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NetObjects: Room for More

Back in October, I talked to the Chief Executive Officer of NetObjects (NETO) , Samir Arora. The company had an IPO that broke its IPO price and was selling for a lowly $6 a share. Many thought it was a software has-been. But when talking to Samir, I thought there was a great opportunity and wrote a column about it "NetObjects: Quietly Building Its Small Business Portal (10/27/1999)." Yesterday, the stock closed at $32-9/16. The high is $41-7/8.

The company continues to become an integral part of the Web. NetObjects has enabled over 2.5 million Web sites globally, which is about a 20 percent market share. With such a huge customer base, the company can continue to rapidly grow its business, as new products are offered into its expanding channels.

In fact, the company has released the new version of its flagship product, NetObjects Fusion, which is version 5. The software is browser based and of course, integrates many Web services to help get companies online (such as www.register.com).

Another important release is Collage, which is a content management system for the enterprise. The system has extensive collaboration tools (linking everyone in the enterprise) and allows for a real-time view of the content management cycle. Users can manage virtually any type of content: images, media, documents, dynamic data, and even applications. Collage is built using reusable components, enabling the technology to be easily integrated in a corporate information system.

But perhaps the most exciting part of the company is its new concept of the embedded ASP (application service provider). Increasingly the traditional software model -- which requires a licensing fee -- is giving way to the ASP model. Think of this as renting software services. What's more, the services reside on a central server, which can be more efficiently maintained.

NetObjects has gone a step further by allowing companies to embed the ASP services. This is accomplished through the company's new site called GoBizGo.com. Here's how it works: Let's say XYZ Corp. wants to established an e-commerce presence, but does not know how. What's more, the company does not want to deal with the constant headaches of managing the complex details of an e-commerce site. By going to GoBizGo.com, XYZ can easily construct an e-commerce presence. More importantly, the site looks like ZYZ Corp. built it.

In fact, the GoBizGo.com site allows other sites to resell these embedded ASP services. For example, OfficeMax has access to many business owners that want to get online. With GoBizGo.com, the company can provide these customers with seamless ASP services. NetObjects has more than 25 such partners, which include ADP, Sir Speedy and Deluxe Paper Payment Systems.

For NetObjects, the embedded ASP model is huge. Instead of relying on one-time licensing fees, the company will now get recurring revenues.

The small business market is relatively untapped. While there are 18 million small businesses, no more than 15 percent have any Web presence. The big problem has been lack of an integrated solution. Well, NetObjects has one. Interestingly enough, it first provided such a solution in Germany. Now NetObjects has enabled 60 percent of the sites in that country.

In my October article, I concluded, "At its current price, the stock looks very attractive." To me, the statement still is true.