an evening with the stars of e-commerce
part 8: The Audience: Questions &
What Is E-Commerce?
Mr. Arlen: Mark defined e-commerce by defining what it
is not. John, what is e-commerce to you?
Mr. Backus: I think e-commerce is something that involves a
different way of doing thingsnot person-to-person, human interaction, but actually
using an electronic interaction, so it's electronic. I think five years ago it would have
been very different than today. Five years ago we might have looked at e-commerce as
touchtone phones and other types of technologies. Today I think it's becoming synonymous
with the Internet. It's reallyit's electronic communication between people.
Mr. Melton: When we first started CyberCash, we used to
say, "If you're not on the Net, you don't exist, for us." A month ago, when we
bought IC Verify, I spent $50+ million dollars saying that I was wrong. We used to say
that e-commerce was only happening on the Net, and we could separate the Net from the
physical world. Our conclusion now is that that is wrong. The physical, walk-around world
has to be firmly integrated with the Net and the Net has to be firmly integrated with the
physical, walk-around world. As John says, the basic thing is it is electronicthe
bits and bytes, the transport. Whether it's coming from a physical location or a Net
location, the bits and bytes are all that matter.
Mr. Gorog: The only thing I would add is that we have to be
very careful about broad descriptors in this business. If we'd asked this question six
years agoand that hasn't been too long agowe would have been talking about Al
Gore's information superhighway and John Malone's interactive television. If you remember
that time, every media guru in the world was telling us that, by the year 2000, everybody
would be doing all the stuff we are talking about today using a toy gun shooting at a
Mr. Arlen: You are getting us that awful sense of vuja de.
Remember vuja de, that uncomfortable feeling you're somewhere you never want to be again.
Mr. Gorog: That's right. At any rate, e-commerce is a broad
term. I'm glad we have the term because it suddenly means that people are paying attention
to our business. I'm not sure it's applicable, but it's as good as any I know of.
Who Are The Leaders?
Mr. Arlen: Tonight's program calls you the Stars of
E-commerce. Who are your stars? Who do you look up to as successful examples of how
e-commerce has developed so far?
Mr. McDonnell: Everyone knows the obvious successes, even
though they may or may not be making money. Amazon.com comes to mind right away as a
ompany that pioneered the concept of moving books on the Net. If you look at the people
who are successfully selling on the Internet, it is things that can be bought from a
catalogue: CDs, books, airline tickets.
Some people ask, "Is the storefront
disappearing?" I get the question all the time, when I make presentations to
analysts, "What's going to happen to your business when all the transactions move to
the Internet?" When are people going to start closing malls? I don't think either
one's going to happen. Certainly, a lot of business is moving to the Internet, but I don't
see it stopping regular commerce that we still enjoy today.
Mr. Walsh: The star of e-commerce for me is the president
of a company called Waukesha Pump in Waukesha, Wisconsin. They make pumps for the
chemical, food processing and wastewater treatment industries. The president of that
company bought a storefront on Water Online and he has created a Web site for himself. He
is selling pumps to people in the pump industry who don't know from PCs, but he is selling
pumps to people in countries, to clients, to projects that he never would have reached
through traditional marketing methods. Neither he nor his company are Web-centric. They
are not e-commerce aware. They don't know what e-commerce is all about. They don't know
what EDI stands for. All they know is that they made more money this year, after doing
stuff like this, than they did the year before. That is the bottom line justification for
e-commerce for the actual, carbon-based world outside of these doors. I think that is who
we should be looking to as our heroes.
Mr. Gorog: I'd like to make one other comment. We may find
that the development of this industry is absolutely 180 degrees out from anything that
I've ever seen before, in the sense that the stars of e-commerce are the consumers. Most
businesses are way behind the consumer today. The classic example is that most of our
business today is related to financial institutions. They are the dinosaurs of e-commerce.
Mr. Arlen: Bill Gates said that once upon a time, too.
Mr. Gorog: That's right. I'll probably end up in the same
trouble he got into with it. Consumers, in my view today, are more ready to accept the
change that's happening in this world as far as electronic commerce is concerned than a
great many of the institutions that should be serving them. There's a lot of inertia with
the institutions, much more so than with the consumers. It's usually the other way around.
