Unable to talk about his own company, Safeguard Scientifics, which is in a quiet period, Stephen Andriole, SVP and Chief Technology Officer of the Internet Incubator, spoke on the next "10 Killer Internet Trends" at PaineWebber's Internet 2000 conference in New York Tuesday.
The overarching trend Andriole highlighted was the bifurcation of e-commerce into two streams; one, commodity-based, will be automated, and driven by intelligent agents. The other, experience-based, will be multi-media, and come about through convergence.
Though Andriole wasn't free to speak about Safeguard's business, as it has recently filed for a follow-on offering of 10 million shares, the following market trends, counted down Letterman style, are the where the company will "place its bets going forward," Andriole said.
10. Broadband By 2004, there will still only be 65 percent penetration in the US, Andriole said. Most of this is B2C, and there is a lot more upside when you factor in B2B. DSL, Cable Modem, and Wireless are all included in this growth sector, and you can expect a lot of consolidation.
9. Appliances Driven by user mobility, they will replace PCs; laptops, PDAs, or Personal Digital Assistants, and phoned are becoming the primary Internet access devices.
8. Online/Offline Bricks and mortar businesses will integrate with online businesses, as AOL (NYSE: AOL) and Time Warner (NYSE: TWX) have. WallMart (Nasdaq: Wand Amazon (Nasdaq: AMZN), Sony (NYSE: SNE) and Yahoo! (Nasdaq: YHOO) are just fantasies at this point.
7. Experience-based transactions Powered by 3-D, virtual reality and photo-realistic imagery, the Web will become a virtual entertainment complex. One of Safeguard Scientific's public partners in this space is LifeF/X, Inc. (OTC: LEFX) a provider of photo-realistic, 3D human modeling for the Internet.
6. Metrics The metrics Internet companies watch will change; they won't care about click-throughs that don't lead to buys. Revenue-per-customer and return visits will be the most closely watched statistics.
5. Rise and Morph of ASPs The number of Application Service Providers will increase in direct proportion to the realization that IT should not be a core-competency of a non-IT organization. ASPs will morph into "Total Solutions Providers," or TSPs.
4. Data will evolve from Information to Knowledge to Transactive Content Structured and unstructured data, information, knowledge, content and analysis will fuel mining and analysis to enhance B2C and B2B transactions and mass customization. Content is king, not data. This is the return of AI (Artificial Intelligence). Sites won't just serve up banner ads, in a couple of years, sites will reconfigure themselves for us as individuals.
3. We will finally be able to converse with our Digital Counterparts Continuous speech recognition and speech output will become widespread first in selected vertical domains, and then across all domains.
2. The ubiquity of trading communities Buyers and sellers will meet, interact, and transact on one-to-one, so-operative, and transactive bases. How they interact will be driven by the evolution toward "perfect markets."
1. B2B and B2C interaction will become Automated Intelligent agents, powered by simple, rule-based systems, collaborative filters and neural networks, will act and adapt autonomously within their designated parameters. DocuCorp International, (Nasdaq: DOCC), a document automation company, is a publicly traded Safeguard Scientifics partner.
Safeguard's stock was up 4 11/16 to 197 3/16 Tuesday, continuing its ascent since the company announced a stocksplit and new CFO in February. Competitor CMGI (Nasdaq: CMGI) also spoke at the conference, highlighting its priorities for the next year.
CMGI, the granddaddy of Net incubators saw shares decline 4 43/64 to 142 21/64 Tuesday. It also competes with the parent company of Safeguard Scientifics, Internet Capital Group (Nasdaq: ICGE).
Hans Hawrysz, Executive VP, Corporate Strategy said global expansion, free Internet access, and B2B are its key growth areas for 2000.
"Asia is a critical market for us," said Hawrysz, who highlighted partnerships with Sumitomo, Richard Li's Pacific Century Cyberworks (PCCW), and Shanghai Information Investment, as key to its strategy in this area. "We expect PCCW to be the largest broadband delivery system in the world," Hawrysz said.
1stUp.com is the companies portal for free access, and MyWay is its business-to-business portal.
In response to questions on its wireless strategy, Hawrysz said, "there will be several announcements over the next few months," in that space. The company currently has a partership with Bell South (NYSE: BLS) in this area.