Michael, Barry, All,
Interesting article (I think) about another future use of your home PC. It would be interesting to make a list of all the functions that could be incorporated into future PC's, I would start with:
TV
DVD movie and music entertainment center
Video conference communicator
Digital photo viewer, editor and printer
ATM machine (as per follows, from Barrons):
HP's giant ATM
By Nikhil Hutheesing
REMEMBER WHEN drawing cash meant
rushing to get to the bank before the damned
thing shut at 3 p.m.? Thank heavens for the ATM.
Yet if Hewlett- Packard gets its wish, those cash
machines will also belong to history. You will
download pocket money through the Internet.
The world's computer network will become a
giant ATM, with hardware and software from
HP.
Real green stuff pouring out of your desktop or
portable? Well, not quite-but HP is working on
the next-best thing: a piece of plastic that would
be as much cash as anything the U.S. Mint puts
out.
Here's the story: Last summer HP paid $1.3
billion for VeriFone, the Redwood City, Calif.
company that runs 70% of the little gray terminals
that restaurants, hotels and department stores use
to check out credit cards. It's a growth
business-$472 million in fiscal 1996 revenues,
up 30-fold over 11 years-but not very
profitable. Certainly not profitable enough to be
worth three times revenues. HP wasn't looking
for an immediate boost to its bottom line, but
rather a toehold in Internet commerce. Someone,
someday is going to make a ton of money selling
the software to run on-line transactions.
After making the Net afe for
credit, HP plans to do the same
for cash.
"We figured if you are going to do business on the
Net, what do you need? You need a way to
move money," explains Glenn Osaka, 42, general
manager of HP's extended enterprise business
unit. Osaka started out looking for ways to
promote HP computers as servers to run
corporate Web sites. Then it dawned on him that
getting a piece of the electronic money business
could be far more important to HP's future than
just selling a few more boxes. "The hardware
business is under margin pressure, so we have to
make software a larger portion of our business,"
explains Richard Belluzzo, 44, executive vice
president of HP's computer organization and heir
apparent to Chief Executive Officer Lewis Platt.
HP could have a gold mine, but first it has to win
over banks and retailers. Problem: Banks are
hardly running after the Internet market. Their
mainframe systems don't talk easily to the
Internet, and replacing them with client-server
systems would cost a lot of money, which they
are reluctant to spend. What's more, HP isn't the
only E-commerce system in the works. IBM is its
fiercest competitor. It is developing a payment
method for the Web that rivals HP's. It is also
developing Integrion, a consortium of independent
companies, to provide home banking services.
Already, 18 banks representing 75% of retail
banking households are working with IBM.
HP is proceeding step-by-step. Its first goal is to
get its credit card authorization business onto the
Net. That would mean that anyone with Internet
access could accept your credit card. After
making the Net safe for credit, HP plans to do the
same for cash. For that, it would need the same
kind of security software it uses to authorize
credit cards, together with a credit-card-size
piece of plastic with a built-in brain: the smart
card.
HP's Osaka knows that success will not come
overnight. After all, it took 21 years to get half of
the population to use cash machines regularly. But
things move faster now-and a huge business is
up for grabs.
Here's how HP's smart card system would work.
You'd fire up your browser on a convenient
machine-a PC, a cell phone, even a pay phone.
Then you'd log on to your bank's Web site and
run a smart card through your PC's card-reader.
The smart card would tell your bank your account
number, your password and other encrypted
information. That accomplished, you would be
allowed to debit money from your account and
credit it to your card. Presto-you've
downloaded cash.
Let's say you download $100. You want to pick
up FORBES at a newsstand. You hand the
newsstand person your card, he thrusts it into his
computer and presto!-$4.95 goes into his bank
account, and your cash balance is reduced by that
amount.
HP has some big players on its side. For its bank
customers, HP is working with Microsoft to load
VeriFone software onto the Windows NT
network operating system. Electronic Data
Systems will run a network service that offers the
VeriFone software. AT&T is considering
embedding it in its payment software, SecureBuy.
HP is also trying to convince Microsoft and
Netscape to bundle VeriFone's software in their
browsers.
HP would rather sell software directly, but it will
do whatever it can to win the early battle for
market share in electronic commerce. If its
E-commerce system catches on, it will not only
sell software but also servers and card-readers.
HP and VeriFone are developing software to
read about six smart-card schemes to store data
on chips. Among the
biggest: Mondex,
MasterCard's British
subsidiary, and Visa's
Java-based VisaCash.
HP plans to preach the
benefits of
E-commerce to all
those merchants who
already use VeriFone's
credit card service.
Smart cards could
provide merchants with
nonconfidential
information on
shoppers: address,
occupation,
frequent-flier miles.
They could also help
merchants make money. For instance, Macy's
might save some of the tariff it now pays to
MasterCard by offering to split the difference with
any customer who uses a smart card instead.
Security is the one big problem in paying through
the Web. Merchants can't see customers in a
virtual shopping mall and so cannot notice guilty
faces and nonmatching signatures. Customers, for
their part, can't be sure the merchant is who he
says he is and not some thief.
To solve the problem, MasterCard and Visa have
specified a standard known as secure electronic
transaction, or SET. Under SET, your bank
assigns a digital certificate to each party in a
transaction. The certificate assures that the
merchant and the customer are who they claim to
be, without revealing the customer's credit card
number.
All that security eats up a lot of transmission time.
There's at least a 50-second lag between the
presentation of a card and the completion of a
transaction, a clunkiness that could dissuade
people from using HP's E-commerce tools to
make purchases over the Internet. VeriFone's
software also works with another, less secure
protocol that isn't hindered by lag time-secure
socket layer (SSL). While already in use today, it
is pretty clear that merchants and bankers will
choose tighter security at the cost of slower
speed. They can push it through by slapping a
premium price on alternative payment services.
So it's a fair guess that a lot of money will be
spent installing the system, which can run a large
retail outlet $1 million in upfront investments.
Killen & Associates, a market research company
that tracks electronic commerce, predicts that by
2000, banks worldwide will spend $5 billion
annually on infrastructure to adapt their legacy
mainframe systems, mostly from IBM, to the
Internet. As that happens, demand for
client-server systems will pick up.
That's the business HP's Osaka is counting on.
"IBM was the builder of the old [payment]
infrastructure," says Osaka. "We are the builders
of the new infrastructure. Think of us as the IBM
of the next decade." IBM, of course, has other
plans, but that's what today's high-tech business
is all about: Nobody's niche is safe.
John |