Mr. Arlen: One of our data points shows that even of the
companies which offer e-commerce, only about 25% of them use e-commerce in their own
On Smart Cards
My name is Steve Carey, I'm president of the New Media
Society of Washington. I'm working with the General Services Administration in launching
the Joint Smart Card Technology Center. That center will debut the latest and greatest
applications as they relate to smart card technology. Some of your discussion sounded like
the European model of smart wallets. Do you believe that the digital commerce that they
use over there will be required over here before we have ubiquitous transactions? I'm
talking about verification, biometrics.
Mr. Melton: As opposed to smart cards?
Mr. Carey: They are actually being embedded together.
Mr. Melton: Okay. I have to be careful what I say. One of
the boards I sit on is the world's largest manufacturer of smart cards, a company called
GemPlus. They create about one million cards per day of various variety, some smart and
some not so smart, but all microchip-based cards. An interesting fact is that there are
more smart cards going into Russia than there are into the entire United States.
You look at a smart card and say, "What do we have
here?" We have a small piece of plastic with a relatively dumb chip on it. If you
look at a PC, you see a very large piece of plastic with a very smart chip on it. Anything
you do on a smart card, you can do on a PC a lot better, a lot faster, and with a lot more
flexibility, so creating great, complex and robust wallets and other kinds of applications
on a smart card is not going to fly, in my opinion, in the United States. Why? Because we
are Webbed. All we need to have on those cards is some form of identity, some form of
digital signature, some form of authentication of who you are. That can be only a few bits
long, so you don't have to have a $15 card. You can have a $1, a $2, or a $3 card. Present
that to a PC-based unit and all of the big, complex brain work is done on the Web, on the
network, much faster and much easier with much less cost to the end users. Smart cards
will happen, but they will be identity carriers, not application carriers.
Mr. Walsh: I agree.
A New Domain System?
Mr. Carey: My second question, and this may surprise
some people, regards the fact that the Internet as we know it will cease to exist in
September of 1998. The United States Federal Government will get out of the Internet
business by canceling the two existing contracts, through DARPA and the National Science
Foundation. It has been decided by the world consensus that they will launch an
international nonprofit association to regulate and govern the top-level domains in the
registration databases for the Internet. What impact, if any, do you see this on your
Mr. Walsh: The Internet and the registration process I
consider to have such inertia that it is impossible, whether allocated or not, to disrupt,
to change, to alter, to make a meaningful business other than what we are doing today. I'm
sure folks will try. I understand there are some registrations now going on outside of the
US with a two-letter country designation, so you can have a McDonald's and an Avis and a
Hertz from Ukraine. The solutions are with the current administrator of the system. They,
or whoever works with them to do that, are not going to change. Consumer inertia in
business is the ultimate gravity. If consumers were smart, nobody would use AT&T long
distance and everybody would have the cheapest mortgage in the world. Of course, nobody
does, because inertia is something that drives a lot of our decisions. I think inertia
will drive domain decisions, as well.
My name is Segeni Ngethe. I'm a student at Georgetown
University. My question is about shopping agents and their role in influencing price
sensitivity. Would Amazon.com, or anyone else, be able to dominate if a shopping agent
could direct you to another site that's going to have the same book at a cheaper price?
Mr. Walsh: In fungible goods and parity products, price
wins. I spent six years at a company called CUC whose whole proposition was that the guy
at the lowest price sells hundreds of thousands of products. When a book is $22 in one
place and $21 in another, what do you buy? Low cost providers will win in fungible good
Suggestion two is that shopping agents are erupting faster
than any individual purveyor of a fungible good is able to stop. My old employer, CUC,
claims to have a book site coming out that will shop the price of a novel in all the other
book sites, and then beat it by a buck. That's kind of a bummer if you are Amazon.com, I
When I used to do a lot of work with EasySabre, I had a
joke. Imagine if airlines made every passenger put on a beanie with the price they paid
for their seat when they walked on the plane. Imagine how much fun that flight would be.
