The month in e-business - May 2000

This month in e-business, May 2000.

News

Lastminute.com feeling the pressure

Lastminute.com found itself under pressure after poor trading figures. It saw second-quarter growth in subscribers, transaction value and gross profit on its sales, but still made an overall pre-tax loss of £11m. It is not expected to go into profit for at least another two years.

Saving millions through e-enabling

The world's fourth largest chemicals distributor, Ellis & Everard, is to close around half its warehouses after launching an online chemicals buying system last autumn. The move will save around £4m over two years, as well as annual savings of £3m each year after that. Nine warehouses will close with the loss of 60 jobs as a result

IBM joins race to equip e-marketplaces

IBM has set out to displace rivals such as Oracle and Commerce One in the growing business of providing software to create e-marketplaces. Late into a sector dominated by Oracle and Commerce One, and latterly joined by Ariba, i2 and Biomni, IBM claims its differentiator is the ability to create marketplaces in 90 days - half the time currently predicted to develop new e-marketplaces. More than 10,000 business exchanges or marketplaces are predicted to be operating by 2002, with over $400bn in annual transactions. However, a shakeout of marketplaces is expected in around 12-18 months, and despite IBM's claims, getting business operations ready for e-marketplaces in three months is a severe challenge.

Banks unveil e-banking strategies

Abbey National has launched its Net-based electronic banking service, with the goal of attaining one million customers within a year, and 5 million within four years. The service will be aimed at Abbey's current 15 million customers, and will complement the launch of a standalone Net bank called Cahoot. Potential targets for the service are Abbey's 11 million-strong savings customers who hold their main account at another bank. Abbey's rival Lloyds has unveiled a new e-business strategy which will see it launch a new pure Internet bank, Evolvebank.com, as well as a dedicated operation to provide advice for small businesses' customers, dubbed Success4business.

France establishes Internet university

The French government has begun a series of technology-based announcements in a bid to claim Western European Internet mindset leadership in competition with the UK, Germany and Ireland. French prime minister Lionel Jospin announced the creation of a Grand Ecole - similar to a university or technology college in the UK - of the Internet.

General Electric revamps Web sites

US industrial giant General Electric has undergone a wholesale revamp of its Web site GE.com to increase online transactions, and better link its disparate businesses. The 108-year-old company's Web site revamp effectively creates a portal for GE's 20 major businesses. GE makes and sells everything from power generators, lighting fixtures, and medical X-ray machines to small business loans, credit cards, kitchen appliances and industrial plastics.

Halifax seeks to patent its banking software

The Halifax bank has applied to patent its design of its account software used for its Internet bank. The bank claims the products of its Intelligent Finance subsidiary rival the development of credit cards in the 1960s, and wants to protect its intellectual property. The move to protect Internet-based processes has already been pioneered by online merchant Amazon, to widespread industry disapproval. The move is almost certainly intended to keep Halifax's rivals on the back foot in designing their own Net-based products.

Netherlands to lead the e-business field

A study by the Economist Intelligence Unit predicts the Netherlands will be the best environment in the world to conduct business over the next 5 years - with the UK second. The survey, which ranked 60 countries, relegated Hong Kong, the current leader over the last five years, down to sixth following question marks over its relationship with China. The survey, though it does not focus specifically on e-business, ranks performance in terms of issues such as the business environment, political stability, labour market, and the financial sectors. It placed the US 3rd, Canada 4th, and Singapore 5th. With the ongoing debate over the impact of the Regulation of Investigatory powers (RIP) Bill, the survey proves that the UK has a lot to lose if business feels it does not offer the best environment to operate e-commerce.

3G auction raises £22bn and a court threat

The UK government raised a £22bn windfall from the sale of five licences for third generation mobile phone services, then found itself threatened with court action. One2One said it wanted a judicial review after it emerged that Vodafone and Orange, which each won a licence alongside BT, could pay for their licences later than the other bidders, saving themselves around £300m in interest charges. One2One claims Vodafone and Orange will save around £2m a day in interest payments because they are allowed to put off paying for their licences until Orange completes its demerger from Vodafone. The demerger was necessary following Vodafone's acquisition of Mannesmann. The spiralling costs of the auction - which is now being seen as a model by other European governments - demonstrates the lengths mobile operators will go to put themselves in a prime position to offer mobile Net services.

