eMailbag: RealNetworks, Yahoo, AOL, Showcase Votes
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First reader up this week writes: "Dear Steve, most of my portfolio is in Internet stocks and I like the concept of melding the Internet with the office PC user. My question: does RealNetwork have a true corner on the market?"
Reply: RealNetworks (NASDAQ:RNWK) commands the lead in audio-video streaming with a reported 35 million registered users of RealPlayer. The firm also says that since debuting three months ago its newest player, G2, has been downloaded eight million times.
Real also just announced three key distribution deals: AOL, Lotus and Netscape. Combined we estimate that could extend Real's reach to perhaps 50 million or more non-duplicated users over time. However, when you say "market" please remember that this is a dynamic place and not static. In a dynamic market firms can "corner" it but it's like saying in the 4th inning of a baseball game "who won?" with five innings to go.
Internet firms have to keep cornering the market in order to succeed--especially software markets, which are only as good as the last upgrade.
Real's biggest danger is Microsoft, which has rights to Real's technology that powers, in part, its Media Player, has more than 100 million Windows users, deep pockets, desktop leverage, can acquire just about anything it desires, and has a proven record of coming out with products that eventually sometimes grab dominant market share. We believe Real has a chance and good head start, that its alliances will help its exposure but that more such alliances are needed. So far AOL and Intuit have been the only firms we've seen to ever beat Microsoft at one of its ventures. Real's CEO Rob Glaser came from Microsoft so he knows the routine well.
Born On Dating
"Could I request, please, an inception date for the ISDEX? A birthday for the index will enable me to set up a gorgeous chart that I can use for personal investing, as well as in capacity as advisor to those I advise on Internet investing."
Reply: ISDEX first began in April, 1996 on the debut of The Internet Stock Report. ISDEX valuation is set to a benchmark of 100 on December 31, 1996, is limited to 50 representative stocks in the Internet industry, and calculated as an arithmetic average to best reflect the often volatile trading nature of this diverse group.
World Wide Web Indeed
"The Dubai investment group has an Internet portfolio which is tailored regularly by myself following the usual Net research which you will be pleased to know includes analysis of your ISR. Shukran (Arabic for Thanks).
You could help me with this query: we've held Yahoo (NASDAQ:YHOO) since May and have a tidy 100%+ . Would you help me decide whether to stay or go as aggressive growth is the mission? Also, I hold Net2phone (NASDAQ:IDTC), CDnow (NASDAQ:CDNW) and ETRADE (NASDAQ:EGRP) and would appreciate a 6-month outlook. Finally, what do you guys have to say on the effect of Y2K upon Internet stocks."
Reply: Dear Dubai, we don't get into the "buy, sell or hold" game but always make our goal of informing you of the ups and downs, pluses and minuses, yins and yangs that constantly engage each other in the Internet investment sphere. Informed investing is our goal, helping you decide for your own return on investment (and return on risk) which best suits you.
So here's our opinion on the above: we expect Yahoo to get heavy competition from AOL, Microsoft and Netscape in the coming year, especially AOL which begins carpet bombing new sign ups disks via mail and whatever other method it can soon. The number one reason people try anything on the Internet is if it's free. FREE trial usage sucks people in to AOL. AOL also understands better than most how to market itself and uses TV effectively.
Yahoo faces the same tough choice that every Internet company does: how to grow and meet growth. So far it's made the right moves.
Intel's Andy Grove says "only the paranoid survive." On the Internet we say "only the paranoid schizophrenic" have half a chance. For only here do competitors ally, rivals cooperate and "competition" proliferates.
On IDTC we think Internet telephony remains a niche that could explode; CDnow has a chance to move beyond music (but probably needs to acquire or be acquired, say by a barnesandnoble.com type); ETRADE's plan of being a financial destination site (rather than just trading site) may take some time. The skill set for content differs from software zapping out a trade confirmation.
On Y2K we think e-commerce sites (retail, banking, marketing, inventory) may suffer if the computer systems that run the sites aren't updated to reflect the year 2000 digit increase. We think the weakest link could be in the shipping of goods bought over the Internet if those shipping systems aren't up to date (literally). And nobody should fly on December 31, 1999; they may find themselves transported "back to the future" landing in the year 1900 as the last two digits of the computers reset. The air traffic control system has us more worried than Internet stocks and Y2K.
And The Votes Go To...
All last week we brought you the dozen or so firms that presented at Fall Internet World's hugely successful Internet Startup Live! Venture Showcase and asked you to vote for a favorite. Those receiving the most votes: DeskGate, InsureSeek and Jumpmusic. Are you an Internet entrepreneur startup firm? Send us your company bio and maybe we'll feature you in an upcoming showcase.