Confederation of British Industry

Andrew S. Grove
Confederation of British Industry
September 21, 1999

DR. ANDREW S. GROVE: Good morning everyone. What I would like to talk to you this morning about is the economics of e-Business. My talk is basically based on a premise that belief and thesis, if you wish, that in some years' time, there will be no such thing as Internet companies because all companies that will be operating will be using the Internet in their business and in their internal operations. This belief is based on the conviction that the Internet provides a competitive advantage to companies that use it, that it is so compelling, and is going to grow even more compelling in time as to bring this thesis around.

To give a little bit of support to this statement, let me show you some data, and I apologize that the data is US-based. On this chart I'm showing on the yellow line on top the US gross domestic product from 1988 to the year 2003, and that line is actually -- this chart is on semilog scale each division -- such a compressed scale, the super center growth in GDP gets lost, the yellow line goes horizontal. By contrast, the blue line is the portion of the GDP that is conducted through electronic network means -- e-Commerce, e-Business -- whatever name you want to describe it with, and that is anything but flat. In 1999, it is estimated to be about a hundred billion dollars goods and services transacted in that fashion -- about 1% of the total GDP. And as you can see, the blue line is gaining on the yellow line, reaching about 10% of the total GDP in four years time.

To use Intel as an example, in 1997 when we kicked off our own internal e-Commerce efforts, essentially none of our own business operations were conducted on the Internet. By 1998, for the year as a total, we performed 21% of our business operations on the Internet. For 1999, I estimate that for the year as a whole, the average is going to be over 40%, and given that we -- we are in the high 20's, billions of US dollars turnover, that corresponds to 12, 13 billion dollars of revenue conducted, transacted on the Internet. Now that will probably place us as one of the larger, if not the largest, player of the previous charts, hundred billion dollars total US revenues, but it also makes me a little suspicious that this chart, the total chart, is understated because I have a hard time believing that Intel would represent 12 to 15 percent of the US e-Commerce GDP. I think our number, which I am comfortable are the real numbers, the aggregate numbers, are probably understated, which is understandable in an environment, that can also be as fast as you can research them.

It is a very strong phenomenon, very rapidly growing phenomenon, and it raises the question: what drives this progression? And the rationale for e-Business is basically very simple. It is attractive to buyers and it is attractive to sellers. It is attractive to buyers because through electronic networks, commerce, the transactions and the commerce of all goods, becomes as efficient as the most efficient of all markets, the stock market; and increasingly you see companies using some of the techniques of stock market transactions applied to industrial goods, like consumer goods. It is attractive to sellers because it brings all kinds of new efficiencies to internal operations, and we will talk about that a little while later.

Underlying both of these, both of these factors, both of these rationales, is a fundamental belief that I share -- is that the basic premise of business has not changed. The value of any business is the sum total of the discounted cash flow that that business generates from now to the next year to the year after, to eternity, summed up -- and I take the liberty of taking a shorthand to indicate what I just said. The value of any business is the integral from here to eternity of the discounted cash flow that the business generates.

E-Business is extremely valuable because it increases the discounted cash flow of the business; it increases the sum total of those two terms under our integral and it does so in two parts: it -- arbitrary divided cash flow increases coming from external factors, external advantages, that we generate for ourselves and internal advantages.

Let's take a look at how these work. When you have a business, an ordinary garden variety conventional business, we will call it a bricks business, any business will increase the discounted cash flow generation ability two ways: It will reach for new customers, move upward in the vertical axis, and improve operational -- internal operationally -- efficiencies, move out on the horizontal axis to the right. So basically, all of our businesses, everyday work to either operate, either increase our discounted cash flow formula by operational improvement or -- and/or rather increases marketing efforts reaching new customers and generating that way.

