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Chapter 2

Basic Technology

of the Internet

and e-Commerce

Businesses

McGraw-Hill/Irwin Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.

2-2Basic Technology of the Internet Basic Technology of the Internet and e-Commerce Businessand e-Commerce Business

• Questions answered in this Chapter:– What is the Internet?– What are four components of Joseph Carl Robnett Licklider’s

original vision that make the Internet easy to use?– What are the content types on the Web?– How are websites created?– What are the key similarities and differences between e-

commerce and bricks-and-mortar selling in regard to location?– How does e-commerce payment differ from bricks-and-mortar

payment?– What role does security play in e-commerce?

– What challenges exist in e-commerce fulfillment?

2-3Early NetworksEarly Networks

• Internet’s beginnings can be traced back to memos written in 1962 by MIT’s Joseph Carl Robnett Licklider outlining the galactic networking concept

• Great advances were made in network technology in 1960s

• To connect computers and permit transfer of information locally, many organizations installed Local Area Networks

• LAN technology was limited by geographical distance

• To allow computer and networks separated by larger geographical distance to communicate ARPA (Advanced Research Projects Agency) developed a Wide Area Network (WAN) called the ARPANET

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What is the Internet?What is the Internet?

• Internet Protocol (IP):– Software that sets the rules for data

transfer over a network

• Transmission Control Protocol (TCP): – Software that ensures the safe and reliable

transfer of the data

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What is the Internet?What is the Internet?

• The internet is a collection of wires, protocols and hardware that allows the electronic transmission of data over TCP/IP

• Any data can be transferred over the net, e.g., email, faxes,video,voice & web pages

• Technically www (web) and the net are not the same.The web is an application for the net

2-6How the Internet WorksHow the Internet Works

Characteristics that allow shared access of data in a network :

1. Unique identification of each computer on the networkInternet is a network of millions of computers and thousands of networks intertwined together. Thus it was important that each computer can be uniquely identified by assigning a specific Internet Protocol(IP) address.

e.g.,198.108.95.145

2. Human-friendly addressingDomain Name System(DNS) gave each computer on the network an address comprising an easily recognizable letters and words instead of an IP address.

e.g., www.philanthropy.com

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How the Internet WorksHow the Internet Works (cont’d)(cont’d)

3. Packet Switching

To remedy delays associated with unequally sized data transfers, April sends a 50 page file, Sunshine sends a one page file. Sunshine would be waiting forever to upload; Solution: instead of transferring files in their entirety, whole files are broken up into data packets before being transferred over the network. April’s 50 page file would be broken up for sending.

4. Routing

Routers are dedicated, special-purpose computers which serve as an intermediary between networks (a go between). They route packets efficiently through networks. Routers are building blocks of the internet.

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How the Internet WorksHow the Internet Works (cont’d)(cont’d)

5. Reliability and Transmission control Protocol

TCP/IP TCP handles safe delivery of packages. IP software handles packet deliveries.

6. Standardization

Without the TCP/IP standardization, there would have been many negative tradeoffs, such as inflexibility and increased functional and switching costs.

2-9Functions of TCP/IPFunctions of TCP/IP

• Prevents loss of data• Checks packets• Eliminates duplicate packets• Sends confirmation when the packet is received• If confirmation is not received, then the packet is

retransmitted• Enables reliable and error-free communication over

the net

2-10How are Web Sites Created?How are Web Sites Created?

1. A Web page can be made by adding text-based codes called Hyper Text Markup Language (HTML) to a text file.Text editor allows to create WebPages and gives more flexibility and control over design and layout.

2. Document conversion tools enable existing documents and new documents to be created and posted with minimal investment in learning markup language.

3. Several web authoring tools are available; e.g., Microsoft FrontPage lets users add multimedia objects such as sound and animation to their web pages.

4. High-end Web authoring tools such as Dreamweaver and Adobe GoLive offer more powerful site creation and management features, and allow expanded features such as database integration to be built in a web site.

