Case Study: Egghead.com

You can imagine how many nights George Orban, Egghead.com's CEO, lay in bed staring at the ceiling, a chill in his heart. While most enterprises can only guess how the Internet will transform their industries, the boxed-software sector got advance notice. Orban knew there was no future in downtown code boutiques. The convenience of downloading programs directly from the Net was unstoppable. The overhead in Egghead's stores was high. And profits were off.

So Egghead moved the entire show to the Internet and didn't look back. In a single stroke, Orban closed all of Egghead's retail stores, laid off some 800 salespeople, and added .com to the company's name. The company's stock price soared.

Will the company survive? It's too early to tell. Eventually businesses and consumers alike will stop buying applications of any kind. Instead they'll click to a Web site, use a program from the site's server, then save the file on their system's hard drive. In other words, Egghead.com's meanest bout still lies ahead. Investors believe the company can measure up. It certainly won't be caught short on guts. And its merger with Onsale.com can't hurt.