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.

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