Australian Cybermalls News

Optus Communications has announced that its pay-TV venture Optus Vision has cost the company almost $500 million in losses over the last 12 months, effectively wiping out the $123 million 1996/97 profit run up by its mainstream telecommunications operations and pushing the company's annual accounts more than $411 million into the red. Optus invested close to $850 million into Optus Vision but so far has received no profit from the venture. Optus has announced that it expects even worse losses in the 1997/98 and believes that it will be "several years" before the pay-TV operations begin to turn a profit. Meanwhile, rival Telstra also announced today that it will be wiping $800 million off its pay TV investment in the current year's accounts, and also does not expect to see any sort of profit from Pay TV "for several years yet."

As a follow-on from Year 2000 guru Peter de Jaeger's recent visit to Canberra to lecture senior Federal Government officials on the seriousness of the problem and the need to take urgent action, Science and Technology Minister Peter McGauran is likely to bring disciplinary action against several senior public servants for their "negligent" and "appalling" handling of the Millennium Bug problem. Although refusing to name the Departments involved, Mr McGauran said that he felt that the Government's approach had been "patchy" up to date and that the approach adopted by some Departments had been "regrettably poor". Another result of de Jaeger's visit will be a public awareness campaign - targeted at both the public and private sector - which is scheduled to begin within the next few months.

In another indication that the Internet is continuing to expand at breakneck rates, research firm EIR's quarterly online subscriber survey disclosed yesterday that subscriptions with US-based ISPs rose 12.9% to 24.7 million during the second quarter of 1997. This is more than double the 6.6% increase that occurred in the first quarter of the year. According to EIR, the biggest ISP in the world is now America Online, which increased its subscriber base from 7.5 million to 8.6 million over the last 6 months. Compuserve, however, posted only minimal growth (1.6%), expanding its subscriber base from 5.3 to 5.4 million during the same period.

According to Network Wizards' 10th bi-annual Internet survey, released today, the number of Internet domains has increased by more than 50% in the last 6 months. Network Wizards estimate that there were 1,301,000 domains on the Internet in July this year, up from 828,000 less than 6 months before. Network Wizards also estimate that there were approximately 27,050 Australian domains in July this year, which compares very favourably to the UK where the company's poll estimates there are only 58,204 domains - a much smaller proportion relative to population. The survey also shows that Norfolk Island now has 114 domain names as the result of a decision last year by Norfolk's authorities to allow Norfolk Island domains to be sold commercially.

An Australian Internet company may have breached US Federal Law by having a domain name too similar to the Internic (http://www.internic.net), the official US registry for Internet domain names. The US Federal Trade Commission has warned Victorian- based Internic Software that it may be violating US laws relating to deceptive practices. Internic Software's domain is http://www.internic.com and the company offers to register domains for $US250 - more than double the Internic's $US100 fee. Internic Software has denied receiving any formal written complaint from the FTC but have posted a disclaimer on their web site to clarify the company's position. Internic Software's domain was originally owned by a firm in Hunstville, Alabama. The domain was transferred to a Victorian-based company in June this year.

More than 82 million PCs will be connected to the Internet by the end of 1997, according to US research firm Dataquest. This will represent an increase of 71% over the previous year and most of the growth will be fuelled by business, the firm says. Announcing the results of its research yesterday, Dataquest predicted that by the year 2001 the Internet will become such a major part of business operations that the number of connected PCs will rise to 268 million. The US will maintain first place against the emerging Internet markets of Asia and Europe, Dataquest says, because US local calls are free; because English is - and will remain - the Internet's dominant language for the foreseeable future; and because PCs are much more widely spread in the USA than any other country. Dataquest reports that the value of the Internet software and services market in 1997 is likely to be around $US12.2 billion - 60% up on 1996 - and will rise to $32.2 billion within 4 years.

The Australian Stock Exchange has announced plans to launch the equivalent of an online venture capital market by the first quarter of 1998. The scheme, which will be called Enterprise Market, will allow unlisted Australian companies seeking up to $5 million in funding to lodge their plans online anonymously and venture capitalists to lodge anonymous expressions of interest in particular areas. The system would then perform a matching process and inform both parties when a clear opportunity had been identified. According to ASX Managing Director Richard Humphrey, research had indicated that up to 10,000 Australian companies were in need of between $500,000 and $1,000,000 in capital to help fund their expansion plans and the potential size of the marketplace could be as high as $5 billion. The idea has already won the support of Treasurer Peter Costello, who likened it to a "financial dating agency".