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Contents of the Web Contents of the Web (cont’d)(cont’d)

• Images

The most supported image formats on the Web are Graphic Image Format (GIF), (PNG), and Joint Picture Encoding Group (JPEG).GIF—The format uses a palette of up to 256 distinct colors from the 24-bit RGB color space. It also supports animations and allows a separate palette of 256 colors for each frame. The color limitation makes the GIF format unsuitable for reproducing color photographs and other images with continuous color, but it is well-suited for more simple images such as graphics or logos with solid areas of color.

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PNG ImagesPNG Images

• Portable Network Graphics. PNG format is becoming an increasingly popular replacement for GIF images since it uses better compression techniques and does not have a limit of 256 colors. Disadvantage—PNGs do not support animations.

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JPEG Photograph ImagesJPEG Photograph Images

JPEG is the format most used for storing and transmitting photographs on the World Wide Web.

JPEG is far superior to GIF, which uses a palette with a maximum limit of 256 distinct colors (most color photographs contain many thousands or even millions of distinct colors).

JPEG is also preferred to PNG, which produces much larger image files for this type of image due to its lossless data compression.

Lossless data compression is a class of data compression that allows the exact original data to be reconstructed from the compressed data

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Why Compress?Why Compress?

• Computers and Networks have a finite amount of critical resources. CPU speed, RAM, & Hard-drive space and Network Bandwidth all affect how much web content can be stored on servers and how quickly that information can be downloaded and displayed for user application.

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Why Compress? Smaller is more Efficient Why Compress? Smaller is more Efficient

• Hardware limitations and in particular limitations on Network Bandwidth have made compression an important technology on the Web.

• GIF, JPEG for images; MPEG, MP3 & Real Audio for music; QuickTime & RV for videos compress enormous media files into smaller units that require less Web-servewr space and consume less Network Bandwidth.

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Content Compression AdvantageContent Compression Advantage

• Web content compression noticeably increases delivery speed to clients and may allow providers to serve higher content volumes without increasing hardware expenditures.

• It visibly reduces actual content download time, a benefit most apparent to users of dialup and high-traffic connections.

• Industry leaders like Yahoo and Google are widely using content compression in their businesses.

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Multimedia AudioMultimedia Audio

MPEG•  • MPEG files are not native to any platform and, thus, require a helper application to play

them. The audio format is high-quality with good compression but requires special hardware to encode.

•  • MP3•  • The MP3 format is a later version of MPEG that generates highly compressed audio files

and provides high quality sound suitable for listening to music or spoken word. The format requires an encoder to capture and a player to playback the recording.

•  • RealAudio•  • This format requires a RealAudio player to hear the streaming audio generated by the

sound source and a special encoder to generate the files. The quality limitations of this format make it better suited for narration than for music or other sounds. VideoVideo capture cards allow users to capture the analog video output of camcorders, VCRs and DVD players.

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Video Digital StandardsVideo Digital Standards

DVD

MPEG-2 used for DVD

Home Video

MPEG-4, used for satellite television and used for home video.

2-19Web BrowsersWeb Browsers

• Browsers make the retrieval process transparent

• Uniform Resource Locator (URL): Tells the browser several things about how to access the desired content:

1. The transmission protocol to access the content.

e.g., Hyper Text Transfer Protocol for Web Pages, File Transfer Protocol (FTP) for transmission of files and the extended S-HTTP for a higher degree of security.

2. The name of the computer where the content can be found

3. The directory on the computer where content is stored and the name of the file containing the content.

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Exhibit 2-5: Components of a URLExhibit 2-5: Components of a URL

http://www.monitor.com/cgi-bin/templates/index.html

Indicates browser should use HyperText Transfer Protocol for

server access

Indicates browser should use HyperText Transfer Protocol for

server access

The directory that contains the file you want

to view

The directory that contains the file you want

to view

The name of the computer being accessed (could also use

this computer’s IP address, which is 208.178.40.89)

The name of the computer being accessed (could also use

this computer’s IP address, which is 208.178.40.89)

The name of the file you want to view

The name of the file you want to view

Source: Adapted from Douglas Comer, The Internet Book, 3rd. Ed. (New Jersey: Prentice Hall, 2000), 203.

