoot for online commerce. Many dot coms are offering free shipping and other perks in an effort to attract new customers. Now, a Forrester report claims, they may find themselves locked in to continuing those money-losing practices. With negative margins, free shipping, and logistical problems, these retailers may have big problems in the coming year [4].

Speaking of logistical problems, it turns out that the biggest lessons from this e-Christmas aren't about robust e-commerce software, high-availability Web sites, or even business-to-business systems integration. Instead, the key to successful e-commerce is disappointingly low-tech: Delivering the goods in a timely fashion. Sounds a lot like real-world commerce, doesn't it?

[1] A Very Big E-Commerce Christmas
(registration required)

[2] Net sales soar past '98 mark

[3] Web Shoppers Report Satisfaction
(registration required)

[4] E-tailers may be stuck with shipping costs

The next net battle may be over TIME ITSELF. The UK government wants to create a universal Internet time standard based on Greenwich Mean Time. They're giving it a new name: "Get," for Greenwich Electronic Time -- although it's not clear how Get differs from GMT [5].

To get Get accepted as a standard, of course, the Brits will have to go head-to-head against Swatch, which is touting its own Net time standard. Swatch's standard is based not on hours, minutes, and seconds, but on a day of 1,000 "beats," each one about a minute and a half long. I guess you'd need to buy a new watch to keep track of *that* time, now, wouldn't you?

[5] Greenwich could mark web time

GIFT ECONOMY: The high-powered engine of commerce that is Christmas makes it clear just how much of America's economy depends on gift-giving. Appropriately enough, Salon ran a nifty article just before Christmas about the online "gift economy" that is the Linux and open-source software movement [6]. Fundamental to this movement is an attitude that values intellectual contributions over market share.

But then a funny thing happened on the way to the newsgroup: It turns out that Wall Street loves the gift economy, too. Not since the pioneer days have American companies found it so easy to get something for free that they can sell to someone else for good money. As a result, shares of Red Hat and VA Linux have shot skyward, making open source stalwarts like Eric Raymond fabulously wealthy.

Can these altruistic hackers reconcile their newfound wealth with their "information wants to be free" ethos? My guess is yes -- but it will be interesting to see how that ethos changes, and is changed by, mainstream corporate culture.

[6] Can Linux billionaires carry the free-software torch?

~ Back issues ~

Just in time: Logistical challenges of holiday e-commerce and online-offline partnerships; the quietness of customer-driven marketplaces; questionable legal actions (12.17.1999).

Networking nightmares: DSL and my home networking nightmare; banner ad deathwatch, part XXIX; CompUSA killing itself -- on purpose (12.03.1999).

Getting personal: Personalization counts on Web sites; Net tax factions prepare for battle royal; auction houses stumble online; it's not cool to be a dot-com (11.15.1999)

The whole blinkin' Tweney.com archive...