Friday, August 27, 1999 Published at 21:23 GMT 22:23 UK
Business
Web changing the nature of
business
More than one million jobs now involve the Internet
By BBC Washington Correspondent Tom Carver
At the end of the last century in the United States,
everyone seemed to be inventing something.
Within the space of few
years, inventors came up
with the light bulb, the
dishwasher, the vacuum
cleaner, mass production
and the elevator.
The feverish pace of invention
was due to one thing -
electricity.
A century later, something
similar is happening in
America. A revolution has
gripped the minds of entrepreneurs - the Internet and the
idea of a world connected by computer networks.
Although one popular image of the Internet is that of chat
rooms and porn sites, the Internet has become big
business.
A recent University of Texas study concluded that more
than a million jobs were now involved in the Internet.
The computer network
generated $300bn in America
last year, and the Internet
revolution is spreading
across the world.
"Through these networks are
going to travel power, capital,
wealth, creativity, images
and many, many other
things," said Shelley
Morissette.
He works for Forrester
Research, one of America's
most respected consultancies, and he says that no one
can afford to ignore the network.
"If you don't have access to any of
these items, it is going to be very,
very difficult for you to participate
globally in these types of markets.
"In addition, individuals who aren't
able to tap into this network are going
to be marginalised as well," he adds.
The US Commerce Department recently released a
study showing that whites and Asian-Americans have far
greater access to computers and the Internet than black
and Hispanic-Americans.
But, as with electricity, it is not the technology that
matters but what you do with it.
When everything is
connected, the normal rules
of business go out of the
window. Take marketing for
example. If you own a
company, the chances are
that you are spending a lot of
money and manpower
marketing your products.
In the connected world, your
customer will do it for you for
free. If something is popular,
word will spread through
e-mail and the chat rooms.
The phenomenon has been dubbed "viral marketing".
Role reversals
Kevin Kelly, the editor of Wired magazine says the
connected world is blurring the line between consumers
and employees.
"If you stand at the ATM machine, are you a highly
evolved bank customer or an unemployed bank teller?
Basically, you're both," said Mr Kelly.
"You are doing the work that a bank used to pay
someone to do, and you are happy to do it because you
have more control," he said.
But it comes at a price. Companies can no longer
control the information about their product. It used to be
that companies guarded information jealously, but in a
connected world, that proves to be counterproductive.
The more you share with your customers, and even your
competitors, the more successful you will be, according
to Tim Oren, an economist with the Institute for the
Future.
Hot-wired Hollywood
"The business needs to be open to the customers. The
most obvious and immediate impact is doing things like
simply showing your inventory in real-time. Attempting to
sell to your customer through ignorance is just going to
go away," Mr Oren said.
As the network mentality takes hold, many companies
are starting to look very different. Old divisions between
employee and employer, consumer and provider are
beginning to blur.
Virtual companies have both funding and a brand, but
they buy a lot of the infrastructure. They contract with
third-party Web hosting firms, telecommunications
providers and advertising agencies, Mr Oren said.
If you want to know the future of the connected
economy, look to Hollywood. There, 85% of companies
employ less than a dozen people. They form temporary
alliances to make a film and then disband.
The Internet is also creating
entirely new types of
companies called
infomediaries, which are
virtual marketplaces.
MetalSite offers steel
companies the chance to
reach hundreds of buyers at
once instead of employing an
army of sales people.
MetalSite President Patrick
Stewart said: "The simple
math will tell you there's not enough hours in the day or
enough people on the streets to cover all the territory
they need to or all the potential buyers that they can.
"Now using the Internet, buyers don't have to use
shoelaces and leather. All the buyers need is an Internet
browser, and they can find a seller through MetalSite."
Wired companies woo Wall Street
If you think this is a passing fad, think again. A blue chip
firm like GE is already doing a billion dollars of business
a year over the Internet.
And the value of the network is increasing exponentially.
The more it expands and the more people join then the
more important it becomes.
"We are basically wiring up the planet with this
communications revolution," Mr Kelly said.
The Internet is said to be over-hyped but undervalued
because we look for the revolution in the wrong places.
Certainly the valuations of Internet companies are
absurd. AOL's market value is twice the size of Ireland's
GDP.
But there is a reason for this. Many on Wall Street
believe the companies of the future will be those that
adapt best to a connected world.
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