- A veteran of the PC industry squared off Thursday against one of the most vaunted darlings of the Internet in the closing panel discussion at Intels eXchange seminar.
The most colorful moments of the debate came as Intel Chairman Andy Grove demanded that the glory days for unprofitable but popular Internet businesses may very well be coming to a close. Grove delivered a somber message to the eXCHANGE crowd as he addressed the struggling performance of tech shares in recent weeks.
Turning to panelist Jerry Wang, cofounder and chief Yahoo at Yahoo, Grove remarked that while the Internet offers a real and valuable medium, the business models of Internet companies like Yahoo will need to focus on more traditional business principles to survive. The boom sparked by companies like Yahoo may be over, Grove urged, and some of the most accepted views on the new economy may need reeveluating.
"It is a period of time where we have reason to doubt some of our own beliefs that we have relied upon," Grove said. "We have to worry about the returns, and we have to worry about the investment."
He pointed to the Nasdaq's fall below 3,000 at one point during Thursday's trading as a signal that the flood of money that has poured into start ups and Internet projects is slowing down and could affect the way tech companies do business in the years ahead. In particular, Grove said that lagging tech shares mean companies will have to start generating funds using more traditional methods.
"Trickle down investing is probably over, if not forever at least for a period of time," Grove said, referring to the cash generated by the markets and delivered by venture capitalists.
Grove took Yang to task somewhat, saying business models that rely on a myriad of Web customers and limited profits might not be celebrated in the months and years ahead. He acknowledged that Yahoo will likely still be in business two years from now, but added that a reduced stock price means that monies for marketing and for back-end growth may be in limited supply.
Not one to be thrown on the defensive, Yang also testified to some of the hype associated with the Web.
"It can be said that the Internet over the years has been overheated," he said. "The market has said we are no longer going to grant the benefit of the doubt to companies that can't show immediate profitability."
While some tension marked the exchange between the two men, they seemed to agreed that business models on the Web that have been acceptable until now will need to be reevaluated in the near future.