The consumer is becoming omniscient. The Internet is providing omniscience of price to a
wide variety of customers who normally would look for something called service. Service is
going away and price is winning. I'm not suggesting that Amazon.com is destined to
failure, What I'm suggesting is that in fungible goods environments, the low cost supplier
will eventually win.
Mr. Arlen: But, Mark, talking about the carbon world that
you alluded to a little while ago, Nordstrom's, which does do service, is doing really
well while a lot of discount stores have disappeared. Right?
Mr. Walsh: Would you buy that $20 novel for $40 in
Nordstrom's because of service? No, that's my point. Of course, Nordstrom's makes money,
because the guy at the Nordstrom's counter says, "Those socks look great on you,
MIDs And TIDs
My name is Clarence Wooten and I'm co-founder in a
start-up called ImageCafe.com, which will be launching shortly. Any business owner or
entrepreneur of any sort, who has gone through the process of setting up a merchant
account, knows that banks make you jump through hoopssending them pictures of the
storefront, merchandise, the whole nine yards. What is happening in e-commerce that will
educate banks and allow them to make the process a little simpler for Internet start-ups
focusing on e-commerce to obtain merchant account status?
Mr. Melton: That's a very good question. When a bank
services you as a merchant, the bank is taking a risk. If you know as much as the guys at
this table, all of us could make a living, a very nice living for a very long time just
ripping off the credit card industry.
A bank has to be secure that, when they sign you up as a
merchant, that you are a good guy and not somebody that's going to rip them off. Most
banks do not know how to evaluate risk in the Internet space, yet. They are looking for
brick and mortar that they can attach if anything goes wrong.
There are some leading banks and some leading bank
processors, what we call independent sales organizations, that have gotten the message and
are starting to turn around facts. Historically if you are going to a bank, it may take
you anywhere from one week to three months to get your Merchant ID (MID) or Terminal ID
(TID). That's what gives you your "license plate" to operate with credit cards
out on the Web.
Traditional banks take this long period of timeit can
take you much longer to get that number than to set up your entire Webfront. There are a
couple of places that you can go to get a MID in about 24 hours. Off the top of my head,
there is a company that we work with called Card Services International (CSI). They are
set up to move quickly. Another is called Payment Tech. They're set up to move quickly, as
well. Several of the other ones are learning that to be competitive, they have to move
fast, and fast means 24-48 hours.
E-commerce In The Year 2001
I'm Tracy Mathieu. And I'm with Partnership
International, which does international business development. Imagine it's the year 2001.
You are sitting in front of your computer and you say, "Wow, that's cool!" What
cool e-commerce solution are you looking at?
Mr. Backus: I feel like I'm at the Miss America Pageant. I
haven't prepared for it properly. I'd lose, don't worry. I don't know. When you look at
what's written about in the popular press, we'll probably be looking at Windows 98 being
released about then.
Mr. Arlen: Ah, but will it be cool?
Mr. Backus: You'll probably have streaming multimedia and
things like that. I'm not sure you are going to see a lot more in two and a half years
that will be greatly forward from what you are seeing right now. You are going to see a
lot of improvement in bandwidth. I would not be surprised if you are getting Web sites
delivered to you not at 56K, but at cable modem or satellite speed.
My perspective is that you are not going to see a big
enhancement in anything that doesn't manifest itself through bandwidth. That means you'll
see a lot more audio, more video, more 3-D. But, bandwidth is going to be the thing that
brings everything to everyone in the next three years.
Mr. Gorog: I just thought, looking back over some of the
comments I have made tonight, that I must sound like the worst pessimist in the world
about this business. But I've got to make another pessimistic view when I answer that
question. Probably everybody in this room today spends a great deal of time looking at a
monitor. I question whether when you go home at night in the year 2001, you are going to
say, "Gee, let's have fun, and let's look at a monitor for another two hours."
This leads me to a point that I'd like to make about e-commerce: we have to think about
the differences between shopping and ordering. Catalogues are still going to be here in
full-blown fashion in the year 2001, because catalogue shopping is fun. Literally. You
pick up a catalogue at night and curl up in bed or on a couch and you fold through the
thing to look at the pretty pictures and see things that you probably haven't thought
about buying. There is a lot of impulse activity that results from that.