Now, we have witnessed this spectacular appearance of a number of companies that take advantage not of a brick-based legacy, but an Internet-based presence. I call those the clicks businesses, corresponding to the clicks of the mouse that all of us have to perform to operate. This clicks basis is very effective in reaching new customers with the very minimal investment. Given the existence of the Internet infrastructure that is there, they are able to reach customers way out of the geographical reach of their operations, and by having a very strong vertical or potential value comes by having a very strong vertical spike in this chart. But as these businesses mature, increasingly they have to concern themselves with their internal operations and move horizontally out of the right through operating improvements. I would cite a couple of statistics; one of the biggest booms that these clicks companies are bringing and the Internet operations are bringing to the economy as a whole is what it does to warehouse construction. All of these businesses that originally started with minimal capital investment being a pure play, clicks operation find it necessary to improve their operational internal cash flow by bringing warehousing functions internally. By recent statistics, there are as many as 60 to 100 million square feet of warehouse constructions in progress for clicks companies in the US alone; and closer to your home, there are almost a million square feet of space under construction for one of the preeminent clicks companies -- Amazon.com, just 20 miles off London. So clicks companies feel the compulsion to improve the area under that rectangle by moving to the right. But the real future to which both the bricks companies and the clicks companies will convert to what a colleague of ours, Schwab, calls clicks and mortar companies. These are the companies that combine the benefits of the bricks operation, the mortar operation, and the clicks operation in a suitable fashion, and by operating in both of those directions, they are able to bring operational improvement as well as improvements, and achieve the largest area under this rectangular shape corresponding to the largest potential business benefit - largest value to their businesses. You will see some examples of this in a minute from Europe. There is nothing in America about this idea, even if the term comes from the United States.

But the reason I want to go back to the first statement I said, why all companies are going to end up Internet companies and, more specifically, clicks and mortar companies, is because internal efficiencies, as well as the customer-reach advantages of companies that use both of these directions to expand their discounted cash flow, are so tremendous as to render those who don't use either or use only one or the other at inherent disadvantage.

I have found in the past that whenever there is a technology that can render users of the technology at a competitive advantage to everybody else, that technology brings about a fundamental change to the business climate that I like to describe as a strategic inflection point, and under those circumstances, the points on the curve, we see fundamental changes in the business philosophy, the business construct in which these companies operate, and companies at that point either adapt to the new construct and move on to bigger heights, better future, or miss that moment and go on to a decline. I think a lot of companies, if not all of us, are dealing in our own way with a strategic inflection point brought about by the capabilities reach and efficiencies brought by the Internet, and I would like to give you an illustration of that by showing a brief video and then introducing the CEO of WOLF Garten company that is probably best described by this little video segment that will continue after that.

(Video Presentation of WOLF Garten)

DR. ANDREW S. GROVE: Please join me in welcoming Gregor Wolf of WOLF Garten.

What is so special about -- what is unique about the garden business?

MR. GREGOR WOLF: It is a wonderful industry. When you go home and you go away from the computers, relax, it's our job to make the flowers smell and give you a wonderful environment to work in. Secondly, it's also a very challenging industry because our period is very limited; it's basically 20 weeks in which we can do business because nature tells us when there is growth, we have growth too.

DR. ANDREW S. GROVE: In California it's a little longer.

MR. GREGOR WOLF: Maybe we should go to California. In an industry which is challenged by a 20-week period, to go out of stock is for us to go out of business. So it's an important lifetime of communication that we know what is going on the market, we understand what is being sold and what issues we have got to address out there in the market.

DR. ANDREW S. GROVE: How many dealers do you have?

MR. GREGOR WOLF: We focus on Europe and have roughly 6,000 dealers -- 1,500 are currently on line.

DR. ANDREW S. GROVE: This may be a prejudicial comment, but in my picture, they probably don't represent the computer savvy of the population.

MR. GREGOR WOLF: We are dealing with the traditional mom-and-pop stories. We all also use sophisticated -- and some of them are not very savvy at all. They need to be taken by the hand, guided through the process of what needs to be done and what the benefits are for them, and how they can create volley for themselves.

