The thinking of 12 to 18 months ago that the Internet was a cash cow, offering a way to generate millions in extra profits, has given way to what Forrester Research Inc. analyst Baba Shetty calls “the era of rational e-business.”
“Its e-business that isn’t driven by stock market capitalization or dreams of new business models,” he said. “It’s much more of ‘How can we use e-business to improve the customer experience or business efficiency?’ ”
Shetty points to two Securities and Exchange Commission filings as evidence.
Last week, General Motors revealed it was killing plans for
AutoCentric, a $50 million joint-venture car-buying site with dealers. The automaker said “the business model is not viable at this time.”
In a February SEC filing, GM said AutoCentric could be run by a third-party Internet service in which GM had a minority stake, or it would be started from scratch by GM.
GM had a locate-to-order pilot in Washington with online auto marketer Autobytel and Chevrolet dealers but pulled the plug in November.
GM spokesman Pat Morrissey called last week’s filing “end-of-the-year bookkeeping.” He added that GM might work with another third-party service again. “It just won’t be in the form of a joint venture,” he said.
GM’s filing came just days after Ford Motor Co. revealed that it will sell its stake in Internet incubator Internet Capital Group Inc. of Wayne, Pa. Internet Capital’s former managing director was Karen Francis, now a Ford vice president in charge of developing Ford’s Internet strategy.
Ford paid $108 a share — nearly $50 million — for its 462,962 shares of Internet Capital Group. Last week the stock was trading below $1.20 a share.
“Reality set in,” said industry analyst Maryann Keller. “Ford is cutting its losses.”
The Associated Press and Reuters contributed to this report