Internet venture capitalists will begin pulling the investment plug in the near future as they get tired of the slow return rates, with pure Web retailers losing out to online brands of bricks and mortar businesses.

Those were the conclusions of ecommerce specialists speaking at this week's Extravaganza, an Internet conference taking place in San Francisco.

Richard Christner, vice president of consultancy Mercer Management Consulting, praised the UK's high street retailer, Dixons, for increasing the use of the Internet in Europe thanks to its free Internet service provider (ISP) business, Freeserve, which also helped it to shift more PCs.

He said: "Dixons traded in its retail foot traffic for online traffic when it launched Freeserve in order to push more PCs," adding that bricks and mortar businesses will begin to leverage their brand and market position to encourage visitors to their websites to also visit their stores.

"You will begin to see hybrid firms whose strength will be to enable links for returns and refunds [at their brick and mortar stores]," said Christner.

David Morrison, fellow consultant at Mercer also argued that traditional companies are not dead because they are the ones making money.

He said: "Out of all the dot coms the only companies that are making money - Yahoo, Ebay and America Online - are the ones that provide infrastructure. Everyone else is losing money. Business to business ecommerce is where the money is and who controls that market? The incumbents that are using intermediaries [their Web brands] to get there."

During an Internet futures panel Hal Varian, dean of the University of Berkeley's school of information management, predicted that venture capitalists will get tired of not seeing return on their investments in Internet startups and will soon "begin pulling the plug".

But even more sinister are some of the potential uses of the university's research into 'smart dust'. Researchers are working on putting transmitters into milimetre cubes that could be put into spray cans and dispersed into a room for surveillance purposes.

See also:

Dot com staff in the stocks

Joining an internet startup is the dream of thousands, but it could turn into a nightmare for everyone in UK.com.  29 Feb 2000

Europe asks e-entrepreneurs to step forward

The search for Europe's top Internet entrepreneurs takes to the streets tomorrow in a bid to prove that Americans don't have all the best ideas.  25 Jan 2000

US venture capitalist invests in UK fund

UK Internet investment firm Dawnay, Day Launder (DDL) has received a cash injection from a US venture capital group.  12 Jan 2000

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