taking advantage of internet technologies for competitiveness derrik khoo president & ceo...
TRANSCRIPT
Taking Advantage of Internet Technologies for
CompetitivenessDerrik Khoo
President & CEO
GO2020.comSept 7, 1999
The Internet phenomenon• In Dec 1995, less than 10 million people worldwide were
using the Web• Three years later, the number has grown to 140 million
people• Due in part to the growth of the internet, the US IT
industry has accounted for a third of total GDP growth in the last three years
• More than 7 mil people work in IT jobs, which pay 66 per cent more than the private sector average
• Price declines in IT reduced overall inflation by a third, from 3.1% to 2% in 1997
Source: US Govt. Working Group on E-commerce, First Annual Report, Nov 1998
The Internet Revolution,Today
Towards Free Computing Power
UbiquitousConnectivity
PCs
LANs
Internet
Software
eAppliance
Information
eServices
Status
•Many Portals
•Abundance of ISP’s
•Mostly Small pipes
•PC based
The Internet Tomorrow
• Portals -> Larger, Portal Consolidation
• ISPs Abundant -> ASPs
• Small pipes -> Large Pipes
• PC Based -> eAppliances“The Internet will challenge any previous traditional business model
just like software and information technology in the last 10 years -- A revolution in music, video entertainment (VCD/DVD), paper-based news industry.”
The Internet Destroys…
• The Internet is an extension of the Local Area Network
• “A technology as dramatic as the Internet destroys any previous traditional economic model just like in the last 10 years software technology violated industrial asset based models”.
Far-reaching implications for the real economy …
Projected Internet commerce Revenue
0.5 6 822
0.625
123
327
0
50
100
150
200
250
300
350
1996 1998 2000 2002
Year
US
D b
il
B2C B2B
… while “bricks-and-mortar” issues languished
Comparative Returns: Borders Grp. vs Amazon.Com Inc
-100%
0%
100%
200%
300%
400%
500%
7/4/97 10/4/97 1/4/98 4/4/98 7/4/98 10/4/98 1/4/99 4/4/99 7/4/99
BGP US AMZN US
For intermediaries, the net has driven down transaction costs …
1.07
0.54
0.27
0.015 0.01$0.00
$0.20
$0.40
$0.60
$0.80
$1.00
$1.20
Branch Phone ATM PC Banking Internet
… and made first-mover advantage key# of years to gain 25% SoM
54
46
44
35
34
26
22
15
13
7
0 10 20 30 40 50 60
Airplane
Electricity
Car
Telephone
VCR
TV
Radio
PC
Cellular phone
Internet
Consumers benefit from lower costs …
December 18, 1997 11:48 AM PST
Reuters
SAN FRANCISCO, Calif. - Charles Schwab & Co. said it will extend its fast-growing online brokerage business to its entire customer base of 4.8 million active investors. The discount broker said that, beginning Jan. 15, it will offer all retail customers access to online investing with simplified pricing and will launch an entirely updated Web site with information such as investment ideas, research, guidance and decision-making tools."
The competition is fierceThe strategy aims to keep Schwab out of online price wars
while preserving its starting price of $29.95 a trade. Some online brokerages have dropped their fees as low as $8 a trade in recent weeks. Schwab's most prominent Internet trading rival is E+Trade Group, the Palo Alto, Calif.-based firm that some analysts rank as the market leader with some 250,000 account holders.
Fidelity Investments, the Boston-based mutual fund group, also has recently moved more aggressively in the market with prices starting at $14.95 a trade for active traders, roughly E+Trade's lowest price point for trading shares.
