PracticeConsultingHoneymoon is over for dotcoms

Honeymoon is over for dotcoms

The future of many European dotcoms hangs in the balance and they continue to ignore traditional business rules at their peril, according to research from PricewaterhouseCoopers. The study says companies will increasingly struggle to come to terms with the demands of equity markets, while traditional "bricks and mortar" organisations look to take advantage of being best placed for long-term success in the e-business evolution.

The profits amnesty granted to many start-ups is rapidly disappearing – most traditional companies and dotcoms believe that they have a window of two to three years in which to achieve profits before they must demonstrate acceptable P/E ratios or perish. A small percentage expect as little as six months.

A large number of dotcom entrepreneurs are looking to make a short-term cash gain from the e-business boom rather than build a sustainable, long-term business. This is seen as a particular issue for US dotcoms, where two-thirds of the companies surveyed think that this is the case.

On Europe, half of respondents said that European dotcoms are run by serious people building long-term businesses. In the UK, this figure was highest, at 66 percent of all respondents, contrasting with Belgium at 38 percent. Most surprisingly, it is the dotcoms themselves (57 percent) who are more likely than traditional companies to think that European dotcoms are led by opportunists. But dotcoms face a more serious problem – failing to see the importance of satisfying customer demand and focusing more on leadership and strategic partnerships, and less on fulfilment and website design.

Twice as many incumbents see first class fulfilment as an important factor to the immediate success of a dotcom, compared to dotcoms themselves (15 percent).

Long-term success factors are very different from those needed to make a short term impact – a significant finding is the dramatic decline of the importance of being first to market from 28 percent (joint 3rd ranking) in the short-term to just 8 percent (last ranking) in the long term.

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