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August 28, 1998


Gene DeRose has radical views on e-commerce

Email this story to a friend. Back to IIW coverage index. Gene DeRose, chairman and CEO, Jupiter Communications, is one of the most eminent pundits of the fast-forward digital world. When he does a prognosis, the best minds in the IT business sit up and take notice. Madhuri Velegar  K cornered him for a quick Q&A on e-commerce, the next big thing:

How would you define e-commerce?
I am very contrary in defining e-commerce. I think that e-commerce, seen as a broad word, defines anything on the Internet, any kind of business on the Internet.

I think we need to focus on more than that. We prefer to use a variation called digital commerce, which specifically refers to 'transactions' and transactions that are driven in terms of selling goods and services on the Net and not necessarily the advantage on the Net or access etc.

What do you think of some of the e-commerce security and protocols in existence? Are they reliable? Do they cover all issues of fraud, tracking, encryption and so on...
I'm not an expert on Internet security and standards but our research tells us that there are concerns that more and more users are making transactions without the touted standards of SET (secure electronic transactions) being in place and some of them we don't think will succeed at all.

There will be newer technologies developed over time to safeguard these issues.

When will these standards be determined and who will bring about the stability. Will the market decide or will a global authority prevail?
A combination of both. There's a certain level where a need for a commonly developed protocols is emerging - ways of getting things accomplished and the W3 Consortium helps put a lot of heat in place but that's different from the issue of driving standards that are involved in the marketplace.

This area has not been explored. It's imperative that in the marketplace standards become competitively driven, so yes, I think there will be a lot of both.

When do you think the standards will finally get set?
Never. For me this is both exciting and tragic. For Jupiter Communications, there is no end to the amount of development that will not happen.

There will be, if we settle a few things now, with more bandwidth and more users, country commerce moving in down the road, it's going to be something else.

When we settle on HTML as being totally anchored on computers, issue on other devices and other communication networks will take over.

I don't concern myself over it, as it will never be fully and finally finalised.

Can you do some visionary stuff and hazard a guess as to the evolution of e-commerce, some trends...
The most significant thing... I'll frame it in the context of the US but it's also an example of a framework that will be compatible to India, we believe there's a bunch of thresholds in any marketplace. And we believe that in the US, we've raced past 10 per cent penetration, which is our first and important threshold, which means our early critical mass and an aggressive deployment of commerce is appropriate.

It also means you are in a period where customer acquisition is the most important driver - getting customers, nailing your first transactions, moving business - it's a landgrab out there and we're in the middle of it all in the US.

What percentage of transactions is being done electronically?
Most of the transactions right now are in areas of utility: the things that people need and want. But going back to my presentation of where I mentioned the year of 'intended purchases' in areas of travel, buying books and transaction-driven areas like financial services and certain kinds of shopping.

Which are the primary areas that clients of Jupiter Communication look at?
They're equally divided between media companies, telecom and technology providers and increasingly they are commerce and marketing players.

How exactly do you research the psychographics of the consumer whose Internet behaviours you're tracking? What are the tools that you use?
We do surveys. Household based surveys outside of online audiences as well as surveys on the online audiences. We think we ask the right questions because we understand the business models and the audiences with the right amount of nuances to help people understand a pure demographic and psychographic profile of the consumer.

A few of your clients complain about the kind of prognosis you offer. For instance, your client, Microelectrons, has alleged that your kind of prognosis has either been very aggressive or has simply panned the market.
I think the evidence in question is pretty soured that we've been right. And we've been conservative here. The markets are growing in many places faster than most people expect them to grow.

There were also instances where we were too conservative. I think there's a lot of legacy of two years at least that isn't really appropriate in today's reality. There's been a lot of furore over our online advertising projections because they can't believe how we can possibly predict such a large market. But for the last two years we've been right about the numbers, but the people just didn't see them.

What is your prediction on the evolution of the Internet in India?
I keep it very simple. Telecom reform and infrastructure build-up. These are the only things that matter. Unless these happen, which will lead to scores of individuals having access at a low cost, there's not going to be market capitalisation.

Back to IIW coverage index. There's a huge potential and it looks very good but I think it should be looked at very realistically. And 5-10 years down the line, people must hammer and hammer away till you get access.

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