I can't see you turning on your monitor at night and
saying, "Let's just see what's here." I think we have to focus e-commerce on
people who want to buy something, who know what they are looking for and are going to use
that monitor for economic reasons (probably more than any other reason) to find a source
to procure a particular product. I don't see it as something that you do as a hobby at
night or something to have fun or amusement.
Mr. Walsh: I disagree. I think that the greatest
salespeople in the world are loneliness and boredom, and the world will be a lonelier and
more bored place in 2001. As bandwidth increases, we will be using that bandwidth to reach
out, sadly, to cure loneliness and boredom in ways that are now currently functioning on
You guys can laugh, but that specific marketplace tends to
use technology the most creatively and at the highest price point. It leads a lot of
marketplaces. I think what you'll see in 2001 are applications like that, which are
driving a lot of new technology use. I also think you'll see a lot more use of voice to
navigate. I disagree with Bill. We do go home after staring at our monitor for six hours
and stare at a monitor for three more hours. It's just called a TV. I think you'll see
TV-like functionality, voice-driven, in high bandwidth ways and, most importantly, you'll
see agents. I think the question about agents is key. There will be agents that will allow
you to find stuff, so even though you don't know you are shopping for something, the
agents will find it for you. I know that's something that's been promised a lot,
particularly interactive TV. Gary has a museum of all the old technology and all the old
promises that were broken time after time after time. But airplanes didn't work for a long
time either and now we use them. I think agenting technology will find stuff for you.
Mr. Gorog: But, Mark, there are none of those people in
this room, the bored ones.
Mr. Arlen: Yes, but on the other hand, we ought to see a
little preview of this in the movie The Truman Show, where the infomercial, the nonstop
infomercial, is integrated into the program. That is the integrated digital environment we
may see, whether it's in 2001 or later.
My name is Jonathan Zuck. I'm the executive director of
the Association for Competitive Technology. We've been looking a lot at this antitrust
lawsuit against Microsoft. You spoke of your desire to drive to a ubiquitous standard on
the back end and have the network which everyone uses to conduct these financial
transactions. Can you draw any parallels to the operating system issues, and what role do
you think the government might play in improving the business that you are conducting? How
they might intervene and solve any problems that might exist competitively?
Mr. McDonnell: All my life I've wanted a monopoly but
nobody saw fit to give it to me. There is not an easy answer to that question. We are
providing the backbone network because we are the only network that's connected to all the
credit card processors. Certainly we are not handling 100% of the transactions coming off
the Internet. There are still some transactions that can bypass our network if someone
creates their own dedicated circuit. Basically, if there is a need for a parallel network
to do this, one that is price competitive, then it will come into existence. It's just
Mr. Zuck: Are you saying you probably don't support the
government's intervention into this to promote competition or, perhaps, a better situation
for competitors trying to come into the market?
Mr. McDonnell: If you are asking me to comment on the
Microsoft case, everybody has his own opinion on that. To the extent that Bill Gates has a
monopoly, one thing that differentiates him from a lot of other people is that he built
it. He built it very competitively and very aggressively. Now that he has achieved it, is
he using it to manipulate the marketplace and throttle competition? We are going to find
out. Stay tuned, but I hope we all live long enough to see the outcome.
My name is Mark Arend and I'm an Internet development
manager. Does anybody remember what happened to microtransactions? What is the promise
there? Is that also perpetually in the future?
Mr. Melton: I'm eminently qualified to answer that. I have
spent many millions of dollars learning the answer. With microtransactions, we had our
head handed to us. It wasn't even a pretty platter that it came on. We assumed, as you
would in the physical world, that you can have value in 3¢, 5¢, 15¢ transactions. What
we didn't understand, but we understand very clearly today, is that the cost per
impression (CPM), the eyeball content, is worth more than selling something for a
For example, if you are trying to get a dime of time for
somebody to look at something on your Web page, the minute you start to charge a dime for
it, the viewership will fall off at least by a factor of 10 to 1, if not 100 to 1. Let's
be conservative and say it's 10 to 1.
