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PLUNKETT’S E-COMMERCE AND INTERNET BUSINESS ALMANAC 2001-2002 The Only Comprehensive Guide to the E-Commerce & Internet Industry
Jack W. Plunkett Published by: Plunkett Research, Ltd., Houston, Texas www.plunkettresearch.com
PLUNKETT'S E-COMMERCE & INTERNET BUSINESS ALMANAC 2001-2002 Editor and Publisher: Jack W. Plunkett Executive Editor and Database Manager: Martha Burgher Plunkett
Internet Design Manager: Sarah Tina Chadra
Senior Editor and Researcher: Scott Rick
Cover Design: Kim Paxson, Just Graphics
Editors, Researchers and Assistants: Natalie Hudman-Hourshad Julian Martinez Ray Marumahoko Paul Medford Leland Short Folake V. Thomas Emma Tsai Suzanne Zarosky
Special Thanks to: The Pew Internet in American Life Project www.pewinternet.org U.S. Department of Commerce, Census Bureau, Economics and Statistics Admin., and International Trade Admin. www.census.gov Nielsen//NetRatings www.nielsen-netratings International Telecommunications Union www.itu.int Gartner Dataquest www.gartner.com Forrester Research www.forrester.com Jupiter Media Metrix www.jmm.com
Senior Customer Support Manager: Chris Hunt Information Technology Director: Alex Preskovsky
Plunkett Research, Ltd. P. O. Drawer 541737, Houston, Texas 77254, USA Phone: 713.932.0000 Fax: 713.932.7080 www.plunkettresearch.com
Copyright 2001 by Plunkett Research, Ltd.
Published by: Plunkett Research, Ltd. P. O. Drawer 541737 Houston, Texas 77254-1737 USA Phone: 713.932.0000 Fax: 713.932.7080 Internet: www.plunkettresearch.com ISBN # 1-891775-42-1 End-User License Agreement, Limited Warranty & Limitation of Liability-Effective April 2002, Plunkett Research, Ltd. Important, read carefully: This agreement is a legal agreement between you (whether as an individual or an organization) and Plunkett Research, Ltd. By installing, copying, downloading, accessing or otherwise using the Plunkett Data, you agree to be bound by the terms of this Agreement. If you do not agree to the terms of this Agreement, do not install or use the Plunkett Data. The information (the "Data" or the "Plunkett Data") contained in this printed version or electronic file is the property of Plunkett Research, Ltd. Copyright laws and international copyright treaties, as well as other intellectual property laws and treaties, protect the Plunkett Data. LIMITED RIGHTS TO INSTALL DATA ON ELECTRONIC DEVICES: Plunkett Research, Ltd. grants you, as an individual or an organization, a non-exclusive license to use and and/or install this Data, including installation of electronic files on one individual desktop computer AND on one laptop computer AND one personal digital assistant or dedicated portable eBook reader (such as a Palm or iPaq). This is a limited license, which applies to a single user. Organizations desiring multi-user licenses may purchase additional rights at reasonable cost by contacting Plunkett Research, Ltd., 713.932.0000, www.plunkettresearch.com, email:
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PLUNKETT'S E-COMMERCE & INTERNET BUSINESS ALMANAC 2001-2002 CONTENTS A Short E-Commerce & Internet Business Glossary Introduction How To Use This Book Chapter 1: Business-to-Consumer (Online Retailing) Markets, Statistics and Trends Chapter 2: Business-to-Business Trends Chapter 3: Online Financial Services Banking, Mortgages, Insurance, Trading, etc. Chapter 4: Trends in Personal Computers and Internet Access Chapter 5: E-Commerce & Internet Business Contacts Web Sites, Publications and Industry Information Chapter 6: THE E-COMMERCE & INTERNET 400: Who They Are and How They Were Chosen Industry Codes Index of Rankings Within Industry Groups (The E-Commerce & Internet 400 grouped by industry and ranked for sales and profits) Alphabetical Index Index of Headquarters Location, by State Index by Regions of the U.S. Where the E-Commerce & Internet 400 Have Locations Index by Firms with International Operations Individual Profiles on each of THE E-COMMERCE & INTERNET 400
93 105 108
Additional Indexes Index of Hot Spots for Advancement for Women/Minorities Index by Subsidiaries, Brand Names and Selected Affiliations
497 599
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70 71 73
84 89
List of Major Tables Internet Users Turn to the Internet for Information What Internet Users Fear Internet Users who have Gone Online for Medical or Health Information Where the Internet Population Grew in 2000 Estimated Quarterly U.S. Retail Sales: Total and E-Commerce Online Christmas Holiday Season Consumer Sales 1998-2000 Internet Marketing Consulting Firms with Customer Profiling or Personalization Expertise Recommended Sources for Online Consumer Buying Pattern Data and Market Analysis Common Online Consumer Activities eBay by the Numbers Selected E-Commerce or Business Exchange Enabling Software Firms Selected Business Content Management Software Firms Selected Business Exchange Sites Selected Consortia-Owned Marketplaces or Exchanges Preliminary Top 10 U.S. ASP Vendors by Revenue Estimates Worldwide B2B Internet Commerce U.S. Manufacturers' Value of Shipments - Total and E-Commerce U.S. Manufacturers' Cost of Materials - Total and Online: 1999 Most Frequently Used Network to Accept Orders in 2000 for Responding Manufacturing Plants Most Frequently Used Network to Place Orders in 2000 for Responding Manufacturing Plants ECNs Largest Online Stock Brokerages Leading Personal Finance and Investment Advice Sites Major Insurance-Selling Sites on the Internet Preliminary Worldwide PC Vendor Unit Shipment Estimates for 2000 Preliminary U.S. PC Vendor Unit Shipment Estimates for 2000 U.S. Software Publishing Industry Estimated Revenue, Expenses & Inventories U.S. Homes with Personal Computers 1996-2002 Fiber Optic Network Speeds Worldwide Semiconductor Production: Selected Years 1960-2001 Exponential Growth of Intel's Microprocessors, 1970-2001 Ranking of the Top 25 Most Visited Web Properties At Home, Month of June 2001, U.S. Average Web Usage, U.S. Internet Users at Home: Month of June, 2001 Leading U.S. Internet Service Providers (ISPs), Est., mid 2001 Online Information Services Revenue: 1998 and 1999 Database and Directory Publishers Revenue: 1998 and 1999 Worldwide Mobile Phone Sales Estimates for 2000 Preliminary Worldwide Server Vendor Unit Shipment Estimates for 2000 Preliminary Worldwide Workstation Vendor Unit Shipment Estimates for 2000 Popular Internet Connection Options Major Satellite Companies Index of Rankings Within Industry Groups (The E-Commerce & Internet 400 grouped by industry and ranked for sales and profits)
8 8 8 9 11 13 13 13 13 14 18 18 18 18 20 21 22 23 24 24 29 29 30 33 36 36 37 38 38 38 39 40 41 41 42 42 46 46 46 47 48
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A Short E-Commerce & Internet Business Glossary 802.11b: A short-range wireless connection standard created by the IEEE. It operates at 11 Mbps and can be used to connect computer devices to each other. Access Network: The network that connects a user's telephone equipment to the telephone exchange. Active Server Page (“ASP”): A specification for a web page with an ASP extension containing Java Script or Visual Basic code. (See "Java" below.) Active X: A set of technologies developed by Microsoft Corporation for sharing information across different applications. ADN: Stands for "Advanced Digital Network." ADSL (Asymmetrical Digital Subscriber Line): High-speed technology that enables the transfer of data over existing copper phone lines, allowing more bandwidth downstream than upstream. AI (Artificial Intelligence): The use of computer technology to perform functions that are normally associated with human intelligence, such as reasoning, learning and self-improvement. Analog: A form of transmitting information characterized by continuously variable quantities. Digital transmission, on the other hand, is characterized by discrete bits of information in numerical steps. An analog signal responds to changes in light, sound, heat and pressure. Analog IC (Integrated Circuit): A semiconductor that processes a continuous wave of electrical signals based on real-world analog quantities such as speed, pressure, temperature, light, sound and voltage. ANSI: American National Standards Institute. Applets: Small applications that Net browsers can download from the Internet on an as-needed basis. These may be software, accessories (such as spell checkers or calculators), information-packed databases or other items. Applets are object-based. (See "Object Technology" below.)
Appliance: See "Internet Appliance" below. Applications: The computer programs and systems that allow people to interface with the computer and programs that collect, manipulate, summarize and report data and information. Archie: This software tool can be used to find files stored on anonymous FTP sites, as long as the user knows the file name or a sub-string of the file name that is being searched for. (See "FTP" below.) ARPANet (Advanced Research Projects Agency Network): The forefather of the Internet, the ARPANet was developed during the latter part of the 1960's by the United States Department of Defense. ASCII (American Standard Code for Information Exchange): 128 standard ASCII codes exist that represent all Latin letters, numbers and punctuation. Each ASCII code is represented by a seven-digit binary number, such as 0000000 or 0000111. This code is accepted as a standard throughout the world. ASP (Application Service Provider): A web site that enables utilization of software and databases that reside permanently on the web site rather than having to be downloaded to the user's computer. Advantages include the fact that multiple remote users may access the same tools over the Internet and the ASP provider is responsible for developing and maintaining the software. (ASP also refers to Active Server Page. See "Active Server Page" above.) Asynchronous Communications: Stream of data routed through a network as generated instead of in organized message blocks. Most personal computers use this format to send data. ATM (Asynchronous Transfer Mode): A digital switching and transmission technology based on high speed. ATM allows voice, video and data signals to be sent over a single telephone line at speeds from 25 million to 1 billion bits per second (bps). This digital ATM speed is much faster than traditional analog phone lines, which allow no more than 2 million bps. (See "Broadband" below.) B to B/B2B: See "Business-to-Business" below. B to C: "Business-to-Consumer." B to E: "Business-to-Employee."
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B to G: "Business-to-Government." Backbone: Traditionally, the part of a communications network that carries the heaviest traffic. The combined networks of AT&T, MCI and other large telecommunications companies make up the backbone of the Internet. Bandwidth: The data transmission capacity of a network, measured in the amount of data (in bits and bauds) it can transport in one second. Baud: Refers to how many times the carrier signal in a modem switches value per second or how many bits a modem can send and receive in a second. BBS (Bulletin Board System): A computeraccessible system that enables people to upload and download files, discuss issues and make announcements without actually being connected to other computers at concurrent times. Several million of such systems exist. Beams: The coverage and geographic service area offered by a satellite transponder. A global beam effectively covers one-third of the earth’s surface. A spot beam provides a very specific high-powered downlink pattern that is limited to a particular geographical area to which it may be steered or pointed. Binhex: This is a means of changing non-ASCII (or non-text) files into text/ASCII files so that they can be used, for example, as e-mail. Bit: This is a single digit number, either a one or a zero, which is the smallest unit of computerized data. Bluetooth: An industry standard for a technology that will enable wireless, short-distance infrared connections between such devices as PCs, Palm Pilot or PDA devices, laptops, cell phones and Internet appliances. Bookmark: Nearly all browsers support this feature. Users can bookmark a site by saving its URL for future retrieval. BPS (bits per second): An indicator of the speed of data movement.
Bridge: (networking) A device that links two local area networks together so they can share files and email. Broadband: The high-speed transmission range for telecommunications and computer data. Broadband refers to any transmission at 2 million bps (bits per second) or higher (higher than analog speed). A broadband network is so sophisticated and so fast that it can carry voice, video and data all at the same time. Browse: A term referring to the viewing of computerized data. Several Internet browsers support a browse mode that allows users to sort through data quickly. (See "Browser" below.) Browser: A program that allows a user to read Internet text or graphics and to navigate from one page to another. The most popular browsers are Microsoft Internet Explorer and Netscape Navigator. Buffer: A location for temporarily storing data being sent or received. Usually located between two devices that have different data transmission rates. Bugs: Errors in a web site or in software applications. Business-to-Business: A rapidly growing category of Internet sites aimed at selling products, services or data to commercial customers rather than individual consumers. Buttons: Graphic representations of linked areas on a web site that take the user to another area or enable the user to download a file by clicking the button. Also referred to as "Links" or "Hyperlinks." Byte: There are eight bits in a byte. This set stands for a single character. Cable Modem: See "Set-Top Box" below. Caching: Storing data in a temporary location closer to the user so that it can be retrieved quickly when requested. CAD (Computer-Aided Design): CAD software generally runs on workstations and is a tool used to provide three-dimensional, on-screen design for everything from buildings to automobiles to clothing. (See "CAM" and "CAE" below.)
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CAE: Computer-aided engineering. Call Automation: Part of the telephone equipment revolution that includes voice mail, automated sending and receiving of faxes and the ability for customers to place orders and gather information by using a touch-tone telephone to access sophisticated databases. (See "Voice Mail" below.) CAM: Computer-aided manufacturing. Capacitor: An electronic circuit device for temporary storage of electrical energy. Carrier: The basic radio, television or telephony center of transmit signal is known as a carrier. The carrier in an analog signal is modulated by varying volume or shifting frequency up or down in relation to the incoming signal. Satellite carriers operating in the analog mode are usually frequency modulated. CASE (Computer Assisted Software Engineering): The application of computer technology to systems development activities, techniques and methodologies. Sometimes referred to as Computer Aided Systems Engineering. CDF (Channel Definition Format): Used in Internet-based broadcasting. With this format, a channel serves as a web site that also sends an information file about that specific site. Users subscribe to a channel by downloading the file. CDMA (Code Division Multiple Access): A multiple-access scheme where stations use spreadspectrum modulations and orthogonal codes to avoid interfering with one another. Cell: Geographic unit of a wireless phone system. Regions are divided into small cells, each equipped with a low-powered radio transmitter. When a mobile phone moves from one cell to another, phone calls are handed off. CGI (Common Gateway Interface): A set of guidelines that determines the manner in which a web server receives and sends information to and from software on the same machine. CGI-BIN: The frequently used name of a directory on a web server where CGI programs exist.
CLEC (Competitive Local Exchange Carrier): A company providing local telephone service. Click Through: In advertising on the Internet, click through refers to how often viewers respond to an ad by clicking on it. Also known as click rate. Client/Server (networking): A way of running a large computer setup. The "Server" is the host computer that acts as the central holding ground for files, databases and application software. The "Clients" are all of the PCs connected to the network that share data with the Server. This is a vast change from the networks of the past that were connected to expensive, complicated “mainframe” computers. CMOS (Complementary Metal-Oxide Semiconductor): Integrated-circuit technology used for processors and memory. Coaxial Cable: A type of cable widely used to transmit telephone and broadcast traffic. The distinguishing feature is an inner strand of wires carrying a signal surrounded by an insulator that in turn is surrounded by another conductor that serves as the ground. Codec: Hardware or software that converts analog to digital and digital to analog (in both audio and video formats). Codecs can be found in digital telephones, set-top boxes, computers and videoconferencing equipment. The term is also used to refer to the compression of digital information into a smaller format. Co-Location: Refers to having a server belonging to one group that is physically located on a network belonging to another group. Co-location is usually practiced for security reasons. Commerce Chain Management (CCM): Includes Internet-based tools to facilitate sales, distribution, inventory management and content personalization. Compression: A technology in which a communications signal is squeezed so that it uses less bandwidth (or capacity) than it normally would. This saves storage space and shortens transfer time. The original data is decompressed when read back into memory.
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COMSAT: The Communications Satellite Corporation that serves as the U.S. Signatory to INTELSAT and INMARSAT. Cookie: A piece of information sent to a web browser from a web server that the browser software saves and then sends back to the server upon request. Cookies are used by web site operators to track the actions of users returning to the site. CPC (Cost Per Click): In advertising on the Internet, an ad rate charged only if a viewer responds to a displayed ad. CPM (Cost Per Thousand): A standard measure of media cost-efficiency. The measure related the cost of a medium to its audience delivery. For example, an ad placement cost of $4,000 in a 100,000-circulation magazine yields a cost of $40 per thousand. CPU (Central Processing Unit): The part of a computer that interprets and executes instructions. It is composed of an arithmetic logic unit, a control unit and a small amount of memory. CRM (Customer Relationship Management): The automation of integrated business processes involving customers—sales (contact management, product configuration), marketing (campaign management, telemarketing) and customer service (call center, field service).
DBS (Direct Broadcast Satellite): A high-powered satellite authorized to broadcast television programming directly to homes. Home subscribers use a dish and a converter to receive and translate the TV signal. Dial-Up Access: The connection of a computer or other device to a network through a modem and a public telephone network. The only difference between dial-up access and a telephone connection is that computers are at each end of the connection rather than people. Dial-up access is slower than DSL, ISDN and other advanced connections. Digital: Transmission of a signal reducing all of its information to ones and zeros and then regrouping them at the reception end. Digital transmission vastly improves the carrying capacity of the spectrum while reducing noise and distortion of the transmission. Digital Local Telephone Switch: A computer that interprets signals (dialed numbers) from a telephone caller and routes calls to their proper destinations. A digital switch also provides a variety of calling features not available in older analog switches, such as call waiting. Digital Signal Processor: Chip that converts analog signals such as sound and light into digital signals.
Cyber: This term is commonly used as a prefix to things and ideas that are being made more prevalent in society through the spread of computers and technology.
Disaster Recovery: A set of rules and procedures that allow a computer site to be put back in operation after a disaster has occurred. The concept of moving backups off-site constitutes the minimum basic precaution for disaster recovery. The remote copy is used to recover data if the local storage is inaccessible after a disaster.
Cyberspace: This term refers to the entire realm of information available through computer networks.
Discrete Semiconductor: Chip with one diode or transistor.
Datanets: Datanets are generally private networks of land-based telephone lines, satellites or wireless networks that allow corporate users to send data at high speeds to remote locations while bypassing the speed and cost constraints of traditional telephone lines.
Disk Mirroring: A data redundancy technique in which data is recorded identically on multiple separate disk drives at the same time. When the primary disk is off-line, the alternate takes over, providing continuous access to data. Disk Mirroring is sometimes referred to as "RAID."
DBMS (Data Base Management System): A system used to store, retrieve and manipulate data in an organized fashion. Usually consists of dictionary, manipulation, security and access components.
DNA (Distributed interNet Applications Architecture): A current Microsoft project, also known as Windows DNA, that is dependent on Active Directory and is designed to provide secure
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delivery of software components over the Internet and intranets. DOCSIS (Data over Cable Service Interface Specification): Standards for transferring data over cable television. Domain: A domain is a domain name (see below) that has server records associated with it. Domain Name: This name identifies an individual site on the Internet and is always comprised of at least two parts, separated by dots, such as IBM.com. Domain (Top-Level): Either an ISO country code or a common domain name such as .com, .org or .net. DRM (Digital Rights Management): Enables control and maintenance of publishers’ rights by delivering encrypted information and, instead of providing the key (or using the recipient’s public key for encryption), in effect permitting the recipient to borrow the decryption key in a highly controlled fashion. DS-1: A digital transmission format that transmits and receives information at a rate of 1,544,000 bits per second. DSL (Digital Subscriber Line): A set of technologies that increases the rate at which information can be delivered across a copper subscriber line. DSS (Digital Satellite System): Hughes Electronics’ brand of DBS (see above) system. Duplicate Host: A single host name that maps to duplicate IP addresses. DVD (Digital Video Disc): DVDs look a lot like music CDs, but they can store more than seven times as much data (DVDs store 4.7 gigabytes of data, compared to 650 megabytes on a CD). They are commonly used to store full-length motion pictures. Dynamic HTML: Web content that changes with each individual viewing. The same site, for example, could appear different to the viewer depending on conditions such as the geographic location of the reader, the time of day, previous pages viewed by the reader and the user’s profile.
EDI (Electronic Data Interchange): This is an accepted standard format for the exchange of data between various companies’ networks. EDI allows for the transfer of e-mail as well as orders, invoices and other files from one company to another. EFT (Electronic Funds Transfer): A method of moving money from one account to another via computer. Withdrawing funds from your account using an automatic teller machine is a good example, as is paying bills using Quicken software on a PC. E-Mail: The use of software that allows the posting of messages (text, audio or video) over a network. Email may be used on a LAN, a WAN or the Internet. It also may be used via online services such as America Online. E-mail can be used to send a message to a single recipient or may be broadcast to a large group of people at once. Enterprise Application: A major software tool intended to manage data over an extremely large corporate or government user base (e.g., SAP, PeopleSoft). ERP (Enterprise Resource Planning): Packages that enable the creation of a single corporate image from disparate, decentralized divisions, enabling users to visualize underlying business processes, reshape these processes and renovate their businesses. Ethernet (networking): The standard format on which local area network equipment works. Abiding by Ethernet standards allows equipment from various manufacturers to work together. Expert Systems: A practical development of AI (see above) that requires creation of a knowledge base of facts and rules furnished by human experts and uses a defined set of rules to access this information in order to suggest solutions to problems. Extensible Markup Language: See "XML. " Extranet: A computer network that is accessible in part to authorized outside persons instead of operating like an intranet, which uses a firewall to limit accessibility. FAQ: An acronym for "frequently asked questions," this kind of document answers inquiries about a
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given topic. Generally, FAQs come in the form of a help file or as a hypertext document. FCC (Federal Communications Commission): The U.S. federal regulatory body, consisting of five members, regulates interstate communications under the Communications Act of 1934. FDDI (Fiber Distributed Data Interface): A token ring (see below) passing scheme that operates at 100 Mbps over fiber optic lines with a built in geographic limitation of 100 kilometers. This type of connection is faster than both Ethernet and T-3 connections.
Gateway: A device connecting two or more networks that may use different protocols and media. Gateways translate between the different networks and can connect locally or over wide area networks. Geostationary: This term refers to a geosynchronous satellite angle with zero inclination, so a satellite appears to hover over one spot on the earth's equator. GIF (Graphic Interchange Format): A widely used format for image files. Gigabyte: A group of bytes generally defined as either 1,000 or 1,024 megabytes.
Fiber Optics: Fiber optic is a type of telephone cable made from glass that can handle vast amounts of voice, data and video at once by carrying them along on beams of light.
Gigahertz (GHz): One billion cycles per second. As one moves above the millimeter waves, signals begin to take on the characteristics of lightwaves.
File Server: Computer that is modified to store and transfer large amounts of data to other computers. File servers often receive data from mainframes and store it for transfer to other micros, or from other micros to mainframes.
Global System for Mobile Communications (GSM): The standard cellular format used throughout Europe that makes one type of cellular phone usable in every nation on the continent and in the U.K.
Firewall: Hardware and software that keep unauthorized users from accessing a network.
Gopher: A way of making menus of material available over the Internet. This is a client-and-server form of program, meaning that the user must have a gopher client program in order to utilize it.
Frame Relay: An accepted standard for sending large amounts of data over phone lines and private datanets. Frame Relay refers to the fact that data is broken down into standard size "frames" prior to transmission. Frequency: The number of times that an alternating current goes through its complete cycle in one second of time. One cycle per second is also referred to as one hertz; 1000 cycles per second, one kilohertz; 1,000,000 cycles per second, one megahertz and 1,000,000,000 cycles per second, one gigahertz. Frequency Band: A term for designating a range of frequencies in the electromagnetic spectrum. FTP (File Transfer Protocol): A widely used method of transferring data and files between two Internet sites. Fuzzy Logic: Used in artificial intelligence, fuzzy logic recognizes that statements are not only just "true" or "false"–but also "more or less certain" or "very unlikely."
Groupware: An emerging type of software that is gaining immense popularity. Groupware enables various people on a network to contribute to one document at the same time, sharing ideas, molding the final product and monitoring its progress along the way. It’s a new way of group "thinking" without physical meetings. Lotus Notes pioneered this market. HDML (Handheld Devices Markup Language): A text-based markup language designed for display on a smaller screen (e.g., cellular phone, PDA, pager). Enables the mobile user to send, receive and redirect e-mail as well as access the Internet (though only to HDML-enabled web sites). Helper Applications: Applications that allow the user to view or play downloadable files. Hertz: A measure of frequency equal to one cycle per second. Most radio signals operate in ranges of megahertz or gigahertz.