DR. ANDREW S. GROVE: Once they get over this hurdle, does it get easier?

MR. WOLF: It does. It takes a lot of patience from us to show them why technology is there to be a stumbling block. We found that the revenues of the dealers who went on the net is significantly increased to those who didn't go on the net. To us it's an indication that with the right support and with the right amount of patience, it is a successful application to use.

DR. ANDREW S. GROVE: How does the application -- how does deployment of an e-Commerce network -- change your business operation?

MR. GREGOR WOLF: To us it changes it fundamentally; it is an extension of strategy. With 20-week selling periods, we want information quicker, and now we have got instant feedback of what is going on and what isn't. It allows us to arrange all of our process based on speed. We are not in a position to do an inventory once per week. So speed and quality of data available to us, and both from marketing different companies, is essential to be good on a one-to-one regime.

DR. ANDREW S. GROVE: Your biggest difficulty is getting to this stage.

MR. GREGOR WOLF: The biggest difficulty is jumping the block and saying we want to do it, dealing with the strategy of how to integrate the dealers, and then going out and convincing them it's in their interest to be with us.

DR. ANDREW S. GROVE: What are the hurdles, knowledge or cost?

MR. WOLF: We never look at the cost side because we are market leaders, and we feel it's our duty to lead the market, so we look basically at the valuation side first and what can we do for our customers to provide a service. One of our missions is, when it comes to Garten, we want to serve customers more than anything else and this is a real method of doing that.

DR. ANDREW S. GROVE: Is there an objective to put the entirety of your dealer network on the web?

MR. WOLF: It's our objective, but we are realistic; we will not be able to do that because of personal wishes. -- "I don't want to be involved; it's not my type of technology" -- and we see that it very much shows what kind of dealers we are working with; successful ones we would get on the net and will strive, and the ones we are not getting on the net we are concerned with because we have to convince them enough why the technology here provides so many opportunities that previously we didn't have.

DR. ANDREW S. GROVE: Is there a difference between those that do and those that don't in terms of age?

MR. WOLF: Yes, significantly. The cutting off point is somewhere around 45, after which it gets tremendously more difficult to get people on the net - I apologize!

DR. ANDREW S. GROVE: On the other hand, time is your ally. Thank you Mr. Wolf.

I would like to move on and talk to you a little bit about the problems of implementing e-Business beyond convincing people who are too told to touch computers to do so. By and large, I think we can look at the task of implementing e-Business in 3 phases, building an infrastructure, modifying the business processes to take advantage of the infrastructure.

Phase 1 - I am going to use Intel as an example, because I am reasonably familiar with what we have to do, putting in place the infrastructure that is necessary to conduct e-Commerce. First of all, you have to have a back-up system that is reasonably modern; it doesn't have to be modern as in 1999, but reasonably modern that can be coupled to an Internet.

Starting in 1995, by the time 1996/1997 came around, we had the system pretty well deployed and were able to combine with a parallel development in the company which was the putting in place of a web-based marketing web page, elementary web page, web page information that we had put in place from '95 to '97. So in '97, we were able to take these two things and marry them and begin that e-Commerce deployment, the result of which you have seen in an earlier slide. That is the first phase of it.

Then the second phase of it, we have to go and talk to our customers and talk our customers into -- some of them were ready to do that on their own and some were not -- to join into this Internet infrastructure and modify their own business processes so that they give their orders on the Internet, give information and get information on the Internet from us. In a very analogous, very interesting fashion, I will tell you a little anecdote. We have thousands of computer dealers, computer assemblers or suppliers, to small time mom-and-pop, particularly throughout all of Asia, large portion of the local market supplied by these very small companies that operate locally, and we supply these to them and people with piece parts. Originally the notion that they would have to modify that process and go on the computer was met with considerable resistance, even though these people made their living with information technology implements. Six months after they got on the web, when we went back to look at what they wanted in terms of further development, they were pushing us to embellish and develop further features of the e-Commerce system -- the same people six months earlier were reluctant. So that is the first and perhaps most expensive, not necessarily most difficult, but most expensive, phase of the three phases.