Now, if you can turn around and get the revenue from
advertising on the Internet at about the rate you're getting it in the physical world,
which you can, that means about 3-4¢ per transaction per viewing for a broadcast ad. If
you can get it focused so that it's not broadcasted, but narrowed to a very targeted
audiencefor example, the financial pages when you're trying to sell financial
servicesthat can run up to 5¢, 10¢, 20¢ per impression.
Now, let's just be very simple and assume that I'm only
getting the broadcast ad rate of 3-4¢. Keep in mind, that's multiplied by the 10 to
15-times factor that I wouldn't get if I would try to sell the content itself at 10¢ a
piece. I'm getting the equivalent of 30¢ or 40¢ or 50¢, as opposed to trying to charge
a dime a piece.
It sounds simple in hindsight; unfortunately it cost me so
bloody much to learn that. The flip side of that, if you really understand what's
happening, is to ask the merchant, "Where are you going to spend your money? Will
you, Mr. Merchant, provide advertising money directly to the consumer in the form of
incentiveroyalty programs, frequent flier equivalents, frequent shopper
programsto get somebody to look? The answer is, obviously, you will and that's what
I mean when I say it's going to stand the world on its head. Now, this is not to say there
will not be a time for microtransactions. There will be, but we have to have a much more
subtle understanding of them than we did a year and a half ago.
My name is Hyaping Wau. I'm with Marriott Corporation.
Are the current money transfer and product moving systems good enough to support
international e-commerce, or do we need new treaty between countries to handle e-commerce
Mr. McDonnell: Basically, it is working; it is happening
today. Goods are being purchased here for shipment to Europe and elsewhere. They are going
through the same import and tariff structures as goods ordered any other way. One thing we
have found is that a lot of the overseas merchants are setting up US bank accounts,
because this is where the market is. They are establishing a relationship with a US bank
and accepting their payment in US dollars, which is the hard currency that everybody seems
to want. They can repatriate the money, wire transfers work very well, as they see fit.
I'm not suggesting that over time the US will become the Internet bank. Lots of other
countries are eyeing this situation as well, but based on the transactions we see today,
somewhere well in excess of 90% are banked here in the US.
Mr. Walsh: We're seeing some of that, too. In the
environmental sites we run, about 40% of our traffic is non-US because the environment is
a global issue. Here in the US, we don't think of it as the global issue. Some of the
companies who are represented, or the visitors who come to companies that are represented
in those sites from outside the US, do ask for an American bank relationship set up for
some of these larger ticket items. Some of the items that get sold in our sites go for up
to $5 million. You see Letters Of Credit and all sorts of very esoteric financial
discussions going on, just like they would go on if they were buying it in the real world.
Mr. Melton: Yes, what Jack and Mark say is true, however,
we have to recognize that it is not complete, not smooth. If you are talking about a
credit card that is usable on an international currency, that's fine, but in Japan, South
Asia, China, many people are carrying credit cards that are only usable in their local
currency and not permitted to be used on a worldwide market. They are not convertible.
There is nothing technically that stops that. That's government policy.
Also, if the merchant is in Hong Kong, or China, or Japan,
or wherever he must have his MID and TID provided by a local bank, if he is going to
receive transactions on a worldwide basis, just like in the US. If you think the US banks
have trouble issuing MIDs and TIDs, they've really got a problem in some other places. It
is coming, but it is still a real nuisance for some people in some countries.
The Supply Chain
My name is Jay T. Smith. I'm director of industry
solutions at the Partnership for a Networked Economy. What role do you see supply-chain
management vendors playing by providing access over the Web to inventory speculations and
capacity knowledge? How do they add value to customer interactions in the future?
Mr. Walsh: I think that they're a winner. My problem, and I
mean no disrespect to the current suppliers, is that they typically put them on WANs or in
proprietary environments. You see some vitality with EDI-compliant, or very close to
EDI-compliant Web-based plays. I think it's undeniable; the Web is the winner. I think
it's like moving chess pieces around the endgame, but the Web is the winner. It may not be
the Web we know today, but the way we're getting used to using the Web is the winner. Look
at what Jack said. When he hears about a company, the first thing he does is to look up
their URL or check out Yahoo! to see if they're there. That's just step one of a 20,
30-stage process of introduction, relationship, purchasing and follow-up from a company
after we hear about them. Supply chain management is the natural evolution of tracking
what the company makes, how much it costs and how to get it to me. Right now, though, it's
proprietary, it's closed, it's expensive and it's still this hub-and-spoke theory of
sales, which I believe is the single most limiting factor of its acceptance. However, it
is the way things have to go.