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Hit: A single request from a web browser for something from a web server; i.e. a request for text or graphics.
ICANN: The Internet Corporation for Assigned Names and Numbers. It acts as the central coordinator for the Internet’s technical operations.
Home Page: The main page of a web site. Usually, the home page features links to other pages within the site.
IEEE (Institute of Electrical and Electronic Engineers): Standards body.
Host: A host computer is any machine on a network that is responsible for services received by other machines on that network. Host Name (or Firstname): The first portion of a host's domain name. HotJava: This set of products, developed by Sun Microsystems, utilizes Java technology. A set of libraries intended for building applications and a Java-enabled web browser are among existing HotJava products. HTML (Hypertext Markup Language): A language for coding text for viewing on the World Wide Web. It is unique because it enables the use of hyperlinks from one site to another. Such hyperlinks create a web. HTTP (Hypertext Transfer Protocol): The protocol used most frequently on the World Wide Web to move hypertext files between clients and servers on the Internet.
Impressions: In Internet advertising, the total number of times an ad is displayed on a web page. Impressions are not the same as "hits," which count the number of times each page or element in a page is retrieved. Since a single complicated page on a web site could consist of five or more individual elements, including graphics and text, one viewer calling up that page would register multiple hits but just a single impression. Information Superhighway: This common term refers to the Internet, bulletin board services, online services and other types of connective, telecommunication-like services. Infrastructure: The telecommunications infrastructure is comprised of all of the cable and equipment installed in the worldwide telecommunications market. Most of today’s telecommunications infrastructure is connected by copper and fiber optic cable, which represents a huge capital investment that telephone companies would like to continue to utilize in as many ways as possible.
Hub (networking): A centralized switch box, or a common connection point, for devices in a network. Hubs contain multiple ports that can intertransmit information in order to maximize the viewing of data. Several types of hubs exist, such as passive hubs (data conduits), intelligent or manageable hubs (hubs with additional traffic-monitoring features) and switching hubs. Switching hubs read the destination address of each packet of information and then forward the packet to the correct location.
INMARSAT: The International Maritime Satellite Organization, or INMARSAT, operates a network of satellites used in international transmissions for all types of international mobile services including maritime, aeronautical and land mobile.
Hub (Internet usage): A comprehensive Internet site dedicated to one category of user or one niche of interest.
INTELSAT: The International Telecommunications Satellite Organization operates a network of 20 satellites primarily for international transmissions but also provides domestic services to some 40 countries.
Hyperlink: A hyperlink is an element in an electronic document that links to another document or to another place in the same document. Generally, the user clicks on the hyperlink in order to follow it.
Integrated Circuit (IC): Another name for a semiconductor, an IC is a piece of silicon on which thousands (or millions) of transistors have been combined.
Interactive: Allows two-way data flow. For example, the Internet is interactive because a viewer can exchange information with the site—for example, by ordering a product.
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Interexchange Carrier (IXC or IEC): Any company providing long distance phone service between LECs and LATAs. (See "LEC" and "LATAs" below.) Interface: Refers to (1) a common boundary between two or more items of equipment or between a terminal and a communication channel, (2) the electronic device to interconnect two or more devices or items of equipment having similar or dissimilar characteristics or (3) the electronic device placed between a terminal and a communication channel to protect the network from the hazard of excess voltage levels. Internet: The Internet (the "Net") is a global computer network that provides a unique (and currently cost-free) way for millions of users to access each other by e-mail. Additionally, users may access thousands of databases at sites that are open to the Internet. Access is generally through HTMLenabled sites on the World Wide Web. Internet Appliance: A non-PC device that connects users to the Internet for specific or general purposes. A good example is a cellular telephone with a small screen and Internet capabilities. Internet Telephony: This category of hardware and software enables users to utilize the Internet to make telephone calls. Also known as "voice over IP." InterNIC: This collaboration between AT&T and Network Solutions, Inc. offers directory and database services, registration services, support services and net scout services to the public. Through InterNIC, one can gain access to white pages, domain name and IP address management services, education and information services and Internet-related publications. Intranet: A network protected by a firewall for sharing data and e-mail within an organization or company. Usually, intranets are used by organizations for internal communication. IP Number/IP Address: ("IP" stands for "Internet Protocol") A number or address with four parts that are separated by dots. Each machine on the Internet has its own IP number, which serves as an identifier.
ISDN (Integrated Services Digital Networks): Advanced telecommunications services offered at higher speeds over standard copper phone lines. While slower than fiber-optic cable, ISDN is a big step up from traditional copper wire speeds. ISO 9000, 9001, 9002: Standards set by the International Organization for Standardization for quality procedures. ISO 9000, 9001 and 9002 are the quality certifications for manufacturing. ISP (Internet Service Provider): A company that sells access to the Internet to individual subscribers. IT (Information Technology): The department responsible for all mainframe, telecommunications, media, television, video, micro computing and technical services. ITU-T (International Telecommunications Union for Telephony): The international body responsible for telephone and computer communications standards describing interface techniques and practices. These standards include those that define how a nation’s telephone and data systems connect to the worldwide communications network. Java: A programming language developed by Sun Microsystems that spices up WebPages with interactive graphics. Java can be read by people using any type of computer or operating system. Netscape Communications (a hot developer of Internet software) and other leading firms have licensed Java for use in new browsing tools. JPEG (Joint Photographic Experts Group): A widely used format for image files. Ka-Band: The frequency range from 18 to 31 GHz. The spectrum allocated for satellite communication is 30 GHz for the up-link and 20 GHz for the downlink. Kilobyte: This is a measure for 1,000 or 1,024 bytes. Kilohertz (kHz): This is a measure of a unit of frequency equal to 1,000 Hertz. KM (Knowledge Management): Includes techniques and technologies that help users find their way through existing information. Also defined as capturing and growing knowledge as employees in an
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organization interact with customers, partners and products. LAN (Local Area Network): A computer network that is generally within one office or one building. The LAN can be very inexpensive and efficient to set up when small numbers of computers are involved. It may require a network administrator and a serious investment if hundreds of computers are hooked up to the LAN. A LAN enables all computers within the office to share files and printers, to access common databases and to send e-mail to others on the network. LATA (Local Access and Transport Area): Operational service areas established after the breakup of AT&T to distinguish local from longdistance service. The U.S. is divided into 161 LATAs. Leased Line: This kind of connection is a phone line that is rented for use in continuous, long-term data connections. LEC (Local Exchange Carrier): Any local telephone company, i.e., a carrier that provides ordinary phone service under regulation within a service area. LINUX: An open, free operating system that is shared readily with millions of users worldwide. These users continuously improve and add to the software's code. It can be used to operate computer networks and Internet appliances as well as PCs. LMDS (Local Multipoint Distribution System): Similar to a wireless fiber optic system, it has tremendous, high-quality and high-capacity transmission ability. Consumers who subscribe to the service will be able to get such features as telephone, television and high-speed Internet access bundled together. LSI (Large-Scale Integration): The placement of thousands of electronic gates on a single chip. This makes the manufacture of powerful computers possible. Mainframe Computer: One of the largest types of computer, usually capable of serving many users simultaneously, with exceptional processing speed.
MAN (Metropolitan Area Network): A data and communications network that operates over metropolitan areas and recently has been expanded to nationwide and even worldwide connectivity of highspeed data networks. A MAN can carry video and data. Mbps (Megabits per second): One million bits transmitted per second. Megabytes: A measure of one million bytes, or 1,024 kilobytes. Megahertz (MHz): A measure of frequency equal to one million Hertz. Microprocessor: Also known as Central Processing Unit or CPU. Computer on a digital semiconductor chip. It performs math and logic operations and executes instructions from memory. Microwave: Line-of sight, point-to-point transmission of signals at high frequency. Microwaves are used in data, voice and indeed all types of information transmission. The growth of fiber optic networks has tended to curtail the growth and use of microwave relays. Middleware: Software that interprets requests between a PC or workstation application and an antiquated database running on a mainframe. Also used to describe software that helps an application communicate with an underlying operating system. MIME (Multipurpose Internet Mail Extensions): A widely used method for attaching non-text files to e-mails. MIPS (Millions of Instructions per Second): Measured in millions. For instance, 25 MIPS is 25 million machine instructions per second, a measure used to compare relative computing power. Modem: This device allows a computer to be connected to a phone line, which in turn enables the computer to receive and exchange data with other machines.
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Modulator: A device that modulates a carrier. Modulators are found in broadcasting transmitters and satellite transponders. The devices are also used by CATV companies to place a baseband video television signal onto a desired VHF or UHF channel. Home video tape recorders also have built-in modulators that enable the recorded video information to be played back using a television receiver tuned to VHF channel 3 or 4.
communications paths and supports high traffic loads through routing decisions. New Media: A wide array of digital communication technologies, including Internet development tools and services, desktop and portable personal computers, workstations, servers, audio/video compression and editing equipment, graphics hardware and software, high-density storage services and video conferencing systems.
MP3: A subsystem of MPEG (see below) used to compress sound into computer files. Now the most commonly used format for downloading music. MP3 compresses music 10 to 14 times while still retaining CD quality.
NIC (Network Information Center): Any organization responsible for supplying information about a network.
MPEG, MPEG-1, MPEG-2, MPEG-3: The moving Picture Experts Group digital standards for the compression of motion or still video for transmission or storage. MSP (Managed Service Provider): An outsourcer that deploys, manages and maintains the back-end infrastructure for Internet businesses. Multicasting: Sending data, audio or video simultaneously to a number of clients. Also known as "broadcasting." Multimedia: A presentation via several different media at once. For example, an encyclopedia in CDROM format is generally multimedia because it features written text, video and sound in one package. Multipoint Distribution System (MDS): A common carrier licensed by the FCC to operate a broadcastlike omni-directional microwave transmission facility within a given city. MDS carriers often pick up satellite pay-TV programming and distribute it, via their local MDS transmitter, to specially installed antennas and receivers. Network: A network is created when two or more computers are connected. Network Numbers: The first portion of an IP address that identifies the network to which hosts in the rest of the address are connected. Neural Networks: Computer architecture that enables redundancy, self-reparation of
Node: Any single computer connected to a network or a junction of communications paths in a network. NS (Nanosecond): A billionth of a second, a common unit of measure of computer operating speed. NTIA: Acronym standing for the National Telecommunications and Information Administration, a unit of the Department of Commerce that address U.S. government telecommunications policy, standards setting and radio spectrum allocation. www.ntia.doc.gov Object Technology: By merging data and software into "objects," a programming system becomes "object-oriented." For example, an object called "weekly inventory sold" would have the data and programming needed to construct a flow chart. Some new programming systems–including Java–contain this feature. Object Technology is also feature in many Microsoft products. (See "Java" above.) OC3 to OC192: Very high speed data lines that run at speeds from 155 to 9,600 Mbps. Online: When a device is online, it is turned on and connected, whether to the Internet or to another device. When printers are ready to receive data from a computer, they are considered online. Open Computing: A movement spawned by the Unix community to make computers and software that are standardized along published specifications so that hardware and software can be used interchangeably.
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OS (Operating System): This is the software that allows applications like word processors or web browsers to run on a computer. For example, Windows 2000 is an operating system. P2P (Peer-to-Peer): Form of cooperative processing in which either of the programs involved can initiate communication with the other. In a peer network, every station can function as both a client and a server. Napster is a peer-to-peer system. Packet Switching: This is a higher-speed way to move data through a network. Files are broken down into smaller "packets" that are reassembled electronically after transmission. Palm Pilot: A handheld device in which data is stored and may also be transmitted. Data usually consists of address books, calendar information and e-mail. This genre of small personal computers is known as PDAs (see "PDA" below). PBX: A central telephone system within one large business office used to route incoming and outgoing calls to various employees and onto long-distance networks. PBX functions are being revolutionized by the application of computer functions, such as voice mail. (See "Voice Mail" below.) PC: "PC" stands for personal computer, an affordable, efficient computer meant to be used by one person and frequently connected to a network as a "client." PCMCIA: Personal Computer Memory Card International Association. PCS: See "Personal Communication Service" below. PDA (Personal Digital Assistant): A handheld or pocket-size device containing address and calendar information. A Palm Pilot is a PDA. Peer-to-Peer: See "P2P" above. Perl (Practical extraction and report language): A programming language geared towards text processing that was developed by Larry Wall. Personal Communication Service (PCS): A type of cellular mobile phone service.
Plug-in: Any small piece of software that adds extra functions to a larger piece of software. POP: An acronym for both "Point of Presence" and "Post Office Protocol." Point of presence refers to a location that a network can be connected to (generally used to count the potential subscriber base of a cellular phone system), while post office protocol refers to the way in which e-mail software obtains mail from a mail server. Port: An interface (connector) between the computer and the outside world. The number of ports on a communications controller or front-end processor determines the number of communications channels that can be connected to it. The number of ports on a computer determines the number of peripheral devices that can be attached to it. Portal: A comprehensive web site that is designed to be the first site seen when a computer logs on to the web. Portal sites often have links to e-mail usage, a search engine or other features. Yahoo! and MSN.com are portals. Portals are aimed at broad audiences with common interests. (Also see "Hub.") PPP (Point-to-Point Protocol): Protocol that enables a computer to use the combination of a standard telephone line and modem to make TCP/IP connections. Protocol: A set of rules for communicating between computers. The use of standard protocols allows products from different vendors to communicate on a common network. PTSN (Public Switched Telephone Network): A term that represents the traditional telephone system. PTV (Personal Television): TV appliances, usually set-top boxes, which allow television viewers to pause live programs (in addition to VCR-type controls such as fast-forward and rewind). Some of the appliances have the ability to recognize viewing patterns and suggest programs based on user profiles. Companies such as Replay TV, TiVo and WebTV offer PTV technology. Push Technology: See "Webcasting" below. RAM (Random Access Memory): Computer memory used to temporarily hold programs and data.
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Real Audio: A helper software application that enables the user to hear real-time audio via the Internet. Real Time: A real-time system or software is one specially designed to acquire, process, store and display large amounts of rapidly changing information almost instantaneously with microsecond responses as changes occur. Router (networking): This is an electronic link that enables two different local area networks to talk to each other, even though each network may be based on a different standard. SAN (Storage Area Network): Links host computers to remote storage systems. Satellite Broadcasting: The use of Earth-orbiting satellites to transmit, over a wide area, TV, radio, telephony, video and other data in digitized format. Scalable: A scalable network can grow and adapt as customer needs increase and change. Scalable networks can easily manage increasing numbers of workstations, servers, user workloads and added functionality.
Shareware: Software that is available for users to download for free from the Internet, usually with the expectation that they will register or pay for the software if they continue to use it. Many shareware programs are set to expire after a period of time. Shockwave: An authoring tool that allows multimedia presentations to appear on the Internet. Shockwave enables interactive graphics, sound and animation to be viewed on the web. SLIP (Serial Line Internet Protocol): The connection of a traditional telephone line, or serial line, and modem to connect a computer to an Internet site. Slugs (Internet usage): Small graphical icons that are used frequently in order to establish a visual language. They often function as buttons such as sound slugs, which inform the user of the size of a sound file and, when clicked, download the file. SMDS (Switched Multimegabit Data Service): A method of extremely high-speed transference of data. SMTP (Simple Mail Transfer Protocol): The primary form of protocol used in transference of email.
SCSI (Small Computer System Interface): A dominant, international standard interface used by UNIX servers and many desktop computers to connect to storage devices; a physical connection between devices.
SNMP (Simple Network Management Protocol): A set of communication standards for use between computers connected to TCP/IP networks.
SDSL: See "Digital Subscriber Line" above.
SOAP (Simple Object Access Protocol) a method for applications to communicate with each other using web protocols line HTTP.
Semiconductor: Generic term for a device that controls electronic signals. It specifically refers to a material (such as silicon, germanium or gallium arsenide) that can be altered to either conduct electrical current or block its passage. Server: A computer that performs and manages specific duties for a central network. It may include storage devices. Set-Top Box: Typically a cable modem a set-top box sits on top of a TV set and is an enhancement to cable TV or other television reception. For example, a cable modem is a set-top box that enables Internet access via TV cable.
SONET (Synchronous Optical Network Technology): A mode of high-speed transmission meant to take full advantage of the wide bandwidth in fiber optic cables. Spam: A term used to refer to generally unwanted, generally solicitous, bulk-sent e-mail. SQL (Structured Query Language): A language set that defines a way of organizing and calling data in a computer database. SQL is becoming the standard for use in client/server databases. SRDF (Symmetrix Remote Data Facility): A highperformance, host-independent business solution that
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enables users to maintain a duplicate copy of all or some of their data at a remote site. Streaming Media: One-way audio and/or video that is compressed and transmitted over a data network. The media is viewed or heard almost as soon as data is fed to the receiver – there is usually a buffer period of a few seconds. Supply Chain Management (SCM): Includes Internet-based purchasing/ordering and control of parts, products and services required to maintain inventory or create finished goods. Switch (networking): A network device that directs packets of data between multiple ports, often filtering the data so that it travels more quickly. T1: This is a standard for broadband digital transmission over phone lines. Generally, it can transmit at least 24 voice channels at once over copper wires–at a high speed of 1.5 million bps. T3: This type of transmission over phone lines supports data rates of 43 Mbps. T3 lines consist of 672 channels, and such lines are generally used by Internet service providers. These lines are also referred to as DS3 lines. (Also, see “OC3”.) TCP/IP (Transmission Control Protocol/Internet Protocol): The combination of a network and transport protocol developed by ARPANET for internetworking IP-based networks. TDMA (Time Division Multiple Access): A digital service for relatively large users of international public-switched telephony, data, facsimile and telex. TDMA also refers to a method of multiplexing digital signals that combines a number of signals passing through a common point by transmitting them sequentially, with each signal sent in bursts at different times. See "Time Division Multiple Access" below. Telecommunications: Systems of hardware and software used to carry voice, video and/or data between locations. This includes telephone wires, satellite signals, cellular links, coaxial cable and related devices.
Telnet: The Telnet program, which is a terminal emulation program for TCP/IP networks like the Internet, runs on a computer and connects to a particular network. Directions entered on a computer that is connected using Telnet will be read and followed just as if they had been entered on the server itself. Through Telnet, users are able to control a server and communicate with other servers on the same network at the same time. Telnet is commonly used to remotely control web servers. Token Ring: A local area network architecture in which a token, or continuously repeating frame, is passed sequentially from station to station. Only the station possessing the token can communicate on the network. Transistor: Device used for amplification or switching of electrical current. UNIX: A multi-user, multitasking operating system that runs on a wide variety of computer systems from PCs to mainframes. URL (Uniform Resource Locator): The "address" that allows an Internet browser to locate a homepage or web site. For example: http://www.aol.com is the URL for America Online. Very Small Aperture Terminal (VSAT): A small Earth station terminal, generally 0.6-2.4 meters in size, that is often portable and primarily designed to handle data transmission and private-line voice and video communications. Voice Mail: A sophisticated electronic telephone answering service that utilizes a computer. Voice mail enables users to receive faxes and phone messages and to access those messages from remote sites. VPN (Virtual Private Network): A VPN cordons off part of a public network to create a private LAN. VSAM (Virtual Storage Access Method): A data storage and retrieval mechanism designed to maintain large quantities of data on external disks or drums on computers designed for virtual storage systems. WAN (Wide Area Network): The other office network (see "LAN"), the WAN stretches over a long
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distance, usually connecting several buildings or locations. WAP (Wireless Access Protocol): A technology that enables the delivery of World Wide Web pages in a smaller format readable by screens on cellular phones. Web Page: A document on the World Wide Web that is identified by a URL. Webcasting: The act of using the Internet (the World Wide Web, usually) to broadcast information or entertainment. Webmaster: Any individual who runs a web site. Webmasters generally perform maintenance and upkeep. Web Site: A specific domain name location on the World Wide Web. Each site, which contains a home page, usually consists of additional documents. Wide Area Network (WAN): A regional or global network that provides links between all local area networks within a company. For example, Ford Motor Company might use a WAN to enable its factory in Detroit to talk to its sales offices in New York and Chicago, its plants in England and its buying offices in Taiwan. A WAN refers to the primary, globe-spanning networks linked together for one organization. Wireless Cable: A pay television service that delivers multiple programming services to subscribers who are equipped with special antennas and tuners. It is an alternative to traditional, wired cable TV systems. Workstation: Simply put, a workstation is a highpowered desktop computer, usually used by engineers. World Wide Web: Also known as the "web." This is a computer system that provides enhanced access to various sites on the Internet through the use of hyperlinks. Click your mouse on a link that is displayed in one document and it will take you to another related document.
XML (Extensible Markup Language): This programming language enables designers to add extra functionality to documents that could not otherwise be utilized with standard HTML coding. XML was developed by the World Wide Web Consortium. It can communicate to various software programs the actual meanings contained in HTML documents. For example, it can enable the gathering and use of information from a large number of databases at once, and place that information into one web site window.
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INTRODUCTION
PLUNKETT'S E-COMMERCE & INTERNET BUSINESS ALMANAC 2001-2002 is the second edition of our guide to the industry that has evolved around the Internet. This almanac is designed to be a general source for researchers. It is especially intended to assist with market research, strategic planning, employment searches, contact or prospect list creation (be sure to see the export capabilities of the accompanying CD-ROM that is available to book and ebook buyers) and financial research, and as a data resource for executives and students of all types. The data and areas of interest covered are intentionally broad, ranging from the various types of businesses involved in e-commerce and the Internet, to technology and access providers, to an in-depth look at the major firms involved in these fields.
components of the Internet industry (see “How To Use This Book”). For example, the impact of the Internet upon retail sales is discussed in exacting detail, along with easy-to-use tables on all facets of the Internet in general, from the types of technologies and services involved to names and descriptions of the divisions and affiliates of the major firms within this industry. In addition, this book presents a general overview of Internet business models (see “How To Use This Book”). For example, the soaring use of Internet sites to boost business, deal in e-commerce and publish data of all types is covered in exacting detail, along with easy-to-use tables on all facets of the Internet and World Wide Web in general.
Because of the exploding nature of the e-commerce and Internet industry, we were obviously not capable of including every related firm or supplier. Nonetheless, we did accomplish a significant and unique feat with this book: we identified, researched and profiled 386 major companies that were operating at significant levels of revenues and services provided, as of mid 2001. (See Chapter 6 for more details).
THE E-COMMERCE & INTERNET 400 is our unique grouping of the biggest, most successful corporations in all segments of the e-commerce and Internet business. Tens of thousands of pieces of information, gathered from a wide variety of sources, have been researched and are presented in a unique form that can be easily understood. This section includes thorough indexes to THE E-COMMERCE & INTERNET 400, by geography, industry, brand names, subsidiary names and other topics.
PLUNKETT'S E-COMMERCE & INTERNET BUSINESS ALMANAC takes a rounded approach for the general researcher or student. This book presents a complete overview of the major
Especially helpful is the way in which PLUNKETT'S E-COMMERCE & INTERNET BUSINESS ALMANAC readily enables readers to compare the financial records and growth plans of large Internet
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companies and major industry groups. You will see the financial record of each firm for the past five years, along with the impact of earnings, sales, and strategic plans on each company’s potential to fuel growth and provide lucrative investment and employment opportunities.
subsidiaries, affiliations, divisions and activities within a firm’s corporate structure. •
This volume is intended to be a general guide. That means that researchers should look to this book for an overview, and, when conducting indepth research, should contact the specific corporations or industry associations in question for the very latest changes and data. Where possible, we have listed contact names, toll-free telephone numbers and World Wide Web site addresses for the companies, government agencies and industry associations involved, so that the reader may get further details without unnecessary delay.
•
We have used exhaustive efforts to locate, and fairly present, accurate and complete data. However, when using this book or any other source for business and industry information, the reader should use caution and due diligence by conducting further research where it seems appropriate. We wish you success in your endeavors, and we trust that your experience with this book will be both satisfactory and productive.
