PERSPECTIVES - The 10 commandments
The internet is quickly replacing the PC as the engine of growth for the IT market, according to IDC, the international researchers on market and technology trends.
According to a 1998 report, about 100 million people worldwide surf the Web on a regular basis and ISPs are set to become the focal point of the internet industry and IT in general, buying vast amounts of networking equipment and creating a frenzy of strategic mergers.
The balance of power will shift from hardware suppliers to pipeline - ISPs and telephone vendors. Hardware suppliers will engage in a head-on war in the low-cost PC/internet device business, while ISPs and telcos will expand their services and reap the benefits from the growing volume of users.
With these points in mind, how can the channel make money from the internet?
Here, PC Dealer lists 10 ways to get those tills ringing:
- Work with people who add value: most distributors still have a stack 'em high, sell 'em cheap product strategy. Few add any real value - especially when it comes to the internet. Those firms will become marginalised so you must find reliable partners for support.
- Sell bandwidth: not many re-sellers do this but should - it's a money-spinner and adds value. Constant demand means endless opportunities. Probe Research estimates the internet will account for 99 per cent of bandwidth use by 2004. On average, internet bandwidth requirements by corporates are doubling between every six and 12 months. Reselling bandwidth provides ongoing revenue stream.
- Sell security: it enables internet adoption and e-commerce. Nine out of 10 firms have experienced a significant security breach in the past two years, according to the Information Security Breaches survey. Compared with the cost of a single breach - at about £16,000 on average in 1996 - security is cheap.
- Sell applications: the internet is enabling a new breed of application service providers to deliver managed application services. Usually, these services address routine maintenance tasks such as network backup, anti-virus, inventory management and software distribution.
- Convergence: the internet is going to become the basic platform for all network traffic; voice, video and data. Resellers wanting to supply complete systems should get the capability by hooking up with voice/switch dealers.
- Information services: the buzz about knowledge management is based on the fact that information has the greatest true value. The internet provides information via intranet, internet and extranet. Portals in particular are an effective tool for disseminating information.
- Sell services: product margins have declined in recent years and the trend will probably continue. Resellers must now focus on strategic service sales. Many believe that there are too many resellers and not enough customers but there is still little competition among service resellers.
- Business benefits: virtual private networks (VPNs) and e-commerce systems are examples of systems that can provide measurable ROI. These are good areas to focus on for initial internet adoption - other services can be added later.
- Leading edge not bleeding edge: Net and e-commerce technology provide efficient, timely operations and reach new markets and customers. Amazon.com, perhaps the best known global internet business, has yet to make a profit, but in most cases a stepped approach is best, focusing firstly on IP infrastructure, then information publication and finally e-commerce.
- Look to untapped markets: a report from Zona predicts the electronic economy will grow to $204 billion in Web-based transactions by the year 2000, up from $10.4 billion in 1997. Clients will deal with existing customers but the lure of e-commerce is in the markets it opens up. E-commerce is a way of creating an ongoing revenue stream.