interesting article from stockhouse
The Rapidly Changing Face Of Computing
The Global Showroom
By Jeffrey R. Harrow (07/06/98)
One way of dealing with the changes being wrought by the Internet is to hold up the proverbial cross, keeping the Knowledge Age Vampire at bay. For example, Jerry Storch, president of credit and new business at Dayton Hudson, told retailers attending an industry conference that selling online is "mortgaging their future" and risk "commoditizing [their] brands."
"We will never allow ourselves to be reduced to a role as a mere showroom for goods sold over the Internet by vendors or others," Storch said (as reported in the June 25 Internet Daily). "Selling over the Internet can destroy years of investment retailers have made jointly with vendors building product brands. It can turn once-desirable brands unprofitable."
That's one view. On the other side of the retail coin, Federated Department Stores recently announced it will establish Macys.com, a free-standing company, explicitly to capitalize on the Internet. "The Internet, much like our global mail-order catalog businesses, represents a strategically important complement to our department stores in an era when convenience is becoming a more important component of the value equation for customers," said Federated chairman James Zimmerman in the June 26 Internet Daily. "We believe [e-commerce] is a phenomenon that will continue to grow."
E-Commerce vs. Other U.S. Industries Revenues, 1997
(in billions)
Total retail trade: 2,500
Grocery retail market: 426
Direct mail (business and consumer): 421.3
Catalog: 79.8
Telemarketing ad dollars: 58
Electronic retailing industry (home shopping, infomerials, etc.): 8.6
E-commerce (eStats estimate): 7.4
Source: Electronic Retailing Industry; DMA; Fortune; eStats
Storch's view reminds me of the railroads' staunch denial of cars' and dirt roads' potential impact -- especially when you consider a recent eMarketer study that conservatively predicts consumers will spend $26 billion online by 2002, while business-to-business transactions will hit $268 billion. In addition, online businesses have a clear advantage -- it costs less to conduct business online. According to the May 20 Internet Daily, it costs eight times less to process an airline ticket online than in the traditional manner, and a $1.07 traditional bank transaction drops to 1 cent. Even grocery shopping, something few people associate with e-commerce, is expected to grow from today's 10,000 e-shoppers to 7 million within four years.
This trend, of online commerce and information changing established commercial rules, is hardly limited to the retail field. For example, consider how several companies have historically made a good income by providing detailed U.S. patent information to attorneys and the like. Yet a year or so ago, IBM implemented its free patent database on the Web. Today, even the government pledges to make available online for free by the end of this year the full text of million patents (back to 1976), the text and images of 800,000 trademarks issued since the late 1800s, plus 300,000 pending trademark registrations.
This is just a taste of things to come. Also on the horizon: <Picture: nugget> IT is businesses' top priority, according to a recent study by A.T. Kearney ("The CEO Epiphany," TechWeb, June 24). This is, of course, about more than just e-commerce, finding that 30 percent of the 213 CEOs surveyed reported IT and data management are key issues facing their businesses (up dramatically from two years ago). Similarly, a Computer Sciences survey revealed 71 percent of chief financial officers, "see IT as a way to cut operating expenses."
<Picture: nugget>Two billion dollars is the value of securities traded each week through Charles Schwab & Co.'s website -- $26 billion during the first quarter of this year. This activity is driven by 1.74 million online accounts holding $120 billion in assets.
<Picture: nugget>Jupiter Communications' recent study on kids indicates there are now 4.5 million 13- to 18-year-olds online, and the number will swell to 11 million by 2002. Perhaps even more interesting is today's 3 million online tykes (12 and under) will become a force of 20 million in the next four years. According to the June 25 Edupage, this marks "one of the single biggest demographic shifts seen on the Web so far." To me, it spells vast opportunity.
<Picture: nugget>Finally, Bill Gates predicted consumer devices will become more prevalent on the Internet than PCs. "There's no doubt some time in the next three to 10 years we'll cross over that threshold," he said.
I don't take that to mean there will be fewer PCs. I see it as the promise that TVs, cameras, PDAs, and yes, eventually even household appliances and office copiers, will find themselves to be Internet citizens in good standing, opening a huge number of opportunities for goods and services that figure out how to capitalize on their new connectedness. <Picture: TW>
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For previous columns, go to the Jeffrey Harrow archive.
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Jeffrey Harrow is a senior consulting engineer for the corporate strategy and technology group at Compaq Computer. A more extensive version of this discussion, as well as other discussions about the innovations and trends of contemporary computing -- The Rapidly Changing Face of Computing -- can be found at digital.com. His opinions do not necessarily reflect the opinions of Compaq. |
