- Warren Packard, Draper Fisher Jurvetson
RealTech Conf-PS-June01-tor-lm
-1-
TOM SIEBEL CEO, Siebel Systems
“If you can’t generate profits, significant market share and customer satisfaction, you re out of business.”
Fiber
105
capacity
… with increased throughput ...
103 104
102
0
RealTech Conf-PS-June01-tor-lm
Time
… and powerful network economics
Value, 100 cost
80
60
40
Value increases as the square of connections
… lower storage costs ...
Cost ($/MB)
Harddrive size (GB)
100 Average HD size in PC at
75 retail (GB)
50
25
0.00
0
1995 1996 1997 1998 1999 2000 2001 2002 2003
80
Price of the Model T touring car
1908-20
60
40
Price of CPU 20 computing power
$/MIPS 1982-95
0
1770
1910 1985
1775
1915 1990
1780
1920 1995
$/MB 1.00 0.80 0.60 0.40 0.20
“Going, Going, Gone: Business-to-Consumer Sector Goes Bust” - , April 2000
“Can you build a brand online selling third-party goods? The answer is no, even though everyone used to think the answer was yes”
“On the B2B exchange side, I don’t think anyone will survive. They are all gone.”
RealTech Conf-PS-June01-tor-lm
-2-
THE CAPITAL MARKETS HAD IT ALL WRONG
$123B
Travelocity
120
Expedia


100
Webvan
80
Priceline
60
eBay
40
20
Amazon
0 Peak Market Cap
$11.4B
All Other Amazon
eBay
Current Market Cap
RealTec-3-
IS THE REVOLUTION OVER?
July 28, 1794
RealTech Conf-PS-June01-tor-lm
-4-
THE BUMPY RIDE OF ECONOMIC REVOLUTIONS
1860 - 1890
Dell Packard Bell
- Bryan Rutbert, Warburg Dillon Read
“The living dead have gotten away with murder because the public markets have funded riskier ventures. Look at - if could be the biggest living dead the public markets have ever seen.”
1895 - 1925
RealTech Conf-PS-June01-tor-lm
-5-
FUNDAMENTAL FORCES ARE AT WORK
Index 120 100
Lower processing costs ...
Workers per bushel of manufactured cotton England 1770-83
Computers
Operating systems
Applications software
Marketing, sales, and distribution
1995
Intel
Motorola AMD Cyrix
Common standards Time based competition
… fragmented radically IBM
F+ nc
-6-
MANY INDUSTRIES EXPERIENCING A REDEFINITION OF COMPETITIVE BOUNDARIES
1985
Microprocessors, integrated circuits,
memory chips
COMPUTER INDUSTRY
IBM , Digital
STRATEGY AND THE INTERNET: TRENDS AND PREDICTIONS
Real Tech Conference Peter Stanger
E-COMMERCE IS DEAD
“E-Commerce Is Dead, Long Live E-Commerce” - The Industry Standard, April 2000
Cost increases linearly with connections
Profit Loss
20
0
0
1
2
3
4
5
6
7
8
9 10 n
Value
Connections
Cost
0
2v
6v 12v
20v
30v
42v
56v
72v
90v n(n-1)v
F+0 F+ 2c F+ 3c F+ 4c
F+ 5c F+ 6c F+ 7c F+ 8c F+ 9c F+ 10c