I'm Dianne Mayfield. I'm the founder of Netique, the
Internet gift boutique. For the past year, we've been promoting our gift boutique strictly
through online sources, search engine positioning techniques, newsletters from our company
to our customers and some online press releases. I wanted to see how far you could go with
strictly online promotional tactics. Do you have any hints for what we should consider or
not consider with a rather limited budget for promoting our site?
Mr. Backus: I think this will go back to the question that
Mark answered earlier about intelligent agents. The technology is certainly there to do
that. I want to look back to something Bill Gorog said during his speech, "Is it a
technology or is it a product?" While agents can theoretically make our lives a lot
simpler, I want to go back seven years ago to a very different industry, because I think
it may help answer part of your question. The airline industry has these computer
reservation systems, where you call up a travel agent and, "I want to go from point A
to point B at the cheapest fare." What they found, when the government broke apart
the computer reservations systems from the airlines, is that 65% or so of the tickets were
booked from an option on the first screen and one third were booked from the first
listing. Now, the options weren't listed in the cheapest order; they were listed in
whatever order the airline wanted them. I am going to take a contrary view from before,
that technology is going to solve all these problems and find you a novel at the cheapest
price. I don't want to discount the lazy consumer, but what it means for your business is,
if you can get your customer's eyeballs, whether it's through a pop-through advertising or
something else, you may not have to have the cheapest price for anything else. I don't
think the Web is going to mean that you're only going to compete on the cheapest price.
There is going to be a lot of click-through. Consumers are going to settle on a site
because it's the easiest thing to do. If you can get yourself in front of your consumer in
an easy way, and I don't know your business well enough to know how do that, you are going
to get a lot of sales that you may not have to work on the lowest price to get.
Mr. Melton: I think one of the richest areas of current
technical development (I'll call it that, but it's partly technical and mostly marketing)
is what is going on with advertising, mostly various kinds of banner ads, which are placed
depending upon the click stream of the useractually selling advertising by matching
the consumer and what you are trying to sell. Last year's hot name was DoubleClick in this
area. There are a couple of other young companies with names I'm not carrying on the top
of my head. One is called NarrowLine. We will have some very, very creative methods five
years from now. We'll look back and see that when it comes to getting the consumer
together with the vendor, anything we're doing this year will be so primitive that we'll
find it unbelievable. Probably the best source for a good, nonbiased, academic study of
what's going on in this area is at the Wharton
School at the University of Pennsylvania. A good percentage of their graduate school
is focusing just on these kinds of issues, studying click streams and what makes people
respond or not.
Mr. Walsh: We had great success going after esoteric search
words. We called all the search engines. We bought photonics. They said, "Gee, no one
else is chasing it down, so you can have it for a couple of bucks." Then we bought,
terbidometer and flowmeter and pinch valve and wafer stepper. We own thousands and
thousands of esoteric words that happen to be products that our clients care about. If you
try and buy gifts from Yahoo, it's going to be a seven-figure event, now. So I would
suggest you buy some weird esoteric words. We found an amazing amount of traffic from
people trying these things out.
Is There Room For Small Fries?
My name is David Gross. I work in the
telecommunications industry. On the Web, there is a much greater proportion of fixed costs
to variable costs; therefore, the high volume players could be a low-cost provider because
they can better cover their overhead. Examples are companies like Yahoo!, Amazon, which
have just grown with the Web. It seems like it must be very difficult for somebody to come
in to compete in these marketplaces where companies have covered all their overhead and
now are driving high volumes. Do you agree with that outlook or are there areas where a
new entrant can come in and compete with some of the larger players?
