In the second of a two-part series, Roger Crombie looks at what e-commerce might mean to Bermuda.

One day, everyone at last week's e-commerce conference seemed to agree, the majority of trade, both personal and institutional, will be conducted over the Internet. Bill Gates, Microsoft's leader, has said that if he could earn one-tenth of a cent for every electronic transaction, he would have to get out of the software business.

E-commerce allows a company to do its business from anywhere in the world. The internet connects people from around the globe, who care little about the location of the computer to which their own computer is connected.

Because e-commerce is a moveable feast, the onshore communities are keen not to lose control of e-commerce, and more specifically the tax revenues from it, to their more efficient offshore competitors, such as Bermuda.

One issue gripping the industry at present, therefore, is: where does e-commerce take place? Although what will constitute a permanent establishment for legal and tax purposes has not yet been established, it is likely that collecting payments in Bermuda, for example, would greatly strengthen a company's argument that its profitable activities are taking place in Bermuda.

This does not mean that Amazon.com or those of its ilk are about to relocate their warehouses to Bermuda. Workers in countries like the Philippines, where labour is cheap, will end up doing the hard physical work of taking products off the shelves and placing them in the delivery stream.

That's why Premier Jennifer Smith said last week that e-commerce will be good for Bermuda, even though it is not labour-intensive.

Amazon.com, or other such companies, might however choose to site their computers and technicians here and, perhaps, a manager or two in an office in Hamilton. For the most part, they would be happier to employ suitably trained Bermudians.

Just as Bermuda is home to 11,000 international companies and partnerships, only about 350 of which are physically present in Bermuda, so the island's e-commerce business is expected to produce a balanced flow of new companies in Bermuda, relatively few of which will need to headquarter large numbers of staff on the Island.

Clearly, the computers will be based in Bermuda, and relevant software written or, at the very least, operated and maintained here. American companies, who may form the majority of Bermuda e-subsidiaries, must have their mind and management here; the bulk of these may be rented from the professional service providers, who will need to continue to import staff, presumably, to manage the work.

The `boffin companies', those providing technical and computer services, will also need to import staff until sufficient Bermudians can be trained. Although the larger technology firms will garner much of the market, expect to see a number of small firms, or even start-ups, be propelled to greater size in very short order. Life, they say, moves seven times as fast on the internet.

Like the other professionals, the technology providers are mostly local companies, not "fast-tracked'' like Bermuda's international businesses. To encourage e-commerce, Government might want to rethink that policy, many at the conference agreed.

Most of those at the two-day event who were asked, agreed that the former Baselands in St. David's is likely to become a Bermudian e-centre. TeleBermuda already has its satellite dishes there. E-specialists, web designers and the like will gather in a "centre of excellence'' and take on the world, according to one view.

By all accounts, there will be enough e-commerce to go around. A flood of business activity is taking place, and if Bermuda selects its legal rod well and baits its marketing hook correctly, it should be able to land a meaningful market share, which need not disrupt the island's infrastructure too greatly.

Many Government functions will be transferred to the net, such as registering companies electronically and eventually all manner of "Government to citizen'' e-commerce (regarded as a branch of the "business to consumer'' trade), such as registering vehicles, paying taxes and providing statistical information.

There was a sense at last week's conference that e-commerce is the wild frontier of cyberspace, that a great and revolutionary idea has come about, perhaps one which history will judge to have been as important as the printing press or the spinning jenny, which gave rise to industrial production on a scale hitherto unimagined. E-commerce is a field in which a prognosticator cannot be wrong -- yet.

But everyone at the conference agreed, indeed it was the central message of the event, that Bermuda is well-placed to continue its remarkable feats of economic levitation thanks to the all-encompassing computer revolution now speeding up our lives.