The week in review: Rent or buy?

Corporate America steps up plans to deliver new services to businesses and consumers alike via Web rental packages and wireless delivery.

5 min read
Corporate America stepped up plans to offer new services for businesses and consumers alike via Web rental packages and wireless delivery.

Dell Computer, Gateway Computer and SAP joined a growing number of high-tech companies marketing hosted Web sites and software applications. Meanwhile, Motorola, Oracle and others moved to stake out ground in the business of providing content for cell phones, handheld computers and other information appliances.

For rent
Previewed at the start of the month, Dell's Tuesday announcement that it will house e-commerce sites for small businesses follows several investments in Web hosting firms and application service providers, or ASPs. Most major PC companies are trying to generate new revenues from computer services, but Dell may find it is also competing with its server customers. Leading small-business hosting service Verio, for one, was displeased.

Gateway unveiled a similar plan a day later, although the PC maker has long been in the Internet service provider market and went further in saying it will ultimately offer everything from digital subscriber line service to rented software. In both cases, however, it remains an open question whether small business customers will choose PC manufacturers over dedicated services companies.

In a related vein, SAP said it will form a company to host its high-end business software, and separately is expected to partner with Corio. Once again, it's unclear how SAP will manage both to cooperate with and compete against the ASPs, but the company's shift away from the sagging enterprise resource planning market is apparent enough.

Such uncertainty contrasts with the newly launched Salesforce.com, a well-heeled start-up counting on the simplicity and low cost of its Web-based sales tools. Its fortunes may serve as a barometer of how quickly businesses are willing to shift from buying to renting.

Wireless wonders
Motorola, Ericsson, Nokia, Palm Computing, Sony and Microsoft, and Symbian were among those who unveiled major wireless initiatives at Germany's giant CeBit trade show. Of particular note, Motorola said it has formed alliances with 19 Internet sites including Amazon U.K., Reuters and Sports.com. The announcement is significant because while cellular phone manufacturers have been preparing to offer specially modified Web content, few have begun delivery.

Oracle unveiled a new company dedicated to helping Internet sites adapt their content for wireless devices. The spin-off is cast in the same mold as Liberate Technologies, which Oracle launched to bring Net content to the television set. Meanwhile, America Online tapped a former chairman of the Federal Communications Commission to head its newly created wireless division.

Internet services firms and leading consultancies are bulking up their wireless divisions and cutting deals with foreign partners to use Europe as a proving ground before tackling the U.S. market. The continent has benefited from a unified standard for wireless data transmissions, encouraging the spread of handheld devices and Web-ready mobile phones.

Be more direct
IBM is expanding its ambitions of manufacturing and selling PCs more like rivals Dell and Gateway. Having exited the retail market, the company is augmenting its "build-to-order" manufacturing capabilities and will increase the number of products it sells directly to consumers and small businesses. Like Compaq Computer, Big Blue has struggled in trying to implement "direct sales," which offer cost advantages but threaten longtime reseller partners.

Microsoft's MSN Internet site is dropping support for newsgroup discussions, the latest sign that the pioneering online chat format has been bypassed by the commercial Web. Marked by freewheeling and often rudely frank discussions on hundreds of specialized topics, the fora once embodied the Internet's ideal of free and open communication.

In the latest security breach affecting the popular ICQ instant messaging service, a Web consultant says his account was held hostage this week by a hacker who took over his user number and tried to pry a ransom out of the deal. ICQ is the instant messaging leader, having signed up more than 60 million registered users, but the software remains highly unsecure, according to Net security experts.

New business
Alcatel acquired struggling Canadian networking firm Newbridge Networks in a $7.1 billion deal to expand its product lines for telecommunications carriers and Internet service providers. The move, which caps a two-year buying spree by the French phone equipment maker, could signal the end of Newbridge's high-profile alliances with Siemens and 3Com. In the fast-moving networking market, some players--such as 3Com--find it necessary to rely on third parties for some of their technology needs.

SBC Communications will acquire Sterling Commerce in a $3.9 billion cash deal adding another Internet-based product to its set of telecommunications services. The company is betting Sterling's business-focused Web commerce expertise will help persuade customers--and Wall Street--that SBC is much more than a voice-oriented network operator with a "Baby Bell" heritage.

Excite@Home and Dow Jones will create a new Internet company targeting small and medium-sized businesses and intends to take it public this year. For Excite@Home, plans for Work.com can be seen as a bold step into the emerging market for business-focused Web destinations, or interpreted as the persistence of a confusing strategy aimed at justifying its often-criticized merger. The company already plans to introduce a tracking stock to separately value its media and content business--the assets that used to fall under Excite's umbrella.

Last hurrah
The leading proponent of a permanent ban on Internet taxes signaled he may be willing to compromise. Virginia Gov. James Gilmore, the chairman of a blue-ribbon Congressional panel studying the issue, is expected to modify a proposal calling for Congress to extend the current moratorium on new online taxes for five more years while encouraging state and local governments to simplify tax rates and rules during that time. The divided Advisory Commission on Electronic Commerce is to hold its final meeting in Dallas next month.

Government officials will be on watch next week for technology glitches related to what may be the last hurrah of the Year 2000 bug. Feb. 29, 2000, may cause problems for computers that don't recognize 2000 as a leap year.

Also of note
Via Technologies took the wraps off its first Intel-compatible microprocessors ? Intel bought Voice Technologies Group, a chip company that will help the giant market products for servers which route telephone call traffic, part of its push beyond the PC ? Fast-growing network equipment maker Copper Mountain Networks inked a series of deals to expand its presence in the high-speed Internet access market ? Palm Computer introduced its first color-screen handheld.