Transcript No Slide Title

Taking Advantage of
Internet Technologies for
Competitiveness
Derrik Khoo
President & CEO
GO2020.com
Sept 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
Ubiquitous
Connectivity
Status
•Many Portals
eServices
Information
Software
eAppliance
Internet
LANs
PCs
Towards Free Computing Power
•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), paperbased 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
350
327
300
USD bil
250
200
150
123
100
50
25
0.5
0.6
22
8
6
0
1996
1998
2000
Year
B2C
B2B
2002
… while “bricks-and-mortar”
issues languished
Comparative Returns: Borders Grp. vs Amazon.Com Inc
500%
BGP US
AMZN US
400%
300%
200%
100%
0%
-100%
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
For intermediaries, the net has
driven down transaction costs …
$1.20
1.07
$1.00
$0.80
0.54
$0.60
$0.40
0.27
$0.20
0.015
0.01
PC Banking
Internet
$0.00
Branch
Phone
ATM
… and made first-mover
advantage key
# of years to gain 25% SoM
Internet
7
Cellular phone
13
PC
15
Radio
22
26
TV
34
VCR
35
Telephone
44
Car
46
Electricity
54
Airplane
0
10
20
30
40
50
60
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 decisionmaking tools."
The competition is fierce
The 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
1,400
1,200
'000s
1,000
800
600
400
200
0
1997
1998
1999
2000
Year
2001
2002
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-andmaterials 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 …
$2,500
2267
$2,000
1592
$1,500
1186
$1,000
'
850
626
$500
467
$0
1998
1999
2000
IT Spending
2001
2003
Internet Devices
2003
Portals
• Search Engines
Entertainment Sites
– Yahoo
– AltaVista
– Skali
MP3
Sony Online
Shockwave
Disney
• Content Sites
–
–
–
–
–
–
MSNBC
CNN Interactive
AsiaOne
TheStar Online
NSTP Interactive
SinaNet
Finance Sites
eTrade
Schwab
WitCapital
Communities
Hotmail
Geocities
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.com
Book
Electronic
Music
Video
Toys & 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
Thank You
Derrik Khoo
[email protected]