Death of DotCom Hype
DotCom. Technology stock. Nasdaq. Everybody knows about it. Everbody wants a piece of it. But with the recent US economic downturn, the shares of DotCom companies are plummeting as fast as you can shout "Yahoo!". Many DotCom companies have to retrench people and some even have to shutdown. Economists call it "market correction", but to me it's just "reality kicking the crap out of these technobizgeek-wanna be". Even the technology giant like CISCO is affected by this. Why did these DotCom failed?
A lot of factors can be attributed to it. Most of all, these companies failed to have a solid business plan and their stock value is sometimes over-valued. A typical DotBomb (a term used to indicate failed DotCom companies), usually spends a lot of money (in a range of more than 10 million USD), without even generating revenues. When they exhausted their cash flow, now that's when they're in big trouble.
Investors nowadays looked for a solid business plan. This is the time where venture capitalist won't be impressed by the words "Portal","Internet Technology","E-Commerce" and all that "mumbo-jumbo". The first thing they will be asking is, "How much do I need to spend on this?", "When do I expect the ROI?", "Is this revenue stream feasible?" and yada-yada-yada, the lists go on. To avoid being a DotBom, one needs to think beyond the box. No longer can DotCom companies rely on the "Free everything" module. Revenue stream coming from "Internet Advertising" is out. Come to think of it, "Internet Advertising" is the most absurd concept ever created. Why would a website promote another website? Wouldn't they want the traffic to come to their site instead of going out of it?
Also, with the traditional "click & mortar companies" venturing into this e-commerce thingy as their net-extension, pure DotCom companies have to compete with a stronger giant. This traditional business company have lots of money that they're willing to spend, since their revenue stream comes from their traditional business. Also, this traditional companies already establish their brand. So, a one-to-one match would likely to favor traditional business. For example, "Merryl Linch", a traditional financial company is now a vicious competitor for "E-trade", a pure DotCom. With "Merryl Linch" having a more established ground, investors are predicting that E-trade will eventually fail.
The above scenario is based on US companies. In our beloved "Bolehland", the situation is much worse. Never ever in the history of the internet do we have the "most pathetic" internet target audience. In terms of making money from the internet, "Bolehland" have the "suckiest" users. If "BolehDotCom" (Bolehland DotCom companies), tries to emulate most of the US dotcom, they are most likely to fail. Let's face it. "Bolehland" users are afraid to use credit card on the internet with all the frauds going on. Asia in general has the worst fraud cases pertaining to credit cards. So, how could these pure dotcoms rely on credit card purchases and e-commerce mumbo jumbo when their users won't pay?
Another thing, "Bolehland" users are a sucker for "free this", and "free that", if the DotCom companies try charging the services, it's pretty safe to assume that nobody will visit that site. Compared to US market or Japan, the users there are willing to pay to use these services and is more keen to use their credit cards. Even with all this "Multimedia Super Corridor" hypes, and Incubator stuff, most BolehDotCom will fail miserably if their target market segments are Malaysian users.
I haven't even mentioned about E-commerce yet. Give me one e-commerce company in Malaysia that has successfully implemented this thing as doing OK? Any? None that I know of. You can correct me on this, if I am wrong, but as far as I am concerned, nil, zilch, nada, zero! And B2B? B2C? C2C? Let's just say this is just another "techno-geek" trying to look cool by using all this terms, where in reality it is nothing but overhyped by our own beloved "Bolehland".
So, if any of you are trying to establish a DotCom companies, think about it. Will your plans work? Or you'll just be another "BolehDotBom", forgotten, and broke. Good idea can fail you know....it does..really.
Techonology Columnist
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