Music giants win key battles in MP3 war

Net music companies have lost key battles in the courts against the record industry. MP3.com lost a New York case against five companies - Seagram, Time Warner, Sony, Bertelsmann and EMI after the judge ruled that MP3.com had infringed on the copyrights of the record companies with its My.MP3.com service. The service acts as a "virtual locker" allowing people to listen to their music from any device connected to the Web. Although other Web sites require consumers to upload music from their CDs first, MP3.com puts music from about 80,000 CDs onto its database. The record companies complained that MP3.com didn't obtain a licence before it launched. In a similar case with implications for digital music, a Californian judge ruled against Net-based "song-swap" company Napster. The company had claimed immunity under a new US law, the Digital Millennium Copyright Act that allows Internet service providers to escape penalties for copyright abuse. The two court cases show that "old" industries such as the music industry are prepared to fight their copyright corner against Net-based services.

 

New proposals to safeguard privacy

The Worldwide Web Consortium has updated a proposal to safeguard privacy on the Web.

The group, which tries to get buy-in to uniform Web standards, has updated its Platform for Privacy Preferences Project (P3P) to enable online users to receive a snapshot of a site's privacy policy before they send any data to the site. The new draft is expected to speed data exchanges between consumers' client machines and Web servers. However, the project has already been described as lacking teeth. A P3P Interoperability event is due to be held in New York on June 21st to discuss the proposed standard.

Cranfield survey shows e-business seen as an "add-on"

A survey by the Cranfield School of Management suggests that although a majority of directors believe that up to 40% of revenues will be generated by e-commerce within six years, 64% of businesses still have no e-commerce sales channel.The survey also suggests that although consumer-buying patterns are changing, executives see e-commerce only as another add-on channel to market. Many report they are spending less time with customers than six months ago. Cranfield said it did not see how the benefits of e-commerce could be implemented if CEOs and senior executives did not lead it.

Exchanges announced for aircraft parts, wine and construction

A whole string of new Net exchanges have been announced as companies rush to be seen to have an e-business strategy. British Airways and a string of other airlines set up a marketplace for airline parts and products, five UK construction companies launched the Mercadium e-commerce site for the building industry to order materials, and the Uvine exchange was set up for the world's wine industry. Both exchanges are examples of a rush towards marketplaces as part of a reshaping of supply chains. Many of the announced exchanges have promised to be up and running in a matter of months, and few have so far achieved it, as companies rethink what they will actually gain from the marketplace, and the extent of their role in it.

E-business strategy group launched

The European Forum for Electronic Business (EEMA) has launched a new group especially for e-commerce and e-business strategists. The European Business Strategy Group will be a non-technical forum for companies to exchange ideas and developing the strategic skills necessary to operate successfully within the rapidly changing business environment. Companies involved include the Post Office, BT, Scottish Equitable, and Clerical Medical.The group will have its next meeting on the second day of the EEMA annual conference, Electronic Business Europe 2000, supported by E-Business Review, from 21-23rd June at Church House Conference Centre, Westminster. For more information on the group visit the EEMA web site.

Boo.com

Boo.com, one of Europe's highest-profile Internet retailers, has been forced into liquidation after spending all but $0.5m of the $135m in funding it raised last year. The fashion e-tailer had been seeking an extra $30m injection to implement a restructuring plan, but investors had been unwilling to stump up the cash. The company had already cut around 25% of its original 400 strong workforce, and slashed prices by up to 40%.

 

UK still poor relation on net use

UK Web surfers still have a distance to catch up with their US cousins. Internet audience measurement group Nielsen/

NetRatings has just produced its first set of data for the UK market. When compared to the US, Internet users still spend a lot more time online, and look at more individual Web pages Whether this will change as Internet call charges fall in the UK remains to be seen.

 

Average UK Interent Usage

 

March 2000 UK US
Number of sessions per month 12 19
Number of unique sites visited 18 10
Time spent per site 18:00 n/a
Page views per month 414 670
Page views per surfing session 35 35
Time spent per month 5:17:29 9:42:57
Time spent during surfing session 27:07 30:42
Duration of a page viewed 00:46 00:53
Average click rate for top banners 0.71 n/a
Total internet audience sample 5,366 43,199
Active internet universe 7,612,483 81,637,799
Current internet universe estimate 16,963,697 129,661,799

Source: Nielsen/net ratings

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