Michael,
Thanks for your interesting reply.
Investor-ex, saying Cisco's business does not involve applications related to Internet Commerce is like saying Intel's business does not involve the computer industry but Semiconductors construction only.
Intel's business IS building and vending IBM PC compatible chips. Until recently, they didn't even sell motherboards for those chips -- didn't want to cheese off the people (clone makers) they were selling their chips to. For most of the history of the 8088, 8086, 80286, 80386, 80486, Pentium, and Pentium II, INTC didn't even bother to look for more applications for their bread-and-butter chips, much less wrote software applications that these chips could run.
Cisco's routers are the heart and soul of Internet Commerce and will continue to be so for the forseable future.
Cisco's routers are a component of the (current) Internet infrastructure. They are no more the heart and soul of Internet commerce than fiber optic cable, modems, POTS lines, switches, hubs, brouters, ISP's, T1 lines, T3 lines, TCP/IP, e-mail, PC's, browsers, operating systems, ISDN, domains, gateways, search engines, HTML, security schemes, and a hundred other things in production or on the drawing board, and these are just examples of the infrastructure layer.
Upon this hardware and software infrastructure, Internet commerce would be built, and it would include tools and specialists in visual design and layout, ergonomics, user testing, database design and construction, transaction integrity, capacity planning and tuning, billing, order entry, invoicing, supply chain, logistics, sales, marketing, finance, purchasing, accounting, etc., etc., etc. In other words, Internet commerce is about building actual retail and wholesale BUSINESSES on top of a networking (the Internet in this case) infrastructure.
Unless a critical mass of clientele is perceived to exist for each and every business that cares to go on-line, it doesn't matter how many routers Cisco has in place. Furthermore, there is nothing in the TCP/IP specification that demands that "routers" are needed in general, or Cisco's routers in particular. The Internet can be made to work without routers. It's convenient to use them for now. It all just hardware and, unless Cisco creates some sort of annoying monopoly position, the technical infrastructure will continue to evolve. That evolution may or not include routers, but it will probably continue to include Cisco, unless they mess up big time.
In terms of Internet commerce acceptance, I agree with you that there are POCKETS of high achievement. The three listed, PC's, books, and trading, are among the best examples. Yet, these exceptions do not make the rule and do not make a trend, though they do provide a marvelously appealing glimpse of what the Internet potentially holds in store.
There are also lots of businesses you didn't list that have tried on-line commerce and came up with operating losses and backed off. Why is this? Poor execution, technophobic client-base, undercapitalization, products and services that don't virtualize well, inadequate web-site resources or personnel, or something else I can't think of at the moment are all possibilites.
I would guess that the best immediate candidates for on-line commerce are those businesses that already had successful WATTS ordering in place, a successful mail-order operation, or designed their model new as a virtual enterprise. Incidentally, this would include brokerages (telephone trading), books (mail-order), and PC's, especially those PC makers who built their businesses by purposely staying out of retail outlets in the first place and instead built their operations from the ground up through telephone ordering (with mail-order catalog teasers). This list includes, not surprisingly, Dell, Gateway, and Micron. Now, how much of that business has simply moved from their original channels to the Internet and how much is new business? I'd be very curious to learn this.
Yes, there is some notable activity, but for a great many businesses, the Internet has been a non-event, so far. Some have tried and done well, some have tried and found a little success, some will never try because it doesn't make any sense to, some have tried and wasted a lot of money, some will try again and eventually be successful if only enough people start using the Internet because those people believe it is cheaper, faster, safer, and more convenient than other methods of parting with one's hard-earned cash.
The infrastructure is important, but only relatively so. And this is why an infrastructure vendor's self-serving opinions about the growth prospects in a domain into which they vend product are best entertained with suspicion. |
