Updated 12-31-99 * Copyright 1999 by Andrew Homer.
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Report: E-biz worth $1.5 trillion by 2004 September 16, 1999
Report: E-biz worth $1.5 trillion by 2004 Goldman, Sachs & Co. paints a bullish picture of
the future of online business -- predicts Oracle and SAP will be big winners. ZDNet
News Investment banking firm Goldman, Sachs & Co. Thursday said it expects a five-year $1.5 trillion boom in
business-to-business e-commerce in industries ranging from
automobiles to medical equipment.
In a report on the sector, Goldman says that the retail sector, with sites like Yahoo! Inc. (NASDAQ:YHOO) and eBay
Inc. (NASDAQ:EBAY), has gotten most of the
attention, but the business-oriented side "is poised for equally explosive growth."
Goldman, which has been one of the most active bankers in bringing Internet companies
public, said it sees the $1.5 trillion total being reached by 2004, and it already estimates
that businesses generated $39 billion from e-commerce applications last year and $114
billion this year.
"Many companies have already been huge beneficiaries of online growth, mainly through
using the Internet as a new medium for product distribution and customer interaction," said
Goldman.
Within many companies, information technology managers, whose main concern in the past has been
automating corporate services, have increasingly become "vocal proponents" of spending on corporate Web
sites and online marketing. In the rush to build this
e-commerce infrastructure, the IT managers are looking to outside technology providers.
Small business will also be "an important driver of the B2B market," Goldman said, citing their growing
need to operate in an e-commerce environment.
Oracle, SAP to benefit Among companies mentioned in the report who may be poised to
benefit from the growth of business to business e-commerce are well known traditional
high-tech firms like Oracle Corp. (NASDAQ:ORCL), SAP AG (NYSE:SAP) and
newcomers like VerticalNet Inc. (NASDAQ:VERT), Ariba Inc. (NASDAQ:ARBA) and
Healtheon Corp. (NASDAQ:HLTH).
The report, written by a team of analysts led by Rakesh Sood, says companies that build
the e-commerce infrastructure will benefit from the growth of e-commerce, as will
companies that conduct business over the Web.
The prime industries targeted for the business-to-business growth are computer hardware and software;
aerospace/defense; electronics; chemicals; motor vehicles and parts and medical equipment and transport.
QuickBooks: E-service killer app? by Margaret Kane, October 20, 1999ZDNet News
Intuit Inc. sees its QuickBooks software program becoming more than just an application.
The QuickBooks Internet Gateway program will allow third parties to bypass the Web to offer and sell services directly
through the software itself.
"The problem with (selling services to) small business is that there's no good channel -- portals have been
a failure, because small businesses have no reason to go there," Intuit (NASDAQ:INTU) founder Scott Cook said.
"We're taking their message and bringing it into the software (small businesses are) already using."
The services include things like electronic stamps, credit card processing, direct mail packages and Internet backup.
They are integrated with the QuickBooks software, so that users are offered the services as they perform related
tasks.
Cook said that QuickBooks 2000, which will be released late this year, will use the integrated browser to pull
in any data needed off of the Internet.
$68.5 million in deals Intuit said it has already signed deals with ELetter Inc., E-Stamp Corp., First Sierra Financial
Inc., Intelisys Electronic Commerce LLC, Storage Technology Corp., Signio Inc., UpShot.com and Wells Fargo Merchant
Services. Those companies will pay Intuit at least $68.5 million over the next three years for the right to offer
their services to QuickBooks customers. The deals include placement fees and revenue sharing deals, Cook said.
And the there's no limit on the number of services that can be offered he said.
"A majority of our small business revenue (right now) doesn't come from software, it comes from add-on services.
This will only accelerate that by opening up for us a huge new source of recurring revenue and profits," Cook
said.
Given Intuit's hold on the small business financial market, the deals should be a no-brainer for most of these
companies, said Vernon Keenan, Internet analyst at Keenan Vision Inc., a San Francisco-based Internet market researcher.
E-commerce's 'Holy Grail' "In many respects a partnership with Intuit is the equivalent of finding the Holy
Grail in e-commerce," he said.
But the deal should be helpful to Intuit as well, and not just because of the new revenue stream.
Adding services will help create loyalty among users and tie them more tightly to Intuit's products. It will also
prepare Intuit for a future where software itself becomes more of a service offering.
"They could make QuickBooks a Web site today, but they have a multi-billion business based on selling software.
They're not going to turn that valve off in hopes that a service model will work," Keenan said. "This
is a good way for them to experiment with providing services from the Web by adding new services from a third party,
rather than replacing their shrink-wrap software with an online service."
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