No other source provides this book’s easy-tounderstand comparisons of growth, expenditures, technologies, trends, corporations, development and many other items of great importance to people of all types who may be studying the Internet industry. By scanning the data groups and the unique indexes, you can find the best information to fit your personal research needs. The best, major growth companies are ranked using specific criteria. Which companies have the fastest growth rates? Which company is the biggest employer? Which company earns the highest profits? All of these things and more are easy for the reader to find. This book’s job is to help you sort through easy-tounderstand summaries of today’s Internet products, services and trends in a quick and effective manner. Whatever your purpose for researching the Internet field, you will find this book to be a valuable guide. Nonetheless, as is true with all resources, this volume has limitations that the reader should be aware of: •
•
•
Financial data and other corporate information can change quickly. A book of this type can be no more current than the data that was available as of the time of editing. Consequently, the financial picture, management and ownership of the firm(s) you are studying may have changed since the date of this book. For example, this almanac includes the most up-to-date sales figures and profits available to the editors as of early 2001. That means that we have typically used financial data for December 31, 2000, or for a fiscal year that ended during 2000. Corporate mergers, acquisitions and downsizing are occurring at a very rapid rate. Such events may have created significant change, subsequent to the publishing of this book, within a company you are studying. Some of the companies profiled are so large in scope and in variety of business endeavors conducted within a parent organization that we have been unable to completely list all
Jack W. Plunkett Houston, Texas July, 2001
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HOW TO USE THIS BOOK
The two primary sections of this book are devoted first to an overview of the e-commerce and Internet industry and then to the “Individual Data Listings” for THE E-COMMERCE & INTERNET 400. If time permits, you should begin your research in the front chapters of this book. Also, you will find lengthy indexes in Chapter 6 and in the back of the book. THE E-COMMERCE & INTERNET BUSINESS INDUSTRY Glossary. A short list of e-commerce and Internet Industry terms. Chapter 1: Online Retailing (Business-toConsumer) Chapter 2: Business-to-Business Chapter 3: Online Financial Services Chapter 4: Trends in Personal Computers and Internet Access Chapter 5: E-Commerce & Internet Business Contacts — Addresses, Telephone Numbers and World Wide Web Sites. This chapter covers contacts for important government agencies, ecommerce and Internet organizations and trade groups.
THE E-COMMERCE & INTERNET 400 Chapter 6: THE E-COMMERCE & INTERNET 400: Who They Are and How They Were Chosen. The companies compared in this book were carefully selected from all e-commerce and Internet sectors on a nationwide basis. For a complete description, see Chapter 6. Individual Data Listings: Look at one of the companies in THE ECOMMERCE & INTERNET 400’s Individual Data Listings. You’ll find the following information fields: Company Name: The company profiles are in alphabetical order by company name. If you don’t find the company you are seeking, it may be a subsidiary or division of one of the firms covered in this book. Try looking it up in the Index by Subsidiaries, Brand Names and Selected Affiliations in the back of the book.
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Ranks: Industry Group Code: An NAIC code used to group companies within like segments. (NAIC is the system that was recently developed to replace the old SIC codes. A complete list of codes allocated to companies profiled in this book is included at the beginning of Chapter 6.) Ranks Within This Company’s Industry Group: Ranks, within this firm’s segment only, for annual sales and annual profits. Business Activities: A grid divided into six categories. A complete index by industry is in Chapter 6. Types of Business: A listing of the primary types of business specialties conducted by the firm. Brands/Divisions/Affiliations: Major brand names, operating divisions or subsidiaries of the firm, as well as major corporate affiliations – such as another firm that owns a significant portion of the stock. A complete Index by Subsidiaries, Brand Names and Selected Affiliations is in the back of the book. Contacts: The names and titles of up to 24 top officers and executives of the company are listed. Address: The firm’s full headquarters address and telephone number, plus toll-free and fax numbers where available. Also provided are web site addresses. Financials: Annual Sales (2000 or the latest fiscal year available to the editors, plus up to four previous years): These are stated in thousands of dollars (add three zeros if you want the full number). This figure represents consolidated worldwide sales from all operations. 2000 figures may be estimates or may be for only part of the year—partial year figures are appropriately footnoted. (Also, you may want to see the Rankings Within Industry Group table at the beginning of Chapter 6.) Annual Profits (2000 or the latest fiscal year available to the editors, plus up to four previous years): These are stated in thousands of dollars (add three zeros if you want the full number). This figure represents consolidated, after-tax net profit from all operations, generally before non-recurring items. 2000 figures may be estimates or may be for only part of the year—partial year figures are appropriately footnoted. Total Number of Employees: The approximate total number of employees, worldwide, as of the
beginning of 2001 (or the latest data available to the editors). Apparent Salaries/Benefits: Due to wide variations in the manner in which corporations report benefits to the U.S. Government’s regulatory bodies, not all plans will have been uncovered during our effort to research this data. Also, the availability of such plans to employees will vary according to the qualifications that employees must meet to become eligible. For example, some benefit plans may be available only to salaried workers – others only to employees who work more than 1,000 hours yearly. Benefits that are available to employees of the main or parent company may not be available to employees of the subsidiaries. A “Y” in appropriate fields indicates “Yes.” NOTE: Generally, employees covered by wealthbuilding benefit plans do not fully own (“vest in”) funds contributed on their behalf by the employer until as many as five years of service with that employer have passed. Pension Plan: The firm offers a pension plan to qualified employees. The type and generosity of these plans vary widely from firm to firm. Caution: Some employers refer to plans as “retirement plans” when they are actually 401(k) savings plans. True “pension” plans are rarely offered. ESOP Stock Plan (Employees’ Stock Ownership Plan): This plan is gaining in popularity. Typically, the plan borrows money from a bank and uses those funds to purchase a large block of the corporation’s stock. The corporation makes contributions to the plan over a period of time, and the stock purchase loan is eventually paid off. The value of the plan grows significantly as long as the market price of the stock holds up. Qualified employees are allocated a share of the plan based on their length of service and their level of salary. Savings Plan, 401(k): Under this type of plan, employees make a tax-deferred deposit into an account. In the best plans, the company makes annual matching donations to the employees’ accounts, typically in some proportion to deposits made by the employees themselves. A good plan will match one-half of employee deposits of up to six percent of wages. In other words, an employee earning $30,000 yearly might deposit $1,800 (6%) into the plan. The company might match one-half of the employee’s deposit, or $900. The plan grows on a tax-deferred basis, similar to an IRA. A very generous plan will match 100% of employee deposits. However, some plans do not call for the
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employer to make a matching deposit at all. Other plans call for a matching contribution to be made at the discretion of the firm’s board of directors. Actual terms of these plans vary widely from firm to firm. Generally, these savings plans will allow employees to deposit as much as 15% of salary into the plan on a tax-deferred basis. However, the portion that the company uses to calculate its matching deposit is generally limited to a maximum of 6%. Stock Purchase Plan: Qualified employees may purchase the company’s common stock at a price below its market value under a specific plan. Typically, the employee is limited to investing a small percentage of wages in this plan. These plans usually offer a 15% discount, but the discount may range from 5 to 15%. Some of these plans allow for deposits to be made through regular monthly payroll deductions. Profit Sharing: Qualified employees are awarded an annual amount equal to some portion of a company’s profits. In a very generous plan, the pool of money awarded to employees would be 15% of profits. Typically, this money is deposited into a long-term retirement account. Caution: Some employers refer to plans as “profit sharing” when they are actually 401(k) savings plans. True profit sharing plans are rarely offered. Highest Executive Salary: The highest executive salary paid, typically a 2000 amount (or the latest year available to the editors) and typically paid to the Chief Executive Officer. Highest Executive Bonus: The apparent bonus, if any, paid to the above person. Second Highest Executive Salary: The nexthighest executive salary paid, typically a 2000 amount (or the latest year available to the editors) and typically paid to the President or Chief Operating Officer.
Second Highest Executive Bonus: The apparent bonus, if any, paid to the above person. Competitive Advantage: A brief statement regarding an outstanding feature that gives the firm an edge in the marketplace. Other Thoughts: A “Y” in appropriate fields indicates “Yes.” Stock Ticker: When available, the unique stock market symbol used to identify this firm’s common stock for trading and tracking purposes. Apparent Women Officers or Directors: It’s difficult to obtain this information on an exact basis, and employers generally do not disclose the data in a public way. However, we have indicated what our best efforts reveal to be the apparent number of women who are either in the posts of corporate officers, or who sit on the board of directors. There is a wide variance from company to company. Hot Spot for Advancement for Women/ Minorities: These are firms that either have posted a far-above-average number of women and/or minorities to high posts, or that have a good record of going out of their way to recruit, train, promote and retain women or minorities in top jobs. (See the Index of Hot Spots For Women and Minorities in the back of the book.) Growth Plans/ Special Features: Listed here are observations regarding the firm’s reputation, hiring plans, plans for growth and product development, along with general information regarding a company’s business and prospects. Locations: Primary locations outside of the headquarters, categorized by regions of the United States and by international locations. A “Y” in the appropriate field indicates “Yes.” A complete index by locations is in this chapter.
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Chapter 1 Business-to-Consumer (Online Retailing)
Significant Trends to Watch Service and Security Privacy, delivery, service, transaction security and honesty are the biggest concerns of Internet consumers (see "Highly Sophisticated Cyberpsychographics Profile and Track Millions of Individual Users" below). Service and follow-through that will retain customers (once they have responded to the costly process of advertising and promotion) will be the benchmark of successful online retailers. Large numbers of consumers continue to be frustrated by breakdowns or complications in the online ordering process. However, an impressive 90% of online shoppers during the 2000 holiday season reported a high level of satisfaction with their experience, according to Jupiter Media Metrix www.jmm.com. Fulfillment and shipping remain immense challenges to many online retailers, particularly during holiday periods. Failure to develop fulfillment infrastructure that will deliver on time has added greatly to the demise of many dotcom retailers. The ability to easily return or exchange merchandise is a critical issue with consumers (see “Business Models” below). Business Models In general, online-only business-toconsumer sites continue to lose vast quantities of
money in their quest to build customer bases and beat the competition. The most profitable pure online business models may turn out to be: 1. Auctions (for example, the highly-profitable eBay); 2. Travel reservations (such as Expedia—the high-volume travel site); 3. Sites that rely on high degrees of personalization in order to build rapport and long-lasting relationships with customers (such as the impressive personalization technology utilized by Amazon.com); and 4. Sites that sell products that lend themselves to customization via lists of options easily described via the web (for example, the incredibly-successful online sale of personal computers by Dell Computer). Early Entry May No Longer Ensure Market Dominance Despite the fame of the largest traditional retail store names, some early Internet-only companies continue to dominate their categories. For example, Amazon.com, with about an 80% market share in online book sales, continues to get vastly more traffic than BarnesandNoble.com, despite the immense success of Barnes & Noble as a traditional book retailer nationwide. However, many major retailers that were not early, aggressive adopters of e-commerce have recently achieved significant market share with their web sites. Examples include Sears, Wal-Mart, Nordstrom and J.C. Penney. Online retail web sites remain among the destinations attaining the highest traffic on the
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Internet. For example, top retail sites in March 2001, according to Jupiter Media Metrix, included Amazon at 18 million+ visitors for the month, BarnesandNoble.com at nearly 5 million, CDNow at 4.7 million and Sears.com at 3.8 million. If you consider eBay to be a retail site, it tops the list at 20 million+ per month. For comparison’s sake, consider these figures against those of the most-visited sites such as AOL at 70 million visitors monthly and Yahoo! at about 60 million, and you can readily see that retailers are gaining exceptional traffic online. Personal Items and Consumables Have Been Generally Disappointing Categories Pet products, personal hygiene items and groceries have been big flops online. Equally disappointing have been categories such as furniture, wine and gardening supplies. Jewelry has enjoyed relatively high success as a category, but jewelry sites continue to have difficulty achieving operating profits. Books, consumer electronics, videos, CDs, entertainment tickets and many categories of apparel have proven to be very viable in terms of high volume sales online, even if the sites offering such items have not yet been profitable in general. Online Shoppers Deliver High Purchase Amounts For example, a report by Ernst & Young showed that consumers made large average purchases while shopping online in 1999, including an average amount of $233 spent at Best Buy’s site, $167 at Wal-Mart’s dotcom, $134 at Toysrus.com and $138 at L.L.Bean’s site. Jupiter Media Metrix found that online shoppers purchased an average total of $304 in merchandise during the 2000 holiday season. Acquiring the Customer at Any Cost Is Not a Viable Strategy Amazon.com, using aggressive methods that include affiliate marketing, heavy advertising and cutthroat pricing, continues to build its customer list while losing vast sums. For example, Amazon added an astonishing 2 million customers during the fourth quarter of 1999 alone, bringing its total customer base to 16.9 million. One year later, during the fourth quarter of 2000, it increased sales revenue by 40% over the same period in 1999. By mid 2001, the firm’s customer base was up to 29 million people worldwide. However, that kind of growth had an unsustainable cost. The firm lost a total of $720 million during 1999, and $1.4 billion in 2000.
Amazon has recently placed intense focus on raising profit margins and cutting customer acquisition expense in an attempt to achieve at least one profitable quarter during 2001. Likewise, Buy.com has acquired over 20 million customers by selling leading brand-name electronic goods, books, videos and more at near-wholesale prices. In fact, some of its items have been sold at prices that were below cost. Needless to say, the company is losing buckets full of cash. As the site's popularity builds and its customer base grows, the company is slowly raising prices in an attempt to achieve profitability. Nonetheless, Buy.com lost $133 million in 2000, in spite of sales growth of 32% and total revenues of $788 million. Highly Sophisticated Cyberpsychographics Profile and Track Millions of Individual Users Internet marketing consulting firms have developed complicated methods, including collaborative filtering, cookies and clickstream analysis, to profile individual customers’ web site viewing behavior, personal interests and shopping habits. For example, DoubleClick has exceptionally deep databases on consumer behavior that it has combined with very advanced technology that can help target online advertising. Consumers have become increasingly uncomfortable with this surreptitious gathering of data. New government regulations will be the result. Another result is the growing success of opt-in lists where consumers agree to receive targeted direct marketing via e-mail, as well as the use of contests and prizes designed to lure consumers into handing over personal data. According to a 2000 study by the Pew Internet and American Life Project, www.pewinternet.org, (see the table below) 86% of Internet users favor “opt-in” privacy policies that require firms to ask for permission to use personal information and 54% state that tracking of users is harmful because it invades their privacy. On the other hand, only 27% believe that tracking is helpful because it facilitates personalization. The Demographics of Online Shoppers Are Becoming More Mainstream In earlier years, consumers who shopped online had a high-income, relatively-young, high-education profile. Today, however, the demographics of online shoppers are much more diverse, and purchases by consumers of higher age and moderate income levels
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have increased. (See the table “Where the Internet Population Grew” below.) Consumer Information May Be the Most Successful of All B2C Offerings For example, according to a November 2000 study by the Pew Internet and American Life Project, 57% of people who access the Internet use it for gathering health care information. Sites like Autobytel.com that provide detailed information about automobiles and then enable consumers to solicit bids from new car dealers are huge hits. Likewise, sites that offer travel information (such as Expedia.com and Travelocity.com) draw immense amounts of traffic, and many of them generate significant revenue by booking travel reservations. The bottom line: consumers of all types turn to the Internet for information above all other things. Many times, the information they seek is vital to their eventual purchase decisions. The challenge for B2B companies is to convert that desire for information into revenues in a business model that generates sustainable purchases and profits, whether those purchases be for books, CDs, clothing or something as substantial as an automobile, a home or vital health care services. Internet Users Turn to the Internet for Information Percentage change from May-June 2000 to Nov.-Dec 2000 The percent of Internet users who say they have gone online to: Look for hobby information Browse for fun Buy a product Get news Get medical information Do research for their jobs Get financial information such as stock prices Buy or sell stocks
May-June 2000
Nov.-Dec. 2000
71% 61% 46% 60% 55% 50% 43%
79% 68% 52% 63% 57% 52% 45%
12%
14%
Concerned
Not Concerned 15%
Businesses and people you 84% don't know getting personal information about you and your family Computer hackers getting your 68% 30% credit card #number online Having unqualified people give 54% 43% you medical information online That you'll get a computer 54% 45% virus when you download information Seeing false or inaccurate 49% 49% news reports online People spreading false rumors 47% 50% online to affect stock prices People you meet online lying 39% 48% about who they really are Someone might know what 31% 68% Web sites you've visited Your email will be read by 27% 72% someone besides the person you sent it to Source: Pew Internet & American Life Project May-June 2000 Poll
Internet Users who have Gone Online for Health or Medical Information Health Seekers All Internet users Online women Online men Veteran users (3 or more yrs) New users (less than 6 mos.) Online parents Online non-parents Source: Pew Internet & American Life Project survey, July-August 2000 Internet users who have gone online
Source: Pew Internet & American Life Project surveys, May-June 2000 and Nov.-Dec. 2000. Margin of error is +3%. www.pewinternet.org
Internet Users' Fears
What Internet Users Fear
55% 63% 46% 59% 47% 59% 52%
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Selected High Traffic Sites, U.S., 2000 General: AOL Time Warner Microsoft sites Yahoo! Terra-Lycos Excite Network About/Primedia Infospace Services Walt Disney Internet Group Retail/Direct Sales: EBay Amazon.com Ticketmaster Travelocity Source: Jupiter Media Metrix, Plunkett Research, Ltd.
Where the Internet Population Grew in 2000 Percent of each group online:
All adults Men Women Whites Blacks Hispanics Parents of children under 18 Non-parents Age cohorts 18-29 30-49 50-64 65+ Income brackets Under $30,000 $30,000-$50,000 $50,000-$75,000 $75,000+ Educational attainment High school or less Some college College degree or more
May-June 2000
Nov.-Dec. 2000
47% 50% 45% 49% 35% 40% 55%
56% 58% 54% 57% 43% 47% 66%
43%
50%
61% 57% 41% 12%
75% 65% 51% 15%
28% 50% 67% 79%
38% 64% 72% 82%
28% 62% 76%
39% 71% 82%
Source: Nielsen//NetRatings
The U.S. Department of Commerce estimates first quarter 2001 business-to-consumer online sales at $765 million, up about 33.5% over first quarter 2000. Online sales as a percent of total U.S. retailing have averaged 0.79% over the six quarters ending with the first quarter of 2001, and achieved 1.01%
during the 2000 holiday season (see the table below). From 1995 through 1999, online retailing was forecast to create extremely rapid growth in revenues. Many entrepreneurs, analysts and investors thought e-commerce would steal significant market share from traditional retailers, and that hoped-for operating efficiencies (for example, the fact that online retailers were perceived to have no need for expensive physical stores) would create exceptional profit ratios. To put it mildly, the actual revenue growth and level of profits were extremely disappointing. Today, the amount of venture capital invested in new B2C businesses has slowed dramatically, but still represents a significant amount of money. For example, the total new investment in B2C by U.S. venture capital firms during 1999 was about $3.7 billion, but by 2000 new investments dropped to about $1.8 billion. During 2001, the amount will be significantly less. Bricks, Clicks and Catalogs The most successful companies among retail firms of all types over the mid term will most likely be those that take full advantage of the stability of traditional, store-based retailing in combination with the growing popularity of catalog and Internet-based retailing. Such as strategy would entail: • Seamless integration of store, catalog and Internet-based offerings to consumers, providing choices of: 1) place and method of purchase; 2) method of pickup or shipment; and 3) place or method of returns and additional service as needed. • Communication of a seamless brand identity and level of service throughout catalogs, retail stores and web sites. Few companies have reached this level of integration of traditional and non-traditional retailing. However, for good examples of companies that are evolving their offerings toward such “seamless” strategies, you can study J. C. Penney, Gap stores and Victoria’s Secret. Twice monthly, Gap sends its online customers tailored e-mails advertising sales, deals and new products. Gap executives frequently use the term "clicks and mortar" to refer to the success of both types of retailing that exist in its infrastructure. The company has reached new heights with this type of integration, installing "web lounges" in several stores. If a customer is unable to find the appropriate size or a particular item, that customer is referred to
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the web site, which offers a much broader selection. In-store clerks are trained to direct customers to the Gap web site as well. Making retail purchases over the Internet has proven to be a viable everyday solution to shopping needs for consumers of many types, for a variety of reasons, including: •
•
•
Concerns about the security of consumers’ names, addresses and credit card numbers have been successfully addressed to some extent by technology, including “secure transaction” systems, the SET standards adopted by MasterCard and VISA and the ecash systems invented for facilitating payments on the web. Another advance called “SSL” (Secure Socket Layer) technology digitally encrypts sensitive consumer information that can only be decoded by the server that receives the information using digital “keys” or "certificates.” Nonetheless, significant security concerns plague online consumers. The growing popularity of “personalized” selling via web sites. Web sites can be customized to a consumer’s tastes and shopping habits resulting in “one-to-one” marketing. Many sites use complex software algorithms to make recommendations that match consumers’ preferences based on their shopping histories. The technology used to measure and monitor the behavior of the cyber consumer is astonishing. A customer’s previous clickstreams, purchases and stated preferences are all taken into consideration when suggesting a product match. For example, at The Sharper Image’s site, customers can enter a detailed personal profile that enable the site to show them specific types of merchandise they’re likely to be interested in. Web sites can combine video, music, animation, graphics, photos and words, a combination that printed catalogs will never achieve. Some sites even allow the consumer to directly influence product research and development. The number of online consumers has reached critical mass. Over 60% of U.S. households now have personal computers. Most of them include relatively high-speed modems. Higher
bandwidth telecommunication lines, like DSL and cable modems, are being adopted by millions of households today. (See Plunkett’s InfoTech Industry Almanac.) •
The Internet delivers vital product and services information: Internet site developers have learned to use powerful databases to enable consumers to conduct customized searches for products. For instance, see the millions of book titles available at Amazon.com. and BarnesandNoble.com that can be searched by author, title or subject.
•
Items the consumer need not touch and feel prior to buying are ideal for purchase over the web. These items include books, CDs, personal computers, software and tickets to concerts and other events (such as tickets sold on sites operated by Ticketmaster). CDNow, www.CDNow.com, offers over 250,000 CD music titles on its web site. 1-800-Flowers, www.flowers.com, sells millions of dollars in delivered floral arrangements via the Internet each year.
•
Ideally, a site on the web shouldn’t be just another place to buy something; it should offer a better way to make that purchase. For excellent examples of sites that make shopping a better experience, click through www.buy.comand www.dell.com. On welldesigned sites such as these, consumers find broader selections of merchandise, more choices and options, more product information and other advantages that they will never receive in a physical retail store.
•
One company that is taking direct selling to a new level is Gateway. It has opened 300+ Gateway Country stores across the nation. Here, a consumer can actually see and use Gateway computers before placing an order for a computer to be built and delivered to the customer's home or business. These showroom-type stores supplement Gateway’s catalogs and web site. Apple is opening similar stores during 2001.
•
Traditional merchants know that information gathered by consumers over the web about stores and merchandise will lead to additional store sales by walk-in, telephone and fax
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methods, as well as direct purchases made online. Consequently, retailers of all types continue to concentrate on launching and improving web sites. •
Internet consumers love to participate in virtual auctions on sites like eBay.com. The auctions are real-time and last a few hours or
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more. The virtual auctions function in a manner very similar to traditional auctions, with bidders competing for products like jewelry, clothing, golf clubs and collectibles. PriceLine.com allows consumers to bid for airline tickets and hotel rooms.
