Is anybody out there?
One day companies will have to relocate in cyberspace. Futuristic babble? That's what they said about the car
Sunday 10 March 1996
But they will not be the usual mix of students and tourists that flock to the cybercafes. They will be business people on their way to meetings with Hoskyns, the computer services company. The foyer of its Shaftesbury Avenue headquarters is being remodelled to incorporate the Cyberclub - customers will be encouraged to arrive early for appointments so they can spend time discovering just what the Internet is.
Peter Falconer, marketing director of Hoskyns, says the club has been set up as a result of a survey among senior managers in its customer companies. "It showed that 80 per cent of them had a very strong interest in the Internet, but few understood much about it," he says.
The Internet has suffered from more than its share of hype, and there has already been a backlash. A recent survey by Sony showed that business people were disappointed with the Internet and believed it had not lived up to expectations. Many people will have nodded wisely when they saw that - proof, they believed, that the Internet was just another fad that they could now safely forget.
They would be wrong. As wrong as the commentators who declared in the the early 1900s that the motor car would never replace the horse. As wrong as the Times in 1909, which said after Louis Bleriot's cross-Channel flight that the aeroplane could never be commercial.
"We are in the Dark Ages of the Internet," says Steve Smith, who runs the London media consultancy Antenna. "But there is a fundamental shift in distribution happening, and some industries are totally unprepared."
The Internet has the potential to replace or partly replace businesses that make their living as intermediaries between suppliers and consumers: shops, travel agents, publishers, estate agents, bank branches. It will be used to replace physical journeys - couriers, airlines, car manufacturers, public transport should watch out. It will replace offices - property companies and urban planners, please note.
It is not fanciful to compare the potential of the Internet with that of the motor car. "There has never been a communication tool like it," Mr Smith says. "It will probably lead to the biggest communications revolution ever." Mr Falconer says: "Any service that provides an agency service will be threatened. The ones that survive will be the ones that use the new technology themselves."
This is the year that business is starting to appreciate that; the year that the suit starts to push the anorak aside. "The Internet is becoming recognised as something to be taken seriously," says Mr Falconer. "I predict that this year we will see some dramatic announcements from organisations about how they are going to exploit it - that is when the real acceleration will take place."
What is this Internet, and how can it possibly be so important? If you have a computer at home, it is probably a stand-alone unit that you use for typing letters or playing games. If you have one at work, it will be connected to a network, which means you can send files or messages to your colleagues. But if your computer is hooked up to the Internet, you are connected to a network consisting of everyone with a similar link - 30 to 60 million people worldwide. Because the Internet is more like a language than an organisation, no one owns it so no one knows the real numbers, but the consultancy Durlacher Multimedia believes that more than 200 million people will be "wired" by 2002.
Its most obvious use is for sending messages, or e-mails. E-mail is not the best way of declaring undying love or of having a good gossip, but it is excellent for confirming a meeting or an order. It is also remarkably cheap - you rarely pay more than the cost of a brief local phone call, even if the message is going round the world. "I realised the power of this tool two years ago," Mr Smith says. "I was sitting with my laptop in a primitive village in India, using it to carry out deals in California and Europe."
But it is not e-mail that is creating the excitement: it is the World Wide Web. This is the part of the Internet that allows "pages" to be sent between computers - they appear in a boxed-off window on the computer screen called a browser. Usually a Web "site" will have a number of pages, each of which contains text, graphics, photographs, even video and sound. Think of it as a constantly updated multimedia noticeboard pinned up all over the world. Anyone with a computer, a telephone line, a modem and a pounds 10 to pounds 15 a month Internet account can look at the noticeboard for no extra cost.
The Web, which was invented in its current form in 1992, has about 100,000 sites and several million pages. Durlacher says it is doubling in size every three months. But most of these pages are of little interest to business - most have been created by students or interest groups covering everything from aardvarks to Zoroastrianism.
Research by Ketchum Worldwide, the US public relations company, last November found that 27 of the world's 50 biggest corporations had a Web site, although most were filled with the dullest information. Web sites are often built by the information technology department as an amusing exercise - the cost is minimal, but so is the commercial benefit. A second route is equally unfocused - what Guy Cranswick, of media group Poppe Tyson, calls the "CEO on the golf course syndrome - he can say: 'Heh, I've got a Web site.' "
The problem is that while it should be easy to make money out of a near- free way of communicating with millions of people, it is not. Only now are managers getting to grips with the complexities. Is the Web an advertising medium? A way to send out information? A "shop" for direct sales? The answer can be all these and more - but only if the company has worked out what it is trying to do. Mr Cranswick, whose organisation "builds" Web sites, says that he is finally seeing some strategic thinking. "In the past you would find a phalanx of IT people and a few cowering marketing people when you went into a meeting," he says. "This year the marketing people are asserting themselves."
Mr Falconer believes this is a necessary shift: "The IT people can take the technology so far, but the people who can make the money out of it are imaginative business entrepreneurs."