… and the volume of shares traded is projected to increase rapidly
Average on-line trades per day: US
0
200
400
600
800
1,000
1,200
1,400
1997 1998 1999 2000 2001 2002
Year
'00
0s
Internet companies offer different business models …
• Access -- Fee based• Content -- Advertising, subscription• Commerce -- Transactions based• Software -- License fees, maintenance fees,
consulting services, hosting and operational fees• Services -- Per click transaction fees, time-and-
materials fees, subscription fees
Malaysia will offer many growth opportunities …
• Internet commerce is at its infancy• Malaysian companies have begun to realize the
significance of e-commerce• Hard and soft infrastructure are being put in place• Government is facilitating
– MSC flagship applications– Payments gateway– E-commerce Committee
… with strong fundamentals for rapid growth …
467626
850
1186
1592
2267
$0
$500
$1,000
$1,500
$2,000
$2,500
1998 1999 2000 2001 2003 2003
IT Spending Internet Devices
'
Portals• Search Engines
– Yahoo
– AltaVista
– Skali
• Content Sites– MSNBC
– CNN Interactive
– AsiaOne
– TheStar Online
– NSTP Interactive
– SinaNet
Entertainment SitesMP3Sony OnlineShockwaveDisney
Finance SiteseTradeSchwabWitCapital
CommunitiesHotmailGeocities
Search Engines
Content Sites
Content – Chinese sites
Entertainment Sites
Finance sites
Communities
Vortals
• iTurf.com– Delias.com
– Droog.com
– Dotdotdash.com
• gURL.com
• Asia Travel Mart
Amazon.comBookElectronicMusicVideoToys & Games
Vortals
E-Commerce is big
• Two billion orders will be placed over the Internet this year, according to Forrester Research. Worldwide, e-commerce will generate US$95 billion in revenue by the end of the year, according to the latest figures from Activmedia. And global e-commerce revenue will top US$1.1 trillion by 2002, (up from US$15 billion in 1997), according to a recent estimate from Deloitte Consulting.
Online shopping changes everything
• Geographic barriers: Online stores can reach to every corner of the globe without building physical stores
• Time barriers: People can research and buy 24 hours a day
• Information barriers: Comparison shopping is a breeze, even for things that are tough to compare in the real world
More importantly…
• Switching barriers: No longer are customers locked in by the time and hassle of finding another supplier, the competition is just a click away. – As these barriers crumbled, consumers tested the
ecommerce waters with small-ticket items. Books. CDs. But they have quickly moved on. The Internet is rapidly becoming a favored way to buy big-ticket items. Or at least to research them.
Three major areas next…• Automobiles. 18.2 million people already shop for
cars and car parts online (but don't necessarily buy). This number far outdistances the 12.6 million people shopping for books. (Source: Nielsen/CommerceNet) And an estimated 65% of new vehicle shoppers will use the Internet to help them shop for a car by the end of 2000. (Source: J.D. Power and Associates)The advantage: people can replace high-pressure sales talk with facts and figures from reliable sources.
Online lending• Forrester Research reports 10% of all mortgages
will be done online by 2003. Further, one in six credit cards will be issued online within the next five years, with Net-sourced credit card lines approaching US$22 billion.The advantage: multivendor marketplaces aggregate rates from numerous credit providers, making it easier for consumers to compare quotes.
Travel• Online travel purchases are expected to reach
US$20 billion by 2001, marking a 700% increase over 1998's US$2.5 billion. (Source: PhoCus Wright) In 1999, 31% of consumers who went to an airline's site booked a reservation online -- up from 21% in 1998. (Source: NPD Online)The advantage: with airlines, hotels, intermediaries and travel agencies all vying for pieces of the online pie, consumers are better able to mix-and-match to create their own low-cost vacation packages.
Focus on survival
• It is already too late to launch a pretty-good version of a Web store. However, there are actions e-tailers can take now to improve the odds of surviving the coming shake-out. According to researchers at Intermarket Online, five conveniences Web shoppers now demand:
Fast navigation
Roughly 35% of online browsers who have yet to make a purchase complain about difficulties of getting around e-tail sites. Interestingly, so do 48% of those who have purchased something online.
Fast checkout
After investing all that time placing an order, you don't dare leave shoppers hanging in checkout purgatory. Or worse, wondering if their order went through.
Fast delivery
A quarter of all buyers complained about the amount of time it took to receive their orders
Fast exchanges
Potential hassle with a return deters 67% of those surveyed from buying online
Fast help
Online, and off.
The launch-and-fix approach to the Web worked as long as most sites were pretty bad. Now that a growing number of sites offer an experience on par with (or better than) their brick-and-mortar counterparts, you don't dare settle for pretty good. At least not for long.
Global Ordering with a clear vision“There has been a substantial disintermediation of wholesalers and retailers owing
to electronic commerce. Virtually all products are now available without going to
a store! The customer can access pictures of any product on the Internet, read the
specifications, shop among the online vendors for the best prices and terms, and
click order and payment over the Internet. Expensively printed catalogs have
disappeared.”
Marketing Guru Philip Kotler describing
marketing in the Year 2005 in his new book,
Kotler on Marketing
GO2020.com Vortals
The Virtual IT Market Auctions