Estimated Quarterly U.S. Retail Sales: Total and E-Commerce 4th Quarter 1999 through 1st Quarter 2001 (Data in millions of dollars. Not adjusted for seasonal, holiday and trading-day differences.) Quarter
Retail Sales in $ millions
Total
E-commerce as a Percent Change over Previous Percent of Total Retail Quarter Sales
E-commerce1
Total Sales
E-commerce
th
$821,351
$5,198
0.63%
st
$747,934
$5,240
0.70%
-8.90%
0.80%
nd
$815,677
$5,526
0.68%
9.10%
5.50%
$812,158
$6,393
0.79%
-4.00%
15.70%
$856,282
$8,672
1.01%
5.40%
35.60%
$765,227
$6,994
0.91%
-10.60%
-19.30%
4 Quarter 1999 1 Quarter 2000 2 Quarter 2000 rd
3 Quarter 2000 th
r
4 Quarter 2000 st
1 Quarter 2001
p
8.50% (NA)
NA Not available. r Revised. p Preliminary. 1
E-commerce sales are sales of goods and services over the Internet, an extranet, Electronic Data Interchange (EDI), or other online system. Payment may or may not be made online.
Source: U.S. Dept. of Commerce, U.S. Census Bureau, Economics and Statistics Administration www.census.gov/mrts
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E-commerce analysts variously place total 2000 e-commerce B2B revenues from $24 billion to $48 billion, and project significant growth, estimating that year 2005 e-commerce revenues will total from $118 to $269 billion. For excellent tracking of U.S. e-commerce sales, see Forrester Research’s Online Retail Index at www.forrester.com/NRF/1,2873,0,00.html. Forrester estimates total 2000 U.S. e-commerce at $48.28 billion, including $13.18 billion in online airline tickets, car rental and hotel reservation sales. Another excellent site for current statistics is Jupiter Media Metrix, www.jmm.com, where you’ll find an area called “The State of Online Retailing.” Jupiter estimates 2000 online holiday season sales at $10.8 billion, up 54% over the previous year. Gartner Group, Inc., www.gartner.com, places online sales for the same period at $6.2 billion, up 43%. Groceries over the Internet The Holy Grail of e-commerce is to convince grocery shoppers to order over the Internet. Online grocery selling is such an appealing target because of the sheer size of the retail grocery market. However, creating a viable online grocery business is a daunting challenge. Food retailing is inherently a highly-perishable inventory, low profit margin enterprise—one in which consumers tend to make multiple trips to the market each week to select and purchase first-hand. Americans spend over $600 billion on food annually. The average American household spends 9% of its weekly income on food and visits the local grocery store twice a week. All of this food consumption makes the prospect of adding convenience services such as online ordering and home grocery delivery look like an extremely lucrative endeavor. Analysts from Forrester Research estimate that about 1.1 million households purchased groceries through the Internet in 1999. Of those households, most opted for ordering specialty items from specialty companies, and only about 235,000 selected companies such as Peapod to handle general grocery needs. Peapod, an aggressive home grocery delivery service that has been in business since 1989, has been building a base of shoppers slowly-but-surely. It operates in conjunction with major retail grocery chains such as Giant and Stop & Shop in Boston, MA; Chicago, IL; NW Washington, DC; Long Island, NY; and other areas. Customers order online
via Peapod and then receive home delivery of groceries that are packed at warehouses near participating supermarkets. The retail customer pays a fee for this service, and Peapod will not accept an order under $50. Despite its lengthy history and wealth of experience, Peapod has struggled financially. It was recently bailed out by European food market giant Royal Ahold. Several other online grocers are competing against Peapod. The most ambitious effort to date was launched by Webvan Group, Inc., which announced in mid 2001 that it would file for bankruptcy. Webvan began selling groceries to Internet customers in the San Francisco Bay area during mid-1999. Webvan and the HomeGrocer firm that it acquired combined burnt through $1.2 billion in venture fund capital, debt and the proceeds of public offerings. Webvan was conceived by Louis Borders, well known as the founder of the Borders book superstores. Webvan’s initial plans were to rapidly gain nationwide marketshare by building highly automated warehouses in 26 major markets across the U.S. It began by constructing a state-of-the-art warehouse in Oakland, California, totaling 330,000 square feet, to serve the greater San Francisco area, its first market. Additional warehouses were built in other major markets such as Dallas and Atlanta as services were loudly launched. Despite its leadingedge technology and deep pockets, Webvan was unable to satisfy the needs of consumers in most markets. A myriad of problems existed. For example, in many cases consumers were not able to get home delivery scheduled for the prime afterwork hours of 5:30 to 7:30 p.m. unless they scheduled purchases and deliveries several days in advance. Webvan found that changing consumers’ habits to lure them to shop online is extremely difficult to accomplish—most people want to shop at a physical store and make decisions to grocery shop on the spur-of-the-moment. Nonetheless, some positive news is beginning to emerge from the online grocery segment. Peapod announced in Spring 2001 that it is finally earning an operating profit in three of its markets, including Chicago. Also, supermarket giant Safeway purchased a controlling interest in a Texas-based firm called GroceryWorks.com and is making home delivery of online purchases in Austin, Houston and Dallas. Albertson’s is testing home delivery from 36 stores.
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Year 1998 1999 2000
Online Christmas Holiday Season Consumer Sales 1998-2000 Sales in Billions $3.1 $7.0 $10.8
Common Online Consumer Activities Change n/a 126% 54%
Source: Jupiter Media Metrix, www.jmm.com
Internet Marketing Consulting Firms with Customer Profiling or Personalization Expertise BroadVision www.broadvision.com DoubleClick www.doubleclick.net Engage Technologies www.engage.com Net Perceptions, Inc. www.netperceptions.com Personify www.personify.com Younology www.younology.com Source: Plunkett Research, Ltd., www.plunkettresearch.com
Recommended Sources for Online Consumer Buying Pattern Data and Market Analysis Dataquest Emarketer Forrester Research Jupiter Media Metrix Ernst & Young The Pew Internet in American Life Project
www.dataquest.com www.emarketer.com www.forrester.com www.jmm.com www.ey.com www.pewinternet.org
Source: Plunkett Research, Ltd., www.plunkettresearch.com
Automobile Purchase Information Chat Check on/Trade Stock Portfolios E-Mail Job Search Mortgage Information and Application Participate in Auctions Play Games Read News Items Read Product or Entertainment Reviews Research Consumer Health Issues Shop/Check Product Prices and Features Travel Reservations Visit Pornographic Sites Source: Plunkett Research, Ltd., www.plunkettresearch.com
Internet Giant Amazon.com has Grown Beyond Its Traditional Offerings In September 1999, Amazon.com launched an offering of over 500,000 products through a flock of smaller merchants. These merchants are charged a fee and a small percentage of sales in exchange for being a part of one of the hottest retail sites on the web. Amazon, with its throng of almost 30 million customers, offers important exposure opportunities to small businesses. Also in 1999, Amazon added new categories of toys, electronics, auctions, software and home improvement to its own lineup of merchandise. These new categories have shown mixed results. Internet Auctions Are One of the Most Popular Forms of Online Activity The most prominent of these online auction sites, eBay, had over 5.6 million registered users in October 1999. By mid 2001 the number of eBay users had grown five-fold to more than 29.7 million. It is the most popular shopping site on the Internet when measured in total user time online. Millions of items are up for grabs on the site during any given day, and the company is one of the few large-scale Internet endeavors turning a sizable profit. The total value of items sold during 2000 was more than $5 billion, up from $2.7 billion in 1999. The United States Postal Service has experienced a 5% increase in parcel delivery due directly to the success of eBay.
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In March 1999, Amazon.com and PriceLine.com launched merchandise auctions. Retailers such as Sharper Image and Cyberian Outpost have jumped on the auction bandwagon as well. Auction retailing is predicted to change traditional retailing in several ways. When consumers begin to view prices of items as mere starting points and become increasingly accustomed to haggling, other retailers may be forced to make changes in the ways they do business. For example, consider the fact that consumers can frequently get better prices on hotel rooms by going to a lodging company’s web site than by making reservations via traditional methods. Likewise, automobile dealers frequently offer better initial prices to shoppers using sites like Autobytel than they do to walk-up car shoppers. The trend of creating one person's treasure out of another person's garbage changes things in the consumer mindset and in the economy as well. Since goods auctioned off on eBay are frequently items that have been sitting in the garage for some time, the re-flow contribution to the economy as a result of the sale of those items is intriguing. After all, items resold on eBay may entail no new manufacturing costs, but the total revenue flow is immense. Additionally, the creation of an "aftermarket" makes it much easier than before to sell previously owned goods, therefore creating somewhat less risk on the part of a consumer purchasing an item that he or she may want to sell later. eBay Statistics 1st Quarter 2001 Auction items sold Commissions and other revenues, Net income Registered users Total items listed for sale Percent of listed items sold Items available for sale on a typical day Average item sale price Number of sellers with sales of $2,000+ monthly Source: eBay
$1.98 billion $154 billion $21 million 29.7 million 89 million 55% 6 million+ $22.50 75,000
Additional Challenges Faced by Pure Online Retailers Some online sellers that originally planned on skirting brick and mortar costs have been forced to invest in warehouses and distribution centers. Moreover, such companies are spending an incredible amount of money on marketing in order to differentiate themselves from the thousands of similar sites. Online retailers are confronted with web-savvy consumers who can bargain shop with the click of a button. Worse still, online retailers often have to drive prices down in order to keep sales up. Additionally, online retailers have to learn how to ship millions of individual packages to customers around the globe. Finally, retailers face problems from wholesalers that now desire to sell directly to the consumer online, bypassing the retailer. This has been particularly true in the personal computer industry. Government-to-Consumer Internet Activity Is Growing at an Extremely Rapid Rate Throughout the nation, government agencies of all types are realizing that the Internet offers innovative new ways to create convenience for consumers, taxpayers and voters. Typical usage of the Internet includes enabling consumers to update car registrations and license plates online. The State of Maryland is enabling dozens of types of professionals to renew their business licenses online. The Federal Government is supplying an unprecedented amount of data via its multitude of Internet sites, from Bureau of Labor statistics to economic reports from the Governors of the Federal Reserve Board. Meanwhile, several private sector web sites have sprung up that intend to foster grass roots movements, provide links to representatives in Congress and act as a conduit to government services. The Atlanta, Georgia firm of egov.com assists online consumers with licenses and permits of many types. In the first comprehensive study of its kind, Federal Computer Week and the Pew Internet & American Life Project found that the government has become successful at online retailing. During 2000, Uncle Sam sold more than $3.6 billion in products and property via the Internet. According to the study, the federal government operates or supports at least 164 sites that sell something to the public.
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Chapter 2 Business-to-Business Trends Trends to Watch: ASPs: Business software makers will develop steady streams of fee revenues by renting out software applications, via the Internet, on an Application Service Provider (“ASP”) basis. The total market in enterprise-level services is already $1.4 billion and will grow to at least $5 billion by 2005. Vertical Portals: “Vertical” Internet portals (e.g. VerticalNet.com) catering to specific industries’ needs continue to face challenges. Most have business models, based on providing in-depth industry information at no charge, that don’t work. Many of these portals hoped to be conduits for business transactions by providing news, information and lists of suppliers. However, they have had little success turning viewers into buyers. Business Exchanges/Marketplaces: Well-funded, industry-specific business exchanges, sometimes referred to as “e-marketplaces” or “business exchanges,” have the potential to enable nearly 100% of U.S. businesses to view catalogs/place orders or request /receive bids for components, products and services online. However, many of these exchanges initially found it difficult, sometimes even impossible, to convince purchasers to create orders online. Revenues are now growing rapidly at some exchanges as the level of service and depth of catalog information increases. Independent exchanges face stiff competition from those owned by consortia of industry-leading companies.
Online Purchasing: Corporate purchasing executives are participating in online marketplaces, auctions and exchanges in growing numbers. A recent study shows that over 80% of companies consider the Internet to be important to their future buying needs. (See further discussion in this chapter.) B2B Revenues vs. B2C Revenues: Total online Business-to-Business revenues will greatly overshadow the revenues generated by online Business-to-Consumer sites over the mid-term, as businesses of all types begin to take advantage of the efficiencies offered by purchasing, bidding, posting requests for proposals (RFPs) and making payments via the Internet. Meanwhile, most consumers prefer to purchase their everyday necessities at traditional stores. Business Information Portals: Well-designed and easy-to-use sites operated by Hoover’s Online, The Wall Street Journal and other leaders continue to build their audiences and will become the preferred source of day-to-day business news and information for many professionals and executives. Paid subscriptions models are working well in these cases as business people expect to pay a reasonable sum for instant access to quality information sources.
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Shortly after the business-to-consumer (B2C) segment of the Internet industry gained early ground, the framework was laid for rapid growth in the business-to-business (B2B) end. In fact, total B2B revenues from e-commerce will vastly exceed ecommerce revenues from consumer transactions, because businesses, by their nature, engage in massive purchases and financial transactions in order to achieve economies of scale—transactions that can easily average in the hundreds of thousands, even millions of dollars—while consumer transactions average relatively small amounts. Just as interstate highways, the telephone, and eventually Fedex and the fax, created a swiftermoving economy in the previous century, the Internet has increased the speed of global business transactions and cash flows today. Companies can order a freight train load of products vital to their operations with the click of a mouse. Computers running enterprise-level software at multinational firms automatically detect inventory shortages that could have caused chaos, had they gone unnoticed, and then post replenishment orders instantly via the Internet. The holy grail in B2B e-commerce is to build very high volume business exchanges: niche industry sites that allow purchasers in need of components, products and services to post requests for proposals, while simultaneously allowing suppliers to answer with bids. While many startups have attempted to turn a profit by taking a commission from sales created through such exchanges, few have been designed and/or executed appropriately to create significant levels of transactions and fees. Far too many competing exchanges emerged in short order. For example, an analyst at research firm Gartner Group counted 252 B2B exchanges in the transportation field alone at the beginning of 2000. The reality is that there might be room for two or three significant competitors in each industry sector. Virtually all industry sectors were (and in many cases still are) suffering overkill in e-marketplace choices. The total number of B2B marketplaces may have approached 4,000 to 5,000 at one time—most of them never gained any traction at all. For example, Chicago-based fob.com raised millions of dollars in venture capital money, planning to create unique marketplaces in chemicals, plastics, coatings, paper and other areas. When its marketplaces were launched, business only trickled in, while the firm’s programmers struggled to create systems that would support truly-electronic transactions. Meanwhile, the
company’s content managers toiled to compile massive catalogs of tens of thousands of products made by thousands of disparate manufacturers. By 2001 the company had exited the marketplace business entirely, and it now concentrates on selling software and services that manage certain industrial safety and compliance needs. Similar fates befell dozens of exchanges, such as Ventro, that were wellfunded by venture capitalists and other investors. However, while a significant shakeout continues, dominant B2B exchanges have emerged in many fields, and consolidation of firms is common. For example, within the chemical industry, ChemConnect and Enerva recently merged. They will operate as part of ChemConnect’s World Chemical Exchange, a global marketplace for buyers and sellers of chemicals and plastics (www.chemconnect.com). Eight of the world’s top ten chemical companies are active on ChemConnect, and the exchange boasts a network of 30,000 suppliers. ChemConnect’s e-marketplace is designed to offer the following advantages: increased efficiency for purchasers, with up to a 50% reduction in purchase negotiation time; reduced transaction costs; access to a massive pool of suppliers; and access to a significant base of market reports and industry-specific information. ChemConnect has published hundreds of case studies of specific purchasing transactions, showing how firms have saved significant amounts of time and money via online methods. Some firms have been able to save hundreds of thousands of dollars on a single chemicals purchase. Often, successful business exchanges are coowned by consortia of the same companies that will use their services. For example, the $400 billion aerospace/defense industry is served by Exostar (www.exostar.com), which is jointly owned by five leading aerospace companies: BAE SYSTEMS, Lockheed Martin, Boeing, Raytheon and RollsRoyce (a maker of jet engines as well as famous automobiles). Exostar is based on Commerce One’s e-commerce software. A total of 4,000 suppliers of components and services are able to view and then bid on the needs of the five owners. In addition to its role as a marketplace, Exostar is a collaborative platform, enabling design teams among various firms worldwide to participate online in the development and management of aerospace construction projects. For example, via Exostar, engineers at Boeing can collaborate with electronics/avionics makers at Raytheon and jet engine makers at Rolls Royce to seamlessly,
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efficiently design a new aircraft. Then, Exostar will enable the design teams to request proposals, bids and input from thousands of suppliers of systems, metals and parts. Exostar’s intent is to foster standardization, simplicity and reduced costs. Another significant e-marketplace model is one practiced by PurchasePro (www.purchasepro.com). This firm hosts what it calls “the world’s largest B2B marketplace,” involving 140,000 businesses that buy and sell from each other. At the same time, PurchasePro acts as an e-marketplace application service provider. Its combination of servers and software enable client companies to use PurchasePro’s service to create their own ecommerce areas very quickly and at modest cost. The company’s service offerings can be quickly tailored to meet a client’s needs. For example, a firm wanting to request proposals and solicit bids online would use PurchasePro’s “Private Label eProcurement” platform. Another type of client might prefer to create an online marketplace or an online distribution center. PurchasePro covers all of these needs. The company’s growth has been spectacular. Selected E-Commerce or Business Exchange Enabling Software Firms: Company Ariba Commerce One I2 Manugistics Oracle SAP
2000 sales in millions $279 $402 $1,126 $268* $10,860** $5,881
*year ended 2/2001 **year ended 5/2001 One of the most ambitions undertakings in the B2B exchange field has been VerticalNet (www.verticalnet.com). This publicly-held firm owns more than 50 web sites attempting to cover the needs of dozens of industries, from bakeries and dairies to waste disposal and water treatment. While the company’s sites boast significant traffic and depth of information, they created a loss of $311 million in 2000 and sales of only $112 million.
Selected Business Content Management Software Firms Company Broadvision Documentum Interwoven Open Market Vignette
2000 Sales in millions $414 $198 $132 $89 $367
Selected Business Exchange Sites: Altra Energy Technologies www.altra.com ChemConnect www.chemconnect.com CheMatch www.chematch.com FuelQuest www.fuelquest.com GlobalNetXhange www.gnx.com Neoforma www.neforma.com
Selected Consortia-Owned Marketplaces or Exchanges: Cordiem (airline procurement needs) Covisnt (automotive) Exostar (aerospace/defense industry) Orbitz (airline ticket sales) Transora (consumer goods) Trade-Ranger (petrochemicals)
Not all corporate purchasing executives are enamored with buying via e-commerce. For example, many face expensive technical obstacles when they attempt to integrate existing internal information systems with external e-marketplaces. Some executives do not perceive any true advantages to be gained from online buying. In a major study released in mid-2001 by Forrester Research for the National Association of Purchasing Management (NAPM), researchers found that 84% of U.S. corporations see the Internet as an important part of their future buying procedures (next 12 months), but only 29% reported cost savings from their Internet activities. Only 7% reported that “the Internet has introduced major changes to their procurement processes.” Corporations that purchase more than $100 million in goods yearly for their entire operations were twice as likely to report significant changes in their buying
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practices, due to the Internet, as companies with lesser buying budgets (10.2% vs. 5.2%). Nonetheless, 20% of respondents reported participating in online auctions, and nearly 73% reported purchasing at least some indirect materials online. Slightly over 25% reported at least some buying at “online marketplaces.” A report released by the U.S. Department of Commerce in June 2001 found that online purchases accounted for 11% ($231 billion) of all costs of materials at manufacturing plants in the U.S. in 1999. The global community that the Internet creates, by its nature, combined with the continuing globalization of business and industry as a whole, will dramatically increase the rate of trade between countries, thus speeding up e-commerce among businesses the world over.
From the Beginning of the Internet, Innovative Firms have Created an Immense Amount of eBusiness. Of all the major corporations that have utilized the Internet’s powers to streamline business, Cisco Systems is a standout. Cisco harnessed e-commerce in a way that has resulted in great advancements in efficiency and profits. Cisco sells nearly 80% of all the networking equipment and routers that power the Internet. With fiscal 2000 sales of $19 billion, and one of the best reputations for management and product excellence in the entire technology sector, the company is a major influence in global business practices. Cisco’s products, including network routers, are typically customized for each customer on an asneeded basis. This customization means that, more often than not, special network configurations have to be implemented in order for applications to function in a way that best fills the needs of the end user. Customers, sales personnel and value-added resellers now use Cisco’s online systems to select options, configure systems, place orders and follow up on order status. With such complexity of products comes the need for constant customer support, which, in many cases, can be effectively supplied via the Internet. The sheer volume of customer support questions coming into Cisco on a daily basis warrants the need for a powerful answering force. The natural solution for Cisco was a complete immersion in e-commerce. The company is able to service a tremendous amount
of its customer support workload via the Internet. As a result, an enviable amount of time and energy was freed up and re-routed towards other endeavors. Currently, over 80% of customers' questions are answered online. Although sales have risen dramatically, the size of the company’s customer support staff has remained largely unchanged, thanks to the efficiencies created by the Internet. Going beyond customer support, Cisco’s entire ordering, contract manufacturing, payment and fulfillment branches are automated. In fact, most of the orders that come through Cisco are processed without the aid of a flesh-and-blood employee, significantly reducing the company’s payroll costs and speeding up handling and delivery for customers. The company’s e-commerce system also keeps up with the origin of each customer and sale, whether generated by a Cisco sales person or by an external dealer. The system automatically credits the correct sales channel. Meanwhile, customers can initiate and then track the progress of their orders from the comfort of their own desktops. E-business, in short, has helped a mega-company like Cisco maintain a level of personalized customer service, sales channel development and operating efficiency that would not otherwise be attainable. Cisco’s employees are constantly in contact with each other through the Internet, from all over the globe. Even Cisco’s hiring process begins and is supported on the web in innovative ways that are the envy of other technological firms. Prospective employees can investigate the company, job openings and benefit plans via the Internet and may ask to be placed in e-mail contact with an anonymous Cisco employee-volunteer who can inform them about actual work conditions at Cisco. Dell Computers has also taken e-business to a new level. In fact, the computer manufacturing giant sells millions of dollars in computers and computer equipment from its web site every day. Furthermore, sourcing, production and delivery processes are streamlined in order to ensure the completion of a seamless e-commerce process that has made Dell the leading PC maker in the world. In fact, the company has achieved incredible operating efficiencies, including miniscule inventory requirements, as components are delivered to the company’s assembly locations on a just-in-time basis according to the flow of actual product sales. Other leaders in business e-commerce include General Electric, an early leader in purchasing via online methods, and W.W. Grainger, a nationwide supplier of industrial and maintenance supplies that
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now has one of the most active B2B sites on the entire Internet.
Application Service Providers (ASPs) will Rapidly Gain Immense Market Share in Business Software and Services. Gartner places the ASP market in enterpriselevel software at $1.4 billion in 2000. IDC predicts that the market will grow to $6 billion in 2005. Qwest CyberSolutions (a unit of Qwest Communications) and Usinternetworking each had ASP revenues of more than $100 million in 2000. Preliminary Top 10 U.S. ASP Vendors by Revenue Estimates Company USi Qwest Cyber.Solutions Interliant PeopleSoft Corio eOnline Breakaway Solutions Agilera Surebridge Telecomputing Others Total Market
2000 Revenue 110.0
2000 Market Share (Percent) 7.7
100.0
7.0
52.0 40.0 33.5 25.0 20.0 20.0 17.0 11.0 1,001.5 1,430.0
3.6 2.8 2.3 1.7 1.4 1.4 1.2 0.8 70.1 100.0
Source: Gartner Dataquest (May 2001)
ASPs, businesses that rent software applications for use over the Internet, are ideally positioned to serve businesses of all sizes. In some cases, these applications would be difficult for a smaller business to install because of a lack of budget or a lack of technical staff in-house. In other cases, it makes more sense for a major enterprise to use ASP-based software so that local purchase, installation and updating are not necessary. This is a logical fit with the major trend toward enterprises utilizing outsourcing to manage their entire IT departments. In the application service provider model, businesses can simply log on to an ASP’s site to access programs immediately that might otherwise take months of work and hundreds of thousands of dollars to implement. For example, the standardsetting human resources software PeopleSoft is now available on a rental basis online via ASP, as is the sales force automation software of Siebel.
