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eBusiness Impact

May 4th, 2004 · No Comments

Business Week has a report on how six new industries are being transformed: jewelry, bill payments, telecom, hotels, real estate and software. From the introduction:

As e-biz strikes again, key questions arise: Why these industries? And why now? In the first round of Net disruption, the online players were selling commodities: books, music, or stock trades. Customers didn’t need to see, squeeze, or sniff the stuff — all they cared about was price. Today’s Net upstarts are pulling together more complex information and boiling it down so consumers can become smarter purchasers of a broader array of products and services. In real estate, for instance, zipRealty and others have learned how to use software to show potential home buyers photos and floor plans for scores of potential houses. Because that reduces the agent’s work, zipRealty can save consumers 20% to 25% off standard commissions. In the jewelry biz, Blue Nile offers loads of educational information on diamonds so lovestruck men feel comfortable buying gems based on a collection of independent ratings on color, cut, clarity, and carat size.

Broadband has been instrumental in the Net’s advance, too. A critical mass of people around the world now have high-speed Net access, including 27 million U.S. households. That means consumers can handle the huge loads of information dished up by the second wave of online players. Lickety-split Net links let them browse through dozens of photos of hotel rooms, check out a variety of gold necklaces, or take virtual tours of scores of homes for sale. Speedy Net connections also have made it easier for programmers around the world to cooperate in developing new open-source software, which is changing the economics of the $200 billion software market.

The industries under assault have other more subtle characteristics in common, as well. Several, including jewelry and hotels, have long supply chains with many middlemen, each of whom takes a cut of the profits, driving up retail prices. A South African white diamond can pass through five different hands, including rough-diamond brokers, cutters, and jewelry and diamond wholesalers. Blue Nile connects over the Internet to its key suppliers, who buy their stones directly from South Africa’s powerful DeBeers Consolidated Mines Ltd. That eliminates three middlemen or more. “Businesses are learning to drive process change by combining it with technology,” says John T. Chambers, CEO of networking giant Cisco Systems Inc.

So, who will win, the upstarts or the established companies? This time, with incumbents attuned to the advantages of the Net, there will be victors on both sides. A Blue Nile here, a Verizon there. More important, though, is that the Internet will continue to have sweeping impact on the economy, giving consumers more choices and making everyone more efficient. “It’s going to be a wonderful mess,” says Al Lill, a fellow at tech-research firm Gartner.

There is also an interview with Paul Saffo. Excerpts:

Each time it gets cheaper to do something, you get more players. It’s irreversibly more complex. You get more than a value chain. You get a value web.

Ultimately, successful technologies have media expressions, but there’s a time lag. TV was invented in the ’30s, but its media expression was broadcast networks in the ’50s.

The media expression of the mainframe in the ’60s was e-mail in 1969, but it didn’t mature until it migrated to client-server computing in the ’80s, which made it much cheaper to provide. The media expression of client-server was the Web in the 1990s. The Web will mature when we can take it everywhere with us and when we have peer-to-peer systems to manage all the connections [more cheaply and efficiently].

And it isn’t about the same old Web stuff. The moment the Web fits into your pocket, you have a whole new set of applications and business opportunities that never existed before, such as location-based marketing.

We’ve reached the point where we’re trading in clouds of electrons.

Tags: Enterprise Software

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