If you want to understand the troubles of Altavista - whose chief executive, Rod Schrock, resigned today - look no further than the bottom line.
The company, which was bought by CMGI in 1999 for $2.3bn, lost a staggering $307m on revenues of $98m in the three months ended July 31 on its portals and search engines division. No wonder its flotation keeps being postponed.
A year ago that may not have mattered when dot.com mania was at its height and making big losses was almost a virility symbol. Now it has all changed. After the crash of high tech stocks in the US (notwithstanding yesterday's mild recovery) investors have abandoned notions that New Economy companies should be judged on different criteria to traditional ones. Profitability - or at least a Path to Profitability, another P2P to get our minds around - must be established before companies will get a second look.
The low barriers to entry in the internet world mean that there are plenty of search engines and portals to turn to if your current favourite isn't up to scratch. And all are for free. This is not because the portals don't want to charge money; they simply can't, because punters will simply move to the next one.
A year ago web start-ups still thought they could recoup their huge investments by charging for "banner" adverts on the screen. But consumers don't like them and advertising revenues are now slowing down.
Virtually every company selling to consumers through the web has felt the force of the hurricane that has been destroying swathes of the dot.com economy. One of the latest casualties was the hitherto highly regarded CD-seller Boxman.com, which this week admitted that it faced liquidation unless it found a buyer.
Tony Salter, chief executive of Boxman, commented to the FT: "I've never really believed in B2C (business-to-consumer)... the barriers to entry are low and B2C companies have a tendency to drive margins to zero and marketing costs to infinity."
I've never read a more succinct critique of the B2C problem. Salter deserved better than to be buried in his own Boxman.
