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NetObjects: Small Business Is Big Business

Several months ago, while at Internet World, I had a chance to meet up with Samir Arora. Of course, we talked about his company, NetObjects , as well as the plunge in valuations of the Net sector.

Yes, NetObjects was on the Net roller coaster. In the past year, the stock hit a high of $45-11/16 and a low of $1-1/16. Currently, the stock is at $1-5/16 and the market cap is $40 million.

Despite the stock price, NetObjects is continuing to focus on its core strengths. And big companies are paying more than lip service. Take Dell Computer. In a recent agreement, Dell will preload NetObjects Fusion Web site building software on Dell PCs. Basically, this will make it much easier for small and medium-size businesses to go digital. Yep, the NetObjects Fusion logo will be on the desktop (on the Dell Dimension and Inspiron notebooks).

But there is more. You see, NetObjects purchased MyComputer.com, which was already a part of Dell's small business Net services. MyComputer.com is an application service provider for the management of Web sites. There are more than one million members.

In other words, NetObjects will be the primary source of Web site solutions for small and medium business for Dell.

In terms of the financials, NetObjects generated revenues of $5.4 million in the past quarter, compared to $5.8 million in the same period last year. Why the decline? Well, the company has shifted its business model away from one-time, up-front licensing to a long-term monthly subscription model. "We get paid a percentage for every small business subscriber that uses our services," says Arora.

NetObjects has also recently introduced a new product called Matrix. It is a set of online services that will be distributed through business service providers. In order to allow for scalability and interoperability, the solutions are based on XML and server-side Java. There is even support for handhelds and cell phones. With Matrix, companies have access to customer interaction services, marketing, reporting, B2B marketplaces, and scheduling.

No doubt, the small business opportunity is huge. Small businesses account for about half of the U.S. economy, but less than one percent of online business. But this is expected to change soon. And NetObjects has the complete solution to make this happen.

"The Internet software industry is going through a major change from licensing to a long-term monthly subscription model," says Arora. "Simply put, NetObjects' goal is to transform itself to the leading B2B infrastructure e-services supplier to partners that are targeting small business."