A barrage of anti-trust lawyers, flocks of software critics, and a billion dollars can’t do what PC box makers can do to Microsoft–turn off the juice simply by creating their own desktop interfaces. Welcome to the future of everything Internet.
We believe that PC maker Gateway (NYSE:GTW)–which quietly built its Gateway.net Web access effort through a custom desktop link–provides clues to where the Internet service provider market, and future e-commerce/e-tail services, may be headed; right into the box maker’s hands. The Gateway.net service is up to 100,000 users in the brief weeks since launching March 9.
We don’t think Wall Street has realized the significance of this event or the speed at which Gateway.net grew in two months. Consider that the life span of a PC is three or four years. Consider that we expect every major box maker to get in on the customer desktop interface game. Consider that the desktop has been Microsoft’s flag planting, front and center real estate, and ultimate ace that it auctions and sells to online services, content partners, and everyone else in every media industry and communications field who will get in line at the $200 billion market cap firm.
Consider that the desktop is the metaphor for the window to the Internet and all it offers.
But today’s “default” Windows desktop may be history after today’s crop of PCs hit the recycle bin if Gateway’s move signals anything. And we think it signals box makers as the new desktop giants and ISPs, portals, and gateways (pun intended).
Consider that in the span of the next few years, more than 100 million PCs may hit the global market, even more if we consider Asia’s vast potential. Let’s estimate that in five years there will be 300 million total PCs on the planet, making them as common as TVs, most of them new or upgraded.
What if each one has an ISP desktop like Gateway provides? The no-brainer “just click here” for Internet access icon plopped front and center on the screen by a box maker.
Implications on Wall Street: fragmented initial PC interfaces and perhaps four or five emerging powerhouses in the ISP, e-commerce, portal and Internet industry. Names? Gateway, DELL (NASDAQ:DELL), IBM (NYSE:IBM), and Compaq-Digital (NYSE:DEC) to name a few.
Whether or not the anti-trust brigade “wins” any suits against Microsoft is almost a non-event because the net effect may have already created an opening into the heart of the desktop, allowing box makers some freedom to tweak their own interface without fear of reprisal. The box is open and Pandora ain’t going back in.
We expect AOL (NYSE:AOL), Yahoo! (NASDAQ:YHOO), Excite (NASDAQ:XCIT), Lycos (NASDAQ:LCOS), Infoseek (NASDAQ:SEEK), Looksmart, and Go2Net (NASDAQ:GNET) to be actively courting their newfound box buddies; or vice versa with the hardware hooligans acquiring any one of them, gaining both access and destinations beyond a customer help desk or PC support.
The implications of that simple desktop play are huge. Think about it and let us know your thoughts.
Tomorrow: Mecklermedia’s WebSite Value Index and how this latest twist and turn could affect valuations. Does the buck and ‘box’ stop here?
