Around the world, companies are pouring billions into gearing up for the Information Superhighway. But - electronic mail aside - what promise does it hold out to business? In particular, how soon is it likely to become a channel for promotion and distribution of goods?
US pundit Howard Rheingold, author of Virtual Reality and The Virtual Community, counters any suggestion that commercial exploitation of the Internet belongs to the future. 'It isn't the future - it's now,' he insists. Gerald Hogan, chief executive of America's biggest cable TV shopping channel, Home Shopping Network, evidently agrees. That's why Hogan acquired a Californian start-up company, the Internet Shopping Network, which offers an 'electronic mall'; and why he's planning 'a large-scale push into the digital environment'. But so far, it seems, on-line browsers and novelty seekers vastly outnumber actual purchasers on the Internet Shopping Network and similar ventures. Moreover it's noticeable that while IBM, for example, has included Internet addresses in some of its advertisements, the corporation is using the network as a means of disseminating information rather than for selling computers.
In theory, the Internet might be better adapted to selling services and other intangibles, rather than physical goods, since in many cases electronics can also handle their delivery. So should we look to service industries for the big breakthrough in electronic commerce? Not according to Roger Foster, chairman of the Birmingham-based ACT Group, one of the biggest suppliers of banking software. Despite its global reach, the Internet 'has a long way to travel before it's likely to be regarded as a safe vehicle for international banking transactions,' he concludes. Indeed, 'too many issues with security' is the fundamental difficulty affecting every kind of transaction, as Cheryl Currid of US analysts Currid & Co points out. Typed-in credit card details are altogether too hackable. The system desperately needs some form of electronic money.
There seems little doubt that the hurdle will be overcome. With 35 million people now hooked up to the Internet, the potential is so great that human ingenuity must prevail in the end. 'The barriers [to using the Internet as a delivery mechanism for home banking] are not technology - that's already there,' says Joseph De Feo, director of operations and technology at Barclays Bank. The barriers are consumer psychology and security issues. 'New competitors may well have a role to play in pushing us to solve these problems,' De Feo believes. 'New entrants can go faster than banks.'
Prominent among the new entrants is Microsoft, whose chairman Bill Gates is a well-known enthusiast for the Superhighway. The company's recent $1.5 billion takeover of the personal-finance-software company Intuit - and the associated tie-up with Visa International to develop a form of encrypted electronic money - has set industry watchers speculating about how far the software giant might dip a toe into the world of banking. If this is Gates' intention, the company will have to do better than of late, when its products have been variously afflicted by delays, law suits, mysterious errors and simple consumer hostility. Unless, of course, Microsoft reckons that's precisely what it takes to make the grade in high street banking.
For a slightly different perspective on the perils of driving the Superhighway, see Heller on Management, page 29.