From Brick-and-Mortar to Click-and-Mortar and Beyond

REDMOND, Wash., Jan. 12, 2000 — You might not think that the simple act of selling your house could put you at the forefront of a revolution — after all, some 5 million homes changed hands in the U.S. in 1999 — but when Steve Schembri sold his residence in Redwood Shores, California, in December, he was the harbinger of a new way of doing business that is about to radically change the face of the real estate industry.

The reason: Schembri used the services of eHome, a startup company based in Campbell, Calif. that is using the Internet to sharply drive down the cost of selling a home. With a traditional real estate agent, Schembri would have expected to pay a 6 percent commission. eHome charges sellers a flat fee that ranges from $2,000 to $8,500, depending on the selling price. For Schembri, that meant a savings of nearly $12,000.

“There were so many advantages to doing it on the Web,”
says Schembri.
“We were able to manage a lot of the correspondence and the transactions electronically, and of course I loved the money I saved. If my experience is any indication, I’d have to say this is the wave of the future.”

If Schembri is the portent of dramatic change for the real estate industry, eHome.com itself signals the rise of a new kind of company — a startup organization launched by Internet-savvy entrepreneurs who are rewriting the rules of an existing industry. For eHome and companies like it, success requires a once-unimaginable combination of speed, flexibility, and innovation. The key is the ability to migrate critical pieces of the business process to the Internet. Increasingly, these companies are turning to Windows 2000, Microsoft’s newest operating system, to
“Internet-enable”
their businesses.

When Microsoft’s Windows 2000 team sat down to begin work on the operating system, it used the Internet as a starting point when considering a wide range of new features and technologies to incorporate into the product. The result is an operating system that offers a rich platform for creating, deploying, and managing Web applications while providing the highest levels of reliability and scalability. This makes it easier than ever for organizations of every size to exploit the advantages of networked computing and the Internet, and it is helping companies like eHome find new ways to bring value to an existing industry.

“eHome is representative of a new generation of dot-com companies crafting business models that are radically different from those followed by traditional ‘brick-and-mortar’ companies,”
explains John O’Hara, a product manager in Microsoft’s Business and Enterprise Division.
“These companies require the latest and greatest technological advances in order to stay competitive, and they are finding that Windows 2000 is the best way to get up and running quickly. They are then able to operate with the speed and efficiency they need.”

The eHome business model takes the “brick and mortar” real estate business and transforms it into what Patrick Husting, the company’s chief technology officer, calls a “click-and-mortar” operation by merging the power of the Internet with the knowledge of experienced real estate agents. Listings are posted on the Web with virtual tours of homes for sale — that puts eHome at the leading edge of one of the most important trends in the real estate industry. Last year, 60 percent of homes listed for sale were posted on the Internet and nearly one third of home buyers used the Web as their primary source in looking for a new home. In addition, eHome uses the Web to manage most details of a sale, coordinating everything from scheduling home inspections to filing property disclosure forms to arranging for title and escrow services.

Speed Pays

That’s the
“click”
part of the operation. The
“mortar”
portion comes in the form of in-house transaction managers and real estate agents who work with sellers at every stage of the process. The salaried agents average nearly five years of experience. But even the mortar side of the business has a strong “click” aspect to it in the form of a live online chat feature that allows visitors to the eHome Web site to talk with an agent over the Web.

According to Husting, eHome took advantage of the technology built into Windows 2000 to develop the chat feature in-house.
“We could have gone out and bought an online chat solution, but with our aggressive expansion plans it would have been very expensive to acquire the number of licenses we expected to need,”
he explains.
“So we looked at functionality in Windows 2000 and came up with a very powerful XML-based solution that provides transparent instant messaging between the user and an agent.”

All told, Husting’s development team spent two days creating the chat service, investing a total of about $2,000. The new feature paid off almost instantly.
“Two days after it was incorporated into the Web site we closed on a customer because they were able to have all their questions answered instantly online,”
he says.

This ability to develop and launch applications quickly is a cornerstone of the Internet-enabled company, and it is one of the primary reasons that eHome has adopted the Windows 2000 operating system. For many Internet startups, time-to-market is a critical factor. Built-in technologies like XML, combined with robust support for plug-and-play, have helped eHome launch on a very tight timetable.
“We got up and running fast with Windows 2000 because we didn’t have to spend a lot of time configuring machines on the backend,”
says Husting.
“We want a simple environment where we can just plug in a Web server and run. Windows 2000 lets us focus on our applications and our business more than on configuring servers or laptops.”

Speed is just one reason that Internet startups are finding Windows 2000 indispensable to their plans. Scalability is also crucial. One company that has taken full advantage Windows 2000’s ability to meet the needs of rapidly expanding online demand is AuctionRover.com, one of the newest entrants in one of the Web’s hottest arenas: the online auction.

