March 17, 1997

This PC Week
Big names overshadow small startups at Net World
By John Dodge

  Spring Internet World last week provided the best evidence yet that large computer companies are taking over the Internet. In the 1995 fall version, a carnival atmosphere dominated the exhibit floor as small startups hawked everything from free Internet access time to basic search services.

Small companies are still there, but they take a backseat to the big boys. For sure, the carnival atmosphere is gone.IBM/Lotus, Hewlett-Packard, Digital Equipment, Sun Microsystems and Microsoft occupied exhibition spaces rivaling the acreage of the Russian steppes. These vast and sometimes empty expanses make a larger statement: The Internet has become a high-stakes game.

Concurrently, sniping between the small Internet push vendors reached a fever pitch last week. Most of the barbs were fired at the push leader, PointCast Network, which its competitors say is little more than a content middleman or aggregator.

PointCast fires back that competitors envy its dominant market position. While PointCast doesn't disclose financial results, its president and CEO, Chris Hassett, cites large investments in new data centers (Tokyo, Dallas and Cupertino, Calif.) as a sign of vigorous health. "We see ourselves in business of delivering content assets [from media companies]. The Internet will mean to media companies what cable meant to TV," said Hassett.

Sources at archrival BackWeb, which delivers personalized information over the Web, boasts it generated $1 million in revenue in the past two to three months.

Among small Internet companies, this number is impressive. A small Internet company with sustainable revenues and a remotely predictable business plan is no small feat.

However, the resource gap between the Internet haves and have-nots is widening at an alarming clip for those with entrepreneurial ambitions.

It's an old story. Startups burn through $20 million in venture capital. The resulting technology either goes nowhere, gets sold or is copied by Engulf & Devour. Basic push technology is being built into future client software from Microsoft and Netscape.

At the show, a buzz circulated about the impending shakeout among the dozens of competing push vendors. The revenue pie is too small and unknown to sustain companies that have a difficult time explaining how they are different from half a dozen other struggling competitors.

"It's a hard call because no one knows how healthy they are financially," groaned a reporter at the show trying to size up how to cover the dozens of companies that have adopted the push paradigm. (There's a pair of buzzwords for you!)

When it comes to delivering Internet content or applications, the wonderfully simple verb runs out of gas. Officials at major content pushers, such as BackWeb, Verity, Marimba, Ifusion and PointCast, concede it is little more than a euphemism for broadcast. The supplier makes some assumptions about what consumers want and "pushes," or broadcasts, a custom package to them.

Interestingly, "push" has disappeared from Web site literature from the companies most strongly identified with the technology. The word may have never been there in the first place.

That's good because the "push" word ends up lumping a company in with a very crowded group these days. And the sharks are circling to see which ones are worthy prey when Act I of the natural selection process concludes.

Is the next Netscape around the corner, down the block or not even in town yet? Write me at john_dodge@zd.com.

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