Let's take a look at our latest thinking for this group:
@Home (NASDAQ:ATHM), the pioneer in cable Internet services. Deals
with all the leading cable operators through an early smart alliance and
investment from TCI, nation's largest cable operator (and John
Malone's Hi-Ho Silver horse). Malone was the interactive TV cowboy who got
thrown from his horse in 1995, when that paradigm shift never happened.
Internet did. Through @Home, TCI gets to get back on the horse and can try
@Home passes more than 10 million homes although we are a bit
worried only a few hundred thousand have signed up. Over time, if cable
Internet takes off, AOL is now waking up to the fact that @Home could make
business very difficult for AOL and any Internet content firm or service as
@Home could charge toll fees to be carried on its service (the cable
The big picture: AT&T has agreed to acquire TCI, which puts TCI's
stake in @Home in the hands of AT&T. Under terms of the merger approval by
the government, AOL and others have asked the FCC to consider requiring
@Home to open the cable lines to others. AT&T says a deal can be made among
industry, the FCC doesn't need to dabble here.
Either way, we think @Home
is wired into the center of cable Internet. Its real challenge may be to
convince consumers that it's not as anathema to consumers as the cable
firms have been for 25 years, with the poor customer service cable companies
have offered all these years.
Concentric Network (NASDAQ:CNCX). Our view hasn't changed in that
corporations want to leverage the Internet infrastructure with the security
aspects of a private network. Concentric, an ISP, offers "virtual private
networks" to companies. This is one reason we put it on the watchlist last
31, 1997. Concentric's focus on Web hosting and other corporate value-added
services also gets our attention. November 2, it launched The Web Developer
Network, adding to its hosting offerings.
Earthlink (NASDAQ:ELNK) tops our list of consumer-oriented ISPs to
watch as we outlined 12/31/97. The Sprint investment earlier this year
included Sprint feeding Earthlink new subs every year, and Earthlink's more
than 600-person customer support team, has put ELNK on the radar. But
lately we've heard some complaints that certain POPs (points of presence)
are busy when consumers try to dial up. This is the same problem that
Maybe it's time to up the user-to-modem port ratio or see why there
are busy signals at times. Nothing like a busy signal to change the winds
as AOL found out, but it has recovered and moved on. Earthlink is much
user base, about 1 million to AOL's 13 million. That said, a busy signal is
a busy signal and should never happen. How would you react if you tried to
turn on the TV and a message said: too many people are watching, try again?
Infoseek (NASDAQ:SEEK) gets closer to revealing what it and the
Mouseketeers at Disney (NYSE:DIS) have been up to pending Disney's $430
million offer for 43% of SEEK. Go.com is the name and it awaits the green
light later this year. At the time we put SEEK on our watchlist last
December, our reasoning was relative valuation to the search peer group.
SEEK flirted with north of $45 just before Disney's offer was announced.
Network Solutions (NASDAQ:NSOL) keeps getting the naysayers believing
that impending competition will change its outlook. We still think that
Network Solutions as default registrar with a service in place holds an
edge. It also just announced a Japanese service. Being first and
capitalized matters on the Internet. These are two things Network Solution
ONSALE (NASDAQ:ONSL), until eBay came along we thought ONSALE had
the best commerce model on the Web. It still has a good one in our view and
nothing explains the gap between it and eBay's valuation except eBay's
cleaner commerce model: never takes possession of goods, only facilitate
RealNetworks (NASDAQ:RNWK) first landed on the list in December,
based on what I saw as a growing demand for audio and some video on the Web
and its leadership status. We believe the recent spate of deals to secure
distribution through AOL, Netscape and Lotus give it a stronger hand in the
battle with Microsoft for media streaming software.
Sportsline USA (NASDAQ:SPLN) had the Olympics and CBS network reach
to raise its profile, which was the event we foresaw 11 months ago before
SPLN zoomed and then softened. We think Sportsline has lately undersold its
lineup of sports stars whose Web sites are on Sportsline.com. And CBS
without an Olympics has proven of little value lately in our opinion. On
the up side, we think CBS Sports and the NFL could boost Sportsline's
USWeb (NASDAQ:USWB), first hit the watchlist 12/31/97, on our view
that companies would want to outsource much of the Internet process. Now
with the pending merger with marketing group CKS (NASDAQ:CKSG), we think
USWeb could come out a stronger firm once the two cultures get to know each
As 1998 draws to a close, we've kept the top 10 watchlist the same.
It's been quite a ride so far and we'll see where the group ends this year
before posting our top 10 to watch for 1999.