|Issue No 27||20 August 1999|
Vizard Agenda Analysed
By Michael Gadiel
- Executive Assistant (Industrial)- Labor Council of NSW
With the ACTU executive expected to discuss the Vizard computer proposal this week, Workers Online have sent our spies out looking for details. Here's what we've been able to uncover:
This report is based on information which is publicly available and from discussions with individuals.
Based on this information, Unions are not guaranteed any share in the equity of the company under this deal because there is no guarantee that there will be any equity remaining after the investors have taken their guaranteed 15% pa return.
At this stage it is not clear who Virtual Communities are. The organisation has been fronted by Steve Vizard however the ultimate ownership structure of the organisation is not known.
If unions endorse this deal then they will ultimately be held accountable by their members for the success of the service. Unions should be cautious of entering into a deal in which they have no ownership.
This issue arises particularly with regards to the control, quality and direction of the products and services recommended to union members through the use of their logo on the Virtual Communities Portal.
Without a substantial ownership stake, then regardless of contractual arrangements, unions, if they are unhappy with the tone of the material they are endorsing through the Portal, will have no choice other than to withdraw rights to use their logo. The members who have already accepted the deal may still remain with the Virtual Communities portal/entry point, with, or without a union branding.
Given the rapidly changing/growing nature of the Internet market, five years is a very long time to be locked into an exclusive deal with a single provider. Five years ago, net giants such as Amazon, eBay, Yahoo and Netscape did not exist!
Computer Hardware Deal
The Celeron 400 is a low cost alternative to the Pentium II/III lines designed for the budget market - however has some technical limitations including the fact that it runs on a 66Mhz motherboard (rather then 100MHz for PII/III) and has only 128kb L2 cache.
These computers will be obsolete by the time they have been fully paid for the current life span of a middle of the range PC is 2 years. Desire for the latest games and software as well as speed on the Internet will drive demand for upgrades.
In the current environment ISP's are desperate to lock-in market share, recently in the US one such company offered free computers to new subscribers.
No known guarantees on the level of service that will provided by the Internet Service Provider, e.g. modem to client ratio, speed of connection, connectivity to the Internet or customer support.
This deal does offer cheap access, however the market is growing very rapidly, ISP's are valued on the stock market by the number of subscribers they have, they are prepared to loss lead to establish market share.
For example, it is expected that Microsoft is about to offer free Internet access in the US in an attempt to break AOL's domination of the market. Telcos are starting to bundle Internet access with local phone accounts. In this environment it is very difficult for a particular deal to remain the best deal for very long!
The main focus of this deal is the hardware and the Internet access to union members but the real value is in the portal, which will be exclusively controlled by Virtual Communities - in terms of establishing the equity of the company it is the portal that the market place will value.
The primary income stream from the project will derive from commissions associated with product sales through the Virtual Communities portal.
It is important for unions to control the content so that they have the opportunity to organise their members through the Internet - but this will not be the case under the Vizard Proposal.
It is generally agreed that the Microsoft Network model which sought to limit user access outside the confines of a limited set of 'endorsed' sites has been a failure.
It is not possible to ascertain whether Virtual Communities intend to block sites which offer products / services competing with those advertised on the Virtual Communities Portal.
A reasonably high standard union web site can be built for around $15 thousand and with an ongoing server charge of $12 hundred per annum. In addition, such a website may cost another $2 -5 thousand to per year to maintain and further develop. The value of Virtual Communities 'in kind' returns should be measured against this benchmark.
The standard of the Web-sites offered under this proposal is unknown.
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