The second one -- I'm sorry; you are interested in more information -- we have described our own experiences in a case study form and can be found, of course, at our web page, www.intel.com/business/. And I'm sure all of you have Internet access, and if you give a few clicks to get the full story.

The second phase is once you have this infrastructure in place, that infrastructure is really not of full use until you take your ordinary business processes, your inventory control process, your data entry processes, and adapt them. This doesn't cost a lot of money, but this is the hardest job because you have to change peoples' business process, operational practice, and your change often encounters resistance. The benefits of that are very interesting. They come in the obvious fashion first. They come in order processes, the time you end the order from before Internet implementation to after implementation went from 15 minutes to 3 minutes per order. The amount of time that the customers had to be on hold while the order entry operator was comparing different databases on different computer systems was reduced in even more dramatic fashion than the numbers that I cited. But once the system is in place, the benefits come in very unexpected fashion. I'll tell you one example of that.

Intel is in the business of selling, of course, microprocessors; in order to aid in that process, we provide our customers with a great deal of technical know-how and information -- specifications, specification updates, how to get around certain problems and on and on and on. We counted these up; we supply 140,000 documents annually to our customer base and these are all different levels of secret confidentiality requirements, and you only have to go to -- each document has to go to a certain customer and we have to keep track of what document is with what customer. This took 56 man days per year to implement, and the man days that I am referring to is field sales engineering, very expensive, very highly trained individuals. They were reduced to postal clerks in a way, record keepers, because they carry these documents under their arm to each customer, drove back and brought the updates, and it was a very, very labor-intensive operation on the part of a very scarce and very highly skilled force. We put all these documents on the web, with proper security, and the appropriate customers were able to download the appropriate documents; the whole process was reduced to eight days per year and the customers had instant availability of these documents rather than having to wait for the sales engineer to make his next way. In the case where you have to provide a workaround to an error in one of our products, it is crucial time lost during which the customer would be building, so it had immense advantage in a place where we did not anticipate it -- but we did have to adapt our document control processes to this infrastructure.

Phase 3 is when you have built the infrastructure, you have adapted your business process, and now you are using the capabilities of this to do things you haven't anticipated before. Mr. Wolf talked about gleaning information from the customer base to generate new products. Some of this has been taken to very well publicized heights by one of the clicks companies that I mentioned earlier -- Amazon.com -- that using his database or buying patterns to concoct indications for what product is most desirable for their own customer base, and, therefore, they plan their offerings on the basis of that. And Dell, probably the most advanced computer seller on the Internet, uses the customer pattern to build their computers and the result of which, they only buy the material once the order is on its way, and their inventory levels are much lower than they would be otherwise. These are examples of how the third phase is turned to business advantage.

Building the infrastructure is largely on information -- technology information. The modifying of the business process is largely internal and external changes, changing from business patterns, and the third one is creativity using database and techniques and infrastructure to improve operations.

And with that, I would like to move on to our next guest, and I would like to run a video describing the operations of Woolwich Bank.

(Cue Video Presentation of Woolwich)

DR. ANDREW S. GROVE: Please join me in welcoming John Stewart, CEO of Woolwich.

What made you go on this project in the first place?

MR. STEWART: About 3 years ago, I took over as CEO and we got the team to go -- realized if we played the same games as the big guys, we were just going to lose. We had to play a different game, and that is what you were calling, a few minutes ago, your strategic inflection point. And what we set about doing was working out what will tomorrow's bank look like, feel like, and how could we use a medium-sized to our advantage to have enough skill to do it, be small enough to be quick to harness the technology to do it?

DR. ANDREW S. GROVE: I picture this that you realize that you have to change your approach, saying that medium-size is good, as you point out in the video and again here, against convention wisdom. How did you figure out what direction to take?

MR. STEWART: Well, we started off by getting a mult-discipline routine; working out what we thought customers really wanted if banks had never been invented. We believe that customers have lifestyle needs. They change a car every couple of years, they want to have a holiday, retire at a certain age and have a certain income, and they don't want financial problems. The industry bombards them with financial products and confuses them, and they have to spend all weekend working out what product to use. Unless you have a Ph.D. in financial services, you are never going to work it out. We needed an anywhere-anytime bank that the customer could use whenever it suited them; it was customized for these needs, if you like. It's personal banking, yet that is too expensive. We had to harness technology; we started to build it -- we were giving ourselves to build it in six months, not six years.

DR. ANDREW S. GROVE: Technology actually helps you in this customerization?

MR. STEWART: It doesn't help us; it wouldn't have been possible three or four years ago -- the technology didn't exist. We have a pretty good basic technology anyway, because the big gaps, the middle line, that is where the Intel architecture and Windows NT came in, allowing us to do something in six months without scrapping our existing systems.

DR. ANDREW S. GROVE: Analogous to what we did at Intel.

MR. STEWART: Sure. We had to actually do it, to experiment it and find out, but it all worked and the last thing is the skill, that is really important.

DR. ANDREW S. GROVE: Every business has a certain conception of its own operation, you know, the cliche, one business we are in, are we in. Has this self-perception of yours changed as a result of your activities?

MR. STEWART: Yes, it has changed, it's about to change a lot more. We have 20,000 customers on this; it's a very big pilot, but eventually the whole of the Woolwich is going to have to change, and the business model, most convention businesses, are based on products, strategic business units.

DR. ANDREW S. GROVE: Stovepipes.

MR. STEWART: Exactly. This new type of business has to be built around the customers, so has to be customer information. So the guy who owns the stovepipe, he is going to go and be replaced by someone who is analyzing customer probability down to the household and predicted future use of that.

DR. ANDREW S. GROVE: Are you going to reorganize around customer segments versus products segments? Are you started on that?

MR. STEWART: We are starting on moving from product to product segments to customers, and customer segments in the whole basis of business, and the drivers for profitability. We will measure a profitability on customer profitability.

DR. ANDREW S. GROVE: You mentioned you have a pilot of 20,000 people. What is your total customer account?

MR. STEWART: Well, we have about 4 million customers, so we have a long way to go. Where we are with our pilot, the pilot has been running for about six or nine months. We are changing lots of aspects of it; what works, what doesn't work, and it's the really important thing that is the integration of all the distribution channels. So, in other words, the customer can use a branch, a telephone, a web, we have a memory of everything they have done, we can talk about them as if they were the only customer of the bank, and what we are doing just now is working on the scalability to take that up to --

DR. ANDREW S. GROVE: Are you worried about scaling from 20,000 to multiple millions?

MR. STEWART: In the technology, we have most of the answers. I don't want to be complacent about this. The other thing is how you take the customers with you, how you take your staff with you, how you change your business practice, all of that is changing in the company and that is pretty fundamental.

DR. ANDREW S. GROVE: Do you have a time scale where 50% --

MR. STEWART: I think that is not in the public domain; we won't be disclosing that.

DR. ANDREW S. GROVE: Both of our visitors here were kind enough to refer to Intel's role in all of this and that is my next section. I would like to talk about what we do in helping customers like WOLF Garten, Woolwich, and Intel bring all this about and build it. And I have to go back a little bit in history in this.

Intel's historical mission was to be the building block supplier to the new computer industry. The new computer industry was a phrase where we described PC and PC-like devices. That is our home territory and we have done very well supplying the innards of that implement. But in the last couple of years we realized that our environment had changed in a very major way, and we rephrased or rethought our objective much the same way as John Stewart has to rethink their own at that time. We figured out our desire to be the building block supplier to the Internet economy -- and these are words, I am going to try to give them some visual meaning by doing two things. First, I would like to go back to 1993 or 1994, I am not sure which, and at a time when we introduced the Pentium® processor. We tried to communicate in a visual way our then-business mission, which is to be the building block supplier, on a television commercial that was actually quite successful worldwide. That is the visual implementation of our own mission.

