Business on the Web

DIGITAL CAPITAL - Harnessing the power of business webs: Don Tapscott, David Ticoll and Alex Lowy; Nicholas Brealey Publishing, London. Distributed by Rupa and Co; Post Box No. 12333, 15, Bankim Chatterjee Street, College Square, Calcutta- 700073. œ11.99.

AT THE height of its popularity - and commercial success - as the preferred chip to put under the hood of your PC, Intel's Pentium processor suffered a body blow, a few years ago, that the company will not easily forget. A small glitch in how the chip performed floating point calculations - and Intel's initial arrogant and hamhanded treatment of customer complaints - resulted in a barrage of adverse publicity spreading like wild fire across the Internet. Jokes were posted and gleefully exchanged among Intel users: ``What's the difference between a nine-year-old kid and the Pentium chip? A nine-year-old can do long division.'' The company learned the hard way about brand vulnerability in the digital economy and had to do some costly firefighting before it regained lost ground.

Making money in the Internet Age is more than a mere matter of ``attracting eyeballs'' to one's e-commerce website. Tapscott, Ticoll and Lowy are respectively, Chairman, CEO and MD of Alliance for Converging Technologies, a firm of e-biz consultants. Together they have pooled their considerable experience to write a fast-paced, survival guide for those who have ambitions of surviving and profiting from the new Internet way of doing business.

The authors define digital economy as the internetworking of three types of knowledge assets: human capital (what people know), customer capital (who you know) and structural capital (how what you know can be built into the business system). To drive home the point they review how the Internet has become an awesome structure for collaboration, with ``apps on taps'' - application tools aplenty. It has created new ``mantras'' like ``Content is king'' and made possible hitherto unworkable business practices like ``coopetition'' - companies that cooperate in some areas to compete with each other, in a larger arena.

The book provides some striking stories of companies that have leveraged these new models to create success stories - the auction sites like ``e-Bay'', online book sellers like ``Amazon'', air travel bargain ticketing like ``priceline'' and direct selling of ``made to order'' PCs as pioneered by Dell. It also analyses how a power supplier like Enron has reinvented itself as a provider of broadband telecom services; how a ``rogue'' airline operator like Virgin, encashed its considerable goodwill to set up a Tele-bank.

The errors of the pre-Net years are recalled to underline how essential it has become for e-commerce players to give up competing on ``petty, parochial and proprietary differentiators''. The classic case of corporate shame was how the software giants in the 1980s lost the opportunity of coming together and creating a truly customer-friendly operating system with Unix, because of their predatory and monopolistic pricing tactics. The mindset of that generation of proprietors was shaken; but like James Bond's martini, not stirred. The authors suggest that with Linux, the new ``open'' system created by a Finnish student, that mistake is not about to be repeated.

The book is prescient in some notable ways; it warns of the dangers of aggressive patent regimes in a nascent technology, quoting some bizarre recent cases; companies trying to patent Internet selling models like e-auctions, or bargain airfares, which they compare to a notorious surgeon in the U.S. who patented a new technique in cataract surgery and tried to prevent others from using it.

However, in the few months since the book was written, some of the top stocks in Nasdaq - like Amazon, Yahoo and e-Bay - have faced hard times and the gleaming success stories begin to appear a mite tarnished. It only underlines the central theme of this stimulating, consistently readable book that the digital economy is central to today's competitive commercial strategy. The best ones succeed, but many fall by the wayside of the Information superhighway.

ANAND PARTHASARATHY

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