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Will E-Commerce Catch on in Europe? Time Will Tell

Champy on Management: Jim Champy

With few exceptions, Europe has always been a few years behind the United States in the adoption of new information technologies.

One of those exceptions was France’s launch of Minitel more than 10 years ago. In that grand effort, thousands of terminals were distributed to consumers and businesses in what was arguably a precursor to the Internet , some of the most visited sites offered dating services and pornography. But Minitel never really took off.

Today, there’s a lot of debate as to whether Europe will experience the same growth as the United States in E-commerce. That question is not only one for investors, but for the world. After all, the Internet is the technology that will eventually connect all of us in trade and communications.

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As I travel, I hear European managers talk about why Internet technologies will take off more slowly in their countries. Here’s what they tell me.

First, there is the issue of security. Europeans seem more concerned than Americans about what might happen if they give their credit card number over the Internet. After all, the number just goes into cyberspace and who knows where it might end up. Well, not quite. Your number may actually be safer in cyberspace than in your pocket.

Next, there are the communications costs of doing business over the Internet. Thanks to the breakup of AT & T;, fierce competition in the United States keeps communications costs low. Soon we will experience the benefits of the fiber-optic cable now being laid. We’ll have better quality and faster service at lower prices. In Europe, monopoly-like pricing still prevails. Many European telecoms are either now or were formerly government-run and don’t have much of an appetite for change or lower pricing.

The Internet also works in the States because so many households have computers and most companies have a communicating terminal or PC on everyone’s desk. Information technology is truly ubiquitous here.

Not so in Europe.

And finally, there is a high degree of computer literacy in the States. More than 35 percent of our young adults are wired , that means they carry some form of computer device and know how to use it. Our schools are also increasingly wired, meaning that the next generation will have a degree of comfort about working, browsing and shopping in cyberspace.

But does that mean Europe won’t catch up for a generation or until the Continent gets wired? I don’t think it will take that long. Technology has had a strange way of being discontinuous , that is, it’s possible for Europeans to skip a generation or two of technology and still catch up.

Just look at what’s happened in some less-developed Latin American countries with cellular technologies. Chile, for instance, had a poor telephone system, and stringing land lines was very expensive. Along comes a new technology that’s easily adopted and installed, and suddenly everyone is carrying or sharing a cell phone.

In the early days of commercializing the Internet, there was an assumption that technology ubiquity would be “complete” when we could use our televisions as communications devices. But technology ubiquity might now come through cheap, portable cellular devices. These devices are becoming increasingly more powerful with more functions, like E-mail and paging.

Soon we will be able to use our super cell phones, as we do our PCs, to do business over the Internet. When that happens, Europe may get wired quickly. And don’t worry about technology literacy. These cellular devices will be a lot easier to use than the clumsy PCs many of us have.

There will still be some cultural and trust barriers to overcome, but the world of knowledge and convenience that the Internet opens p should go a long way to getting people onto the ‘Net.

When that happens, there will be some interesting benefits back to the States. European-based E-commerce companies will start offering European goods that before might have required a trip to Paris to buy , or at least required a trip to an expensive U.S. site or store. Maybe we’ll even figure out how to deal with taxing and regulatory issues to allow you to buy French wines direct from Bordeaux at great prices.

The Internet is destined to make the world a bit smaller. The press of technology and economics , combined with the urge to shop , will not be held back.

Write to Champy at Tribune Media Services, 435 N. Michigan Ave., Suite 1500, Chicago, IL 60611, or E-mail him at (JimChampy@ps.net).

& #352;1999 Tribune Media Services

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