IT's a rEvolution in cyber-speak

By Chris Barton


The last year of the millennium was one of dramatic change for the New Zealand information technology industry.

It was not just because armies of software geeks gazed on gazillions of lines of code and laboriously changed two-digit century dates to four. Or that battalions of hardware boffins on search-and-destroy missions for date-stupid computers and chips wiped out enough gear to build an Everest-sized monument.

No, the real change involved IT's use of meaningless and bewildering abbreviations and acronyms. In an unusual display of uniformity, the sector decided to standardise on the letter "e."

E-MONEY

The biggest advantage of the e-change was that people no longer had to talk about IT. Just when mere mortals had come to realise IT was something to do with computers and that an IT professional was a nerd, suddenly "it" is no more.

Everyone says e-commerce. You can also say e-business. Mostly however, e-professionals are still nerds.

Signs that the e-trend was gathering steam showed up all over last year. Clear started its Payment Gateway, which means that with Epas, BuyLine, Access Online and Worldpay, we have five ways to pay electronically via credit card and the net.

But technical problems exist in this brave new e-world. New Zealand's banking system cannot settle e-tailers' accounts in anything but New Zealand dollars. That means e-shops hawking their wares to the global market cannot deal in the de facto e-currency, the US dollar.

Local banks have yet to solve the problem. Meanwhile, Webfarm's Worldpay is doing multiple currencies by sending transactions to the National Westminster Bank in Britain.

E-fraud is on the increase, too, mostly by technically savvy minors using false or stolen credit-card numbers to shoplift online.

New Zealand had its first convicted phone phreaker last year. Borislav Misic defrauded Telecom of about $80,000 worth of calls and copped a year suspended sentence and six months' periodic detention.

In April, a 15-year-old hacker known as DF proved no one is safe by breaking into Vodafone's computer system.

The Law Commission considers New Zealand e-laws woefully inadequate, even though some amendments to the Crimes Act were brought before Parliament late last year to close loopholes.

Laws have been proposed to deal with hackers and electronic trespass, and an Electronic Transaction Act will clarify a variety of matters, including the legality of electronic signatures and the liability of internet providers when hosting defamatory or offensive material.

E-BAZAAR

Business-to-business e-transactions are the happening place. Every man and his dog has decided it is a good idea to build online e-portals - cyber bazaars where businesses can sell their goods and services.

The German business software giant SAP crowed loudly about its fledgling mysap.com. Locally, Advantage squawked that it would spend $10 million building Venice, a virtual marketplace.

High on the hype-o-meter was the acronym ASP - application service provider. Instead of buying software, the plan is for businesses to connect online and rent applications such as accounting, customer relationship management, billing - even word processors and spreadsheets.

The potentially monopolistic menage a trois of Telecom, EDS and Microsoft is going to do it. So is Australian-listed Solution 6, plus Peoplesoft and KPMG, Datacom, Sequent and a host of others.

Meanwhile, Axon's Quality Direct Online and Wang are already efficiently clocking up millions of dollars in online computer equipment trade. And the Norcross e://volution portal is miles ahead of anyone else in providing e-procurement of stationery and office equipment supplies.

E-STOCKS

Nowhere was dramatic change more apparent than in New Zealand technology stocks.

Dead companies came alive when e-mania was breathed into their empty shells. IT Capital, formerly Iddison; Habitat, renamed Ephone; NZ Salmon, now under the Newcall flag; Advantage, Strathmore - all got the e-treatment and watched their share prices soar.

It was not quite as spectacular as the internet stock fervour overseas - much to the disgust of Advantage shareholders Eric Watson and Evan Christian, who complained that New Zealanders just did not "get it."

That has not stopped a horde of other sluggish performers lining up to board the e-train. Spectrum Resources and Paynter Timber - now Eforce - are the latest to do the e-commerce shape change. Expect a lot more this year.

Analysts continue to look at the paltry revenues of some of these companies and shake their heads in disbelief at their surging share prices and market capitalisation.

They predict the e-bubble is about to burst. But they have been saying that forever.

It is also much easier now to buy and sell stocks, with five local brokers offering New Zealand Stock Exchange trades online at cut-rate brokerage fees.

Some of the big overseas players, such as E*trade, are expected to join the throng this year when the NZSE opens its doors to straight-through trading.

So what was the best New Zealand e-stock of 1999? No contest: Telemedia - except that the New Zealand company jumped the ditch and listed on the Australian exchange in October.

When its shares were first issued at $A1 ($1.27), founder and 73 per cent shareholder Chris Jones was worth on paper $A43.8 million and Telemedia had market capitalisation of $A59.8 million. The shares are now well past $A5.

E-MILLIONS

Some e-pioneers cashed in last year. In January, Adrien de Croy signed a multimillion-dollar licensing deal with Compaq for his internet sharing software Wingate.

Mr de Croy kept track of sales on his PC - rigged up to ring like a cash register each time another online sale was made.

In August, Australian-listed company Liberty One bought local web developer Clearview for about $A8 million, making founders Bob Gray and Ken Westlake quite rich. Both were asked to stay on for a year. Mr Gray lasted two months.

The sale followed that of a similar-sized web developer, Glazier, snapped up by Advantage for $7.1 million.

Not much later, Advantage struck again, making Web Masters founders Frank van der Velden and Steve Shearman $8 million happier.

Brothers Tim and Nick Wood, who started New Zealand's third-largest internet provider, Ihug, nearly became millionaires when Sky offered to take a $30 million stake in the company. But the deal fell through for a variety of reasons.

In November, ex-Hutt Valley High boys Adam Rands and Scott Cooper, founders of stock information service Iguana, sold to Solution 6 for $A1.4 million and joined the brain drain to Sydney.

Dr Grant Ryan, of Christchurch, also hit the bigtime with his Global Brain internet search technology, netting several million dollars and a shareholding in US news portal Snap.

Serious overseas money is eyeing our e-shores. Asia Online dropped in late last year on an $A30 million shopping spree that included local internet service provider Iconz and two Australian providers.

A joint venture between Japan's Softbank and Rupert Murdoch's News Corporation also persuaded Sky TV founder Craig Heatley to take a 20 per cent stake in the local branch of eVentures.

After years of famine, New Zealand venture capital funds are also emerging, headed by Jenny Morel's $27 million No 8 Ventures and Auckland Uniservices' Seed Fund, which is aiming for $30 million. Late last year, Telecom also weighed in with a $20 million fund.

E-GAD!

You cannot leave 1999 without mentioning Y2K.

A programming convention that started in the 1950s and '60s and stored dates in a two-digit format, continued through to the '90s until e-professionals suddenly realised it was a big mistake.

With the arrival of the new millennium, computers and all manner of equipment using date-aware electronic chips would think 00 was 1900 not 2000. Doh!

E-professionals worked hard for several years fixing the problem and spent scads of money. How much? Who knows, but it is well over $1 billion here.

On New Year's Eve, instead of celebrating, thousands of e-geeks anxiously watched their e-clocks tick over. Everything carried on as normal.

Now everyone is convinced it was all a big hoax.

Some big e-bungles and e-budget blowouts also happened last year, led by the IBM-built police computer system, Incis.

It was supposed to cost $95 million, but ballooned to $132 million and was years late.

Last year, IBM walked off the unfinished job. The Government sued for $3 million. IBM counter-sued for $75 million.

In the end it was settled out of court and police were left with a pile of hardware but little of the software to help them do their job. E-waste!

The Government's Landonline project - already $35 million over budget - threatens to become another Incis. Surveyors, conveyancing lawyers and other users of the $141 million system learned last year that they will pay between $13 million and 17 million more annually in charges because the project is a year behind schedule.

By far the e-bombshell of the year was US District Court Judge Thomas Penfield Jackson's ruling in the antitrust case against Microsoft. He found that Microsoft's tactics in holding on to its Windows market abused its monopoly power and hurt consumers.

But what to do now? Should the Microsoft empire be broken up or be given a slap on the wrist? Should Windows source code be shared among rival companies, or should price controls be imposed so all computer-makers are charged the same to license Windows?

Opinion is so divided that Judge Jackson took the unusual step of appointing a mediator. Settlement talks began in November.

What happens next could be the business issue of our time. The outcome has the potential to completely transform competition in the information ... I mean, e-age.