Mr. Walsh: I disagree. I think you're in the middle of one
of the most forgiving financing environments in the history of mankind. This particular
geographic community here is filled with venture capitalists (VCs) who are prepared to
back ideas that ten years ago, or even three years ago, might have been perceived as
laughable. There's a lot of money that's backing small companies, a lot of money that
gives them a shot at getting a toehold on a beach so they can potentially brand. We just
went through financing and it was extremely encouraging. We thought our idea wasn't
laughable, and it was extremely encouraging how much pretty smart money is out there
chasing the Net. I also disagree that small companies are at a disadvantage anymore. You
heard all of these guys talking about how much money it cost them to learn lessons. That
was in an unforgiving investment environment, so I think the timing now to try this is
Mr. McDonnell: I think the niche is going to be for the
specialty search engines, and I think Wall Street has voted, if you look at the relative
prices of Excite versus Yahoo and Lycos and the rest of themthey have declared Yahoo
the winner. It's a fickle place, but do they have the Microsoft advantage in that
business? I doubt it. I think they certainly have a major leg up, and I think the market,
now, is for niche players who address specialized markets.
Mr. Arlen: But that's not to say that there aren't some
places where an established player, the first to market is not necessarily the long-term
survivor in that market.
Mr. McDonnell: No, Univac built the first computer, right?
Mr. Arlen: Right, and in the case of Amazon, which was
mentioned a couple times. Ingram books just made an investment in a competitor, and since
Ingram is the supplier to Amazon and a number of others, it will be an interesting play
there as well.
Who Should Be On The Web?
My name is Rose Woodruff, I'm one of the owners of US
Net, a regional Internet service provider. Even I haven't found a reason for my local dry
cleaners to get a Web presence: the fact that they are local, the fact that people must
come to their shop. What characteristics of an organization or its products predict
success for a Web site in today's market? Are there any businesses or products for which
you do not predict success for e-commerce?
Mr. Gorog: I got two bad leaks in my roof and I would love
to find somebody on a Web site who does roof repairs, at this stage in the game, because I
can't get any of the contractors I have called to come out. I think it's unlimited,
really. The more we develop an understanding of the power of the Web, the more people are
going to understand that even basic businesses have a place there. With the collapse in
prices of building Web sites, anybody can be on the Web. My grandson builds them, and he
is 15 years old, for $195 a shot.
Mr. Arlen: Which now sets a new pricing level
Mr. McDonnell: But you get what you pay for.
Mr. Walsh: Why do you think your dry cleaner wouldn't be on
the Web? How do you choose your dry cleaner? Is it because of geography, or because they
eradicated a stain once very well? Why do we choose any service that we go to? It's
usually for features that, if we knew all the providers either close by or who were good
at a certain thing we cared about, we might change providers. I used the term before, I
think the Web is a tool for omniscience. I don't see why people keep saying that there's
necessarily going to be failures on the Web. I think the failure will be whether we, as
users, learn how to use it to find vendors that make sense for our lifestyles.
I'm Lou Ivey. I have an antique and art auction site
called Biddington's. Are you gentlemen looking at other languages? Do you primarily
operate in English? Have you positioned yourself primarily as American businessmen selling
to other countries, or are you looking at global business and including other languages or
other ways of operating?
Mr. Walsh: No. The French are trying to promote that Web
sites in France be in French. It's a losing fight. Like it or not, English is the language
of aviation, telecommunications and commerce. It's just happened. That doesn't mean you
shouldn't have links people want. On an Automatic Teller Machine (ATM), you go
multilingual. You are going to have to do the same thing on a Web site that's appealing to
an international community, link them to the language of their choice, but I guarantee
that the first page to pop on 99% of the Web sites is going to be in English.
Mr. Arlen: And with translation software coming along, the
opportunity to choose the language is soon, if not imminent. Maybe by 2001.
Mr. Melton: In our situation we have to be localized. In
Germany, German; in France, French; in Japan, Japanese. In all of those countries we are
already operating in the local languages. We are starting to bring up some Chinese pages.
You have to.
Intellectual Property Laws
My name is Rob Stern and I'm an electrical engineer who
made the mistake of going to law school. When I founded my intellectual property law firm,
Stern, Kessler Goldstein & Fox, 20 years ago,