excerpt from Mike Aymar, VP of Intel Online Services, speech 6/27/00:
When we look at the Internet, we see an evolution going on. The initial phase of the Internet was basically for marketing purposes, information purposes. Companies would create Internet sites, and it was essentially electronic brochureware. You can find out about products and services.
One thing my family does, we do this quite frequently because we are sort of addicted to Disneyland, we look on the web to find out what attractions are open and closed, what events are happening and so forth, and it is a tremendous informational device, and this is pretty much how the web has started in each geography.
The next phase is when companies begin using the web to deliver their products or their services, they begin selling their products to consumers or businesses that are downstream from them, and they use the web to actually create the business to handle the transactions; they have taken a step beyond brochureware to actually use the infrastructure of the web to carry on business to their customers.
Currently Intel is doing over a million dollars a month of business with our customers, and we are seeing many, many customers and companies doing the same sorts of things.
As we look to the next level beyond kind of customer-focused e-Commerce, first of all we have to appreciate what's going on here. Just the fact that we are able to deliver our products to our customers much more efficiently on the Internet means big savings. In 1998 the estimate was over 15 billion dollars was saved because of the efficiencies of dealing on the Internet.
So what we're seeing is fewer people involved, 24 by 7 availability and a much better service delivered to customers when they want to make orders, change orders, get updates, get information on their orders. The estimate is that this will increase to nearly 600 billion dollars by 2002, so there is a tremendous savings. If you remember that number I showed of 7 trillion dollars by the year 2003, what you are going to see here is more than 10% of that is going to be paid back to companies in terms of savings that they see from using the Internet. It is not just an opportunity to improve business -- I believe it is a mandate.
Every company is going to have to use the Internet, it is going to become a requirement in order to stay competitive in their respective industries.
Now, if we look to the future and some of the trends that are emerging, the next thing we see is that every business isn't just going to become a supplier, but obviously every business is a vendor, they exist in a food chain: Buy raw materials or goods from companies earlier in the food chain and add their value and sell them to their customers.
So far e-Commerce has primarily been focused on selling to customers. What we're seeing is that the companies are more and more going to have to face in both directions. They are going to use the Internet to much more efficiently procure the raw materials and goods that they need and to use the Internet to deliver the productions to the customers. So this business is going to continue to evolve to where the Internet is going to be involved in all phases of doing business-to-business mission critical e-Commerce.
Intel, for example, this year is moving our focus to include our suppliers and not just our customers. And we intend to have the same kind of focus and same kind of results with buying products from our suppliers that we have already seen in providing products to our customers.
So what I would like to do now is talk about this third generation. We call this "EB3" for "E-Business Third Generation"; this is where both selling and buying happens on the Internet, it becomes very dynamic and very fast moving and also very efficient. It is now a very customer-centric e-Business, meaning each company is a customer as well as a supplier, so the Internet is moving across each of these phases.
What I showed you on the earlier pie chart is that in Europe we expect to see European companies begin embracing the Second Generation immediately and then moving to the Third Generation, just slightly behind US companies and ahead of what's happening in Asia.
Another thing that we are seeing is a tremendous explosion in the types of devices that people are going to use to access the Internet. Certainly the personal computer will remain the most powerful and most flexible device for accessing the Internet. More and more people will use personal computers for a complete experience; they will start using lap-top computers, notebook computers, so they can be more mobile. Then the emergence of other devices, cell phones, this is a big trend in Europe with WAP, also in Japan. Other devices like organizers like the Palm Pilot showed here; music devices to play MP3 audio; a tremendous range of appliances. Unlike the PC, many, many things that do one or two things very well yet are linked to the Internet and gain their power and the immediacy of their value to the consumer or the business user from the Internet.
The current estimates are that every business user by the year 2003 will own three such devices, maybe a notebook computer, maybe some sort of cell phone that accesses the Internet, and maybe some sort of pocket device that keeps a calendar and so forth. By the year 2006 the estimate is that they will have six such devices. All of us are going to be carrying lots of batteries around as we keep all of these devices running.
Another thing we see in support of these devices is a range of different types of protocols for wireless connectivity. I have already mentioned the Wireless Application Protocol, WAP, which is beginning here in Europe and will catch hold here first. Here in Europe you have by far better cell phone technology than we do in the United States. We lust after what you have here. Certainly this is going to make it easier and better for companies, for users, business users as well as consumers to use their cell phone to get scaled down Internet data so that they can use it remotely, kind of like the guy in the early video that we showed in the presentation. Another Wireless Protocol under development is Blue Tooth, this is for very short range, and basically allows you to let all the devices I have described communicate; so when you open the briefcase you have a notebook, cell phone, maybe a personal organizer or music player; they can communicate over a shorter range with each other without any wires, basically a localized Wireless Protocol for mobile devices to communicate.
Finally we have the General Packet Radio Service which is going to be a replacement for Local Area Networks. This offers a broad availability within a building or campus allowing devices to be connected wirelessly. So you'll have a range of different types of wireless solutions for different types of uses and applications.
Another thing we notice as we look to trends is that the Internet is already going through a process that we see other industries going through. For example the computer industry. The computer industry, like many industries in their infancy, started out providing products that were fairly difficult to use, so the earlier providers in the computer industry were vertical providers. Basically you went to a single company, it could have been IBM or NCR, Control Data, Bull and these companies would provide the complete solution for you. Everybody you talked to would be a badge-wearing employee of that single company, the sales person, the computer installer and repair person; and all the equipment was provided by the company, all of it -- the hardware and operating system and application - carried the logo of that company. The reason for this is early in an industry's evolution it is fairly complicated and difficult to get things to work, so you see vertical suppliers and their job is to get things to work over the complete range of infrastructures. But as industry matures you start seeing specialization. You start seeing much more competition at specialized layers, as various vendors start competing to deliver the best of class solutions at individual layers.
In the computer industry we saw that horizontal approach with the microprocessor suppliers like Intel, operating system suppliers, PC suppliers, desk-top, and services application suppliers and many, many choices on channels. The result is that as an industry matures, as the computer industry has, the consumer, has many choices. He doesn't have to choose one vertical solution. He now can choose best of class component from each layer, because he knows they are going to work together, and each of these layers has appropriate interfaces with the other layers. So basically the buyer can mix and match best of class components and get the best solution for them. |
