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Commentary: Dot-coms learn a lesson from

The glamour of epitomized the excitement of start-ups in Internet retailing. Its collapse illustrates the risks.

See news story: British e-tailer calls it quits

By Alexander Drobik, Gartner Analyst

The glamour of epitomized the excitement of start-ups in Internet retailing. Its collapse illustrates the risks.

This first major dot-com collapse came the day after U.K. electronic auction company QXL and Germany's Ricardo agreed to a merger valued initially at $937 million.

These two events are consistent with Gartner's prediction last November that there would be dot-com failures and dot-com mergers in 2000. Gartner's hype cycle indicates that "e" hype would diminish by the first quarter, primarily due to deficient business strategies, poor implementations and the use of the wrong technology.

Unfortunately, failed in all respects--most noticeably in its almost unusable, avatar-based system that demanded high-speed access. When coupled with poor business management and an uncontrolled cost base, the result was inevitable.

Gartner believes the hype-cycle scenario is correct and forecasts that more failures and consolidations will take place.

However, one should not conclude such events invalidate e-business as a concept, or that all business-to-consumer dot-com models will fail. Instead, strong alignment among business strategy, technology, sound management and a clear view of what the customer really wants must be ensured.

The lesson from for dot-com companies is to ensure strategies and technologies are aligned with reality and that the attributes of physical businesses are not all forgotten.

Entire contents, Copyright © 2000 Gartner Group, Inc. All rights reserved. The information contained herein represents Gartner's initial commentary and analysis and has been obtained from sources believed to be reliable. Positions taken are subject to change as more information becomes available and further analysis is undertaken. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of the information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof.