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ICE Expo: Singing the praises of e-commerce

U.S. still leads in Internet use, alliances abound but few products debut at ICE

By Kristi Essick

September  1996
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Anaheim, CA -- The hype surrounding electronic commerce may not be unfounded after all, according to executive keynote speakers who heralded the medium here in early September.

"Electronic commerce will bring about a whole new world of increasing returns in the economic model," said Jim Manzi, chairman, CEO and president of Nets Inc.

Manzi, whose company (not surprisingly) crafts electronic transaction services for business-to-business commerce, agreed there is a lot of hype about what electronic commerce will bring to businesses in the next five years. But, he said, common misconceptions about how to do business online are the only roadblocks to real growth.

"Many people mistake the Internet as another broadcasting medium, when it is categorically not meant for broadcasting information," Manzi said. The real opportunity for electronic commerce lies in "narrowcasting," or targeting, certain communities with certain information, he said.

Mark Jarvis, Oracle vice president of server marketing, agreed that Web sites will have to be personalized for each visitor for electronic commerce to really take off.

"We are living in the age of the big server and are moving toward the ability to provide scalable and dynamic transactions inside, outside, and within companies over the Internet," Jarvis said.

Another way to target specific customer tastes is to use electronic agents that search out certain information for a user depending on predefined preferences, he said.

While the two may agree that companies in the future will need to integrate electronic commerce functions into their overall business strategies in order to stay afloat, they differ on how companies will get there.

Oracle, a database company from the ground up, advocates using a powerful data warehouse on the backend of a Web site which can dynamically generate content and allow employees to update information directly into the corporate database.

"Until you can do real transactions [based on a database], you can't do real electronic commerce," Jarvis said.

On the other hand, Nets Inc. has based its Industry.Net service and other business-to-business transaction services on two key principles: low-cost universal service and narrowcasting of information, Manzi said. In order to see a wide acceptance and usage of electronic commerce, businesses will have to build a whole new marketplace based on customized content and simple and cheap connectivity, he said.

How long will it take to build this new marketplace? Manzi pointed out that it took 39 years for the telephone to gain a 30 percent acceptance rate among American households, while the Internet took only 7 years to achieve the same goal.

"It's a long-term building process," but the industry is working on Internet time, Manzi said.


U.S. Internet use leads all others
While Internet usage continues to surge worldwide, analysts and industry executives at the Internet Commerce Expo acknowledged that many countries outside of the U.S. still face serious barriers to widespread connectivity.

"Many people are not aware of the aggressive growth of full-service Internet service providers in Europe, Asia, and Latin America. These regions, however, still have a long way to go before their people see the Internet as a necessary part of daily life," said Tom Wyrick, director of business solutions for Global One. Wyrick was part of a panel discussion on the Internet's international growth potential.

Some of the roadblocks that developing countries may face when attempting to set up global Internet networks are high costs of fiber-optic cable, governments that censor information and restrict access to certain individuals, and a lack of perceived need for the Internet in daily life, Wyrick said.

"We need to be politically and culturally sensitive to these countries' concerns," he said.

Analysts agreed that the Internet is far from a truly global phenomenon. International Data Corp. has predicted that more than 163 million users worldwide will have access to the Web by the year 2000, compared to only 34.6 million today.

However non-U.S.-based usage won't surpass 51 percent of total Web access until the year 2000, said John Gantz, senior vice president at IDC, during a presentation on the Internet market outlook.

In addition, U.S. consumers are expected to generate over 50 percent of the $100 billion electronic commerce industry forecasted for the year 2000, Gantz said. By the turn of the century, 50 percent of PCs worldwide will have Internet access, while that number is expected to reach 76 percent within the U.S., according to IDC.

GlobalOne, which has set up Internet services in more than 24 countries, has predicted that 72 percent of Internet usage happens within the U.S., with Europe trailing at 23 percent. Still, the company is confident overseas companies will catch up.

"We're beginning to see international Internet traffic shift away from viewing sites based in the U.S.," Wyrick said.

Currently, about 80 percent of global Internet users access World Wide Web sites based in the U.S., but over the next two or three years, GlobalOne expects this number to drop to 60 percent as more localized content is created on the Web, Wyrick said.

In addition, smaller countries are setting up sophisticated Internet backbones at an increasing rate, Wyrick said. Countries such as Botswana, Jordan, Ethiopia, Vietnam, and Honduras have set up networks based on GlobalOne's products over the last year, he said.

"Almost every country in the world today recognizes that the Internet is critical to their economic and social development," Wyrick said. Intranets that connect international businesses are fueling a lot of the demand for international Internet connectivity, said Michael Sullivan-Trainor, Internet research director for IDC. While many large international corporations are developing Web sites and internal intranets, they are not achieving the productivity goals they had hoped, Sullivan-Trainor said.

Sixty percent of Fortune 500 companies surveyed said they had hoped their intranet would increase productivity, with the other 40 percent citing various goals including improved data access and lower development costs. Only 16 percent, however, said these goals had been reached.

Still, many companies remain optimistic that the Internet will prove a golden business opportunity. One expo attendee said he was here to find out about ways to connect his sales forces in Germany, Canada, Australia, and the U.S. over an intranet and was impressed with the "sophisticated technology and intuitive interfaces" of the electronic commerce products vendors were plying at the show.

"Once cost goes down, and security goes up -- maybe in a year or two -- we will expand our intranet to accommodate electronic commerce between our business and consumer customers," said Eric Holmgren, vice president of marketing for Exprex Group, a hospitality and medical services company based in Newport Beach, CA.

The alliance is the product
While product announcements were slim at the inaugural, three-day Internet Commerce Expo, several vendors announced partnerships in the electronic commerce arena.

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