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 NEWSControlling the clients By Ephraim Schwartz August 25, 2000 1:01 pm PT AS E-BUSINESS MOVES beyond the desktop, nimble companies are creating a multitude of new client platforms -- and in the process they are finding themselves with virtual monopolies over the client types they are helping to define.
Ten Square has been building its de facto monopoly over the information shown on gas pump dispensers' LCD screens by signing exclusive deals with petroleum companies BP Amoco and Chevron and finalizing a deal with Texaco. It has also signed up pump dispenser makers such as Marconi and Dresser Wayne that account for more than 82 percent of the gas pump dispensers in the United States. San Jose, Calif.-based Ten Square is gaining market share by developing its own business-to-business personalized marketing programs that it sells to consumer-focused companies such as 7-Eleven as well as by sharing revenues with all of the platform participants. One deal alone with Chevron gives Ten Square exclusive access to 28 million customers a day processing 1.3 billion transactions. Within 45 days Ten Square will launch a unique loyalty program that lets customers earn points which give them the right to buy shares in their favorite company. "Chevron did a study and found that its credit card holders who also own stock in the company are 384 percent more likely to go out of their way to use a Chevron station," said Scott Slinker, CEO of Ten Square. One marketing program will, for example, offer interactive coupon programs as the gas starts flowing. Ten Square knows that it has 123.9 seconds as a consumer fills 20 gallons of gas to make an offer. So a company such as Starbucks could offer a discount coupon through the pump receipt printer redeemable at the local Starbucks, thus earning the consumer points toward stock ownership. Gas station owners are encouraged to participate in these marketing programs and gain an equity stake, turning a cost center into a profit center, Slinker said. Similarly, Ten Square's partners on the equipment side also benefit. "Marconi [the largest supplier of gas dispensers] sells a gas pump every five years. But by sharing revenues with platform system providers [such as Ten Square] they can to a certain degree subsidize the cost of the device," Slinker said. Ten Square is also signing up NCR for its ATM machines, IVI Checkmate for its credit card verifiers, and has an unannounced deal with a British telecommunications provider that will bring that company's unprofitable phone booths into the New Economy, said a source familiar with the project. The telecommunications company is required by the British government to maintain the phone booths as part of its license, but Ten Square is developing a project that would turn them into interactive information kiosks where, for example, users could download MP3 files onto their RIO players , said a source familiar with the program. Even Old World soft drink companies such as Coca Cola and Dr. Pepper/Seven Up are partnering with new platform companies like Isochron and Jerusalem-based TeleVend to bring new capabilities to their machines. The next-generation soda machines will have displays and will allow consumers to pay for a soft drink in any form they want, said Steve Winter, CEO of Austin, Texas-based Isochron Data, a new platform provider in the vending industry. Once a credit system is set up, companies like Isochron and TeleVend (see E-Business Trend Watch, page 29) own the customer and can also offer content from other vendors. Companies such as Ten Square and Isochron are reinvigorating stale markets, according to Zachary Kaiman, a consultant at Datamonitor, in New York. "The idea of what a platform is is changing completely and if it goes well [with Ten Square] anything can be a platform. This is the tip of the iceberg, and models beyond everybody's wildest dreams will be discovered," Kaiman said. As another example of this, Kaiman cited General Motors' in-car OnStar technology. According to observers, GM has been quick to spot that a restriction on how in-car technology can be deployed -- that it must be tightly integrated into the car during manufacturing to override a regular call in case of a 911 emergency -- which will place the company in the catbird seat ahead of mobile service providers. This fall, GM will roll out a Personal Calling service that incorporates a hands-free, voice-activated in-vehicle cellular phone service. Because GM is required to integrate services such as these tightly with the car, GM takes ownership of the system, and mobile phone providers such as Verizon become tier-1 suppliers to GM rather than owning the platform. Virtual Advisor, another service due to launch this fall, will bring hands-free Internet access with OnStar controlling the choice of content providers. With between 50 percent and 80 percent of all cell phone usage occurring in cars, according to the Cellular Telecommunications Industry Association, and with 1 million vehicles deploying the new services this year and 4 million by 2003 on GM cars alone, OnStar will most likely not lack for mobile service providers and content providers that want to participate. "We own the customer," said GM CTO Dennis Walsh, not the service provider or content provider. Emphasizing the momentum behind OnStar, industry analyst Rob Leathern, of New York-based Jupiter Communications, estimates that GM, a $180 billion company, may at some point see a staggering 25 percent contribution to revenues from OnStar services. And GM has exploited the other potential for its early lead in in-car services by also targeting other automakers. Honda, for example, which was reluctant to develop a costly technology of its own, has signed an agreement to deploy OnStar in some of its models and Toyota is expected to follow suit. There is irony in the fact that GM has relegated mobile phone providers to the position of suppliers because they were among the first vendors to leverage their control of clients. Amazon.com, for example must pay a fee for access to the platform and even share revenues with the mobile service provider. If a deal is not made, a consumer will not be able to access Amazon over that network. More such attempts to control client devices are expected. "There is a war about to emerge for owning both new assets and new technology platforms to create new relationships with buyers and sellers and investors and owners. Before companies wanted to own the means of production; now they want to own the means of acquisition -- to own the economic transaction," said Barry Libert, an analyst at Arthur Andersen and the director of MIT's New Economy Business Lab.  RELATED SUBJECTS  Client HardwareE-CommerceSPONSORED WHITE PAPERS 
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