UK: Techknow - Lessons from Silicon Valley.

UK: Techknow - Lessons from Silicon Valley. - It was meant to be the deal that brought together the old world of bricks and mortar retailing with the new world of internet commerce.

by ROGER TAYLOR.
Last Updated: 31 Aug 2010

It was meant to be the deal that brought together the old world of bricks and mortar retailing with the new world of internet commerce.

Toys 'R' Us, the leading toy retailer, was shaken when eToys, its online rival, floated earlier this year and quickly earned a higher market cap despite relatively puny sales. So Toys 'R' Us called in help from Benchmark Capital, the hotshot Silicon Valley venture capitalists behind successes such as online auctioneer eBay. To demonstrate willingness to learn from the lords of cyberspace, it set up a separate online operation, took just one seat on the board, and brought in Bob Moog, a tech entrepreneur from the computer games industry, to head the operation.

Within weeks the cracks started to appear with the netheads complaining of too much interference from the greyheads in the Toys 'R' Us boardroom.

The trouble started in July when Bob Moog changed his mind and decided not to join. Then in August, Toys 'R' Us severed its ties with Benchmark and appointed John Barbour, an exec from Hasbro and part of the traditional toy industry, to run its online division. The boardroom suits obviously aren't ready to let those pesky internet kids mess with their toys just yet.

More bad blood between the old world and the new is behind feuding at AT&T. The grandma of the US telephone industry has recently undergone some painstaking surgery to remodel itself as a beautiful young star of the internet age. Since the start of the year it has bought up the greater part of the US cable TV industry, which it plans to transform into a 'next generation network', capable of delivering high-speed internet access, video and music to customers' homes along with more mundane telephone services.

Bringing together telephone companies and cable companies was hard enough.

Michael Armstrong, head of AT&T, is said to be appalled at the standards of service that cable companies work to. But now Mr Armstrong is also in the internet business through his company's large stake in Excite, the leading provider of internet services over cable lines.

By all accounts, relations between Excite boss Tom Jermoluk and his colleagues over at AT&T are not good. Mr Jermoluk is trying to create a new broadband net service for AT&T's new cable customers.

But the folks at AT&T seem to want to be able to strike deals with other internet service providers. Rumours keep appearing that AT&T wants to sell off parts of Excite to rival Yahoo!, or that it wants to strike a deal with AOL to provide services to its customers. Of course, AT&T denies there is any truth in these stories. But to the conspiracy theorists, that only confirms the worst.

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