Gartner Group: 85% of Asia Pacific dotcoms could fail in next 24 months

By Irene Tham

Thursday, May 11 2000

SINGAPORE--Market research firm Gartner Group predicts that 85 percent of all pure-play dotcoms in Asia Pacific will fail in 24 months following the bursting of Nasdaq's Internet bubble.

"These dotcoms will either fold up because their business models are no longer sustainable. They might merge with or be acquired by other companies," said Albert Lill, Gartner Group vice-president for E-Business Transformation.

In the worldwide arena, the failure rate is expected to be in the 95 percent to 98 percent range, as most pure-play dotcoms came from the US and Europe, he added. (Asia Pacific only contributes about 1 percent of the total number of dotcoms worldwide.)

Most of the dotcoms from the US and Europe went public without tangible business models, he said. "Their huge market capitalization is sheer insanity."

"But, it won't happen now... the traditional ruling (which is stricter) in taking companies public is starting to come back," he said, adding that investors will make more sensible investments as well.

Following the failure of almost all the dotcoms in the world, a new business model termed a "hybrid" will emerge to be dominant, Lill said.

"Hybrid" companies have both brick-and-mortar and Internet businesses and they will be formed by the merger of brick-and-mortar firms and dotcoms or by acquisitions.

In 24 months, the world market will consist of 94 to 97 percent hybrid-type companies across all industries, Lill said.

About 2 to 3 percent will be pure brick-and-mortar companies, especially in the retail and food industries. The remaining 1 to 3 percent will be pure-play dotcoms who offer portal and online commerce exchange services, he added.

"There will be two to three commerce exchanges per industry per country and one to three portals per region," Lill predicted, adding that the big portals such as Yahoo and Alta Vista will be the ones to survive.

Ironically, by 2006 to 2008, "there will be an end to 'e-business'," said Gartner Asia Pacific research director Joe Sweeney.

This is because it will be part-and-parcel of any normal business practice that it will not be talked about in the same hyped up fashion as it is today, Sweeney explained.

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-- Carl Jenkins (Somewherepress@aol.com), May 11, 2000

Answers

The Gartner Group's predictions for Y2K were
so far off the mark, it's a wonder that any-
body still listens to their predictions.

-- spider (spider0@usa.net), May 11, 2000.