In fact, virtually all makers of business software will likely begin delivery through ASP methods eventually, because of the convenience, ease of maintenance, access to customization by experts and the advantages of a monthly fee or user-based fee system. Even Microsoft’s standard office applications in the Microsoft Office suite are now available on an ASP basis. In November 1999, Microsoft announced the launch of Office Online, an ASP version of its Office applications. On sites such as Microsoft’s bCentral.com, small businesses can rent the applications for a fee. Microsoft’s arch rival, Sun Microsystems, has long been advocating the use of business software on servers, rather than the installation of such software on each individual desktop in a network. Sun’s new Star Office product is positioned to operate in the ASP model, easily filling the majority of the daily word processing, spreadsheet and data management needs of a typical office worker without local installation of the software. IBM Net.Commerce Start Now enables customers to create an automated storefront for their web sites, while remotely providing back office applications that can be used for inventory and shipment tracking. By opting for online software, companies are finding it increasingly easy to upgrade as well. Whereas client-owned software generally gets updated in an office once every year or 18 months, software rented from Internet ASPs is upgraded continuously.
ASP Summary: • • • • • •
ASP access will become a major component of Internet traffic. ASPs have the ability to deliver state-of-the-art software applications for immediate, costeffective use. Users pay a reasonable monthly or per-use fee. The costs of developing, maintaining and upgrading software are borne by the ASP. Authorized users at remote locations are able to access their files with great convenience. Many ASPs provide robust service platforms designed to fulfill a specific business management need. For example, Austin, Texasbased Hire.com provides a thorough employee recruiting package in ASP mode that gathers, tracks and manages all aspects of recruiting,
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from advertising to the gathering and analysis of resumes. As Internet access becomes faster for small- and mid-size businesses that upgrade to DSL or T-1 connections, use of ASPs for day-to-day needs such as bookkeeping, inventory management and sales contact management may become commonplace.
Worldwide B2B Internet Commerce 1998 1999 Millions of Dollars 49,877 150,050 % Growth Year to Year 201% Source: Gartner Dataquest (March 2001)
2000 2001 2002 2003 2004 433,300 919,000 1,929,000 3,632,000 5,950,000 189% 112% 110% 88% 64%
2005 8,530,000 43%
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U.S. Manufacturers' Value of Shipments1 - Total and E-Commerce: 1999 (latest data available)
NAICS Code
311 312 313 314 315 316 321 322 323 324 325 326 327 331 332 333 334 335 336 337 339
Percent Distribution of ECommerce Shipments
Description
Value of Shipments Total E-Commerce
E-Commerce as Percent Total Value of Shipments
Total Manufacturing
4,038,109
485,283
12.0
100.0
Food products Beverage and tobacco Textile mills Textile product mills Apparel Leather and allied products Wood products Paper Printing and related support activities Petroleum and coal products Chemicals Plastics and rubber products Nonmetallic mineral products Primary metals Fabricated metal products Machinery Computer and electronic products Electrical equipment, appliances and components Transportation equipment Furniture and related Miscellaneous
429,053 107,437 54,854 32,642 62,798 9,673 97,583 157,491 102,404 168,096 419,674 172,397 97,498 158,102 256,899 277,117 458,485 119,792
37,548 8,998 4,819 4,896 11,376 1,775 3,373 13,412 6,422 6,530 42,891 22,876 (S) 12,940 28,109 39,942 46,876 23,671
8.8 8.4 8.8 15.0 18.1 18.3 3.5 8.5 6.3 3.9 10.2 13.3 (S) 8.2 10.9 14.4 10.2 19.8
7.7 1.9 1.0 1.0 2.3 0.4 0.7 2.8 1.3 1.3 8.8 4.7 (S) 2.7 5.8 8.2 9.7 4.9
675,122 72,752 108,238
140,259 6,229 10,584
20.8 8.6 9.8
28.9 1.3 2.2
(S) Data do not meet publication standards because of high sampling variability or poor response quality. Unpublished estimates derived from this table by subtraction should be used with caution and not be attributed to the Census Bureau. Note: Detail may not add to total due to independent rounding. 1 Includes data only for manufacturing plants with paid employees. Source: U.S. Census; www.census.gov
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U.S. Manufacturers' Cost of Materials1 - Total and Online: 1999 (latest data available)
NAICS Code
Description Total Manufacturing
311 312 313 314 315 316 321 322 323 324 325 326 327 331 332 333 334 335 336 337 339
Food products Beverage and tobacco Textile mills Textile product mills Apparel Leather and allied products Wood products Paper Printing and related support activities Petroleum and coal products Chemicals Plastics and rubber products Nonmetallic mineral products Primary metals Fabricated metal products Machinery Computer and electronic products Electrical equipment, appliances, and components Transportation equipment Furniture and related products Miscellaneous
(Z) Percent is less than 0.05%. Note: Detail may not add to total due to independent rounding. 1 Includes data only for manufacturing plants with paid employees. Source: U.S. Census; www.census.gov
Cost of Materials Purchased Total Online
Purchased Online as Percent of Total Cost of Materials
Percent Distribution of Cost of Materials Purchased Online
2,079,523
230,914
11.1
100.0
251,736 38,940 31,895 18,548 32,403 5,145 59,516 82,836 40,029 127,147 192,190 81,488 41,191 91,149 114,654 137,903 193,022 59,137
11,163 3,365 1,576 912 1,358 105 1,954 3,596 1,764 11,595 17,608 4,121 1,865 4,683 4,660 16,828 23,182 6,012
4.4 8.6 4.9 4.9 4.2 2.0 3.3 4.3 4.4 9.1 9.2 5.1 4.5 5.1 4.1 12.2 12.0 10.2
4.8 1.5 0.7 0.4 0.6 (Z) 0.8 1.6 0.8 5.0 7.6 1.8 0.8 2.0 2.0 7.3 10.0 2.6
405,442 32,848 42,304
111,732 1,265 1,569
27.6 3.9 3.7
48.4 0.5 0.7
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Most Frequently Used Network to Accept Orders in 2000 for Responding Manufacturing Plants That Accept Orders Online Number of Plans and Associated 1999 E-Commerce Shipments (E-Commerce shipments in millions of dollars) EDI Network
Extranet
865 65,868
6,621 260,044
159 6,814
613 31,864
26,542 8,100
3,906 19,298
810 65,026
6,435 256,979
146 6,784
321 31,094
451 6,571
26,462 (S)
247 (S)
47 (S)
149 (S)
11 (S)
280 (S)
25,728 (S)
454 2,850
32 1,224
8 222
37 981
2 7
12 167
363 249
Accepts Orders Online
Total
Total Respondents E-commerce Shipments
38,985 393,780
4,185 21,091
DO accept orders online: E-commerce shipments
12,069 385,751
DO NOT accept orders online: E-commerce shipments Orders online unknown: E-commerce shipments
Internet
Intranet
Other
Unknown
(S) Data do not meet publication standards because of high sampling variability or poor response quality. Unpublished estimates derived from table by subtraction should be used with caution and not be attributed to the U.S. Census Bureau. Note: All respondents were instructed to choose only one network as the most frequently used network. All e-commerce shipments were assigned to that network. Detail may not add to total due to independent rounding. Source: U.S. Census; www.census.gov
Most Frequently Used Network to Place Orders in 2000 for Responding Manufacturing Plants That Place Orders Online Number of Plants and Associated 1999 Online Purchases (Online purchases in millions of dollars) Total
Total*Respondents Online*Purchases
38,985 197,762
10,141 26,875
938 23,733
1,963 127,427
146 2,533
576 10,054
25,221 7,141
DO*place*orders*online: Online*purchases
13,233 195,786
9,631 26,392
874 23,510
1,855 126,845
136 2,525
206 9,919
531 6,594
25,237 (S)
402 (S)
51 (S)
95 (S)
7 (S)
350 (S)
24,332 (S)
515 799
108 242
13 121
13 309
3 8
20 14
358 106
DO*NOT*place*orders*online: Online*purchases Orders*online*unknown: Online*purchases
Internet
Intranet
EDI Network
Accepts Orders Online
Extranet
Other
Unknown
(S) Data do not meet publication standards because of high sampling variability or poor response quality. Unpublished estimates derived from table by subtraction should be used with caution and not be attributed to the U.S. Census Bureau. Note: All respondents were instructed to choose only one network as the most frequently used network. All e-commerce shipments were assigned to that network. Detail may not add to total due to independent rounding. Source: U.S. Censuswww.census.gov
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CHAPTER 3 Online Financial Services: Banking, Mortgages, Insurance, Trading, etc.
CONTENTS I.
Online Trading
p. 27
II.
International Finance
p. 30
III.
Online Banking
p. 30
IV.
New Technology
p. 31
V.
Mortgages and the Internet
p. 32
VI.
Insurance and the Internet
p. 32
I.
Online Trading
Without a doubt, the Internet has created sweeping changes in the stock brokerage and trading landscape. The cost of making a trade has plummeted. Many online brokers offer trades for less
than $10, and even stalwart traditional brokers like Merrill Lynch and Morgan Stanley have found themselves forced to announce online trading services at value prices. As solid proof that a brokerage's cost in creating an additional online trade is next to nothing, and in support of the theory that online trading fees will continue to plummet, the brokerage arm of American Express enables customers who keep at least $25,000 in their brokerage accounts to execute some trades online for free. At the same time, American Express’ aggressive new reach into no-cost trading proves another irrefutable trend: one of the most viable ways for stock brokerage firms to make money is through the control of substantial assets in their customers’ accounts, not through large fees charged for executing trades. While there has always been a limited number of individual investors who trade stocks over the very short-term, buying and selling a security in the same day or even in the same hour, the Internet has created an entirely new category of investors who attempt to
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make their fortunes through extremely rapid buying and selling: daytraders. Daytrading has not only increased the total volume of stocks traded on U.S. exchanges, but it has also vastly decreased the average amount of time that a typical common stock is held by an investor. About 75% of the shares of the average U.S.-based firm listed on the NYSE changed hands last year. That is, if a company had 10 million shares outstanding, 7.5 million of them were bought and sold last year alone, on average. That percentage has soared from 46% in 1990 and 12% in 1960. While the average time that a share of stock is owned in traditional old-line companies remains relatively long, the time line for the average ownership of a new Internet company's stock is amazingly short. For example, the average investment in General Electric, Exxon or Johnson & Johnson is held for about 30 to 33 months. A study completed in 1999 showed that the average investment in Wal-Mart is held about 18 months. In contrast, the average investment in Microsoft is held only 6 months, and the average investment in Yahoo, Amazon.com, Doubleclick or Priceline.com is held for eight days or less. Online investors tend to be young males. Many consider themselves tech-savvy, and many are aggressive in their investment practices. Of course, the NASDAQ crash of March 2000 put a damper on individual investors and especially drained both the financial resources and the optimism of many daytraders. Prior to the steep market decline, many amateurs made creating profits by trading look easy—others lost considerable sums despite rapidly rising markets. Many daytraders have given up. Nonetheless, there is a cadre of highly-talented traders who are enjoying continued success by carefully controlling their exposure to loss through limit orders and rapid trades. Simply put, the Internet is an absolutely revolutionary catalyst in the financial services arena. It lowers the cost of processing funds transfers. It enables individuals working at their PCs at home to act like global financiers. The Internet has put so much money into action from so many new players that it is directly responsible for an immense increase in the pool of investment funds and the availability of venture capital. That venture capital is fueling the creation of new products, new services and new technologies that further fuel the investment fire. The Internet provides near-perfect, real-time market data and research to those willing to go to the trouble to dig it out of the hundreds of millions of web pages posted on the World Wide Web. The Internet is
rapidly making markets of all types much more liquid and efficient. Online investors are using the Internet to their advantage, and the entire structure of Wall Street is changing as a result. The cost of trading stocks online has plummeted since the inception of online trading, thanks to the low overhead achieved when an Internet-enabled brokerage cuts the amount of costly office space and support staff required to execute trades. Many online investors are not seeking personal investment advice from their brokers — they know what they want, when they want it and how much of it they want thanks to the research they are able to do online. Consequently, they do not need to interact with an individual stock broker. Furthermore, an increasing number of investors are turning to the Internet to make an entrance into the investment community. Advisory material (both good and bad) is readily available and easily located on the Internet. More than one in every three individual investors' equity trades is now being made online. The number of online investing accounts has grown from 1.5 million in 1996 to approximately 13 million at the end of 2000. The number of online brokerage firms soared from none in 1994 to more than 100 by the end of 1998. Consolidation has reduced that number today. By 2005, nearly all investors with access to personal computers will use the Internet for their stock and mutual fund investments — if not to enter trades and orders, then at least to gather information about the status of their accounts. As the Internet becomes a required distribution channel, the distinction between "online" and "regular" trading will disappear. Analysts at eMarketer expect online trading at home to grow to 17.4 million households trading through 31.3 million online brokerage accounts by 2004, and that $400 billion will reside in online mutual fund accounts by that date. Like any revolutionary practice, online trading's rapidly growing popularity requires the industry to constantly implement change. Firms must consistently upgrade computer systems in order to prevent catastrophic crashes. Also, like most banking companies (see “Online Banking” below), many leading online brokerages are adopting a bricks-and-clicks model that combine physical storefronts with online services. E*Trade opened its first physical brokerage branches in 2001. CSFBdirect has opened at least one storefront, and the lesser-known Web Street has opened several branches in cities like Beverly Hills, Denver and Boston. Schwab and TD Waterhouse have very
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successfully built blends of storefronts and online offerings.
Enhanced Technology and Extended Trading Hours: Due to increasing trade volume and investor demand, NASDAQ and the NYSE have upgraded their technology and are completely changing the way they operate in several essential ways. Already, some networks (see "ECN's" below) allow investors to indulge in after-hours trading, and others are utilizing wireless devices to let customers trade at any time, from any place. Individual investors will continue to demand enhanced services. The ability to make trades after normal market hours is a logical way to serve the needs of individuals who can best make time to manage their portfolios after normal working hours. However, technology has to be upgraded continuously (at tremendous cost) so that promised services do not get too far ahead of systems. For example, in early 1999, several of the largest online firms experienced difficulties when tidal waves of trades were unleashed by the heady stock market. Among firms whose systems floundered were Charles Schwab Corporation, E*Trade Group, Inc. and Toronto-Dominion Bank's Waterhouse Securities, Inc. Ameritrade went so far as to hire a technology expert as its co-chief executive in an attempt to forestall systemic computer breakdowns. Along with technical problems and changes, organizations in charge of regulatory practices have been forced to pick up the pace. Securities regulators are taking long, hard looks at day trading firms and those who promote rapid-fire trading designed to capture minuscule stock price differentials. Firms offering investors a pie-in-the-sky picture of quick wealth gained through rapid trading are being thoroughly scrutinized by state and federal officials. Television commercials aired by brokerages sometimes feature supposedly average people getting rich quickly through Internet trading. These ads are being eyed by regulators, as the distinction between humorous irony and false advertising blurs. Regulators have decided to target these messages, subjecting firms to fines or pre-airing clearance. In a June 1999 speech by Securities and Exchange Commission Chairman Arthur Levitt, allusions were made to the potential danger of humorous ads such as one of Morgan Stanley Dean Witter Discover & Co.'s. In the ad, a truck driving online trader accumulates enough wealth to buy his own private island. Levitt apparently didn’t find it funny.
Crack-downs on stock fraud are intensifying as well, with the implementation of cyber-cops and Internet investigators. Online message boards and newsletters shouldn't be a safe place for those engaging in fraudulent behavior. Newsletters that tout stocks but fail to give supportive data and proper disclosures are a target for regulators, as are hucksters who promote stocks online to boost prices and then quickly liquidate their own positions. Trading via Electronic Communications Networks (ECN’s): One of the most remarkable developments to spring from the online movement is the Electronic Communications Network, or ECN. These privately organized networks of investors allow buyers and sellers of securities to post notice of their desire to trade directly with each other, via the network, completely bypassing stockbrokers and traditional stock exchanges. These ECNs create highly-efficient markets that lower transaction costs for participating investors. The cost of trading on an ECN may run from a fraction of one cent up to four cents per share, which may be as much as 99% lower than the cost of trading through more traditional means. While these networks are a relatively new development, there are already at least nine ECNs. The leaders include Instinet, Island, MarketXT, REDIBook, Archipelago, Bloomberg Tradebook and BRUT. Some of these firms made a September 1999 announcement that they intend to create a joint, transparent network to make trade and market data available to members for extended hours and with enhanced accessibility. Both the NYSE and the NASDAQ are keenly aware of competition from ECNs. Extended hours, enhanced services and even direct connection services identical to those offered by upstart ECNs may eventually be offered as standard services by the major, traditional exchanges, rendering ECNs essentially superfluous. But that would only happen if the major exchanges created systems that could make trades at the vastly reduced costs offered by ECNs. Otherwise, the market share of these ECNs may continue to climb. For example, Instinet, long a leader in the ECN field, is a wholly-owned subsidiary of Reuters Group, LLC. Established in 1969 as Institutional Networks Corp., Instinet now has seats on at least 18 major exchanges around the world and trades in at least 40 major markets. The company focuses on serving the largest broker/dealer and buy-side firms, and it offers 24-hour-a-day services. It customers include 459 of the 500 largest investment management firms. The Attain network (www.attain.com) is owned by All-Tech Direct, Inc. It offers direct access
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electronic stock trading to investors of all types, and appeals in particular to active individual investors and daytraders. A $250 monthly Attain Pro account fee is waived for people executing 100 trades or more monthly. The minimum account balance is $25,000. ECNs Archipelago, Chicago, IL , www.tradearca.com Attain, Montvale, NJ, www.attain.com BRUT, New York, NY, www.ebrut.com Instinet, New York, NY, www.instinet.com Island, New York, NY, www.isld.com MarketXT, New York, NY www.marketxt.com NexTrade, Clearwater, FL, www.nextrade.org REDIBook, New York, NY www.redi.com Bloomberg Tradebook, New York, NY www.bloomberg.com ALTERNATIVE TRADING SYSTEMS Bernard Madoff Knight/Trimark OptiMark Source: Plunkett Research, Ltd., www.plunkettresearch.com
Largest Online Stock Brokerages Ameritrade Charles Schwab CFSBdirect Datek Online E*Trade Fidelity Merrill Lynch Morgan Stanley Online National Discount Brokers TD Waterhouse Source: Plunkett Research, Ltd., www.plunkettresearch.com
II.
International Finance
The Internet is creating a more truly global economy than has ever existed. For example, if a company wishes to conduct a business meeting among its American, Japanese and German subsidiaries, it can now do so instantly via online video conferencing. International finance, arbitrage, trading and currency exchange can now be practiced 24-hours-a-day from any location on the planet.
Equally as important, the web provides an endless plethora of the latest global financial news, with a great deal more expedience than the morning paper (although you can usually read that online as well). Several sites have surfaced that place an increased emphasis on specialty areas, such as international finance. (See Plunkett’s Online Trading, Finance & Investment Web Sites Almanac.)
III.
Online Banking
Three types of banking organizations are now competing fiercely for online customers: 1. Internet-based, or "virtual," banks that have no traditional storefronts, lobbies or ATMs. 2. Traditional banks that offer Internet services as an additional convenience. 3. Online stock brokerages that have expanded into banking or bank-like services. Online-only banking firms have tried to give brick-and-mortar establishments a run for their money but have encountered great challenges because they lack a physical presence. Throngs of technology firms have developed banking, payment and payment processing software that easily runs over communication networks, creating the opportunity to take market share away from traditional brick-and-mortar payment processors. Since commerce is clearly becoming more electronic, traditional banks are teaming up with technological firms in order to compete with online-only financial institutions. At first glance, the business model of online banking is intriguing: They have the potential to be more cost-effective to operate than traditional institutions. When the traditional expenditures associated with brick-and-mortar banks are eliminated and new customer-friendly features, such as online payments and account transaction records, are available to the user, the Internet bank has some advantages. The customer is often offered a much simpler, faster and more direct banking experience via online access. Account information can be reviewed with the click of a mouse at any time, and inter-account transfers can be seamlessly executed. Internet-only banks try to offer higher interest rates to depositors and often charge lower fees. This is based on the theory that an Internet-only bank is more efficient to operate—requiring fewer employees and less physical space than a storefront bank.
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However, as has proven to be true in many Internet business areas, Internet-only banking never created the customer base that entrepreneurs sought when launching these enterprises. Several factors are at work here, but the trust that a consumer feels by seeing a physical bank presence combined with the convenience (or sometimes an unavoidable necessity) of the services offered by physical banks have combined to make Internet-only banks a poor bet. The bottom line is that Internet-only banks lack a competitive advantage of appeal to most customers. After all, banking giants like Citibank and Bank of America can afford to build online access features more easily than a startup Internet-only bank can. Now, software firms offer online banking packages that are affordable to even the smallest of banks. At the same time, only a physical bank can offer standard services like safety deposit boxes, the ability to deposit cash and the ability to walk up to a teller or bank officer. (Meanwhile, smart bankers are taking banking into the heart of convenience by building branches inside of supermarkets.) The “virtual vs. tangible” bank issue is one that banks have aggressively taken to tasks. Well managed banks nationwide now offer full-service online banking combined with their traditional bank offices in the best of a “bricks-and-clicks” environment. This is very analogous to the success found by many traditional retailers, such as Gap, Wal-Mart and J.C. Penney, in creating synergies between retail storefronts and online stores. One of the most interesting projects in online banking was WingspanBank.com, a wholly-owned, Internet-only bank started by Bank One, a major, nationwide bank holding company. While Bank One started Wingspan as a truly independent firm designed to compete against all banks (even Bank One itself), the parent company grew tired of losing money on Wingspan while attracting only modest numbers of customers. Wingspan was eventually dropped, and the online customers were folded into Bank One, where they can enjoy both storefront and online banking. All of the nation’s 25 largest banking companies now provide extensive online banking services. Meanwhile, some online and discount stock brokerage firms are venturing into banking or banklike services. E*Trade acquired online banking firm Telebank in January 2000, and then purchased 8,000 physical ATM machines. More consolidation along these lines will occur.
Leading Personal Finance and Investment Advice Sites Site Visitors in June 2001 AOL Personal Finance 12.2* MoneyCentral.MSN.Com 5.4 Quicken.com 2.0 Fidelity.com 1.9 ETrade.com 1.6 Schwab.com 0.9 *May 2001 Source: BusinessWeek, Nielsen//NetRatings, Jupiter Media Metrix
IV.
New Technology
Smarter Cards Called the "first true Internet Visa" by its creators, the NextCard (www.nextcard.com) serves as a pioneering model for credit cards of the future. Though there are several similarities between the operating regimens of standard cards and the NextCard, a number of differences set it apart—and perhaps ahead—of the crowd. To begin with, applicants go online to apply for the NextCard and get accepted or rejected in approximately two minutes. Customers are drawn towards NextCard not only because of an expedient application process but also because of unusually low introductory interest rates. After step one of the application process, NextCard automatically shows the customer's other credit card balances on the screen, without asking for the numbers, so that the customer can specify what amount he or she wishes to transfer to the new NextCard balance (if any). NextCard has completely integrated its own computers with the national credit card processing system, allowing for these real-time credit and balance transfer approvals. All card-related business can be conducted through the firm's web site. Online, the customer can review statements, transfer balances, upgrade the card and obtain general services. NextCard has approximately 1 million card holders. American Express has introduced a smart credit card called “Blue from American Express.” Designed to appeal to technology-savvy consumers, Blue offers several unique features, including perks designed
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specifically for people who are intense Internet users. To begin with, Blue offers an enhanced level of online shopping security. Utilizing what American Express calls “Smart Chip Private Payments,” it provides a secure, temporary transaction number to use, instead of the actual credit card account number, when filling out an online order form that requires prepayment by credit card. The card holder inserts Blue into a special reader attached to his or her computer, enters a PIN (personal identification number) and then creates a Smart Chip Payment online. This smart chip, embedded in each Blue credit card, has the potential to create several additional features and competitive advantages for American Express.