Founded just over six months ago, AuctionRover.com is the first true auction portal site. Rather than hosting online auctions itself, AuctionRover.com bills itself as an
“online auction resource site.”
The site’s central attraction is its ability to search a number of auction sites and return the results to a single screen. Visitors can use the AuctionRover.com search function to compare items on leading auction sites, including eBay, Yahoo, Amazon.com, and MSN. Users can also save searches and track specific types of items. Saved searches allow the user to receive automatic notification and updates on new and ongoing auctions in categories that they are interested in.

The site also offers services for sellers.
“If you don’t know HTML or feel entirely comfortable on the Web, posting auctions online can be daunting,”
says AuctionRover VP of Product Management Michael Jones. “Even if you know what you want to sell on eBay or Yahoo, for example, how do you insert images and take care of all the details? AuctionRover.com has developed an auction manager that walks you through the whole process, with templates for posting information and a place to host images.

The AuctionRover.com Web site went live in October, just three months after the company was founded. The volume of visitors to the site has been growing exponentially ever since, fueled by positive press interest and a number of important deals, such as an agreement reached last month that makes AuctionRover.com the only online auction resource that can search eBay.

“Our traffic has doubled or tripled every month,”
says Jones.

And we’ve seen some incredible spikes as people find out about us through publications such as USA Today and Yahoo, which named us one of their hot sites.”

Scalability features built into Windows 2000 have made it easy for AuctionRover.com to cope with the growth.
“Scaling is extremely important for us,”
says Jones.
“As we grow, we need technology that can grow with us, and we’re very happy with the new features of Windows 2000 that have helped us meet the demand without any downtime. In our business, downtime is something we just can’t afford.”

For AuctionRover.com, scalability is an issue not only for the Web site, but on the backend as well. The company already has nearly 50 employees and Jones expects that it will grow to more than 100 by the middle of the year. That will mean adding hardware and software at a furious pace, something that Windows 2000 is designed to do easily and quickly.

A Platform for Today and Tomorrow

Where eHome and AuctionRover.com are using the Internet to transform longstanding sectors like the real estate industry and the auction business, other startups are carving out new niches by providing services designed to bring additional value to companies that are already on the Web. One of the most innovative of those companies is Glides.com, a Redmond, Washington, company that helps companies take advantage of the global nature of e-business by providing centralized, remote administration of multilingual Web sites.

“What we have seen in the past couple of years is an important paradigm shift as companies move from creating sites in one language, to recognizing that the demands of the global economy require the ability to provide online information and services in many languages,”
explains Glides.com founder and CEO Miguel Rabay.

Glides.com is not a translation service — although it does work with partners who can provide translations for Glides.com clients. Instead, Glides.com has developed an application called UniSite that simplifies the creation and management of a multilingual site that offers content customized to meet the lingual and cultural needs of different locations. With Unisite, a company can scan a single language site and convert it into a multilingual site that can be managed remotely, without adding HTML developers to handle the creation or posting of content.

The importance of Unisite became clear in December when Glides.com signed an agreement with PSINet, the world’s largest independent Internet service provider. According to the agreement, PSINet will offer UniSite to its customers in Latin America through a special hosting and maintenance package. According Phillipe Kuperman, President of PSINet Latin America, the arrangement will give the company an important edge.
“UniSite give us a competitive advantage in providing a complete Web solution in the Latin American marketplace,”
he said during the official partnership launch in Sao Paolo last month.

The Microsoft platform is a critical part of the UniSite package. Glides.com built the application using Microsoft Internet Information Server 4.0, Microsoft Windows NT 4.0, and Microsoft SQL Server 6.5 and 7.0, and has migrated the product to Windows 2000. Glides.com chose Microsoft technology because of its unbeatable combination of flexibility and reliability.
“We’ve developed an application that provides a mission-critical service to our partners,”
says Rabay.
“Having a reliable platform is absolutely essential.”

Glides.com opted for Microsoft technologies for another reason as well.
“We are a leading-edge company and we don’t look at just today’s opportunities, we’re also looking at the technologies that will put us in the forefront two or three years down the road,”
explains Rabay.
“If I was just looking at the near-term, I might have thought about the Unix platform, but we feel that the combination of flexibility and robustness will make Windows 2000 is the operating system of choice for most of our customers in the future.”

Future considerations were also an important consideration for eHomes’ Patrick Hustings. Windows 2000 will play a key role as the company expands from a single office in northern California to a nationwide company with a presence in 18 cities around the United States by the end of the year.
“I’m going to have a large network connecting offices spread across the country,”
he says.
“I don’t want to have to add an IT person for each office, because that’s just not cost effective. The remote management features of Windows 2000 will let me administer the network from one location, which will save on the number of employees I need to hire, and keep my cost of ownership down significantly. Those are the precisely the kind of cost efficiencies that will allow us to change the face of real estate.”

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