by Dana Blankenhorn
Volume I, No. XXIII
Oh, Word 8 supports HTML, all right. It forces any file saved in HTML into a Microsoft HTML format. This format forces every paragraph into an unstructured list, adds font commands everywhere, and throws in meaningless garbage separated by p and /p marks - which hasn't been good HTML style for some time.
Worse, you can't get around it (at least I couldn't). Any time I'd save a file with the extension .htm it would be converted (as in "The Night of the Living Dead" converted). Finally (I thought thankfully) the whole program crashed, and when it came back I could edit the code manually. Turned out it had "recovered" the remains of the issue, and made it an "X-HTML" file - one Netscape can't display. (Well, Explorer. Explorer's built into Word. You can't substitute Navigator.) Thank God Tommy Bass, who posts these pages at http://www.tbass.com/clue , had not yet upgraded. He spent a morning re-writing the pages into something that worked, which was delivered to you late Saturday. (I finally uninstalled Word 8 Wednesday and returned to Word 6.)
To its credit, Microsoft seems aware of what delivering crap implies. The company's no longer buying-back stock to make up for the dilution of its generous options. They would like an orderly retreat to, say, $120/share before renewing buybacks. The company told analysts recently Windows '95 sales are slowing, that Windows '98 won't do as well, and that Office '97 sales are modest. (Maybe they've loaded it.) Unfortunately, analysts turned a deaf ear. Zona Research , for instance, points to strong sales of Windows NT among enterprises, writing "our research shows it has become the platform of choice for more Web deployments," and "it may seem that Microsoft prints money, not CDs, in Redmond." Microsoft's warnings are written off like Michael Jordan asking opponents to disrespect him.
Why does this matter? Microsoft is now worth over $150 billion, more than General Electric, nearly as much as General Motors. If Microsoft's own spin is to believed (and who can disbelieve, given Office '97), its P/E (the price of the stock divided by its annual earnings per share) should be 25, closer to the market average of 20 (which itself is an all-time high). That would make Microsoft a $75 stock. Re-pricing Microsoft to reality wipes out $75 billion in market capitalization. Given the way markets work, that will likely happen suddenly.
What do you think happens when $75 billion in value disappears, from what many now feel is the bluest-of-the-blue-chips? What does that do to the price of Compaq, to Dell, to Intel and Texas Instruments? Won't that drop the whole high-tech sector? Won't the banks then fall out-of-bed? Won't that drop the whole market? And once the game ends, friends, it's too late to beat the traffic out the parking lot. The Internet makes it possible for everyone's "sell" orders to be entered at once, but it doesn't guarantee they'll be buyers. And when prices start collapsing most buyers hit the sidelines until the collapse ends. (Mr. Potter isn't selling, Mr. Potter is buying...he's picking up some bargains.)
But wait, there's more. America's prosperity is tied-up in the value of its stock market. That's what gives us the confidence (and the credit) to keep buying what the world makes. Given that Asia's big economies are all mercantilist (the kind of economy Adam Smith's "The Wealth of Nations" was written to attack) and the U.S. has been the world's buyer-of-last-resort, what does a stock market crash (and the disappearance of maybe $1 trillion in capital) imply for the world's economy? Falling prices (deflation), negative growth. As Herbert Hoover said in 1931, it's not a recession, just a little depression.
Does all this follow naturally from the fact Word 8 is garbage? I don't know. I'm not a stock analyst, just a business reporter. But my instinct is Microsoft stock has become a mania, like tulips in 18th century Holland, like stocks in the late 1920s. You know why Joe Kennedy was rich enough to bankroll his sons' political careers? He said he got out of the stock market in the middle of 1929 when he saw that even the shoeshine boys were chasing stock tips. (Did you notice that in the last two weeks both Dow-Jones and Time-Warner have announced new, subscription-only Web sites with investment information?)
What's this got to do with Internet Commerce? No computers, no money, no commerce, online or offline.
Business is picking up. But we can always do more. Because it's Journalism -- checking the news, calling people, listening carefully, writing on deadline -- which keeps the clues coming, although I also handle consulting and commercial writing (ask about those rates via e-mail). If you're looking for excellent work -- like that found in my column at Atlanta Computer Currents or my regular work for Net Marketing magazine don't wait for the e-mail -- give me a call at 404-373-7634.