According to a study released yesterday by TK Associates International Inc, the Japanese online marketing consultancy, the Japanese online community has grown to 6.7 million over the last 18 months - and the majority of those are consumers who are buying online in the belief that it's cheaper than buying in Japan. Meanwhile, a separate report compiled by Paul Budde Communications shows that Asia now accounts for 10 percent of total Internet hosts and that average growth in Asia has been 240 percent since 1996. Furthermore, this rate of growth is likely to accelerate dramatically in the near future when the China Education and Research Network introduces the Internet to universities, educational and research institutes across China.

Australian software developer Sausage Software - makers of the internationally acclaimed HotDog web editor - are seeking a $US5 million funding injection from venture capitalists after losing millions of dollars on the company's failed "Snaglets" venture in 1996. The company - which recently released a completely rewritten HotDog 4.0 after abandoning Microsoft's Visual Basic in favour of Borland Delphi - now intends to move into the burgeoning e-commerce area but is currently hampered by lack of funds and a strong presence in the lucrative US market. According to Managing Director Steve Outtrim, a "number" of technology partners have come to the company's assistance and Sausage expect to be able to make several positive announcements within the next few weeks.

According to visiting Canadian expert Peter de Jager, the cost to repair all Australian Government computer systems to avoid the year 2000 "Millennium Bug" is likely to be anywhere between $1.5 and $3.0 billion. Mr de Jaeger, who is an acknowledged world authority and has testified before the US House of Representatives on the subject, is speaking at several Australian conferences this week. The Commonwealth Bank has already admitted that its own cost to fix the problem is around $100 million, and yesterday Telstra admitted that it, too, faces a bill of anywhere between $30 million and $100 million to rectify its systems before the January 1st 2001 deadline approaches, but is keeping the precise figure "confidential" in light of the company's impending stock exchange float. Mr de Jaeger will be addressing a special briefing of top Canberra departmental officials later this week to drive home the serious (and expensive) nature of problem.

The "bundling" strategy that worked so successfully for Microsoft in the early 1990s when it used the Microsoft Office pack to obtain dominance in desktop software appears not have translated to the Internet. Netscape - which attempted to do the same thing with its recent releases - is expected to begin offering its Internet browser as a separate stand-alone product shortly, reversing the strategy it adopted last year of trying to persuade customers to buy its email and newsreader software by selling all three as a bundled package. The slimline Netscape 4.0 browser, when available, is expected to sell for $A80 ($US 59.95). In addition, Netscape is expected to announce that corporate employees who use a licensed Netscape browser at work will be allowed to use the same licence after hours, at home, without penalty. The move has been prompted by Microsoft's continued erosion of Netscape's market share by offering its stand-alone Internet Explorer browser as freeware.

National ISP OzEmail has announced that it plans to launch its Internet phone and fax services into the Asian market within the next month. According to Ozemail president David Spence, the company is currently dealing with 61 different countries over the technology, including 14 European nations. The move looks potentially very profitable for OzEmail, which has increased its net cash-in-the-bank position from $34 million to $55 million over the last year on the back of licensing sales for the phone/fax service. OzEmail - established in 1992 - is currently the largest ISP in Australia and already provides dial-up services for 121,000 subscribers nationwide.

The world's largest arts site was opened on the Internet today by Communications and Arts Minister Senator Richard Alston. The new ArtsInfo site - funded jointly by the Federal Government and sponsors such as Ozemail, Cisco and Sega - holds data on more than 4,500 cultural grants, training opportunities and industry development programs for participants in Arts industry. ArtsInfo itself is funded by a three-year grant and reportedly cost close to $1 million to set up. The site will aim to provide a focal point for Australian arts on the Internet and provide a launch pad to all other Australian arts and heritage resources at both Government and community levels.

More than 24,000 commercial Australian domains have now been registered with the Australian issuing authority Melbourne IT, according to its head Professor Peter Gerrand. Speaking at Internet World 97 today, Professor Gerrand said that the rate of growth appeared to be accelerating and that the number of business registrations had increased by close to 140% in the last nine months. He said that although Australian figures paled in comparison to the much larger and longer-established US market, the overall trend was encouraging and showed that Australians tended to be "early adopters" of new technology. He also attributed at least part of the growth in .com.au registrations to the slightly more relaxed registration policies MelbourneIT recently introduced after consultation with the local Internet community.

