December 1999

BESTOFFER.COM GOES LIVE - a highly visible Web site (written up in Time Magazine 9/27/99, built by OMIX) which provides information, performs inspections and soon will auction used cars. Check out BestOffer.com and especially check out the photos and inspection report on vehicle ID# 217804, which is an extremely cool 1990 Ford Taurus being sold by Kyle. A must have for any pre-IPO entrepreneur. See http://www.bestoffer.com

BACKEND RELIABILITY IS PARAMOUNT when users are a click away from switching companies. It is surprising how many sites still are unreliable despite the money being spent on Web promotion. We are finding that VC board members these days are recommending that their startups spend the money for industrial grade infrastructure, considering this well worth the increased cost. Jim Vicars, an Addwater.com fulfillment consultant says that the backend is collapsing. Over 70% of the shopping carts are being abandoned and orders that do go through are delivered in a frustrating manner. The Web backend IS the customer's shopping experience.

MANY BIG COMPANIES ARE SLOW TO ADOPT WEB paradigms. OMIX continues to see small and midsize companies that understand the speed of the Web marketplace and the new ways that commerce flows on the Web. While a large company is spending 6 months making a decision, a smaller companies is on the second revision of its Web site. If this continues, the economy may break into Web commerce haves and have-nots, and finally justify the valuations of Web companies. Some large companies are fighting this trend with a clicks and mortar strategy. Innovations such as Web kiosks in stores and allowing Web users to return products at stores help to merge the two worlds. Some large companies also create their own channel conflict before a Web startup forces the issue. If WebVan.com gets 5% marketshare for high value food in urban centers, it could put a dent in Safeway's 3% margin. Charles Schwab is building an on-line investment bank based in Silicon Valley to change the rules for how online investors participate in IPOs.

WEBHARBOR.COM IS AN ASP PORTAL, which tracks many of the application service providers now hosting applications for companies. Webharbor makes money by architecting & selling equipment infrastructure for ASPs. OMIX builds the software infrastructure that a software company needs to become an ASP. Building software infrastructure includes developing ordering, billing, security, Web application front-ends and downloadable client applications. HP predicts that 75% of small business IT spending will be on out-sourced infrastructure and applications. HP announces a service to host email for companies for a monthly fee per user, as part of their Apps on Tap strategy.

FREE WEB APPLICATIONS CAN HELP SELL your products. Charles Schwab has an insurance needs calculator which allows customers virtually to sell themselves insurance. OMIX built Web applications for Cisco and HP to help potential product customers figure out their return on investment, upgrade credit, product configuration and other information.

BUILDING COMPETITIVE ADVANTAGE WITH WEB infrastructure seems to be a key strategy for Silicon Valley startups. OMIX's (currently) typical architecture of Enterprise JavaBeans for business logic, Java Server Pages for dynamic page creation, WebLogic for an Application Server and Oracle or SQL Server for database management seems to combine the right tools for creating a unique competitive yet flexible advantage. High level screen painting or e-commerce tools allow companies to do only what others already do, with little flexibility. Enterprise JavaBean components promise the best of both worlds by potentially being bought off- the-shelf but integrating into a flexible architecture.

GETTING LISTED ON SEARCH ENGINES is still proving hard to automate. A friend of OMIX, Zack Geiser, zack@webative.com does this by hand for $175. However it should be repeated every quarter, and for that he charges $100/qtr.

USWEB/CKS MERGES WITH WHITTMAN-HART and moves its headquarters to Chicago. Goodbye USWEB/CKS. It's actually surprising these days when the market values a Web Integrator at only 8 times sales rather than 40.

FOR QUESTIONS OR TO RECEIVE OMIX NEWS call Kyle Hurlbut, Jim Chabrier or Milla Milojkovic at 650-330-8950 or sales@omix.com