This week I talked to Langley Steinert, vice president-marketing at ViaWeb Inc. , Cambridge, Mass., which offers a service bureau model for Web store development. "If you know how to use a browser, you know how to use our product," he says. "I'm getting merchants by the handfuls."
Not only are those merchants making money, but many of them aren't small merchants. He said John Weld of Oregon put together a ViaWeb store called Movie Madness , for $1,200, and drew $47,000 in sales over 120 days. Frederick's of Hollywood, Virgin Interactive , and catalog publisher Hanover Direct are also satisfied ViaWeb customers, he says.
Merchants should be like George Foreman in the Midas Muffler ads, he suggests. Say, I'm not going to pay a lot for that Web store. Yet many do. "There's a Forrester report which surveyed 60-90 small to medium-sized companies, and they were spending anywhere from $75,000-150,000 to create Web stores." Why? "There's a lot of not-invented here syndrome...people who think if they didn't create it, if the server doesn't reside in their building, that it can't work."
So listen to Steinert closely. "There's a popular belief that you can't make any money in Internet commerce. The facts some people are using to support that are IBM World Avenue shutting down, Nets Inc. going bankrupt. We have a number of accounts making significant money, because we lowered the cost of creating a store, and sped up the time to market."
In other words, if you know what you're selling, and keep selling costs low, you can make a lot of money online. A key clue. If you insist on spending a lot of money to know this, click here and check out ActivMedia's latest survey of over 3,500 net marketers, divided by company size, location, profitability, product type, market orientation and many other variables. Some 85 percent of Web-generated revenues at commercial Web sites, $24.4 billion in 1997, will come from selling merchandise, the survey concludes, and 30 percent of Web sites are already profitable.
In the far-off Shetland Islands, an editor named Jonathan Wills got fired from his job at the local paper, the Times, by managing director Robert Wishart. A few years ago, that would have been that, but Wills got the bright idea of starting an online counterpart to the Times, which he named the Shetland News . Wishart followed him online, and many of Wills' stories then began including links to stories on the same subjects from his rival publisher.
Here the farce began. Wishart sued, claiming Wills' links were infringing his paper's copyright. Last October, he even got a court to issue a restraining order against Wills, pending a hearing in November. Both are running about the country seeking allies. Wishart often gets there first and wins an endorsement of his silly position, until Wills comes on and explains the technology. (The National Union of Journalists now supports Wills, despite Wishart pressing his staff into service to push his point.) Wishart's latest gambit (and this is where you can LOL) is to claim he can't afford to buy new printing presses because of Wills' competitive threat and the NUJ support of his position. (There have been no hyperlinks between the News and Times since last October.)
It's all quite funny, and may lead some idiots here to claim a "precedent" is about to be set, or even that one has been set, that you can't hyper-link without permission. Don't believe 'em.
Clueless, officially, is America Online . They tried to give members' phone numbers to "marketing partners" (read direct marketers) and were forced to back down just days later. (They're also trying to charge "rent," saying service providers it once shared revenue with are Web stores. Right.) The commercial onliner continues to insist its data on users is its to re-sell, and maybe it is, but buyers of that data will learn there's a big difference between a sales pitch and a sale. Eventually, those who buy-into AOL's spam marketing plan are going to get the idea, and the company's many shorts (the stock was selling at $64/share last week) may stop taking it in the shorts.
NOTE: For last week we wrote-up Ralph Liniado of Manheim Online as "clued-in." Well, color us clueless. His last name's not spelled Liniardo, as we had it, but Liniado. No "r". Our apologies. (Thanks to Eliza Taylor of Alexander Communications for pointing this out.)
A Clue...to Internet Commerce is a weekly publication of @Have Modem, Will Travel. It's sent free to a qualified e-mail list. Like Netscape Navigator, it carries a list price -- $49 per year. Subscribers can receive either a .txt file or an .htm file. The .htm version features links which become active when online with a browser, or an e-mail package like Netscape 3.0. (Let us know which you prefer.) To take your name off the list, simply write REMOVE as the subject, or content, of a message replying to this post. To request your free copy, write us at Dana Blankenhorn@worldnet.att.net. We're on the Web at www.tbass.com/clue and www.ppn.org/clue.
A Clue...to Internet Commerce -- Copyright @Have Modem, Will Travel and Dana Blankenhorn, 1997