Today, those distinctions are much less meaningful. Most successful IT companies offer a mix of products, technical and financial services, consulting, and customer support. Many firms believe that long-term profitability lies in value-added services rather than hardware, which customers sometimes view as a commodity. In a striking example of this trend, IBM stated in its 2005 annual report that services, software, and financing produced almost 75% of its total revenue, while hardware accounted for only 25% of its sales.

The newest company category is the Internet-dependent firm, often described as dot-com (.com) company because its primary business depends on the Internet rather than a traditional business channel. Google, Yahoo, AOL, and eBay are examples of pure dot-com companies. At the other end of the spectrum are more traditional companies, sometimes called brick-and-mortar companies because they conduct business primarily from physical locations. Today, that distinction no long exists. Most successful brick-and-mortar firms – such as Sears, Wal-Mart, and Target – have added Web-based marketing channels to increase sales and serve customers more effectively. This has allowed them to combine the convenience of online shopping and the alternative of hands-on purchasing for customers who prefer that option.

In recent years, some Internet-based companies have enjoyed spectacular growth, while others have fallen by the wayside. As competition heats up for the online consumer, dot-com companies will need to work hard to survive and grow in a dynamic marketplace.

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