RealTime IT News

NetObjects: Quietly Building Its Small Business Portal

On Monday, Lycos announced its ambitious shopping destination site, called simply enough, LYCOShop. The site provides full-service hosting for online merchants -- such as The Sharper Image, Neiman Marcus and more than 1,000 other merchants -- to sell their wares to the massive Lycos user base.

This, of course, comes on the heels of Amazon.com's similar endeavor, ZShops. Why is this such a big deal? Because it is a win-win. Consumers get choice and merchants get an easy way to market their products.

But there is one company doing something similar that has not garnered the hype or surge in valuation: NetObjects (NETO).

The company's roots are in the development of software tools. The most popular has been Fusion, which allows for the creation of Web sites. However, it is a competitive market, involving such players as Microsoft and Allaire, yet NetObjects has been able to create a loyal customer base of over 500,000 -- many of which are small businesses. And they definitely want value-added services.

According to International Data Corporation, there were 44.7 million small businesses and home offices in the US in 1998. This is expected to swell to 57.6 million by 2002.

Over the past few months, NetObjects has been piecing together a strategy to capture its share of the small business market:

  1. Sitematic: NetObjects purchased this company, which allows for the Web-based creation of e-commerce catalogs and stores. Other services, as well: domain name registration and Web marketing. Sitematic has partnerships with OfficeMax, US West and Sir Speedy.

  2. Hosting: NetObjects signed a co-marketing agreement with Concentric Network to provide free Web site hosting services.

  3. Portal: NetObjects will launch its destination site for the small business market on December 6, 1999. It will become a one-stop source for small businesses, including the tools from Sitematic, hosting services and tutorial information (this will come from an existing site of NetObjects called eFuse.com).

But NetObjects has other opportunities besides small business. In fact, IBM promotes NetObjects products to its massive channels (IBM is a major investor in NetObjects). Taking advantage of this, NetObjects released a new product called the Authoring Server Suite 2000, which allows for collaborative intranet site building. The software provides a variety of key features, such as cross-site linking, automated task scheduling and instant messaging.

Of course, the market for the product is huge. According to International Data Corporation, one out of every four dollars spent on corporate Web initiatives was spent on intranets in 1998.

NetObjects had its IPO in the middle of the year, but has struggled since then. The stock now trades at about $6 per share. But the company has $70 million in the bank, is showing a run-rate for revenues of $20 million per year and has effectively controlled its burn rate. At its current price, the stock looks very attractive.

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