Furthermore, many companies with Internet services reduce or even eliminate the standard 1% loan origination fee. The automation that the Internet brings to many mortgage processes is a great benefit both to consumers and businesses. The time it takes to originate, process and underwrite a mortgage application can be whittled down to hours and days instead of weeks and months. The Internet is also a vast source of information on all aspects of the mortgage industry, resulting in empowered, betterinformed customers. While much of the legwork can be done over the Internet with online mortgage companies, actually closing a loan electronically is still a few years down the road.
Electronic Billing and Payments
VI. Online billing and payments certainly may benefit both the consumer and the business world — it could save paper and some of the estimated $20 billion that businesses spend on postage yearly. Businesses can send bills electronically through a customer's e-mail. When the customer is ready to pay, one simple click will automatically send the funds to an e-bill clearinghouse. There, the payment is deducted from the customer's account and the vendor's account is credited. Many banks now cooperate with online payment exchanges to enable the payment of bills through online banking instead of physical check writing. The convenience can be extraordinary. For example, a consumer can set up an online bank account to automatically pay standard bills on the first of each month—without writing a check, buying a stamp or sealing an envelope. Also, customers of Intuit's Quicken.com and Microsoft's Money software have electronic bill payment options. One of the more popular online transaction services is PayPal (www.paypal.com). PayPal enables both businesses and consumers to easily set up accounts that facilitate the transfer of money to anyone with an e-mail address.
V.
Mortgages and the Internet
For those seeking home financing, either for the purchase of a home or to refinance an existing mortgage, the Internet is a great place to start. Just type the word "mortgage" in your favorite search engine and you'll be sifting through hundreds of search results.
Insurance and the Internet
Insurance is one of the slowest sectors of financial services to move the selling process to the Internet. In the same way that very few insurance companies have converted to direct mail to sell insurance, many companies are resisting using the Internet for direct selling. Insurance remains an agent-to-customer relationship industry. However, the purchase of some types of insurance via the Internet can offer the customer tremendous cost advantages. For example, life insurance lends itself to cost/features comparison, and the Internet is both an ideal way to receive such information and an excellent medium for making the purchase. Likewise, automobile insurance is already being sold directly via the Internet. In fact, this trend has led to an increased use of links to automobile insurance sites (and auto financing sites) by consumers. In the near future, watch for leading edge insurance marketers to capture an excellent market share by selling homeowners' insurance and business insurance (including fire, extended coverage and liability insurance) at extremely competitive rates over the Internet. If you are considering buying insurance via the Internet as a consumer or as a business owner, you should weigh the advantages and disadvantages. As with any financially-related venture, it’s always wise to explore your options when it comes to insurance. It is easier than ever before to gather information and shop around for the best deal. This relatively new wave of information availability is creating an increasingly competitive market and is making it much more difficult for insurers to charge uncompetitive rates. It has never been more
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important — or easier — to do your insurance homework. A number of insurance information portals have recently surfaced, enabling the customer to make informed decisions. One such site, Insure.com, informs its visitors on how to interpret misleading insurance sales pitches, how to file a complaint against an agent or insurer and what steps to take to collect a claim that an insurer won’t pay. Like several of its contemporaries, the site features an extensive list of research links. It additionally offers free access to ratings of each insurance company's financial stability. Reliaquote Insurance at www.insureclick.com offers well-organized information on life insurance basics as well as quotes from hundreds of different insurers. The site asks the user to complete a short questionnaire regarding his or her needs and then offers several policy options. The visitor can then apply for whichever policy is desired online, an impressively easy process. Several similar quoting sites exist on the Internet. Like any other financial services-related industry, the insurance segment will continue to undergo major changes as e-commerce and the Internet affect it. The Internet and the development of e-commerce promise to deliver more expedient operations and cost efficiency to the insurance industry, though they also raise many new questions. According to consultants at Booze, Allen and Hamilton, insurers selling over the Internet have a substantial cost advantage over the lifetime of a customer, relative to non-Internet based insurers. Additionally, reports done by Datamonitor indicate that Internet insurers have a 23% expense advantage over agency insurers and a 5% advantage over direct response writers. Reduced sales costs, lower customer service expenses and more advanced information-gathering capacities fuel these efficiencies. Meanwhile, electronic commerce’s progression is prompting the integration of insurers’ information systems. The role of insurance intermediaries/agents and the overall structure of the insurance market are changing dramatically as a result of Internet and ecommerce influences. Insurance portals now exist that can generate a number of competing insurance quotes within seconds. Since information transmission and the facilitation of transactions have been the primary function of insurance agents, electronic markets that can perform these tasks more efficiently and with fewer costs threaten these agents. Several agent functions are currently being
disintermediated or simply replaced. Today, according to the Insurance Information Institute, there are approximately 1.8 million insurance agents in the U.S., taking an average commission of 11.3% of insurance policy premiums. The Center for Risk Management and Insurance Research at Georgia State University found that the furthering of electronic commerce will decrease the use of the independent agency system relative to exclusive agent and direct-response distribution systems that have grown since the 1970s. The future role of the insurance agent may be geared more toward customer service and general advising roles. Nonetheless, most of today’s online insurance sites require the services of a traditional agent to finalize the sale. This will change quickly as more new sites sell directly via online methods without the use of insurance agents. The concept that the network becomes more valuable as more people are connected to it is also affecting the insurance industry. Hundreds of millions of people on the Internet translate into an increase in the value of Internet-based insurance services. With the increased value of online connection comes decreased distribution costs. For example, products such as travel, credit or burial insurance have relatively high fixed costs and low value, and they are relatively expensive to produce. Customers purchasing these products generally pay a high price per dollar of coverage. The Internet allows the disintermediation of this high overhead for low facevalue products, meaning that prices can be lowered and more insurance sold by reducing the transaction cost. Increased access through electronic commerce is also influencing some consumers to purchase broader, high-value insurance products, such as liability umbrellas, to manage their risk. The sheer competitive edge that the Internet provides prompts firms to offer more unique and complex insurance and reinsurance products. Transactions involving many products rely heavily on information and communication, areas where the Internet proves to have a considerable competitive advantage. At the same time, the sale and servicing of complex insurance products will require different kinds of networks appropriate for individualized transactions. Security will be an important consideration, given the large amount of proprietary information at stake. The Internet is currently prompting many insurers to restructure and repackage insurance services. In order to take advantage of advanced Internet technology, many companies are reengineering,
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outsourcing and/or streamlining their management functions or marketing and distribution arms. Some insurers will be able to reduce their investments in physical facilities and certain personnel as a result of the Internet’s ability to more efficiently deliver their services. For example, mammoth firm Allstate Insurance announced in 1999 that it would layoff about 10% of its workforce and begin selling insurance over the Internet as part of its new plan to streamline the firm. Electronic commerce may also enable independent agency insurers to more easily adapt their distribution mechanisms to market competition and expedite their transactions with intermediaries. Several different strategies will be used as the insurance industry becomes more Internet-oriented. For example, online insurance sellers that rely heavily on information technology for many functions are rapidly emerging, while other insurers are simply using electronic commerce and the Internet (via wide area computer networks) to significantly increase the productivity of their human and physical resources. Some aggressive insurers will grow significantly through the effective use of the Internet and electronic commerce, while others will wane due to market changes. Meanwhile, integration between the insurance industry and other financial services industries will become a more seamless and common process. The inclusion of the Internet and e-commerce into the insurance industry changes the way that customers interact with their insurers. Customers can obtain quick quotes from a number of companies and can see ratings and evaluations of insurers on the Internet. Additionally, they can receive better customer service and enjoy cost savings provided by outsourcing. Price comparisons are easily obtained online, and customers can also have access to internal records in order to see where their claims are in terms of payment, when an annuity payment is due and how a mutual fund is performing. Technology brings customers closer to the basic insurance contract through eliminating inefficiencies.
Major Insurance-Selling Sites on the Internet Ebix.com www.ebix.com enables consumers to solicit bids from 1,000 agents representing 2,000 different insurance carriers, as well as 40 different carriers that quote directly--without agents. Insweb www.insweb.com enables consumers to compare quotes from different insurance companies. Quicken Insurance www.insuremarket.com is part of the Intuit family and provides quotes from a large variety of different insurance carriers. Quotesmith.com www.quotesmith.com enables consumers to compare quotes from an array of insurers. Quotesmith has over 300 insurance companies in all 50 states within its database.
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Chapter 4 TRENDS IN PERSONAL COMPUTERS AND INTERNET ACCESS Consumers and businesses are steadily adopting broadband sources such as fiber optics, satellite and cable modems that provide very high speed access to information and media of all types via the Internet, creating an “always-on” environment. The result will be the Convergence Age, a widespread integration of entertainment, telephony and computerized information: data, voice and video, delivered to a rapidly-evolving array of Internet appliances, PDAs, wireless devices (including cellular telephones) and desktop computers. For example, 3M Corporation estimates that 5 million U.S. office workers are already directly tied into a true “last mile” solution via optical LANs delivered directly to the desktop. Such networks deliver data access at 100 Mbps (a typical DSL connection runs at 1% of that speed). Such a highspeed optical connection is the equivalent of dozens of streaming video files running at once. Starting with today’s very rapid implementation of cable modem access to U.S. homes, increasingly faster broadband will soon begin to change the nature of many facets of day-to-day life. To envision the Convergence Age of the near future, dwell on two things: always-on and complete integration of information and media of all types.
For Information on Leading-Edge Solutions and Projects to Provide Fiber Optic or Other Broadband Access to the Public, See: Optical Solutions (“Fiber-to-the-home now”), www.opticalsolutions.com Palo Alto, California Fiber to the Home project, www.cpau.com/fth Grant County, Washington PUD Fiber Optics Pilot project, www.gcpud.org/zipp Gigabit Ethernet Alliance, www.gigabit-ethernet.org Terabeam (wireless optical network solution), www.terabeam.com
Trends in the Personal Computer Market At least 42% of U.S. office workers have access to the Internet at work, and 63% of the U.S. workforce now use a computer on the job daily, in every conceivable application – from receptionists answering computerized telephone systems to cashiers ringing up sales in Wal-Mart on registers that are tied into vast computerized databases. A March 2001 survey by the U.S. Department of
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Commerce found that 84% of American manufacturing plants have Internet access at the plant. By early 2001, approximately 60% of U.S. homes contained a PC, and many homes contained more than one. That percentage will continue to climb, thanks to the rapidly declining retail price of high-power PCs and Internet appliances combined with the growing usefulness of the Internet. However, many home market sectors are saturated, and PC makers are suffering from slowing sales. Logically enough, most U.S. homes that contain computers also have Internet access. According to Nielsen//NetRatings, by January 2001, 58% of U.S. homes had Internet access, and a rapidly growing number of those homes had broadband connections. While most homes are using an Internet browser on a PC, many have interactive TVs or other Internet appliances (such as wireless phones or personal organizers with Internet abilities). The annual worldwide production of personal computers was about 135 million units in 2000, an increase of 14.5%. Production is growing as the price of PCs is falling. Eventually, as the relative price of PCs continues to decline and the amount of entertainment and information delivered over the PC continues to expand, virtually each member of the household will have his or her own individual PC or Internet appliance. The number of such devices per home will reach or exceed the number of automobiles per home. However, not all Americans will be willing or able to participate in the InfoTech Revolution, and a growing gap will appear between those who are technically literate and those who are not. (A charitable foundation founded by Microsoft’s Bill and Melinda Gates is making a serious effort to bring Internet access to lower income students and public library patrons.) The PC is rapidly becoming the focus of home entertainment/home information. A well-equipped PC now functions as a CD player for music, a DVD player for movies, a video game machine, a storage and viewing device for family photos, a multi-media entertainment player, an e-mail enabler, a voice mail/fax machine and a gateway to the Internet. By the way, it still serves the old-fashioned roles of word processing, helping with homework and storing the family’s favorite recipes. Today, the burden of paying bills and keeping the family’s checkbook is also simplified by electronic means. However, as more homes get hooked up to broadband sources such as cable modem, the use of
Internet appliances may slowly erode the use of fullyfeatured PCs. This is due to 1) the growth of specificuse appliances such as Palm-like PDAs, as well as game machines, and 2) the fact that homes with fast Internet access may begin to store their files on remote Internet servers while downloading software on an instantaneous, as-needed basis from such suppliers as Microsoft’s new .Net initiative. The makers of Palm Pilot sold an impressive 11 million units by the end of 2000, and the market for all such devices will top $3.7 billion (9.4 million units) worldwide in 2001. Approximately 10 million North American homes will have cable modems connecting interactive TVs to the Internet by 2003. (About 64 million homes had cable modem service options available to them at press time.) According to Kinetic Strategies, Inc. (www.kineticstrategies.com), there were already 5.5 million cable modem connections by March 1, 2001, compared to only 1.8 million at the beginning of 2000. As of March 1, 2001, there were also about 2.3 million North American homes connected to DSL lines. Major Changes in the Personal Computer Market A revolution has taken place in the personal computer market due to 1) the introduction of the low-cost, full-featured PC and 2) the popularity of buying PCs directly from the manufacturer, thereby diminishing the previously powerful role of retail stores. Dell Computer and Gateway are leaders in selling top-quality computers at competitive prices via the web. IBM and Compaq have followed. Meanwhile, massive companies that previously acted only as wholesale distributors for name brand machines are now building and selling their own lines of clones at very competitive prices. The cost to produce an entry-level PC is falling dramatically. As the price falls, manufacturers are realizing that the long-term profit potential lies not in selling PCs, but in selling monthly Internet services, such as those provided by America Online.
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Preliminary Worldwide PC Vendor Unit Shipment Estimates for 2000 (Thousands of Units)
Company Compaq Dell Hewlett-Packard IBM NEC Gateway Others Total Market
2000 1999 2000 Market 1999 Market Growth Shipments Share Shipments Share (%) (%) (%) 17,203 12.8 15,870 13.5 8.4 14,536 10.8 11,459 9.7 26.9 10,237 7.6 7,600 6.5 34.7 9,162 6.8 9,331 7.9 -1.8 5,848 4.3 6,045 5.1 3.3 5,110 3.8 4,745 4 7.7 72,642 53.9 62,577 53.2 16.1 134,738 100 117,626 100 14.5
Note: Data includes desk-based PCs, mobile PCs and PC servers. Source: Gartner Dataquest (January 2001) www.gartner.com
Preliminary U.S. PC Vendor Unit Shipment Estimates for 2000 (Thousands of Units) Company Dell Compaq Hewlett-Packard Gateway IBM Others Total Market
2000 2000 Market Shipments Share (%) 9,430 19.1 7,615 15.4 5,641 11.4 4,271 8.6 2,674 5.4 19,800 40.1 49,432 100
Note: Data includes desk-based PCs, mobile PCs and PC servers. Source: Gartner Dataquest (January 2001) www.gartner.com
1999 1999 Market Growth Shipments Share (%) (%) 7,263 16.2 29.8 7,234 16.1 5.3 3,939 8.8 43.2 4,021 9 6.2 3,290 7.3 -18.7 19,065 42.5 17.4 44,811 100 10.3
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U.S. Software Publishing Industry Estimated Revenue, Expenses & Inventories: 1998 & 1999 (latest data available) 1999
1998
% change
$ millions
$ millions
$80,959
$72,098
12.30%
$12,940
$11,818
9.50%
7,974 2,308
7,247 2,324
10.0 –0.7
1,254
1,095
14.5
Revenue Total Sources of revenue Personal computer software total Consumer applications Vertical market applications Software development tools, languages and utilities Enterprise software revenue, total
$22,849
$20,580
0.1
Cross-industry applications
15,003
13,194
13.7
Vertical market applications Software development tools,
5,532 2,313
5,426 1,960
2.0 18.0
12,261
10,130
21.0
$8,676 4,854
$8,065 4,669
0.1 4.0
2,699 1,122 $16,076
2,483 913 $13,625
8.7 22.9 0.2
Implementation & customization
5,428
4,597
18.1
Software upgrades & maintenance Software user training
8,575 1,313
7,224 1,201
18.7 9.3
Web site advertising Other revenues
35 $6,883
15 $7,117
138.5 –3.3%
Expenses Selected purchases, total
languages and utilities Systems and systems management software revenue Mainframe computer software total Operating system software Database software Networking software Other services revenue, total
$5,460
$4,751
0.1
Purchased printing Purchased software reproduction
693 2,413
627 2,136
10.5 13.0
Purchased programming services Inventories at end of year, total
2,354 $863
1,987 $784
18.4 0.1
Finished goods, work-in-process
697
665
4.8
Materials, supplies, fuel, etc
167
119
39.8
Suggested research resource: Software & Information Industry Association www.siia.net Source: US Census Bureau, 1999 Services Annual Survey: Information Sector Services.
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U.S. Homes with Personal Computers 1996-2002 (millions)
Advanced Semiconductors Power new PCs and Internet Appliances Worldwide Semiconductor Production:
1996 1997 1998 1999 2000 2001 2002
35.4 39.6 43.7 50.0 55.5 60.2 (est.) 64.1 (est.)
Source: Media Metrix, www.mediametrix.com; Plunkett Research, Ltd., www.plunkettresearch.com
Fiber Optic Network Speeds Basic Fiber Technology (1 wavelength per fiber), 10 Gigabits per second WDM, “Wave Division Multiplexing” (16 wavelengths per fiber) up to 40 Gigabits per second DWDM, “Dense Wave Division Multiplexing” (160 wavelengths per fiber) up to 1.6 Terabits per second Next-Generation Technology, (from 10 to as many as 500 wavelengths per fiber) >10 Terabits per second. For leading-edge technology see www.avanex.com.
Selected Years 1960-2001 Year 1960 1965 1970 1975 1980 1985 1990 1995 1996 1997 1998 1999 2000 2001
Worldwide Production $ billions $0.7 $1.3 $2.4 $4.9 $13.9 $21.8 $50.5 $144.4 $132.0 $137.2 $125.6 $149.4 $204.0 $165.2, est.
% Change 167.0 30.0 2.2 -6.8 30.0 -16.5 1.6 41.7 -8.6 3.9 -8.5 18.9 37.0 -19.0
Source: Semiconductor Industry Association www.semichips.org, Plunkett Research, Ltd. www.plunkettresearch.com
Source: Plunkett Research, Ltd.; JDS Uniphase
Another market shift will occur due to the growing use of intranets within households. Easy to install and use systems (including wireless LANs and Bluetooth connections) will make it very simple and affordable for homes to connect every member of the household with a PC or Internet appliance in every room. A wide range of new uses for both the PC and the Internet will result.
Meanwhile, the next generations of microprocessors are under development at a neverslowing pace, at a research and development cost of about $1 billion for a major new design. The biggest beneficiary of industry growth is the U.S.-based semiconductor company Intel. Intel’s current Pentium chips are only the beginning of a continuing stream of ever-faster, ever more powerful Intel chips. Years ago, in what became a well-known axiom about semiconductors, Intel’s founder, Gordon Moore, predicted that the power and complexity of the silicon-based chip would initially double every year–while later that doubling would slow to every eighteen months. Here’s what “Moore’s Law” has meant to those of us who rely on PCs to enable us to run larger and larger files at higher and higher speeds:
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Growth in Internet Access Exponential Growth of Intel’s Microprocessors, 1970-2001 Approximate Year Intel Chip Model Transistors per Chip 1970 4004 2,000 1980 8086 60,000 1990 80486 1,000,000 1995 Pentium Pro 5,500,000 1997 Pentium II 7,500,000 1999 Pentium III 9,500,000 2000 Pentium 4 42,000,000 2001 Itanium* 64,000,000 2002 Itanium-McKinley 2nd generation Itanium 2003 Itanium-Deerfield 3rd generation Itanium 2003 Itanium-Madison 4th generation Itanium *Itanium, launched in 2001, is important because of its 64-bit format, capable of running 20 different operations simultaneously. Based on Intel’s “Explicitly Parallel Instruction Computing” technology, “EPIC,” it is the first major chip redesign for Intel since the 386. Source: Plunkett Research, Ltd., www.plunkettreserach.com
Growth of Intel's Microprocessors
Transistors per Chip
70,000,000 60,000,000 50,000,000 40,000,000 30,000,000 20,000,000 10,000,000
Year
Source: Plunkett Research, Ltd., www.plunkettreserach.com
2000
1997
1990
1970
0
In January 2001, Nielsen//NetRatings (www.nielsen-netratings.com) placed the total number of Americans having either home or workplace access to the Internet at 169 million. Soon (by 2004 at the latest), the total number of users worldwide will top one billion. Analysts at IDC place worldwide e-commerce revenues at $272 billion in 2000 and forecast explosive growth to $1,685 billion in 2003 (www.idc.com). The nations with the highest Internet use per capita are the U.S., Iceland, Finland, Sweden, Canada, Denmark and Norway. The rest of the world will steadily increase their usage as well. For example, Costa Rica and Hungary posted the highest growth rate in imports of U.S.-made technology goods between 1993 and 1999 as U.S. firms built new manufacturing plants in those nations. That activity will lead to an increased use of computers and Internet access by local populations. Similarly, U.S. high-tech exports to Mexico grew 170 percent between 1993 and 1999, reaching $22 billion, according to the American Electronics Association (www.aeanet.org). Think of the potential of consumer use of the Internet in these terms: Standard local telephone service has become so affordable and so accessible that over 95% of all U.S. households now have at least one telephone line. Only when Internet devices and access become as widespread as the telephone (particularly when broadband access is as widespread) can the Internet reach its true potential as a business-to-consumer medium and as an entertainment/communication device. Users are giving up their old habits to spend their free time on the Internet. A 2000 study by the Stanford Institute for the Quantitative Study of Society found that, of the Americans who spend five or more hours on the Internet each week (20% of all Americans), 60% watch less TV than they used to, 34% read fewer newspapers, 25% work more hours at home and 25% spend less time in stores. Internet users initially tended to be white males from affluent households. However, as each year of the Internet’s existence passes, the profile of the average Internet user starts to more closely match the profile of the average American. For example, early studies found that 80% of Internet users were male, while recent studies usually show that Internet users are only slightly more likely to be male.
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Ranking of the Top 25 Most Visited Web Properties At Home, Month of June 2001, U.S.
Property 1. AOL Time Warner 2. Yahoo! 3. MSN 4. Microsoft 5. Lycos Network 6. Excite@Home 7. About The Human Internet 8. eBay 9. Walt Disney Internet Group 10. Amazon 11. InfoSpace 12. Vivendi Universal 13. CNET Networks 14. eUniverse Network 15. Google 16. Ask Jeeves 17. ClassMates Online 18. NBC Internet 19. GoTo.com 20. Viacom International 21. Napster 22. AT&T 23. American Greetings 24. Promotions 25. Real Networks
Unique Audience Reach % Time per Person 63,531,959 62.61 0: 53: 30 54,493,102 53.71 1: 32: 40 48,371,258 47.67 1: 16: 56 25,745,577 25.37 0: 09: 55 21,971,353 21.65 0: 19: 28 19,938,445 19.65 0: 36: 34 15,994,150 15.76 0: 13: 18 15,949,118 15.72 1: 38: 22 14,995,364 14.78 0: 32: 24 14,952,600 14.74 0: 14: 35 14,364,228 14.16 0: 08: 33 12,779,633 12.60 0: 16: 00 12,209,460 12.03 0: 15: 09 12,058,010 11.88 0: 20: 19 10,082,127 9.94 0: 17: 48 9,942,117 9.80 0: 09: 51 9,743,191 9.60 0: 11: 32 9,245,945 9.11 0: 13: 07 8,735,529 8.61 0: 03: 59 8,368,171 8.25 0: 20: 32 7,982,141 7.87 0: 16: 05 7,476,285 7.37 0: 22: 07 7,458,991 7.35 0: 13: 36 7,205,467 7.10 0: 09: 18 7,150,956 7.05 0: 07: 01
The reported Internet usage estimates are based on a sample of households that have access to the Internet and use the following platforms: Windows 95/98/NT, and MacOS 8 or higher. The Nielsen//NetRatings Internet universe is defined as all members (2 years of age or older) of U.S. households which currently have access to the Internet. Source: Nielsen//NetRatings, www.nielsen-netratings.com
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Average Web Usage, U.S. Internet Users at Home: Month of June, 2001 Number of Sessions per Month 19 Number of Unique Sites Visited 10 Time Spent per Month 9 hr. 44 min. Time Spent During Surfing Session 30 min. 47 sec. Duration of a Page viewed 51.2 sec. Active Internet Users 101,464,514 Current Internet Users Estimate 167,138,270 The reported Internet usage estimates are based on a sample of households that have access to the Internet and use the following platforms: Windows 95/98/NT,and MacOS 8 or higher. The Nielsen//NetRatings Internet universe is defined as all members (2 years of age or older) of U.S. households which currently have access to the Internet Source: Nielsen//NetRatings, www.nielsen-netratings.com
Despite rapid growth in use of the Internet, it probably delivers much less than 5% of the information used in the world today. The potential for development is unlimited, and vast fortunes will be made here over the long term, both by innovative start-ups and by large, established firms.
