A second dotcom bubble?
Article Date: Aug 14 2007Investment in web companies in Europe has soared over the past 12 months. But Darren Harper, head of analysis and editorial at Library House, argues that fears of a second dotcom bubble are unfounded.
'A lot of lessons were learnt when the dotcom bubble burst in 2000,' Harper tells GrowthBusiness.co.uk. 'At that time, there were a lot of great ideas, but not many households had broadband access.
'Now, technology has caught up. Data transfer speeds are increasing, and there’s been an explosion in user-generated content.'
But Harper adds there is still a danger of appetite for innovation overtaking consumer demand, especially in the mobile internet sector.
'There are still fundamental technical issues to be solved, such as the compatibility of browsers,' he comments. 'It’s an interesting opportunity but not all of the pieces of the jigsaw are in place.'
Another problem, as Harper sees it, is that some companies are still concentrating very much on getting 'eyeballs on their websites' as a route to raising advertising revenue: 'People expect advertising to be their entire business model, while ignoring other potential revenue streams.'
However, Harper concludes that the 'enthusiasm and passion' driving the second dotcom boom in Europe is tempered by more realistic expectations both from investors and entrepreneurs, particularly those who lived through the dotcom crash of 2000.
'The US shouts and gets a lot of attention, but Europe could be really strong in the web space,' Harper adds. 'Its creativity and cultural diversity may well help it change how the game is played.'
The second quarter of 2007 saw over €150 million invested in European web companies, more than double the figure for the equivalent quarter last year (€64 million), according to data from Library House.
