A leading technology analyst has warned that only a handful of online companies will survive in an industry that will be worth several trillion dollars within the next decade.
Mr Henry Blodget, Internet analyst at the US investment bank Merrill Lynch, believes three-quarters of all existing US Internet companies will fail to make any money.
He expects these companies to "disappear" or be taken over in a wave of consolidation. "The spoils will go to the few and not to the many," he said, indicating that between seven and 10 companies could end up dominating all areas of Internet business.
Mr Blodget warned investors to beware of highly overvalued companies being driven ever upwards by the momentum of Internet excitement.
However, Mr Blodget remains one of the most bullish investors in the sector. "Internet companies may be overpriced but the Internet itself is still undervalued," he said.
He believes the industry will expand from its current value of $200-$250 billion (€188$235 billion) to several trillion dollars within a few years. He compares the impact of the Internet to that of the car or personal computer, which created an industry worth $350 billion within its first 10 years.
"The Internet is much more profound as an engine for economic change than the PC," he said.
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