(Cue Video Presentation of Commercial)

DR. ANDREW S. GROVE: Our challenge is to come up with a 30-second TV commercial that tells in a similar descriptive fashion our mission to be a building block supplier to the Internet economy. I am coming to give you a progress result, a computer animation, to walk you through something that I'm sure you are all very familiar with -- how the Internet works. More particularly, those of you that have ordered a book, initiated a bank transaction, or downloaded MP3 music, one must have wondered from time to time what happens when you hit the return key. If you didn't wonder about it, you should. But I'm going to give you a -- what basically happens is that keyboard that you see there, you hit the return key, it takes an electronic signal, breaks it up into packets of information, those are sent out, typically, from your home and the telephone wire, to an Internet service provider. It is handled there, sent out to what somebody called the Internet backbone, to the place where all the MP3 music songs are stored, some more magic takes place there, and the song in the form of digital information is sent back to your computer.

So let's take a look at this a little bit slower, step by step, and what happens when we send a request to the website. The computer takes your request and breaks it up into packets -- those little bits are meant to represent those packets. They leave your house on the telephone wires and go to a building not too far from you, in most likelihood, that is the Internet service provider. What happens inside the Internet service provider, we have to strip the building of its walls, go inside and what happens is the bits go, the packets go inside the building, and bit server computers processes this information, starting with the web server. That information, that all has a designation built into it, is translated in something called a domain name server, in an operation that is very akin to putting the postal codes on those bits to send them to the appropriate locations. Then a traffic management server figures out the optimum route where that information can get to the web server the fastest, and a router exit issues that instruction and sends the bits on their way. Now we are leaving the Internet service provider and going to the place where all the stuff that you read of billions of dollars going to fiber optics to do this. They start, the backbone starts at network access points, the bits gets segregated and separated into different streams, and they are sent on the backbone, far distances, sometimes across continents, to a place called Internet Service Provider, the company rep server, which is again filled with server computer, microprocessors, that process the packets. The packets -- the blue signals are the response to them, they are the song or the order confirmation coming your way, beginning its journey back from the web server, back to your house. This information is traversing back through much the same way, goes through a traffic management server, a router, through the back bone through the Internet Service Provider, and ultimately your house. An operation like this would typically, as the clock indicates, take about 480 milliseconds, a good guess would be 480 milliseconds or half a second.

I disjointed this by talking about it through that. I would like to walk you through in an accelerated fashion, without providing the voice-over on this, watch the process a little bit faster and keep in mind that the speed you are going to see this happen is still 8 times slower than real life.

(Video Presentation of DVD)

DR. ANDREW S. GROVE: That is what happens every time you hit the return.

Why did I show you this? I showed you this because our desire is to be supplying the silicon building blocks to wherever these bits travel in the Internet, and of course, we are starting from a very well-established presence in the access device, starting many years ago as our TV commercial indicated, that is our home base, our home territory, and process the bits, date the request, bring them into bits and shape them for the journey. We have adapted our product offerings in a way that some of them are performance-oriented and some of them are cost-oriented, allowing very, very low-cost access to be built around these microprocessors. Part of the segmentation process is dealing with the branch of the process that is particularly well-suited for operating in the task that takes place in the servers, both in the Internet Service Provider and at the web server, web presence, Amazon.com, or whoever. And they are more powerful devices capable of processing a lot more information than the one that you have in the microprocessor, in the personal computer, but they have certain similarities.

In between, as you could see the bits being bounced from machine to machine to machine, there is a lot of traffic control processes, communications processes taking place, and these require microprocessor light functions, communication functions. And we have been increasing our activities in those areas, some of it through internal operations, some of it through acquisition. In the last year, Intel has grown through its history, almost completely. The last year we have spent actually more money acquiring some seven companies that we have spent on capital, spending in the company for the first time ever, 4 billion dollars, three on capital spending.

