As consumers tune out to the white noise that digital media and
convergence start-ups have created since flooding the Internet in
the past three years, the growth of broadband technology - from
content firms to the technology companies that deliver that
information to consumers and business - is being
re-evaluated.
That seemed to be the consensus yesterday at Convergence 2001, a
broadband conference in San Francisco presented by digital media
research firm The Carmel Group.
Dwindling hope that consumers will adopt the Internet as a new
venue for mass communications, equal to television and radio - and
pay for it - has led technology developers and investors to become
interested in the corporate market.
"There's now a trend toward moving into enterprise because they are
the customers that write the cheques," said Lynda Keeler, managing
director for Redleaf Group, a venture capital firm investing in the
broadband and digital media space.
As has been proven time and again that most customers are not
willing to pay for content on the Internet. As a result, businesses
that measured success in terms of page views rather than income
sheets are now scrambling for a new market.
"Stickiness and eyeballs don't count anymore," said Satish Menon,
chief technology officer of Kassena, a digital media platform
developer that emerged out of Silicon Graphics. "We need to focus
on what makes money today - that's in the enterprise space."
Spending by corporations and small and medium-sized businesses on
broadband software and hardware reached $140m (£97.8m) in 2000,
according to Jupiter Media Metrix. While that is a small percentage
of overall IT spending, the figure is pegged to grow to $2.8bn by
2005, Jupiter Media Metrix estimates. With the corporate market
growing, and the consumer market losing much of its steam, most
companies working in the content delivery space are running, not
walking to acquire business customers.
Moving into the corporate sphere will be a tough transition,
venture capitalists and business executives have claimed. The most
difficult shift will be for companies that launched their
businesses, and raised their investment capital, for a target
market of consumers. Corporate IT buyers are a very different breed
of customer to consumers, according to Keeler.
"Many of these companies don't have the experience, for instance,
of selling hosted software to corporate customers," she said.
Another difficulty has to do with the slowdown in the economy. Alex
Bennick, an associate with venture capital firm Battery Ventures,
whose portfolio companies include content delivery firm Akamai
Technologies, noted during a panel discussion that corporate
information technology spending is "stuck in a holding pattern,"
and most of the potential corporate customers are not buying into
the idea yet.
"The focus on the enterprise is really the key market that the
industry needs to turn its attention to," Bennick said. "But it
will rely on a leap of faith on behalf of enterprise CEOs."
But the questions still remain whether broadband and streaming
media can even penetrate the corporate market, especially when
companies are investing less into new technology. And there is
little evidence that investments in streaming communication will
reduce costs in other parts of a business, Bennick said. For
instance, do companies that invest in Webcasting software and
hardware save money on corporate travel budgets?
"It's something that businesses need to prove on a case by case
basis," he said. "Evidence is starting to emerge."