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November 14, 1995


By CBR Staff Writer

Despite the as-yet-unsolved problems of effecting financial transactions over the Internet, it is already a viable – indeed, an ideal – sales channel for software and other digital products, say industry executives charged with developing electronic sales. The Internet should, in fact, count for at least 10% of total sales at companies like Microsoft Corp and IBM Corp in the next few years, said Johan Liedgren, director of channel policies, emerging technologies, for Microsoft, and Randy Mysliviec, IBM Internet products manager. The two were part of an industry panel on Cyber-marketing and Sales: What’s Possible Today? at the recent EuroChannels ’95 conference in Paris. The software industry has been waiting forever for a tool like the Internet to sell software! Liedgren exclaimed. It was always hard to describe the new features of a software and why they were good; now you can try them out! It’s fantastic! William McKiernan, president and chief executive of Menlo Park, California-based CyberSource Corp, which was created to market and distribute digital content over the Internet, was obviously in agreement. The Internet is really ideally suited to delivering digital content. It enables software developers, for example, to release new versions more economically than they can with the current model. McKiernan is well acquainted with software’s suitability to the on-line channel. Launched last November, CyberSource’s first product,, has 8,700 software products that can be ordered on-line and physically shipped. About 120 of those, from companies like Claris Corp and Symantec Corp, are available for electronic fulfillment, he said. On, we’re getting 3,000 unique names per day, of which about 1% are transactions – 20% of total sales are electronically fulfilled, he said.

Picks up the package at the post office

Not all of that on-line business is done in the US, either. When we launched, the view was that we would probably not do a lot of business outside the US until we localised the net for different countries. But 35% of our business is being done outside the US, of which 25% comes from Europe – Germany, France, the UK – 8% from Japan and the rest from Australia and New Zealand, he said. Overseas sales, he added, are skewed toward physical delivery because our agreements with software distributors are for US support only, so we send the boxes to the user. In an interesting note on the supranational character of the Internet, McKiernan said he wasn’t sure, but believes the [overseas] customer pays when he picks up the package at the post office. Apparently Microsoft has yet to catch up to some of its competitors on electronic delivery. Liedgren says physical delivery will be the fulfillment mode of choice for Microsoft until we figure out how to market software electronically; that is, how to download it safely and get paid. McKiernan says insufficient bandwidth is an issue for his company, noting that the biggest application we have on the server is 12Mb. Liedgren believes, however, that the bandwidth issue will go away. The important thing is to figure out the business model to set up secure transactions. In the wider scheme of commercial activity, the Internet is still small potatoes. David Szetela, vice-president, international, for on-line newsletter publisher The Cobb Group, said an executive at Visa told him that some $20m worth of business passed through the Internet in 1994, which represents only about 20 minutes worth of Visa business. Said McKiernan, I frankly don’t see the Internet adding a lot of value to the sale of things like clothing or cars. That said, there are a lot of car manufacturers creating Web sites, and there will be lots of imaginative uses that we can’t even conceive today. It’s like hockey – you don’t skate to where the puck is, you skate to where it’s going to be. This will be an important channel, he concluded. Indeed, said IBM’s Mysliviec, A lot of companies are not clear what they want to use it for, but

they are certain they want to. – Marsha Johnston

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