September 27, 1996 6:15 PM PDT
Wall Street rates Net high
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Brokerages offering online and Internet trades, along with online investment sites, are also looking to cash in on this booming area.
"This is being driven by a red-hot stock market, explosion on the Web, and a dramatic price war with online brokerages rushing to get market share," said Julio Gomez, senior analyst with Forrester.
Projections have grown exponentially in just the last two years. In 1994, for example, Forrester had projected 781,000 online and Internet accounts by 1996. That figure has now nearly doubled to 1.5 million accounts.
The research firm arrived at these figures after surveying 50 investment ranging from full-service houses to discount firms. Among the other surprises found by Forrester was a shift to Internet investment services from online and dial-up accounts.
Dial-up methods--which involve loading software onto a PC and then dialing into the firm to get account information--is losing ground to the Internet.
"Brokerages aren't getting into dial-up accounts if they're not there already," Gomez said. "They're finding people have access to the Internet at work, and that's when the markets are open."
In addition, unlike with traditional investments, brokerage houses aren't demanding a designated level of financial return on their investment to begin offering online or Internet trading services. "Very few firms are holding their efforts to rigid standards and goals," Gomez added.
Microsoft is one company that is moving ahead in this arena. Microsoft Investor is operating a beta version that it expects to wrap up in a few weeks, according to Kirk Koenigsbauer, product manager.
The new features of the site, which originally launched in July, will be a portfolio manager with ActiveX software, free downloads of historical stock data, free business and financial news, and trading information.
"We're taking the first step in the area of trading with this," Koenigsbauer said. "[discount broker Charles Schwab] will be our first partner in executing trades, and we plan to add big name brokers later on." The company receives about 90,000 hits a day, he added.
Meanwhile, Schwab has seen PC transactions account for 24 percent of total trades since it got into the business in 1984, Schwab spokesman Tom Taggart said.
Finally, there is E*Trade, a discount broker that was launched in 1992, which offers trading only electronically. The company has seen demand for its dial-up services also shift to Internet trades, which now account for 40 percent of its business.
The company began offering Internet trading in February, while Schwab launched its Net service in May.
"There is more competition and more traditional brokers who are getting into this because they see they're losing customers if they don't," said Rebecca Patton, E*Trade senior vice president of marketing.
