An entrepreneur, a consultant and a researcher, Bob Hayward has seen the various aspects of the IT industry. Catching the dotcom mania at the right time, Hayward had quit GartnerGroup in early 1999 to set up his own consultancy firm providing advice to IT start-ups in Australia. Prior to the first stint with Gartner, he was running his own company called Qualix for about a year or so.
He rejoined GartnerGroup for a second stint as Senior VP, Operations,
Asia Pacific in late 1999 and is currently based in Australia. He has been associated with the IT industry for the past 21 years. In India recently to meet top industry people, he gave his and GartnerGroup’s views to DATAQUEST on the dotcom phenomena, B2B, B2C, brick and mortar and other issues of the internet world. Excerpts:

How do you view the dotcom phenomena?

First of all there is too much generalization. Though any company in the internet domain is considered a dotcom company, there are lot of different business models in this segment.

The dotcom companies are not similar to a big wave going up or down together. So even when the stock market fell by 500 points, some technology stocks went up. We have always been of the opinion that there has been too much heat in the market when it comes to some of the internet startups. At the same time there have been other technology stocks which have been overlooked or undervalued because they are building the next generation infrastructure. For example, players in providing WAP-enabled infrastructure or companies doing speech recognition software. So overall it is going to be hard not to generalize, but we need to take care not to club all the players in the same dotcom category.

Do you think that the current correction in Nasdaq is temporary and a majority of dotcom companies will regain their old valuations?

It is fairly obvious that most of the B2C segment has been dramatically overprized by the stock market. For example, retail even at the best of times has low margins and is a hard business to be in. So why should a company suddenly have such a compelling and better business model just because it is selling online? It is hard to justify valuations of such dotcom companies. The high valuations of such companies have been really based on high expectations of growth and flawless execution without expecting any competition in the next 4-5 years, which is really an unrealistic scenario. With reality setting in even before the big fall, most of the online retail segment was already down by about 50%-60% from their all time highs.

People and investors are realizing that there is actually going to be lot of hard work before they can see some profits. Moreover it is going to take longer and cost more to acquire customers, and consequently revenues. There seems to be little loyalty toward etailers.