Internet Access and Service Trends Mergers, consolidation, aggressive marketing, repositioning and new business models characterize today’s Internet access and service market. The largest factor in Internet access is the continued dominance of the early leader, America Online (now AOL/Time Warner). No one has come remotely close to touching AOL’s lead. In fact, AOL continues to grow at an astonishing rate and claimed about 30 million subscribers to its AOL and Compuserve brands as of mid 2001. Even software giant Microsoft has not been able to shrink AOL's lead in a significant way. After an early stumble, Microsoft’s MSN service has grown rapidly in recent years, and now has about 5 million subscribers (MSN and WebTV combined) as of mid 2001, which still leaves it positioned miles behind AOL. (Ironically, Microsoft’s own corporate web site is one of the busiest sites on the Internet. With 500,000 pages, Microsoft.com enjoys five million viewers daily-- users who are interested in Microsoft’s software and its features but not necessarily in its Internet access service.)
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Meanwhile, the major independent firms of Earthlink and Mindspring merged, creating a giant firm that rapidly grew from 2.5 million subscribers in 1994 to about 5 million by mid 2001. A trend that is fading is the use of Internet service provided on a free-of-charge basis. Aggressive ISPs (Internet Service Providers) at one time provided free service to millions of users. These ISPs based their business models on revenue from advertising. However, advertising-based business models are out of fashion and out of money in the Internet world, and free ISPs are unable to create enough advertising revenue to offer satisfactory levels of service to users. Leaders such as 1stUp and Spinway had closed their services by early 2001. Meanwhile, AOL’s strong content offerings, particularly now that it has acquired Time Warner, will assist it in keeping a vast customer base willing to pay $23.90 for monthly service. Another strong factor in AOL’s favor is the amount of time that its subscribers spend at the AOL site (averaging as much as 88% of their online time), as opposed to cruising the rest of the Internet. Finally, AOL acquired a vast new customer base in the merger with Time Warner, including 48 million HBO and cable TV viewers and 25.4 million magazine subscribers. In addition, AOL can market to a total of 87 million Instant Messenger registrants and 20 million Netscape Netcenter registrants. Leading U.S. Internet Service Providers (ISPs), Est., mid 2001 Company: America Online (AOL) United Online BlueLight EarthLink Microsoft Prodigy
Subscribers: 30.0 million 7.0 million* 5.0 million 5.0 million 5.0 million 2.2 million
*result of mid 2001 merger of Juno Online Services and NetZero, includes approximately 6 million free service subscribers and 1 million paying subscribers. Source: Plunkett Research, Ltd., www.plunkettresearch.com
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Online Information Services1 Revenue: 1998 and 1999 (latest data available) Revenue Total
1999
1998
% change
$ millions $18,025
$ millions $10,882
65.60%
$8,979 1,355
$5,499 725
63.30% 87.0
520 NA
261 NA
99.4 NA
7,038
4,322
62.8
Sources of revenue Internet access fees Advertising Web hosting & design Online sales commissions Other revenue NOTES: 1
Census Bureau classifications in this industry sector include: Internet access providers, Internet service providers and similar establishments. Suggested research resource: Software & Information Industry Association www.siia.net Source: US Census Bureau, 1999 Services Annual Survey: Information Sector Services.
Database and Directory Publishers Revenue: 1998 and 1999 (latest data available) 1998 $ millions
% change
$ millions $15,433
$14,239
8.40%
Single copy and subscription sales, total Print Electronic
1,409 605 804
1,274 631 643
0.1 –4.1 25.0
Advertising sales, total
10,679
9,889
8.0
Print Electronic
10,590 89
9,850 39
7.5 127.6
Contract printing Other revenue
143 3,202
127 2,950
12.7 8.6
1,198
1,182
1.3
1999 Revenue Total Sources of revenue
Expenses Purchased printing Inventories at end of year, total Finished goods, work-in-process Materials, supplies, fuel, etc.
408
227
80.1
383 NA
206 NA
86.1 NA
Suggested research resource: Software & Information Industry Association www.siia.net Source: US Census Bureau, 1999 Services Annual Survey: Information Sector Services.
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Another extremely vital access trend has emerged: millions of mobile, affluent Internet users are acquiring wireless access, via cellular phone and Palm Pilot type devices, creating a rapidly-growing, non-traditional means to access the Internet. This trend has the potential to steal some market share from AOL and other providers. For example, Palm offers its own online service, providing Internet access and e-mail services to mobile customers.
Increased Use of Satellites In many rural locations worldwide, Internet access is difficult to obtain. Broadband satellite is the answer for connection in these remote areas and is increasingly a viable solution in urban areas as well. As an alternative to building fiber optic lines, a satellite can now provide two-way Internet connections. In fact, satellite access may provide one of the best last mile solutions for users anywhere, especially now that two-way satellite technology is becoming practical, allowing high-speed e-mail and other uploading by the user, as well as extremely high-speed downloading of web pages and streaming video. The demand for high-speed Internet access is immense. Vast new satellite systems are being built for the transmission of a wide variety of data, including that which is Internet-based. Satellite Distribution Networks (SDNs) have been designed that will bypass the Internet’s traditional backbone system by beaming web content directly to local, last mile broadband access providers, such as firms that utilize cable TV systems and wireless providers that use lasers to reach homes and offices. However, many satellite firms offer services that are much more specialized. Corporations with offices spread about the globe are able to buy satellite time that will enable them to speed up worldwide computer networks and tap main databases at corporate headquarters for research, customer service, inventory and ordering. In the extreme, satellite network systems have the potential of bypassing the Internet entirely, by beaming data directly to specially-equipped receiver dishes that relay data to computers or cell phones. Through miniaturization, satellites have enjoyed the same improvements of power from which other electronic media are benefiting. Today’s satellites make those of 10 years ago seem like dinosaurs. Digital signal processing means much faster movement of data out of a satellite at multimegabit transmission rates. The future of the entire broadcast
entertainment industry will evolve as a result. For example, that improved distribution speed can be used for direct satellite-to-TV distribution of movies and entertainment, and several firms have made significant investments in this area. Companies Building Satellite-Based Internet Services Networks: DirectPC (a unit of DirecTV/Hughes Electronics) StarBand (backed by Microsoft/aimed at serving the 25 million American homes that are not in range of DSL service) PanAmSat Wireless Internet Access “Wireless” access to the Internet can be provided in many ways, including Internet-enabled cellular mobile telephones, personal digital assistants (PDAs), like Palm devices, with Internet capabilities and technologies that create wireless networks based on technology standards such as the new Bluetooth and 802.11b. Combined, various types of wireless access will have revolutionary impact over the next five years. The rollout and consumer adoption of new standards, including 802.11b and advanced generation (2.5G and 3G) cellular telephone services, will depend greatly on the ability of providers/manufacturers to create services/products with desirable features at affordable prices. At the same time, cellular telephone companies will be hard pressed to come up with the capital necessary to build communications infrastructure capable of providing additional levels of cellular-based Internet features. Meanwhile, current cellular phone standards provide Internet connections that are adequate for many uses despite their slow speeds. To begin with, worldwide mobile phone sales jumped by 46% in 2000, according to Gartner Dataquest, (www.gartner.com) to 413 million units. Increasingly, new cell phones are Internet accesscapable. Access to advanced Internet services via cell phones will lead to rapid growth in cellular phone service revenues. Every major cellular phone company in the U.S. offers wireless Internet access service. For example, Sprint PCS, AT&T Wireless and Verizon Wireless offer cell phone-based Internet access in major markets across the nation. Gartner Dataquest projects that there will be nearly 800 million wireless data users worldwide by
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2004, and that by 2005 there will be 137 million such users in North America alone. These people will subscribe to mobile Internet access services while using a wide variety of portable devices. Meanwhile, homes and workplaces will be adopting wireless local area networks (LANs) that will enable laptops, Internet-enabled cell phones, PDAs and other devices to log in, check e-mail and conduct business or entertainment tasks via wireless network connections. The fastest and most secure wireless networks may be those based on 802.11b technology, but the Bluetooth wireless standard will also be in use. Japan continues to lead in wireless access services. In early 2000, NTT DoCoMo, Japan's largest wireless carrier, applied for government permission to enable a GPS (Global Positioning Satellite)-based personal navigation system, called Doco-Navi, that allows the user to get directions from one place to the next, while pointing out nearby sites such as restaurants and tourist destinations. The company's "iMode" allows the user to access restaurant guides and reserve tables, make travel reservations, bank by phone, directly access the Internet and get a constantly updated weather report. Users are charged based on the amount of data transferred during the interaction, not the amount of time spent online. DoCoMo acquired a major interest in AT&T Wireless in 2000, and invested in other leading global wireless companies. Its long-term strategy is to encourage the use of DoCoMo technology and services on a worldwide basis. Why should consumers be tied to a desktop for Internet access when cell phones can give them many of the Internet services they want while on the go? For a European example of such advanced services, look at Telenor in Norway. What does wireless access mean to the Internet? People can be constantly connected—constantly in touch with e-mail, shopping, information and each other. Instant messaging in AOL and Microsoft formats is now available for wireless devices, including a format for Palm Pilot VII. Wireless Application Protocol (WAP) is the current worldwide industry-established standard for delivery of information to digital wireless devices (cell phones, pagers and PDAs). WAP uses Wireless Markup Language (WML), a technology that reduces the size of the format to a unit suitable for the small screens and low speeds of cellular phones that is read by a microbrowser built in to the cell phone’s handset. Wireless devices typically have screens capable of displaying fewer than 30 words at a time,
and operate at speeds of 14.4 kbps to 19.6 kbps. (Traditional web languages of HTML, HTTP, TLS and TCP are inefficient and hard to display on the small screens of cell phones and pagers.) With advanced wireless Internet services, a user can send and receive e-mail, buy event tickets, order food for take out or delivery, get directions, trade stocks, find weather conditions and check voice mail messages, among many other options. Within five years, about one-half of e-commerce transactions by consumers will be made via wireless methods using cell phones, pagers, wireless-modemequipped portable computers and Palm-type devices. The Palm VII is a PDA produced by Palm, Inc. specifically for accessing the Internet. Because the product uses a paging network to establish its connection to the Internet, it works in locations where cell phones typically do not work, such as hospitals or factories. The connection to the Internet is not a constant one, but instead grabs information in bursts. Similar, extremely popular products are made by Compaq and HP. Corporations that provide paging services have consolidated in order to invest heavily in advanced services, including e-mail messaging. Mergers have created firms with nationwide networks. New services are keyed around the ability to page the user, regardless of location, and on advanced two-way paging systems that allow the person receiving a page to respond. The person sending the message can do so most easily with e-mail from a PC. Research In Motion, Ltd. (“RIM” www.rim.net) has created an extremely popular pager with a small keyboard that can send and receive e-mail. The Motorola PageWriter is another highly advanced two-way pager. These state-of-the-art pagers work nationwide. In addition to sending and receiving email, they can receive news updates from web sites. In fact, several advanced e-commerce applications are now available for pagers, including stock quotes, online trading and online shopping. The biggest downside to using a pager as an Internet appliance is the tiny keyboard. By early 2001, RIM had 400,000 wireless, pagerbased messaging customers, up from 100,000 one year earlier. There will be as much as 80% penetration of the U.S. cellular market by 2005. Even though more people than ever before are using cell phones, and cell phone users are talking on those phones for longer periods of time, the average wireless phone bill in the U.S. has decreased dramatically as service providers have become more competitive. In 1988,
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the average cell phone bill in the U.S. was $95 per month. That monthly bill fell to just over $40 in 1999. Annual 1988 service revenues were $1.56 billion. That total grew 2,285% to $37.21 billion in 1999. While all of Europe is interconnected for cell phone use based on the Euro-standard GSM (Global System for Mobile Communications), U.S. companies continue to pour billions of dollars into a wide variety of incompatible wireless communications networks, products and services, including Personal Communications Services (PCS). These wireless PCS networks use tens of thousands of small radio-base stations, with specialized switches to tie them together. PCS uses a network of low-powered radio transceivers—much less powerful and smaller in range than cellular mobile phones— that are spaced close together. The systems are relatively efficient to build and operate. AT&T paid $1.68 billion for PCS licenses in 21 markets. Sprint is the U.S. leader in PCS service. Motorola and other manufacturers are reaping giant orders for PCS equipment from worldwide cellular phone firms. A study by Peter D. Hart Research Associates, Inc. found that 38% of U.S. consumers have some interest in "cutting the cord”—replacing their home phones with wireless phones. For those worried about making the switch, 62% were concerned with cost, and only 20% had problems with the logistics of change. In fact, wireless systems like PCS have become the home telephone system of choice in Third World nations that lack extensive networks of landline telephone cable and switches. It can be much quicker and simpler to install a new cellular system than to develop a traditional local exchange's infrastructure. CDMA (Code-Division Multiple Access) technology, invented by Qualcomm, Inc., enables cellular mobile systems to make quantum leaps in the number of telephone customers they can handle. CDMA filters out background noise, cross-talk and interference for higher quality and greater privacy. Calls are translated into digital transmissions (0s and 1s). The spread spectrum of CDMA provides some of the largest coverage in the industry, and the low power necessary for the handsets equals longer battery life and therefore smaller batteries and handsets. Commercial CDMA networks serve tens of millions of subscribers worldwide. While CDMA is one of the fastest growing second-generation telephony digital standards, it is certainly not the only one. Europeans use GSM on a nearly universal basis—making it simple to have
roaming mobile service throughout the continent, AT&T Wireless uses TDMA (Time Division Multiple Access) and Japan generally uses PDC (Personal Digital Cellular). As cellular phones are quickly becoming a worldwide tool, the need for compatible systems becomes more important. Cable Modems Cable Modems are being distributed by the millions to U.S. homes that subscribe to cable TV. These modems enable consumers to access data over the Internet using the TV cable as the means of communication. Watch for cable modems to lead to the first widespread use of truly interactive television. Cable modem is currently twice as popular as DSL service. AT&T and other leading cable providers have adopted hardware and software standards for TV settop boxes that enable cable TV subscribers to enjoy greatly enhanced services by accessing the Internet over cable. This massive distribution of the Internet to the home will totally revolutionize home entertainment. Using cable modems, viewers can access the Internet instantly, with none of the wait associated with traditional phone modems. This means that users will be much more inclined to jump in and out of the Internet all day, since access will be painless and instantaneous. For example, a person watching the Super Bowl might see a side bar on the TV screen, hooked up to cable modem, that would allow the viewer to seamlessly switch to an interactive screen that would provide additional team statistics, player biographies and the opportunity to order Super Bowl merchandise, all without leaving the game itself.
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Worldwide Mobile Phone Sales Estimates for 2000 (Thousands of Units) 2000
2000 Market
1999
1999 Market
Shipments
Share (%)
Shipments
Share (%)
Growth (%)
Nokia
126,369
30.6
76,335
26.9
65.5
Motorola
60,094
14.6
47,818
16.9
25.7
Ericsson
41,467
10.0
29,785
10.5
39.2
Siemens
26,989
6.5
17,687
6.2
52.6
Panasonic
21,511
5.2
15,581
5.5
38.1
Company
Samsung
20,639
5.0
12,982
4.6
59.0
Others
115,662
28.0
83,393
29.4
38.7
Total Market
412,731
100.0
283,581
100.0
45.5
Source: Gartner Dataquest (February 2001), www.gartner.com
Preliminary Worldwide Server Vendor Unit Shipment Estimates for 2000 (Units)
Company Compaq
2000
2000 Market
1999
1999 Market
Shipments
Share (%)
Shipments
Share (%)
Growth (%)
1,065,603
27.1
962,308
28.0
10.7
IBM
658,287
16.7
594,077
17.3
10.8
Dell
573,219
14.6
402,992
11.7
42.2
HP
440,210
11.2
422,542
12.3
4.2
Sun
286,661
7.3
177,901
5.2
61.2
Others
906,401
23.2
874,981
24.9
3.6
3,930,381
100.0
3,434,802
100.0
14.4
Total Market
Source: Gartner Dataquest (February 2001), www.gartner.com
Preliminary Worldwide Workstation Vendor Unit Shipment Estimates for 2000 (Units)
Company Dell
2000
2000 Market
1999
1999 Market
Shipments
Share (%)
Shipments
Share (%)
Growth (%)
381,718
23.1
238,184
16.0
60.3
Sun Microsystems
358,909
21.7
322,541
21.6
11.3
HP
289,674
17.5
312,031
20.9
-7.2
Compaq
230,248
13.9
208,268
14.0
10.6
IBM
76,264
10.7
217,774
14.6
-19.1
Others
215,439
13.0
193,686
13.0
11.2
1,652,252
100.0
1,492,484
100.0
10.7
Total Market
Source: Gartner Dataquest (February 2001), www.gartner.com
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One problem: Can the entertainment industry develop enough content to keep up with the delivery potential of cable modems? Today’s typical cable TV system may offer something less than 100 channels, while direct satellite broadcast may offer 200 to 250 channels. However, digital compression, Internet broadcasting via cable modem and increased DBS service may soon offer 300 or more channels to viewers. Media giant News Corp. is forecasting as many as 1,000 channels during the decade beginning in 2010. What will the content be? Can content producers earn consistent profits when the audience’s viewing choices become so spread out? By contrast, a few years ago, the profitability of television broadcasters was all but assured when viewers had only a handful of choices, primarily the big networks. For more information on cable modem products, broadband content services, FAQs and tutorials, check out Kinetic Strategies’ cable modem portal: www.cable-modem.net. Popular Internet Connection Options Type Mbps Conventional Dial-up 0.056 ISDN Phone Line 0.112 DSL/SDSL Phone Line 0.250 – 1.500 Satellite* 0.400 Cable TV Modem 1.000 Microwave 1.400 T1 Line 1.500 T3 Line Up to 45.0 OC3 to OC192 155.0 to 9,600.0 * Satellite dish uploads move at a slower speed Source: Plunkett Research, Ltd., www.plunkettresearch.com
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Major Satellite Companies Company
Market
Cidera Gilat Satellite Networks Globalstar Hughes Electronics
Content providers, ISPs Business, Consumers
ICO-Teledesic Interpacket Iridium NetSat Express
Business, Consumers Business Business Business
Orbcomm PanAmSat
Business Business
StarBand
Business
Tachyon
Business
Business, Consumers Business, Consumers
Services Data Data, Phone, TV Phone Data, Phone, TV Data, Phone Data Phone Data Data Data, Comm., Internet Consumers, Data Data
Source: Industry Standard, November 2000, Plunkett Research, Ltd.
Owns/ Leases Leases Leases Owns Owns Owns Leases Owns Leases Owns Owns
Financial Status Private, filed for IPO Public Public Public Private Private Reorganization Subsidiary of Globecomm Joint venture Public
Leases
Private
Leases
Private
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Plunkett's E-Commerce & Internet Business Almanac 2001-2002
Chapter 5 E-COMMERCE & INTERNET CONTACTS Web Sites, Publications and Industry Information
I.
Contents: I. E-Commerce & Internet Related A. Privacy and Consumer Matters B. Major Internet & E-Commerce Consultants C. Recommended GovernmentRelated Websites D. Internet Business/Technology Related Contacts E. Additional E-Commerce & Internet Industry Associations F. A Short List of E-Commerce & Internet Related Publications G. Foreign Internet Organizations
p. 51 p. 51
II. Information Technology Related A. Computers/Technology Careers Information B. Engineering C. Telecommunications
p. 61
E-Commerce & Internet Related
A.
Privacy and Consumer Matters •
p. 52 p. 53
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p. 55 p. 55 p. 58 p. 61
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p. 61 p. 62 p. 65
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Anonymity and Privacy on the Internet www.infosyssec.org Discusses how you can protect your privacy and security on the Internet. BBBOnLine www.bbbonline.org This is the online version of the venerable Better Business Bureau, an organization that attempts to foster high standards of customer service and online privacy. Electronic Frontier Foundation www.eff.org EFF is a protector of civil liberties on the Internet. This non-profit, non-partisan organization strives to protect free speech while protecting children from potentially offensive materials, to protect privacy while allowing recovery for damages and to find ways to legislate something that is everywhere and nowhere all at once. Electronic Privacy Information Center www.epic.org EPIC, a public interest research center, examines emerging civil liberties issues, the First Amendment and constitutional values. Using the Freedom of Information Act and litigation, EPIC offers the public information
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about what its government is doing, ensuring oversight and accountability. This group works in tandem with Privacy International, a human rights group in the UK. MyPrivacy.org www.myprivacy.org A privacy service organized by PrivaSeek, MyPrivacy.org allows the Internet user to set specific preferences for online identification that will be honored by all web sites participating in the program. Privacy International www.privacyinternational.org Privacy International is a government and business watchdog, alerting individuals to wiretapping and national security activities, medical privacy infringement, police information systems and the use of ID cards, video surveillance and data matching. Privacy Journal www.townonline.com/privacyjournal The Privacy Journal is a monthly report on the impact of new technology on individual privacy. Privacy Times www.privacytimes.com This site is for attorneys and professionals wishing to follow legislation and developments in the information privacy arena, including the Freedom of Information Act, direct marketing, Caller ID and credit reports. PrivaSeek www.persona.com/privaseek.html Provides expertise and guidance to online and offline businesses. Also counsels businesses who are struggling to create and maintain accurate, sensible privacy guidelines for their organization. TRUSTe www.truste.org TRUSTe, a non-profit agency, formed an alliance with all major portal sites to launch the Privacy Partnership campaign, a consumer education program designed to raise the awareness of Internet privacy issues. The organization works to meet the needs of business web sites while protecting user privacy.
To get names removed from most mailing lists, write to: Mail Preference Service Direct Marketing Association P. O. Box 9008 Farmingdale, NY 11735-9008 B.
Major Internet & E-Commerce Consultants (and Major Firms with Consulting Arms) • • • • • • • • • • • • •
Accenture www.accenture.com New York, NY Answerthink www.thinkinc.com New York, NY Computer Sciences Corp. www.csc.com El Segundo, CA CPS Direct www.cpsdirect.com Woburn, MA Deloitte Consulting www.dc.com New York, NY Digitas www.digitas.com Boston, MA EDS www.eds.com Plano, TX Ernst & Young www.ey.com New York, NY Euro RSCG Worldwide Interactive www.eurorscg.com New York, NY Grey Global Group www.grey.com New York, NY Hewlett-Packard www.hp.com Palo Alto, CA Hill, Holiday Interactive www.hhcc.com Boston, MA IBM www.ibm.com White Plains, NY
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IllusionFusion http://ifgallery.illusionfusion.com New York, NY http://ifgallery.illusionfusion.com/ iPlanet E-Commerce Solutions www.iplanet.com Palo Alto, CA iXL www.ixl.com Atlanta, GA KPMG Consulting www.kpmgconsulting.com McLean, VA Luminant Worldwide www.luminant.com Dallas, TX Modem Media www.modemmedia.com Norwalk, CT Periscope www.periscope.com Minneapolis, MN PricewaterhouseCoopers www.pwcglobal.com New York, NY Proxicom www.proxicom.com Reston, VA Publicis Networks www.publicis-networks.com Munich, Germany Risdall Linnihan Interactive www.risdall.com New Brighton, MN Sapient www.sapient.com Cambridge, MA Silicon Graphics www.sgi.com Mountain View, CA Starpoint Solutions www.tisny.com New York, NY Stein Rogan and Partners www.srpadv.com New York, NY Sun Microsystems www.sun.com Palo Alto, CA Targetbase Marketing www.targetbase.com Irving, TX
• • •
C.
