``This location is closed,'' the message said. And so it was, along with 22other AutoNation outlets. They were the victim of rapid expansion in aused-car market that did not grow quickly enough, either in profits or unitsales, to support expensive retail operations.

The shutdowns threw 1,800 people out of work and brought a chorus of ``Itold you so'' commentary from traditional auto dealers who, whenAutoNation opened its first used-car store in 1996, predicted that thecompany would fail.

But auto industry analysts said AutoNation wasn't going out of business. Thecompany, with nearly $20 billion in annual sales, is changing the way itdoes business. It's getting out of stand-alone used-car facilities andputting its money in new-car sales and related enterprises.

Closing the used-car superstores would pull $1 billion a year fromAutoNation's revenue stream. And the shutdowns will result in afourth-quarter charge of $430 million to $490 million against AutoNation'searnings.

``None of that is good news for AutoNation, but the overall strategy amountsto a prudent business move,'' said Walter McManus, executive director ofglobal market forecasting in the Detroit office of J D Power and Associates,a market research firm.

By shifting its resources to new-car and related sales at a time of flatused-car sales and profits, AutoNation ``actually could wind up putting morepressure on traditional auto dealers,'' McManus said.

In 1996, AutoNation was one of the brash new kids on the tough used-carblock. It figured it could win with civility what traditional dealers werewinning the old way-rock-'em, sock-'em, haggle-based bargaining.

AutoNation embraced the no-haggle, upfront pricing approach. But whatAutoNation did not have was a realistic, long-term assessment of theused-car market in the United States, according to J D Power analysts. Thecompany entered the market at a time of booming auto leases, when itappeared that leased vehicles could eventually account for as much as 40 to45 per cent of new-vehicle sales.

But things changed for used-vehicle megastores: used-vehicle prices begandropping in 1998. And automakers began loading sales incentives and otherrebates on slow-selling cars, which had been shunted aside by wealthierconsumers in favour of sport-utility vehicles and other trucks.

A process revolution
Marshall McLuhan wrote 35 years ago that the medium is the message, apuzzling perception that turned out to be profound. Today, a great manybusiness thinkers, in one way or another, seem to be saying somethingsimilar: In the new economy, the process is the product. Set aside theelectronic gadgetry. Are the other things we buy -- the cars we drive, theshoes we wear, the trips we take -- all that different from what they werewhen the other George Bush was president?

Not really, according to a report in The New York Times. The shirts andskirts and jackets we wear today are pretty much the same as the ones thathung in our closet a decade ago. But the ways they are produced - all thesteps from textile plant to doorstep delivery - have been overhauled, in aforced infusion of information technology. In the 1990s, the apparelindustry saved its skin by bringing off a process revolution all butinvisible to the consumer.

Something similarly invisible is taking shape now with the Internet. Whocould possibly escape the squall of dot-com retailing this season? Butlargely out of sight, the Internet is also devising the institutions thatwill enable businesses to deal with one another in radically different ways.Corporate America seems to have concluded that the train -- the InternetExpress - is leaving the station. The foundations of a new business orderare being laid right now. And unless companies respond in kind, they willwither like towns on the Great Plains that failed to attract the early raillines.

Richard R Roscitt, the new president of AT&T's huge business services arm,made his reputation building complex Internet-based networks for corporategiants. He thought he saw the makings of a business revolution in theInternet several years ago, but he is astounded at how quickly it came.``You would have to have a crystal ball,'' he marveled in an interview lastweek. The commanding heights of business have come alive to the power ofnetworking as a pervasive way of doing business, Roscitt said.

Established giants are shifting critical functions to the Internet, at leastto their roped-off corner of it. Merrill Lynch has embraced online trading,Citibank sends trillions of dollars a day across the Net. The Internet ispumping ``the lifeblood of the organisation,'' Roscitt said. ``The stakesare much higher.''

The chronic weakness among automakers has been a development process thatmoves at a turtle's pace. Now AT&T is building an Internet network forGeneral Motors that will enable GM to bring cars to market more quickly. Thefive-year, $350-million project will link GM design centers, factory floorsand dealerships the world over and allow them to perform continuously asthough they were side by side.

In `Blown to Bits' (Harvard Business School Press, 1999), Philip Evans andThomas S Wurster, partners at the Boston Consulting Group, argue thatcommunication via the Internet has become so cheap and so powerful -- andstill no end in sight -- that it will shatter today's business order. Theypredict it will force every business in America to pick apart the processesthat lie behind its products and consider putting the chain back together innovel ways.

It has always been costly to convey thorough, reliable, timely, richinformation. That reality protected those who could afford to play. On theInternet, the cost will all but dry up. And once pure information is cutloose from the expensive physical means of delivering it, whether a printingplant and a fleet of trucks or a dedicated network of mainframe computers,the value of all those old arrangements comes into question.