In addition to that, as companies, small and large, join into using the Internet as part of their business operations, it is becoming increasingly clear, particularly as the use of the Internet pressed through small and medium companies, not all of those companies will build a web presence such as we showed in that skyscraper in that animation. We cannot afford it, do not have the minimum economic scale to have their own technical expertise to run that. So some of these capabilities will be acquired particularly by small and medium companies to be available to them in service form. So we have recently announced our intention to provide our microprocessors, if you like, a bit at a time, in a service operation, and very soon we are going to open our first server farm, if you like, a bit farm that is designed to do exactly that. And just to give you a bit of a glimpse of it, one of these locations is a very carefully controlled location containing lots and lots of server computers that process that information. But again, as the information goes, the type of information that these are used for going from relatively mundane and non-mission like showing web pages, marketing information, to the actual life and blood of commercial-like order processing, inventory control and the like, it is increasingly foreign, maintain a 24 hours-by-seven days operation all through the years with all kinds of redundancy built in. It is necessary to provide sophisticated data management functions, and we intend to do that in the centers by equipping them with state-of-the-art control centers and encryption and all of those that are used by large companies today. The same capability will be available in small companies to the service centers.

We are also taking the requirement of these servers very, very seriously. Mr. Stewart talked about the jobs of scaling from 20,000 customers to millions of customers. That is going to be the story of the Internet. Today most companies, even including Intel, are doing a fraction of their total business on the Internet. In the years to come, these operations will have to be scaled every dimension the size of databases, the amount of data is going to scale, the microprocessors have to scale with that. For the last number of years, we have been dealing in microprocessors - that is meant to be the environment of this Phase 3 of business where we get the feedback operations out of the microprocessor-based implementation, that is called the IA64; this is a microprocessor house, very powerful microprocessor house, in a case like this and this is going to be a product that is going to see the market sometime in the middle of next year, and it is particularly well-suited for the jobs of e-Commerce. The fact it operates in 64 versus 32 bit words allows you to search customer records like you have heard mentioned, right out of memory and, therefore, offering much faster response time. It is designed to accelerate encryption and visualization wouldn't be necessary with complex databases. Three-dimensional visualization would be very difficult for an analyst to deal with.

We have most of the Internet by far ahead of us, so we think this scaling process is going to coincide with the advanced product. Just to give you a bit of an illustration of that -- if I look at -- compare the server capability that we think the Internet requires today with what is going to be needed about five years from now, and we just do a few arithmetic extensions and allow for increasing Internet -- increasing Internet population as more and more people and companies are on the Internet, the use of diverse services, the use of -- the increase of sophistication of those services and the added padding that is necessary to make sure that services have added capacity for surges and demand. What you find is that 96% of the estimated server capacity in 2005 has still to be deployed. So we have most of this ahead of us, most of this, I dare say, ahead of you as well.

And I would just like to add, end on a comment on this: I've tried to paint a methodology that seems to be fairly common phases of implementation. You have seen our story. You have seen WOLF Garten's story, Woolwich's story. They are all very, very similar in that regard, and I think each of the companies are either underway on those phases or will have to be underway on those phases to implement an Internet-based commerce operation.

Just a word of caution, we supply product and many other companies supply product for the phase of implementation. Many companies supply services in helping you implement Phase 1. Phase 1, money can buy, in other words. Phase 2 is your job -- your job. Every company has to own the responsibility and the process of adapting their business processes to the implemented Phase 1 infrastructure, and only if you do that will you see the benefit of the Internet on your business, and only then will you be in a position to move forward into further and general implementation of the phase of the applications. And with that, I wish you good luck for the journey. It's going to be an exciting one for all of us. Thank you very much.

And I will be ready to answer some questions.

* Other names and brands may be claimed as the property of others.