US Interactive www.usinteractive.com New York, NY Viant www.viant.com Boston, MA Worldwide Xceed Group www.xceed.com New York, NY Recommended Government-Related Web Sites
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Access to Federal Implementation Conventions http://snad.ncsl.nist.gov/dartg/edi/fededi.html The National Institute of Standards and Technology. Advisory Commission on Electronic Commerce www.ecommercecommission.org The Advisory Commission on Electronic Commerce (ACEC) was created by Congress to study federal, state, local and international taxation and tariffs on transactions using the Internet and Internet access. Board of Governors of the Federal Reserve System www.federalreserve.gov Phone: 202-452-3684 This free site offers extensive background on the Federal Reserve System, as well as congressional testimony, economic indicator analyses and specific consumer information. Bureau of Economic Analysis www.bea.doc.gov Phone: 202-606-9600 BEA, an agency of the U.S. Department of Commerce, is the nation's economic accountant, preparing estimates that illuminate key national, international and regional aspects of the United States economy. Bureau of Labor Statistics http://stats.bls.gov Phone: 202-606-5886 The BLS is the principal fact-finding agency for the Federal Government in the broad field of labor economics and statistics. The BLS is an independent national statistical agency that collects, processes, analyzes and disseminates essential statistical data to the American public, the U.S. Congress, other Federal agencies, state and local governments, business and labor. The
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BLS also serves as a statistical resource to the Department of Labor. The Federal Communications Commission www.fcc.gov 445 12th Street SW Washington, DC 20554 Phone: 202-418-0190 An independent U.S. government agency established by the Communications Act of 1934. Charged with regulating interstate and international communications by radio, television, wire, satellite and cable. Federal Electronic Commerce Program Office http://ec.fed.gov Official web site of the office, whose mission is to develop a policy framework to support EC, help government agencies find and use the best EC tools, and spread the most promising ideas across government. Federal Trade Commission www.ftc.gov/privacy This department of the Federal Government is responsible for many aspects of business-toconsumer and business-to-business trade and regulation. Institute of Telecommunication Sciences www.its.bldrdoc.gov 325 Broadway Boulder, CO 80303-3328 Phone: 303-497-5216 ITS is the research and engineering branch of the National Telecommunications and Information Administration, a division of the U.S. Department of Commerce. National Electronic Commerce Resource Center www.ecrc.ctc.com The ECRC Program assists industrial and government organizations to enter the world of electronic commerce. STAT-USA Internet www.stat-usa.gov Phone: 202-482-1986 STAT-USA delivers vital economic, business and international trade information produced by the U.S. Government to persons that may then use that information to make important decisions affecting business, community and personal finances. This site scours the government information vaults, assembles information in one location and delivers it to the public.
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U.S. Census Bureau www.census.gov Phone: 301-457-4608 The Census Bureau web site is designed to enable intuitive use of the bureau's Internet offerings. Designed with user-friendliness, visitors do not need much familiarity with the bureau's internal organizational structure to utilize this site. U.S. Department of Commerce www.doc.gov Phone:202-501-0666 The Department of Commerce promotes job creation, economic growth, sustainable development and improved living standards for all Americans by working in partnership with businesses, universities, communities and workers to build for the future and to promote U.S. competitiveness in the global marketplace. U.S. Government Policy on Electronic Commerce www.ecommerce.gov Outline of the U.S. Government's official policy regarding electronic commerce and its involvement with the Internet. U.S. Securities and Exchange Commission www.sec.gov Phone: 202-942-8088 The SEC is a nonpartisan, quasi-judicial regulatory agency responsible for administering federal securities laws. These laws are to protect investors in securities markets and ensure they have access to disclosure of all material information concerning publicly-traded securities. White House www.whitehouse.gov Phone: 202-456-1414 This site was designed for communication between the Federal Government and the American people. It provides access to all government information and services that are available on the Internet.
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D.
Internet Business/Technology Related Contacts
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Business Resources •
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AT&T Business Network www.att.com/business/ Offers powerful business services such as CNN, Dow Jones, the Thomas Register and TRW databases. Commercial Internet eXchange www.cix.org 1301 K Street NW, Suite 325 Washington, DC 20005 Phone: 703-709-8200 Fax: 703-709-5249 Leading provider of technical, business, policy and regulatory support to ISPs. Intercat www.intercat.com 3399 East 19th Street Long Beach, CA 90804 Phone: 562-961-0103 Fax: 800-634-9524 Publishes catalogs or other information to the web. Links to catalogs and other services. Internet Service Providers’ Consortium www.ispc.org 1301 Shiloh Road, Suite 720 Kennesaw, GA 30144-8086 Toll-Free: 866-533-6990 Fax: 678-819-1028 Provides services to startups and small and medium-sized ISPs and represents the needs of small and growing businesses. Internet Society www.isoc.org 11150 Sunset Hills Road, Suite 100 Reston, VA 20190 Phone: 703-326-9880 Fax: 703-326-9881 Non-profit organization that focuses on standards, public policy, education, training and membership. Represents who’s who of the Internet community. InterNIC www.internic.net Provides public information regarding Internet domain name registration services. The List http://thelist.internet.com A directory of Internet Service Providers. Find ISPs by entering an area code or country.
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TechWeb www.techweb.com Articles about e-commerce and Information Technology. Recommended Sources for Online Consumer Buying Pattern Data , Market Analysis and Traffic Analysis
• • • • • •
E.
Ernst & Young www.ey.com Forrester Research www.forrester.com GartnerGroup www3.gartner.com Jupiter Media Matrix www.jmm.com Nielsen//NetRatings www.nielsen-netratings.com Shop.org www.shop.org
Additional E-Commerce & Internet Industry Associations •
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Advanced Network & Services www.advanced.org This organization strives to advance education through the increased use of computer network applications and technology. American Registry for Internet Numbers www.arin.net ARIN is a non-profit organization that administers and registers Internet Protocol (IP) numbers. Association for Interactive Media (AIM) www.interactivehq.org This non-profit association is geared toward persons using the Internet for business purposes. Association for Local Telecommunications Services www.alts.org ALTS is the trade association that represents the builders of high-speed local communications – CLECs that are "facilitiesbased." ALTS was founded to harness the shared energy and vitality of the new local competitors and to help ensure regulations for robust competition (spawned by the 1996 Act) are implemented and enforced.
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Berkman Center for Internet & Society http://cyber.law.harvard.edu/ This research center focuses on the exploration of the development, inner-workings of and laws pertaining to the Internet. The center offers Internet courses, conferences and more. Better Ethics Online www.actionsites.com/beo Better Ethics Online provides information concerning protecting online copyrights and detecting unauthorized web site use. Commercial Internet Exchange www.cix.org This association is geared toward entities that offer TCP/IP or OSI public data internetworking services. CommerceNet www.commerce.net The premier industry consortium for companies using, promoting and building electronic commerce solutions on the Internet. The Congressional Internet Caucus www.netcaucus.org The Congressional Internet Caucus is a bipartisan group of over 100 members of the House and Senate working to educate their colleagues about the promise and potential of the Internet. Cooperative Association for Internet Data Analysis (CAIDA) www.caida.org CAIDA works to promote an atmosphere of greater cohesion on the Internet. CSPACE http://cspace.unb.ca/ This non-profit organization focuses on maintaining and developing educational resources on the Internet. Cyber District Association www.cyberdistrict.org This association is dedicated to improving and creating interactive media. The CyberSkills Association www.cyberskills.org This association’s program serves to provide the skills, knowledge and training needed to compete and thrive in today’s changing Internet industry.
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Data Interchange Standards Association (DISA) www.disa.org DISA is the leading provider of educational and networking forums on e-business. They provide technical and management services to standards and specification development organizations, including OTA, the IFX Forum, MBA's MISMO, and ASC X12. DISA's affiliation with EC user groups and emerging initiatives around the world facilitates an interchange of e-commerce topics hitting the marketplace. Financial Services Technology Consortium www.fstc.org FSTC sponsors project-oriented collaborative research and development on interbank technical projects affecting the entire financial services industry. Particular emphasis is placed on payment systems and services, and leveraging new technologies that help banks cement customer relationships, boost operational efficiency, and expand their market reach. Florida Internet Service Providers Association www.fispa.org FISPA encourages discussion and education concerning the Internet industry. Global Business Dialogue on Electronic Commerce www.gbd.org GBDe is a company-led response to the need for strengthened international coordination with regard to worldwide electronic commerce. Steering Committee includes CEOs from 24 international companies, including IBM, AOL, Bertelsmann, Fujitsu, HP, and Time Warner. Global Internet Liberty Campaign (GILC) www.gilc.org This association stands up and takes action when it comes to free speech and privacy protection. Hands Off the Internet www.handsofftheinternet.org This association opposes government regulation of entrepreneurial ventures. Hudson Valley New Media Association www.quickpages.com/hvnma This organization focuses on artistic and creative talent in electronic communications.
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iAdvance Coalition www.iadvance.org iAdvance advocates the implementation of affordable high-speed Internet access across the United States. Information Systems Security Association www.issa-intl.org ISSA is geared towards those in the information security industry. International Academy of Digital Arts and Sciences www.iadas.net IADAS is dedicated to the progress of new media worldwide. International Center for Electronic Commerce www.icec.net Based in Korea. Objectives include development of the next generation electronic commerce technologies and management schemes and establish an international research consortium of electronic commerce related companies. International Society for Mental Health Online www.ismho.org This society strives to promote online communication, information and technology for the mental health community. The Internet Alliance www.internetalliance.org Strives to assist the Internet industry in becoming the most important mass market medium of the 21st century. Internet and Computer Law Association http://grove.ufl.edu/~cmplaw This site offers information concerning the Internet and its surrounding laws. Internet Assigned Numbers Authority (IANA) www.iana.org This association serves as the central coordinator for the assignment of parameter values for Internet Protocols. Internet Content Coalition www.netcontent.org The ICC is a non-profit organization for producers and distributors of original content on the Internet.
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Internet Education Foundation www.neted.org The Internet Education Foundation is a nonprofit organization dedicated to educating the public and policymakers about the potential of a decentralized global Internet. Internet Public Policy Network www.internetpublicpolicy.com The Internet Public Policy Network (IPPN) is a virtual company. It connects organizations to writers, speakers and experts on issues such as electronic commerce, telecommunications and community technology. Internet Service Providers' Consortium www.ispc.org The goal of the ISP/C is to function as the lead international trade association of ISPs, representing all of its ISP members. Internet Software Consortium www.isc.org This non-profit organization has extensive expertise in the development, management, maintenance and implementation of Internet technologies. NASA’s Learning Technologies Project http:/learn.iw.nasa.gov/ Promotes growth of a national information infrastructure using information acquired by NASA. National Industrial Information Infrastructure Protocols (NIIIP) Consortium www.niiip.org A team of organizations that has entered into a cooperative development agreement with the U.S. Government to develop open industry software protocols that will make it possible for manufacturers and their suppliers to effectively interoperate. NetCoalition www.netcoalition.com Some of the most innovative Internet companies in the world belong to this organization, which serves as a discussion forum for exchanging ideas about the Internet. New Media Association of New Jersey www.nmanj.com The New Media Association of New Jersey is a regional organization made for and of users of the new media industry, where members can strengthen their skills, expand their networks and learn from each other.
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New York New Media Association www.nynma.org NYNMA is a not-for-profit industry association founded in 1994 to support and promote the new media industry in New York. OASIS www.sgmlopen.org The Organization for the Advancement of Structured Information Standards, is a nonprofit, international consortium dedicated to accelerating the adoption of productindependent formats based on public standards, including SGML, XML, and HTML. OpenNET Coalition www.opennetcoalition.org The openNet Coalition strives to promote the rights of all consumers to obtain affordable, high-speed Internet access. People For Internet Responsibility www.pfir.org PFIR is a global, grassroots, ad hoc network of individuals who are concerned about the current and future operations, development, management and regulation of the Internet in responsible manners. RosettaNet www.rosettanet.org A consortium of computer makers, resellers, and users creating e-commerce standards for transaction-centered data exchanges using a standardized set of terms for product, partner, and transaction properties. Smart Card Industry Association (SCIA) www.scia.org SCIA is a global trade association which strives to stimulate the use and understanding of smart card technology in the marketplace. Texas Internet Service Providers Association www.tispa.org This organization is one of the nation's strongest state ISP organizations and operates on a non-profit basis. Voice On the Net Coalition (VON) www.von.org The VON Coalition's mission is twofold: actively advocate the viewpoint that the IP Telephony industry should remain as free of governmental regulations as possible and to educate consumers and the media on Internet communications technologies.
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WWW Consortium Electronic Commerce Interest Group www.w3.org/ecommerce Describes the various activities of the W3C Electronic Commerce Interest Group.
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A Short List of E-Commerce & InternetRelated Publications
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Recommended Business Magazines •
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Business 2.0 www.business2.com Business 2.0 takes a look at business in the information age. A well-rounded and focused magazine for e-commerce entrepreneurs and investors. Business Week Online www.businessweek.com This informative and useful online version of Business Week magazine offers an investor service, global business advice, technology news, small business guides, career information, a retirement guide, daily news briefs and more. Computerworld E-Commerce www.computerworld.com/home/ecommerce.nsf /all/index Bi-weekly online companion to ComputerWorld covering e-commerce trends and developments. E Business Magazine http://hpcc920.external.hp.com Monthly magazine from Hewlett Packard covering electronic commerce, e-trends, and more. EC.com www.ecmedia.com Monthly publication written for technical and corporate managers that covers who technical issues and business strategies relating to the converging technologies of Electronic Commerce. E-Commerce Tax News www.ecommercetax.com Weekly newsletter covering taxation of electronic commerce.
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Electronic Commerce World www.ecomworld.com Monthly magazine covering electronic commerce implementation, financial EDI, electronic messaging, workflow automation and imaging. Forbes www.forbes.com This top-quality financial and business magazine maintains a fascinating web site. The toolbox contains calculators, a financial calendar, current economic information, Forbes lists and surveys. A mortgage center, a career center, a small business center and a mutual funds buyer's guide are available. Archives, Forbes global information, e-business information, technology news and company files can be accessed through this comprehensive site as well. Fortune www.fortune.com One of the world’s best business magazines, Fortune contains comprehensive information about all facets of U.S. and international business. IBM's Think Leadership Magazine www.ibm.com/thinkmag/index1.html Includes in-depth articles related to management, e-commerce and IT issues. Industry Standard www.thestandard.net The Industry Standard features industry news and information on commerce, media, politics and policy, technology and health. Its focus is on e-business. The web site is chock full of upto-the-minute information. The Standard also hosts numerous conferences, including The Internet Summit, iB2B, Net 21 Honors and iDeals. Internet World www.internetworld.com This magazine focuses on the business and technology segments of the Internet. Past issues have focused on such topics as Globalization, Web Host and ISP rankings, Metamodels and The Most Influential Internet Services and Products.
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Red Herring www.redherring.com Red Herring “covers the business of technology and all the business that technology touches.” The magazine looks at companies and industries, analyzing the impact of technology and its position as an asset to business. Upside www.upside.com This magazine examines industries that are involved with the Internet and technology, including media, telecommunications and entertainment. Each issue offers editorial comment, company profiles, market analysis and profiles of the people making things happen in the industry, as well as articles that look at the way technology is influencing our lives on a daily basis. VentureWire www.venturewire.com (online only, published by Technologic Partners) A daily electronic newsletter with the latest information on venture capital, mergers, acquisitions, startups and management changes in the e-commerce business. The Wall Street Journal Online www.wsj.com The outstanding resources of The Wall Street Journal are now available online for a nominal fee.
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A List Apart www.alistapart.com This publication is a weekly e-zine and daily digest for people who make web sites and covers everything from pixels to prose, coding to content. Automatic I.D. News www.autoidnews.com Bar codes, RF/DC and other automatic data capture technologies are the focus via product listings, case studies, trade show lists and more.
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Card Technology Magazine www.cardtech.faulknergray.com This magazine examines issues and developments in smart cards and other advanced card technologies in banking, transportation, government and university settings. Cascade News www.cascadestudios.com This publication features Web News, Web Books to order, a Chat Room, a Question of the Week, Resource Sites, Web Courses and more. Cascade w3 is a useful site for web designers, web graphic designers and HTML coders. Caught in the Net www.sos-connect.com/caught This site features previously published columns and current rants concerning the Internet. The CyberClub http://members.nbci.com/thecyberclub The CyberClub is a weekly newsletter containing reviews of sites, software, desktop themes, screen savers and fonts, helpful tips/tricks, breaking news and a Q & A section where readers can ask Internet/computerrelated questions. DWAHL www.vaxxine.com/dwahl/ This publication focuses on online security issues. ECMgt.com eZine www.ecmgt.com ECMgt.com is designed to keep the visitor up to speed with EC developments by highlighting e-commerce strategy, trends and news. E-Commerce Times www.ecommercetimes.com This magazine offers news, features and special reports. ENYC.Com - Silicon Alley's Definitive Resource www.enyc.com Here, readers can find out what's going on with Silicon Alley's small Internet businesses. MagNet Interactive www.magnet-i.com Computers, community and commerce are among topics discussed here. .net Magazine www.netmag.co.uk This webzine focuses on Internet issues pertaining to the United Kingdom.
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Net Market Makers www.netmarketmakers.com Net Market Makers covers developments, trends and issues for intermediate or vertical markets bringing together business to business transactions on the Internet. NetReview Email Newsletter www.netreview.findhere.com This newsletter features news covering the latest Internet and software developments. NetSlaves www.netslaves.com NetSlaves is an e-zine and listserv devoted to persons working in the Internet/computer industries. Personalization.com www.personalization.com This publication offers news, information and analysis on web personalization for online marketers and e-businesses. Sell It on the Web www.sellitontheweb.com Sell It on the Web is designed to help small businesses learn how to sell their products online. It includes shopping cart reviews, industry news and marketing tips. TopHosts.com http://webmaster.tophosts.com This useful webmaster resource offers tutorials on HTML, DHTML, CSS, JavaScript and more. Tri-State Computer Chronicle www.3aweb.com/tscc This publication provides answers to questions about the Internet for people in Iowa, Minnesota and South Dakota. VZINE The Cyberspace Portal www.vzine.com This publication is an EZINE portal for web beginners to webmasters covering all things Internet. Web Design, Graphics, HTML, Javascript Domains, Email, Hardware and Software are among the topics discussed here. Web Developer's Journal www.webdevelopersjournal.com This publication features news and reviews of the latest web tools and techniques, product reviews, tutorials and discussion groups. HTML, Java, CGI, E-commerce and Web Multimedia are among the topics covered here.
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WebReference Update Newsletter www.webreference.com/new/ This publication, updated weekly, highlights what's new on the web. Webmonkey www.hotwired.lycos.com/webmonkey/frontdoor This publication serves as a how-to guide for web developers. WindoWatch www.windowatch.com Here readers can find a full range of in-depth articles covering all flavors of Windows that are written by computer professionals. WWWiz Magazine www.wwwiz.com This publication features Internet and web news.
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Information Technology-Related
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Computers/Technology Careers Information •
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Foreign Internet Organizations •
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Argentine Chamber of Databases and Online Services www.cabase.org.ar This organization focuses on forming ethical codes in the Argentine online industry, in addition to serving other cohesive industry functions. In Spanish. CORDIS: The Community Research and Development Information Service www.cordis.lu Provides information about Research and Development sponsored and supported by the European Union. Hong Kong Internet Service Providers Association www.hkispa.org.hk HKISPA serves as a forum for consideration of issues or topics that may affect the development and deployment of the Internet in Hong Kong. Internet Association of Cyprus (IAC) www2.spidernet.net/web/~iacinfo/ This association strives to promote Internet use in Cyprus. Irish Internet Association (IIA) www.iia.ie The IIA site is a resource of information on events and happenings in the Internet world, as well as reviewed and catalogued links for topics to research.
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Aquent www.aquent.com 711 Boylston Street Boston, MA 02116 Toll-Free: 877-727-8637 Fax: 617-535-6001 Specializes in providing businesses with (Macintosh and Windows) computer experts, filling temporary and permanent positions around the world. BrassRing.com www.brassring.com 4701 Patrick Henry Drive, Suite 1701 Santa Clara, CA 95054 Toll Free: 888-999-6505 Phone: 408-970-8800 Fax: 408-970-4938 Career management and development, technology trends and future outlooks. Permits the posting of resumes. Dice.com www.dice.com P.O. Box 7070 Des Moines, IA 50309 Toll-Free: 877-386-3323 Phone: 515-280-1144 Fax: 515-280-1452 Provides free employment services for IT jobs. Includes advanced job searches by geographic location and category, availability announcements and resume postings, as well as profiles on employers and a recruiter’s page. Also provides career links. Heuristics Search www.heuristicssearch.com 160 West Santa Clara Street, 12th Floor San Jose, CA 95113 Toll Free: 888-943-8747 Phone: 408-925-9300 Fax: 408-918-0505 A specialty firm that establishes direct hiring and contract hiring relationships between software engineers and software engineering companies. Provides personal assistance to people seeking jobs in computer science and information technology.
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Information Week Online Careers www.informationweek.com/career3/ Provides career services, links and job listings, as well as salary surveys and other information. Institute for Electrical and Electronics Engineers Employment Service http://jobs.ieeeusa.org/jobs/services 1828 L Street NW, Suite 1202 Washington, DC 20036-5104 Phone: 202-785-0017 Fax: 202-785-0835 Job listings by geographic area, a resume bank and links to employment services are featured among other items of interest. MindSource Software Engineers, Inc. www.mindsrc.com 2685 Marine Way, Suite 1305 Mountain View, CA 94043 Phone: 650-254-8909 Fax: 650-254-8907 Specializes in recruiting technical talent in the field of UNIX Systems and Network Administration, Web Engineering, Quality Assurance and support for contract and fulltime staffing needs. Pencom Systems Inc. www.pencom.com 40 Fulton Street New York, NY 10038 Phone: 212-513-7777 Fax: 212-227-1854 Geared for software professionals, this open systems recruiting company offers an interactive salary survey, career advisor, job listings, technology resources. techcareers.com www.techcareers.com Job resource for technology professionals as well as a source of daily news and information on career management and trends in high technology. Technology Locator www.tlcsd.com 6480 Weathers Place, Suite 200 San Diego, CA 92121 Toll Free: 800-275-4852 Phone: 858-552-6800 Fax: 858-552-6820 Technology locator provides engineering and information technology consultants on a contract basis to companies throughout California.
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Telecom Insight, Ltd. www.telecominsight.com 9457 South University Boulevard, #352 Highlands Ranch, CO 80162 Phone: 303-470-6104 Fax: 303-470-6104 Job matching service of professionals with telecommunications and/or information technology experience with companies. TeleCom Resources www.telecomresources.com 1824 N.E. Division, Suite 1 Bend, OR 97708 Toll-Free: 800-800-6577 Phone: 541-388-6911 Fax: 541-388-1663 Search and placement services for the telecommunications industry.
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Engineering
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Electrical Engineering Industry Associations •
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ASEE Clearinghouse for Engineering Education www.asee.org 1818 N Street NW Washington, DC 20036 Phone: 202-331-3500 Fax: 202-265-8504 Includes databases of engineering associations and
