The Bloor Perspective: E-marketplaces made simple, optical internet deal in the offing, and internet access uneven

In recent weeks, suppliers have been up in arms about the proliferation of e-marketplaces and the difficulty of building links to them all. Now IBM and Ariba claim they have the technology to solve the problem.

Business-to-business (B2B) transactions are seen as the high value part of ecommerce. The action started with bilateral transaction, involving direct contact between buyer and seller. Often the larger party determines the strategy by creating an internet-based forum either for buying or selling. So Intel has been successful in moving many of its sales to its internet operation, while IBM has been just as busy persuading its suppliers to work through a web site.

But handling all transactions in this way is fraught with difficulties, especially in a world where robust standards are hard to come by. The obvious solution has been the e-marketplace, the internet centre that pools information from sellers and presents it to buyers. Both sides can build systems that interface to the marketplace, which provides a buffer zone, simplifying the standards issue and limiting the dependencies.

So marketplaces have been springing up on a daily basis. So much so, suppliers have been alarmed at the number of interfaces they would have to build to participate. This interface looked likely to put a brake on progress towards electronic procurement.

For some time, purchasing software maker Ariba has been working with IBM to develop the sector. Now the companies believe they can offer a solution to the suppliers' problem. Targeted particularly at mid-sized companies, IBM will offer a product suite - including Cisco hardware - to support the development of a web site that connects to marketplaces in the Ariba network.

This looks a useful offering, but it is by no means a universal solution. Suppliers will probably go on complaining. We still need more consolidation and more robust, open standards. XML provides a sound basis for standards, but specific details on the way it is used still need to be hammered out.

*Nortel and Corning*

Sherlock Holmes famously solved one case by pointing to the dog that didn't bark. We might ask why the internet and the telephone system haven't collapsed under the growing load.

Nortel and Corning know the answer lies in the deployment of high performance optical backbones. Now it looks as though some financial engineering is in the works to alter the positioning of the two companies.

Neither company has confirmed rumours of an impending deal involving the sale of Nortel's optical components business to Corning, although the stories claim to be based on a source close to the negotiations.

There is logic to the deal. Corning has transformed itself from a sleepy manufacturer of ovenproof glassware into a leading player in the high-tech optical components business. Nortel is currently perhaps the most aggressive of the equipment suppliers for the telecommunications industry, and has built a substantial optical components division.

At present the makers of optical systems can't build them fast enough to meet demand from the carriers. Business is booming. But there are other companies in the components area, notably JDS Uniphase.

Nortel's component business is of roughly similar size to Corning's and its growth has naturally been underpinned by Nortel's success in the market. Nortel wants to hang on to what would probably be a majority investment in the enlarged Corning.

For Corning, the mooted deal would increase its range of products and its size, thus improving its market position. It would sell components to Nortel as well as to the raft of venture capital funded new specialists in optical systems. Nortel would focus on building integrated optical-network systems.

It is quite possible that exposing the fast growing Nortel components business directly to investors would boost the stock market value of Nortel, in the same way that Dixons has gained from the flotation of Freeserve.

While refusing to comment on any possible deal, Nortel has announced nearly $2bn of investment in the optical components business. That will be a factor in the negotiations, along with the potential for improved growth for the combined operation. However it turns out, it is clear that both Nortel and Corning have been successful at turning current trends in data communications to their own advantage.

*Digital divisions*

Figures from National Statistics make depressing reading for anyone who sees the internet as a great equaliser, bringing information for all. They point to a large and growing divide between the information haves and have nots.

National Statistics, formerly the Government Office of National Statistics, has released a set of figures based on its Family Expenditure survey, collected over the period April 1998 to March this year. These figures will be updated quarterly from now on. They have clear implications not only for dot-coms but also for e-government.

The proportion of households in the UK with internet access at the end of March was 25 per cent, double the figure a year ago. If the growth rate since the end of last year is extrapolated to the current time, then 30-33 per cent of households now have internet access. The distribution of households having access is very far from even, however, either by geographical location or income group.

Northern Ireland lags behind the rest of the UK with less than half the percentage to be found in London and the South East, followed closely by Scotland, Wales and the North East.

But, with the less wealthy regions starting from a lower percentage base, the number of households with access in wealthier regions has been growing much faster. So the gap between haves and have nots will grow.

Individual household income is broken down into deciles and the four lowest deciles show clear deprivation of access, averaging around 5 per cent of households. This is in marked contrast to the highest earning decile, in which 48 per cent of households have access.

This has to be good news for dot-coms aiming to relieve higher income households of their disposable cash. Similarly, tabloid newspapers needn't fear competition for their advertising revenues from the internet.

The implications for spreading e-government (and education) out to the mass of the population are dire though.

Lack of access in less advantaged households is confirmed in a breakdown by family composition. Single-parent families and pensioners living alone had the least access of all. Families with the highest percentage of access were those consisting of pre-retirement couples with one, two or no children.

For the UK Government to stop the gap growing it will have to make internet access available freely through public buildings wherever possible, for example in libraries and post offices.
This wouldn't cost a lot, particularly in villages and remote communities, training post office staff to assist. Think of the Brownie points that would earn in a lead-up to a general election!

* Further analysis is available at http://www.it-director.com