The clearest commercial use for the World Wide Web is as a retail outlet. Take the Innovations catalogue, now available on the Internet. You can browse through it on your computer screen, looking at full-colour pictures of the product, then fill in your credit card details. It will arrive by post just as though you had applied by post or phone. What is the advantage over the phone? There may be none now (we are in the Dark Ages, remember) but soon you will be able to see a video of the product in action, and perhaps a magazine review of it.
Sainsbury, Tesco, WH Smith and Virgin Records all offer an online sales service: volumes so far are tiny, but they will inevitably take off, both as more people log on to the Internet and as fears about security diminish. A year ago, only the foolhardy would commit their credit card number to the Net. Now it is safe enough, if you use one of the encryption systems available. But it will be a while before use increases.
How far online shopping takes off depends on a number of commercial and social factors. It is possible, however, to draw a picture of a world in which physical shopping is a leisure activity - mundane soap powders and cans of dog food will be delivered by the supermarket, which will have received its orders across the Internet. The supermarket itself will disappear, to be replaced by a vast warehouse on an industrial estate. Or maybe it won't - but the fact that this is already technically possible is concentrating the minds of retailers.
Financial services are moving rapidly Netwards. Both Midland Bank's First Direct and Barclays have announced plans for "home banking" by computer, giving impetus to a trend pioneered by the Bank of Scotland. You will be able to check your account and move money around, wherever you are in the world.
Other international companies are
discovering different reasons for building a Web site. Take Benetton which "opened" its Internet site last week. With 370 pages, it is one of the most elaborate commercial Internet launches there have yet been.
The site is, as you would expect from Benetton, a combination of the practical and the desire to shock. An elaborate "virtual gallery" has been created for viewing advertising campaigns. You can send an electronic postcard, featuring an advertisement, to anyone who has an Internet connection. The love-and-hate mail page is pure Benetton - it happily publishes one letter that ends graphically: "Fuck you."
The company is known for its unorthodox approach to marketing and, according to Marina Galanti, the head of international media relations who masterminded the site, the Internet fits perfectly. "We try to communicate with people, not to them," she says. "We want people to react to our ads, and the Internet falls in with this kind of anarchic communication."
But the practical value of the site is the one that will ring bells with more conventional companies. "We get hundreds of student requests for information," Ms Galanti says. Instead of receiving an expensive brochure, they will simply be directed to the Web site.
She hopes to use it to keep journalists informed, too. Press notices will be posted there, along with a mass of background information, financial data and photographs. "It makes a great deal of sense for Benetton," says Mr Smith, whose company created the site. "They have a dozen press officers who spend 75 per cent of their time answering requests for information."
It is the Internet's potential as a distributor of information that excites Mr Smith most. "Right now it's not a distribution tool, but it will be soon," he says. "That's the day we're planning for."
The World Wide Web is the cheapest publishing medium ever invented - people publish their own poems, stories and photographs on the Internet. The problem is getting anyone to look at them - one Web site among 100,000 is a very small needle in a haystack. That is why an Internet presence must be signposted elsewhere.
Companies such as Benetton publish their Web addresses on their print and television advertisements (all Web addresses start http://); others pay Web index pages to provide Internet users with a link direct to their site.
If the Internet can be used to send out brochures, why not other documents? Why not legal agreements, product details or film scripts? No reason at all, which is why courier companies and fax suppliers should be feeling nervous. Mr Smith suggests that one day the Net could even be used by music publishers to distribute the latest pop tracks.
Encryption systems can protect these documents from prying cyber eyes. But there is another technology, the "firewall", which can screen a complete section of the Internet from the public.
This leads to one of the business buzzwords of the year - the Intranet. An Intranet uses Internet technology at a company level. If it is operating within one building, it will not use the public network at all - but when it connects sites around the world, the data can travel on a private section of the Internet. As memos, phone numbers, company regulations, even house newspapers can all be carried on an Intranet, there are those who believe it will become a huge business in its own right.
Why are we still in the Dark Ages? Because the amount of information that can be sent on the Internet is limited by the capacity of the phone network, known as the bandwidth. An ordinary telephone line is adequate for text and can handle photographs, albeit slowly. But video and sound often cause indigestion.
Bandwidth is limiting the Internet's acceptance - "It's too slow," is the principal complaint of first-time users. But not for long. ISDN lines, which are up to eight times faster than an ordinary line, are becoming common in business, and in a few years' time many of us will have a fibreoptic link.
At this stage the Internet will merge with the other visions of the "information superhighway". Your computer will be a videophone, an interactive television, a fount of all the printed matter, photographs and films ever created. Teleworking will be a practicality for the masses; distance will have been abolished, and the knock-on effects for offices, city centres, the entire national infrastructure will be immense.
Governments should be worrying. Meanwhile, it makes sense for business people to pop into a cyberclub to see what the future is all about.
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