E-commerce value only just begun

According to Bill Gates, there is still a big question about how broad e-commerce is going to be in the future.

“Will it be just for big businesses? Just for start-ups? Or will it really become a way in which every business can participate?”

Gates, chairman and CEO of Microsoft Corp., spoke recently in San Francisco about the company’s electronic commerce strategies and the changing roles of businesses and consumers.

“Though the Internet is the ultimate marketplace, the place to get information, the place to compare prices, the place to find out what other experiences consumers have had …there are so many pieces that need to fall into place to make that come together.”

According to Gates, in this new world, the middleman must add value to survive.

“In some ways that’s great news, because you can reach out to more customers than ever before – but then so can your competition. And the transparency, the quality of what you’re offering and the prices you’re offering is so much greater here.”

One obstacle to e-commerce in the past has been that the bulk of businesses on-line are not large enough to build up their own applications and their own sites. But new products and technologies, especially XML, are going to help change that, Gates said.

“So what’s going to be the impact? Well, I think it’s quite wide-ranging. The whole way that information flows inside companies that sell will be very different than it is today . The way that’s done on paper, the speed of those systems, the way that that information goes back into suppliers, that will finally be a fully digital activity,” he said.

E-commerce will reshape business in a number of ways, Gates predicted, including a dramatic increase in the market for specialized products.

“A lot of products that today are in physical form will actually become digital products. And that makes the Internet particularly exciting because it can be not only the shopping vehicle, the Yellow Pages and the transaction closer, but also the delivery vehicle as well. A great example of that is what is taking place in music. The revolution in music is really starting. We can see that with the popularity of MP3.”

Making transactions between existing business partners easier is where most of e-commerce’s benefits lie today, Gates said. “And that’s a good thing. It gets rid of the paperwork. It lets coordination be a lot better. But that’s not the profound change. The profound change is when you’re matching buyers and sellers in a different way.”

Bob Herbold, executive vice-president and COO of Microsoft, who also spoke at the event, said literally every business and every organization should be able to benefit from e-commerce.

“Our goal is to enable e-commerce for over a million new businesses. We really think we have that kind of breadth in terms of products, capabilities and services.”

Every business, regardless of size, wants to operate more effectively, Herbold said.

“You will be able to get those links to suppliers far more automated, so you can put aside those fax machines and all the phone calls and recording devices. Oftentimes we overlook the obvious of what these capabilities can do for organizations.”