Daniel Amor
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DANIEL AMOR, Hewlett-Packard Company, E-Solution Division

Author of The E-Business (R)Evolution (HP Press, 1999), Dynamic Commerce (Galileo Press, 2000) and Internet Future Strategies (Prentice Hall, 2001).

Just like during the Gold Rush in the 19th century, the Internet has attracted many people who believe they can make money for nothing. While people in the 19th century died in the cold, today's adventurers only lose their money. The Internet has revolutionized the way we work but not how business is run. The next generation of e-business will keep the way we work but change the business completely.

Today's Information Revolution seems to be something very exciting and new, but even the hype that accompanies it is actually a very regular feature that has occurred over and over again in the past. The pattern is always very similar when a new technology is introduced.

If we compare the Information Revolution today with the Industrial Revolution of the early 1820s, we find some very interesting similarities. Although the first steam engine had already been in operation since 1776, it wasn’t until the 1820’s that steam engines were used in an industrial environment. At that time, the output of these industrial operations was cotton; today it is information. In both cases, the products have matured to become a commodity. While cotton has been a commodity since the 1820s, information is about to become such a commodity as well.

The steam engine was to the Industrial Revolution what the computer has been to the Information Revolution, merely its trigger, not the change that it provoked in society. At the beginning, only very few people knew how to use the technology. The technology itself was not ready. Do you know how many steam engines exploded in the beginning? How many people died while digging for gold and oil? How many companies went bankrupt during these times because they could not keep up with the peoples’ expectations? Probably not. Most people will not even remember the hype surrounding the introduction of the personal computer in the early 1980s. But does it really matter? What really matters is the fact that we still use these technologies. They have all become commodities, even though few people know what James Watt achieved, for example.

Few will remember today's start-ups, just as few people remember all the gold diggers in Klondike and few recall the railway companies in the 19th century. But all these technologies from the past are still in use. They have become commodities. And if you look at the economic value during the first years into a new technology, the value has largely been overestimated. The real money can only be made after industrialization of the technology has begun. Only then is the market big enough to accommodate low prices and high quality.

Water and electricity are two good examples of standard commodities. Few people care where the water comes from or how the electricity has been produced. By industrializing a new technology it becomes accessible to anyone, making everyone a potential customer. In order to make this happen, a major shift in paradigm needs to take place on the Internet over the next few years.

A first step towards commoditization of the Internet has already taken place. No matter which ISP one uses today, it is possible to access the Internet in the same way. Internet access has become genuinely transparent. In the past, companies like AOL used proprietary software to provide access to their own network and from thereon access to the Internet. Through the use of standard technologies, it is possible to switch providers without losing functionality or the requirement for additional software components.

This basically meant the industrialization of the Internet access industry. As a result, the market has consolidated over the past few years and only very few global players can be considered competitive. There is always a market for niche players as well, but the market is less fragmented than it used to be a few years ago, when every ISP provided a different set of services.

Through the industrialization of Internet access services the margins are lower, but due to the larger market that is accessible now, companies are able to grow at a steadier rate. The early years can be considered as explosive growth, but with less reliable forecasts. For many services on the Internet we have just passed the explosive growth area that was fuelled by the investors’ hype. We are now in the consolidation phase where many businesses and standards are being newly defined and where nobody really knows what the next killer hype technology could be. While some companies are trying to jump onto the next bandwagon, many will try to stabilize their business through the adoption of standards in technology and processes. Once this phase has been completed, we will see a commodity layer of services on the Internet.

Although explosive growth seems to me more interesting, you should take the base figures into account. While companies like Yahoo and eBay have rocketed from zero to a billion dollar business, they often lack the ability to provide a profitable business. Many Internet companies have just burnt cash along the way. While the companies grow exponentially, the investors hope that at some point they will make a profit.

In a slowly growing market, you have to be profitable right from the beginning, otherwise investors and shareholders will not believe in your company. E-Business is becoming a mature business model and companies that have survived the shakeout will have to learn to move into a more stable business environment where growth, not profitability, is key.

The move towards a commoditization of Internet Services or E-Services will change the way companies work in the near future. Instead of building up their own infrastructure to accommodate all sorts of services, in the future they will be able to choose easily from an E-Service. Instead of building an HR service or a travel system, companies will be able to buy these services and plug them into their B2E portals, for example. Although this is already possible today, it involves integration and compatibility issues. In the future there will be a standard for HR services and travel systems, making it easy to plug in a new E-Service, just like pushing a plug into a socket.

The major advantage of this approach is that complexity is considerably reduced. Companies can focus on their core competencies and expect these additional services that are required to come from reliable third-party sources without having to worry about integration. E-Services will be one of the major growth areas on the Internet over the next few years. In the end, it will turn around more money than all current e-business services can do taken together.

This new generation of e-services will generate a new hype over the next few years, and we will see another shakeout afterwards. One strategy would be to wait until after the shakeout, but my suggestion would be to get into e-services now with moderate investments and let the others be pioneers in business models and technologies. With the investments one can ensure that your company will at least be informed about the latest developments and can move towards e-services once they have proliferated. After that, your company can move more easily into this generation of Internet technologies. In recent years, many companies have been caught in the cold with regard to the Internet.

With some forecasting about future commodity technologies, companies can make a lot of money, save a lot of costs and become more successful in what they are doing. The time to commoditize a product is still a task that takes several decades. We will see this process speed up in the future, but it is unlikely to see commodities to come out of labs and be in use within a few months or years. Therefore it is important to understand that the Internet will need some time to become a commodity.


Daniel Amor studied computer science and romance languages at the University of Tübingen, Germany and Pisa, Italy. In 1990 he started to make first moves on the Internet. Since then he has set up many websites, both for private use and for businesses. Daniel Amor works since 1997 for Hewlett-Packard’s E-Solution Division in Europe, which has large enterprise customers and Internet startups in Europe and the Middle East. Daniel has been working in large EBusiness projects for Retail, Finance and Manufacturing providing localized websites that require multiple languages, currencies, countries and processes. Daniel has been writing articles for computer magazines and newspapers and has published three books: The E-Business (R)Evolution (1999), Dynamic Commerce (2000) and Internet Future Strategies (2001). All books have been translated into multiple languages. The topic of this essay is based on the book “Internet Future Strategies”. See Daniel Amor’s websites at: