The online revolution has taken the world by storm. Voicemail has replaced answering machines while online tutorials and virtual classrooms are beginning to replace the conventional classrooms, writes C S MIRCHANDANI.

ONCE UPON A time many people had a gadget called an answering machine. My students remember seeing it at home or in dad's office. However, they do regularly see audiocassettes and CDs but believe you need to be stupid to go out and buy them. Many of them believe that VCDs/ DVDs are also obsolete. Similarly they believe that only the illiterate would use the services of an ‘off-line' broker who charges several times what they pay online.

That technology, mainly the Internet and telecom are changing the world has become a cliché. But when we think of changes caused by the Internet we tend to talk of Amazon.com or Bazee of Fabmart and their impact on retailing. Or we think of how easy it is to reserve an airline ticket and check train status etc. We also appreciate the wealth of current information accessed through search engines like google. Very few of us realize that the change is more fundamental than we imagine and could alter the essential nature of some products.

Let us look at industries where a dramatic transformation is taking place. Answering machines disappeared because all telecom service providers offered voice mail and mailboxes free or at a nominal charge.

In financial services, banks and other institutes offer the opportunity to do all your transactions over the telephone, on the ATM, via debit cards or ideally online. In fact they want only the really big fish to come into their offices and have begun to levy
transaction charges on every physical transaction. Some have completely done away with the brick and mortar. Etrade and 5paisa.com in broking ING bank in Canada and Citibank Suvidha in Bangalore are prime examples.

In music, Napster showed the way and now there are several Napster clones. If the record labels do not quickly switch to digital delivery their decline will continue to accelerate. The crusade against piracy is not sufficient by itself. Why should a physical product, which needs to be manufactured, shipped, and stocked, intrude on the information value chain?

In the newspaper industry, while most believe that online publications, will not, in the foreseeable future be able to provide the convenience of reading on the throne or in bed, but will the economics allow continuation of the print format? Today news is available instantly on radio, TV and the Internet and these media attract much of the advertising pie. Newspapers depend heavily on classifieds. But if I want a 90-year-old wife with one leg how many back issues do I search? Online, the database can be queried to give an exact answer. There are already a host of “classified sites” that will eventually cause the end of newspapers.

Similarly we went to travel agents who ensured that our itineraries were properly planned, they got us the right flights and hotel rooms at the best price. But that was before the wealth of information and booking facilities on numerous travel sites. In my area, teaching, online tutorials and virtual classrooms are beginning to replace the conventional classrooms. Substantial portions of computer and quantitative methods courses are already online. MIT USA has now put all their courses online. In India XLRI and IIM Calicut are already offering programmes in remote locations using satellites and the Internet.

All goods and services that we use are derived from two value chains- the physical and the information chain. The extent of change in the value proposition that is taking place depends on whether the information component is at the core or the periphery.

When information is at the periphery the changes are essentially in the supplementary services like client advice, billing, payment etc. but it is in the two bottom quadrants that there is a total transformation underway.

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