Less than 3 months after United Power's announcement that it intended to conduct a six-month field trial in Victoria to see if it could reproduce the 34Mbps Internet connection speeds that laboratory tests had shown were possible through power cables, a panicky Telstra has applied for retail electricity licences in both NSW and Victoria. The move is seen as an attempt to head off the possible emergence of power companies as major alternative telecommunications providers in the future. Mr Gerry Moriarty, CEO of Telstra Multimedia, confirmed the licence applications yesterday and announced that Telstra is also "having discussions" with a number of power companies. The emergence of power companies as potential rivals has been confirmed with the announcement that rival telco AAPT has already struck a deal with United Power to offer a broad range of communications services through power cables in the near future.

According to International Data Corp (IDC), more than 50% of Australia's ISPs will cease to exist within the next two years as the overcrowded market matures and undergoes a massive shake-out. In a report on the future of the ISP industry, author Tim Sheedy predicts that the shake-out would be similar to the one that overtook the PC market several years ago. Sheedy forecasts that the number of ISPs in Australia will drop from more than 400 down to 150, and that the 15 national players will reduce down to 5 through a process of mergers and acquisitions, backed up by two or three strong local players in each region. However, Sheedy also predicts that the survivors will serve a much bigger market, with total online access fees expected to rise from $96 million to $600 million by the year 2001.

In an move that sent shockwaves throughout the computing industry, an increasingly desperate Apple announced today that it has accepted a cash injection of $US180 million from PC software giant and long-time rival Microsoft in exchange for dropping a long-standing lawsuit against the company and sharing a number of trade secrets. Apple - which has been losing both money and market share for the last few years as it's struggled to bring a new operating system to market - is not expected to unveil the long-promised upgrade until 1998. Officials from both companies attempted to downplay the significance of the move, but rumours are now rife that the company may not survive after two years of massive downsizing and the recent departure of a number of key executives.

A new Internet-based venture targeted at lawyers and accountants is attempting to raise $3 million in a float on the Australian Stock Exchange. The company - National Databank Limited - intends to offer an Internet site which would enable subscribers to access information from the Australian Companies and Securities Commission and the Australian Stock Exchange and conduct searches of seven other government-related information services. Joint chief executives Ted and Brenton Avery have persuaded InterSuisse to underwrite the fund-raising and the company is currently seeking to issue 15 million shares and 7.5 million options at 20c each. The new service will be aimed at reducing the labour involved in many common legal activities, such as title and company searches.

Internet business trade in the USA is expected to increase 40-fold within the next five years from $US8 billion to $US327 billion, according to a new report from Forrester Research, which says that many US companies are already using the Internet as their fourth sales channel (next to direct sales, phone/fax and other channels like mail-order, catalogue sales etc). According to Forrester, the main drivers behind the change are costs savings, reduced order processing time and improved information flow. The study, which covered the electronic commerce plans of 150 companies in 12 major industries and in-depth interviews with executives in 63 companies who are already trading up to $5 billion a year in business goods and services over the Net, showed that there had been a 10-fold increase in business in the last 12 months. The report also predicts "wrenching" changes in the business wholesale and retail markets over the next few years as Internet commerce continues to accelerate.

A new security flaw has been found in Netscape Navigator 4.0 by a programmer in Singapore. The security bug exploits a hole in LiveConnect (a new Navigator feature that allows Java and JavaScript objects to pass data between each other). The hole allows a web-site operator to see information that a visitor types into their browser - including URLs, credit card numbers and passwords - as well as data passed between cookie files and the site. Netscape have been hit by the discovery of two similar security flaws since the product was officially released in June this year, but say that they will have an new update ready for distribution in two weeks which will remedy the problem.

Australian Internet sites increased by around 2% during July 1997 according to our monthly Australian Internet Growth Index, which has been continuously measuring the number of sites on the Australian Internet for the last 18 months. Although lower than June's 8% spurt, the latest figures show that Sydney continues to lead Australian Internet content provision, closely followed by Melbourne. All capital cities registered a gain during July except for Hobart, which showed a slight fall as retired sites outpaced new content. The August 1st figures (with July 1st figures in brackets) are as follows:

Australian Internet Growth Index July 1997
(Figures Show Estimated Sites)

Brisbane - 3,344 (3,340)
Sydney - 10,547 (10,200)
Melbourne - 8,112 (7,958)
Adelaide - 3,190 (3,131)

Perth - 3,136 (3,119)
Hobart - 1,234 (1,259)
Canberra - 2,988 (2,920)
Darwin - 2,622 (2,566)

During July Australian Cybermalls displayed 55,441 storefronts, an increase of over 10,000 on our June visitation figures of 44,726. A large part of this was due to our northern hemisphere visitors returning to work from from their summer vacations. The July figures equated to an average of 1,788 visitors per day. For comparison, 12 months ago (in July 1996) we displayed 7,760 storefronts to an average of 250 people a day.