Internet Commerce

The bear can dance a little

For innovators and hackers, phase one of a technological breakthrough is the most fun. It's like watching a dancing bear. That the bear dances at all is a miracle, and no one asks how well. People are excited that something--anything--works. Early adopters throw money at it and spend little time asking about what they're buying. Fifteen years ago, personal computers were in phase one.

Phase two is where the work usually gets done--the innovators have to produce real results. Realists begin asking where the money is going, and the accountants want to know if the bear can dance the mambo and a cha-cha. That phase was the PC industry in 1990. MIS directors started asking ugly questions about price/performance, and prices started falling.

Phase three is full industry maturity. The bean counters wonder whether they're getting anything for all this money. The fun dries up. Hackers find another phase-one innovation to promote. The bear has to dance better than ever, for less money, before a larger and more critical audience. That's the PC industry today; you can buy a whole machine for less than what 2MB of RAM cost in 1984, but most of the fun of pioneering is gone.

Right now, the Internet is entering phase three, and Internet commerce is somewhere between phases one and two. A few Internet-based businesses have wrestled the available software into shape and are selling products worldwide to anyone with a browser, a credit card, and a pioneering spirit. But the online community still has to answer some big questions: Can retailers secure information on the net? How do retailers verify a customer's identity? How can retailers keep people from duplicating the software they download? Can retailers provide online commerce with Windows NT? How much of the online work should retailers do in-house and how much of it should they contract out? And, will the Internet support commerce?

Internet Commerce Expo
In September, I went to the Internet Commerce Expo (ICE) in Anaheim, California, with these questions in mind. ICE was for the small guy interested in doing business on the Internet--it didn't cover Internetworking and Internet communications.

But just Internet commerce is scary enough for a beginner, who has plenty of new concepts to assimilate. The companies involved don't always help you comprehend their ideas, and they seem to think they're household brands. This belief is a common malady during the early days of any technology. Attitude was the only answer I got to many of my questions. I nearly fell into a Mel Brooks routine and ran around asking, "What is it? A product? A service? An API? An initiative? What?" Each company has been developing its own product for so long that it can't tell you why you need it.

Another problem was the premature death of paper. Many companies had no printed information. They expect you to search their Web sites--and I do mean search. When I asked a Silicon Graphics (SGI) representative for more information about the company's Cosmo MediaBase video data-streaming product (viewable on NT soon), he wrote on a sticky note. When I asked him for a more detailed URL on a piece of paper I wouldn't lose, he seemed insulted. Please, if you're developing some Internet-related item, remember that paper doesn't crash and is never inaccessible. The Internet is a wonderful place to find all manner of product info, but it's a supplement, and not the only delivery method.

Electronic Commerce: The Internet Replaces Classic EDI
For the past five years, electronic commerce has meant electronic data interchange (EDI). Big companies use EDI to order products and settle bills over private networks.

Some companies have started taking baby steps into using EDI standards over the Internet. But private-net EDI has several advantages over Internet commerce: Private-net EDI is secure, it exists now, and it's not subject to Internet congestion or failure. Of course, such an independent network requires separate maintenance and works only with companies that are already connected. End users do not have access to EDI because it occurs company to company. Commerce on the Web may not be as refined as EDI, but Internet-centric business solutions are coming.

Every emerging technology needs standards, and much of the Web's success comes from the Hypertext Transfer Protocol (HTTP). Most secure Web communications standardize around Secure HTTP (SHTTP) to transfer information from a Web server to a user. In turn, many commerce solutions, such as Terisa Systems's Secure Electronic Transaction (SET) protocol, are built on SHTTP. Visa and MasterCard have both adopted SET for transferring credit card information from browser to server, through a SET browser plugin.

For the browser plugin to work, it must connect to a secure server. O'Reilly & Associates took the opportunity at ICE to announce that the next version of WebSite Professional, the company's Web server software for NT and Windows 95, will support Terisa's SecureWeb Documents service (which also uses SHTTP). This service lets you securely transfer any document, not just credit card numbers, over the Web.

One vendor at ICE in platoon strength was Netscape. Perhaps the company made such a show of force because it has decided that Microsoft's number one priority is to kill Netscape (by the way, Microsoft didn't show up at ICE).

Netscape has announced three major initiatives in the past few months: Open Network Environment (ONE), a framework to connect server components, including third-party parts; ONE server, Netscape's Web server suite of components that directly competes with Microsoft's Normandy; and Navio, Netscape's embedded Web initiative to put Web browser technology into everything from microwaves to TVs.

At ICE, Netscape built on ONE by announcing AppFoundry, which highlights and promotes Internet-oriented applications you can buy from big-name companies instead of building them yourself. Not coincidentally, these apps all run on Netscape's products. AppFoundry makes in-house developments such as travel and expense reporting, decision support, training enrollment, and inventory management applications available as real-life Internet products. AppFoundry support includes official online discussion groups, which were lacking from Netscape in the past. Most AppFoundry products are cross-platform, so you can use them on NT, provided you use Netscape's server.

