E-marketplaces set to crash

Wireless banking, the rise of application service providers and a new dotcom crash were some of Gartner Group's predictions at...

Wireless banking, the rise of application service providers and a new dotcom crash were some of Gartner Group's predictions at its annual symposium in Cannes this week. Nick Huber reports

The dotcom market is heading for a second crash as companies in the much-vaunted business-to-business (B2B) marketplaces struggle with a limited take-up.

That was the stark warning from Gartner Group this week. The company also urged European governments to overhaul both their e-business strategy and their regulatory frameworks to boost growth in the new economy.

Despite the hype and a flurry of investment in B2B services, according to the Gartner, the actual value of transactions, particularly within e-marketplaces, is still very low.

It predicted the B2B market crash could be less than one year away.

As recently as this spring only an estimated 25% of all European e-marketplaces were actually conducting transactions and only half will be doing business online by the end of the year, Gartner claimed.

The company also predicted that a growing number of companies will start to double their e-commerce investment over the coming year as the complexities of e-business investment sink in.

According to Alexander Drobik, vice-president of business management at Gartner, "The crash will be more subtle than the B2C crash.

"There is still a lot of investment and people setting up business plans. But venture capitalists are getting more ruthless," he said.

Gartner also called on European governments to step up e-business investment and focus their efforts more clearly.

Flexible competition laws and employment schemes to combat the e-business skills shortage were among areas for government action highlighted by Gartner.

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