Dot.com take 2: Web 2.0 plus powerful broadband re-ignite e-commerce

But this time the story includes more players and will not end in a crash as it now has the infrastructure to support it, according to analysts.

Web 2.0 combined with increased broadband presence has the power to re-fuel e-commerce, according to a recent Paul Budde report.

Internet Media companies such as Google, News Corp and Yahoo are just some of the leaders taking advantage of this market, according to Paul Budde, but there are also many ISPs and BSPs that are diversifying their business in order to make the most of the 'many opportunities' that this new wave of technology presents.

"We see more and more businesses increasing their e-activities. This includes e-trading, Web site marketing and other forms of related communications. This increase in activity is being reflected in the companies' financial performance," said Paul Budde Communications senior analyst Kylie Wansink.

"An estimated one million companies, worldwide, now rely on the Internet economy for more than 50 per cent of their revenue. There are now around 100 million Web sites in existence worldwide and around 16 per cent of the population is online -- leaving room for more growth ahead."

Wansink said that while the industry had the right vision in the late 1990s, the timing was wrong. Now, with high speed broadband connections increasing, the Internet economy has been revived

"What was missing (during the dot.com days) was the infrastructure needed for the Internet economy. We have always maintained that there was nothing wrong with (most of) the so-called dotcom businesses. Unfortunately these companies had to wait around for broadband before they could really take off," she said.

"Of course, another group of cowboys, driven by greed, also entered the dot.com market, and they all went under in the subsequent dot.com crash."

Gartner analyst Mark Raskino also compares the Web 2.0 phenomenon with the dot.com boom, in that most of the action is taking place in startup businesses entering industry sectors with new offerings.

"Investment will be spurred by the lucrative pipeline of second mini-dot.com boom stories from the social networking category of Web 2.0," he said.

Examples of this can already be seen in the MySpace purchase by News Corp for $US580 million, Google's purchasing of YouTube for $US1.85 billion, and Microsoft buying a $US240 million minority stake in Facebook.

Raskino agreed that there are differences this time around, and that the interest in Web 2.0 is not leading to a crash.

"First, the lessons of the dot.com era are a frame of reference in the memories of many leaders. Therefore, this time, we expect real progress to go a little faster, the volume of startups to be smaller (fewer "no-hopers" getting funds) and the success rate to be higher," he said.

"Second, there are many individuals waiting in the wings for this type of opportunity. Biding their time in mainstream jobs since the turn of the century, they are now relishing another 'rush of excitement'. Finally, the battle this time is not so much "online vs. bricks and mortar", but more "community vs. brand", he said.

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