Considering the comparatively modest size of the trade show, NT had a surprisingly good presence at ICE, even without Microsoft. Most UNIX-oriented companies and Macromedia, best known for its Mac software, are rapidly porting their products to NT. One company, Speedware, was demonstrating its Autobahn Web-application development product, which began as an application generator on HP 3000s. Autobahn is a multithousand dollar investment for ambitious Web sites that include heavy database access and decision-making logic. Autobahn's 15-year pedigree really stands out when most companies are just now bringing new products to market. Speedware showcased a customer's (PC Parts Express) Web sites in the ICE Solutions Expo. You could browse the entire PC Parts catalog online--at least, until I crashed it.

Is Internet Commerce Right for You?
Can you, as a small-business owner, host a worthwhile Internet commerce site with NT Server? The answer is yes, but you probably don't want to. Hosting an online store that relies on large databases is a lot different from hosting a static Web site. You need a significant investment in an Internet connection, a good Web server, a fulfillment plan (to sell hard goods, you need to send them out), development tools and talent, a firewall to keep unauthorized users off your site, and a Web-based application to accept orders. Oh, and most important, you need (expensive) people to maintain everything in case a user crashes your system.

Many small-business owners are turning to service bureaus as an alternative to building an online store from the ground up. Several companies offer to do everything, from design through hosting, for you. Two accomplished service bureaus are VeriFone and Commerce Direct. VeriFone sells the ZON swipe credit card verification terminals you see in stores, and the company has recently branched out to Internet commerce. Commerce Direct does everything from providing technology for do-it-yourselfers to hosting entire sales sites. In the latter case, you put a link on your Web page to Commerce Direct's server, and the company handles everything from there, including product fulfillment and billing. The customers bounce back to your site when they finish--most people won't even know they left.

Selling Electrons
Electronic product fulfillment is heating up. Many companies already sell software over the Internet without exchanging anything larger than electrons. But what's to stop someone from downloading an application and sending it to a friend without paying anything more? Possible solutions include encrypting the code, copy-protection, and embedding User IDs in programs.

One company displaying its online cryptographic solution at ICE slipped a reprint of a Forbes article on the subject into its press packet. I wondered whether the company appreciated the irony of giving away an illegal Xerox about copyright protection--and the demonstration of why honesty may be the only real copyright protection.

The Tip of the ICEberg?
So why bother doing business over the Internet? Why is Microsoft so concerned over Netscape's success? And why are both companies competing so vigorously to get their browsers into your hands? The Internet is a pathway for many business-related functions, and the Web browser is the user's ride into that world.

A good example of the Web's potential is office control. Many color printers--such as the Tektronix Phaser--have Web-based controls. Mac, UNIX, and NT users don't have to wait for a printer-control app to move from Win95; all the intelligence is in the printer manufacturer's Web server. Suddenly, the Web browser is more than just a way to look at online pages, it's a business tool. And that browser can run applications--I've seen usable word processor and paint programs written only in Java that run quite well on Netscape 3.0. This potential for business opportunity is why Microsoft wants to kill Netscape: If all this opportunity is available to anyone with a browser, operating systems will become obsolete.

So Far We've Come, So Far to Go
ICE wasn't well attended, and Internet commerce won't be closing any shopping malls this decade. Right now the bear's dance steps are limited. I uncovered more questions than answers about what the electronic future of business will look like. Trusting the Internet for commerce is hard in a world where a New York Internet Service Provider (ISP) can't get traffic out to the Web because some vandal floods the router with bogus packets.

Users know they need the Internet, so it will become a success for selling, just as it has for finding information. Yet, how far we have to go. After ICE, I tried to help a client use his America Online (AOL) connection to run an online video of a prospective employee. After an hour of downloading Netscape and the appropriate video player plugin, I discovered that AOL's Winsock is 16-bit and the VDOLive player needs the 32-bit version. All this for a 10-second video clip.

This example is just one reminder of how far the Internet has to go. If viewing an online video, even at two frames per second, is this hard, significant buying through the Internet is a long way off. Of course, nobody would have guessed a few years ago that Microsoft would be poised to do away with the differences between an operating system and a Web browser.

The only constant on the Internet is change. Four years ago no one had heard of the World Wide Web. Now, if you sell anything, you'd better get your feet wet with the basics of Internet commerce, before it goes into phase three.

Next Month
Next time, I promise to get to part two of using free software to communicate within your company--unless something bigger comes up. (For now, check out's site for a preview of Post.Office, the company's TCP/IP mail server that runs on all NT platforms, with a free 10-user license.)

I look forward to receiving your comments and suggestions. What's the most difficult or irritating roadblock you've hit while switching to NT? What features and capabilities would you like to see Microsoft put in future versions of NT? Thank you for your assistance.

Contact Info
Commerce Direct * 206-313-3143
Email: [email protected]

Internet Commerce Expo (ICE)

Macromedia * 415-252-2000

Netscape * 415-937-3777

O'Reilly & Associates * 707-829-0515
Web: * 805-882-2470

Speedware * 416-408-2880

Terisa Systems * 415-919-1750

VeriFone * 415-591-6500
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