Dot-com dreams yielding to reality

Survivors: The dot-com companies that have endured are getting stronger, and most have more to offer than simply e-commerce

High technology

January 20, 2002|By Stacey Hirsh | Stacey Hirsh,SUN STAFF

Jay Steinmetz is confident that 2002 will mean growth for his Baltimore dot-com company.

"Now that the fallout has happened, the people who are still around are getting stronger," said Steinmetz, president and founder of

The worst is over, experts said, and this year is expected to be more stable.

The companies that will be successful selling online will be the more trusted brick-and-mortar businesses, said Steve Butler, senior e-business analyst for eMarketer Inc. in New York.

"To some extent, I would say, there are very few pure-play dot-coms left standing," Butler said, referring to companies that do commerce solely through the Internet.

Companies such as Wal-Mart Stores Inc. and Kmart Corp. - and their Web sites ( and - have elbowed out some of the pure dot-coms, Butler said.

Traditional retailers are moving toward using the Internet as one of the many ways to communicate with their customers, Butler said.

"Different companies are adopting and understanding that the Internet is a significant component," Butler said. "But it's not the only component.", for instance, sells bar-coding equipment and wireless devices that collect data over the Internet. But Steinmetz said the company also relies on salespeople for in-person or telephone deals. Last year, the company grew from nine to 33 employees, Steinmetz said. As it builds out its Canton office, Steinmetz predicted, likely will be up to 60 employees by year's end.

Dot-coms with strong balance sheets and more to offer than simply e-commerce will be the ones that make it during 2002, Stein- metz predicted., for instance, relies on its customer service and professional services, such as product installation, rather than simply Web sales, he said.

The last two years were full of overblown expectations about the impact the Internet would have in the short-term, said Tim Miller, president of, a San Francisco-based company that researches Internet businesses.

This year, there will be a shift to what he calls the "real Internet." Miller said it would mean profound changes in the way business is done, including how people shop or how companies trade goods.

"E-commerce is going to take its place, along with all other means of retail, including catalogs, including direct marketing, including stores," Miller said. "And it's going to fit in its own little niche relative to those."

Miller predicts Internet commerce will be slightly bigger than the catalog industry. And Butler predicts business to business dot-coms will see some growth. Many of the dot-coms that survived the bubble burst have evolved into consulting companies or software suppliers, Butler said. And one bright spot for dot-coms is the auction space, where businesses can go online and ask several suppliers to bid for their contract.

And there is still consolidation waiting to occur in the dot-com sector, said Miller of More mergers and acquisitions are in the future.

This year, there will be more "business as usual," said Penny Lewandowski, executive director of the Greater Baltimore Technology Council. Instead of looking for the next hot thing, investors, partner companies and workers looking for jobs will seek out a business with a solid management team, she said. Companies that are led by "techies" are looking for more experienced management teams to take over the helm, Lewandowski said., for instance, was founded by 28-year-old John Ferber and his 31-year-old brother, Scott. The company grew out of a technology that John Ferber was using to run ads on the Internet for an online game he invented while in college.

The Baltimore dot-com said it recently brought to the company a seasoned chief operating officer and a new senior vice president of sales and marketing.

Scott Ferber said sought the two new hires because of their experience and because is growing right now.

"They can help take it to another level," he said.

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