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Placement: Bricks-and-MortarPlacement: Bricks-and-Mortar

• Placement– When deciding on a store location, a company

must consider many factors including:• Geographic desirability• Nearby stores, • Number of customers accommodated• Attributes of the space itself

• Competition– When choosing a location, merchants prefer to set

up stores where there is little competition for customers

• Convenience– In addition to considering convenience for

customers, merchants also consider how convenient a location is for themselves

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Placement: e-CommercePlacement: e-Commerce

• Location– It is important that the website is highly visible and easily

found. Factors that facilitate this are:• Placement of links to the website• Multiple domain names• Partnerships with websites• Use of search engines

• Competition– The location and visibility of competitive websites is a factor

is deciding the location of an e-commerce location

• Convenience– Some e-commerce locations offer more convenience to the

merchant than others, sites like Amazon zShops and Yahoo function as large online malls

2-23Merchandise and Audience Size: Merchandise and Audience Size: Bricks-and-Mortar Bricks-and-Mortar

• Store Size:– There are two issues related to size

• What type of items the store sells—the size of the merchandise will influence the size of the store

• The number of customers who will be shopping in the store at once—more customers per hour requires a larger space

2-24Merchandise and Audience Size: Merchandise and Audience Size: e-Commercee-Commerce

• Store Size– Just as Bricks-and-Mortar stores consider parking spaces,

aisle width, etc., e-commerce stores need enough bandwidth, processing power, and data storage capacity to provide proper service to their customers

• Bandwidth: Is the amount of data that can be sent through a connection at once

• Processing Power: Is the amount of data that can be processed by a website at a given time. Three factors influence the amount of processing power needed

– Product breath– Number of transactions– Level of interactivity

• Data Storage Capacity: Online businesses collect and store huge amounts of customer data such as demographics, purchase patterns, billing histories, and click streams

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Presentation: Bricks-and-MortarPresentation: Bricks-and-Mortar

• Store Layout– Store layout often speaks volumes about the

image a store wishes to project and the type of customers it wishes to retain. As a result, marketers and merchants often pay great attention to how their merchandise is presented

• Customer Service– Customer service is a necessity for a successful

merchant and great service often enables merchants to charge premiums for their products

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Presentation: e-CommercePresentation: e-Commerce

• Store Layout– Online presentation encompasses all customer-facing

aspects of the store.• User Interface

– Ensure your customers see what you want them to see.– Know your customer

• Online Customer service– The lack of direct interaction between customer and the

purchasing environment is addressed using:• The Web and FAQs• E-mail• Chat• Discussion Groups

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Payment: Bricks-and-MortarPayment: Bricks-and-Mortar

• Cash– Issues with cash:

• Theft• Cash Fees

• Credit Cards– Issues with credit cards

• Fraud• Fees

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Payment: e-CommercePayment: e-Commerce

• Cashless Society

• Credit Cards– Issues with credit cards

• Card-Not-Present Transactions• Higher Fraud Rates• Higher Fees• Security

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Security: Bricks-and-MortarSecurity: Bricks-and-Mortar

• Overt and Covert Cameras– To monitor both shoplifting and shrinkage

• Alarms and Security Tags– Stores can use alarms to monitor entry and exit

activity during off-hours – Place security tags on high-value items

• Security Guards– To monitor both in-store activity and off-hours

activity

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• Technologically Complex– Because selling products on the Web is so dependent on

technology, significant technological expertise is required to secure an e-commerce site

• Many More Potential Attackers– Because the Internet allows a website to be accessed by a

worldwide base of customers, it also allows it to be accessed by a worldwide base of hackers and criminals

• Much More Potential Damage– Because an e-commerce website is functionally the equivalent of a

large single store, the scale of crimes is far larger than for any single outlet of a chain of physical stores

Security: e-CommerceSecurity: e-Commerce

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e-Commerce Security Technologye-Commerce Security Technology

• Several technologies can be employed to help reduce the risk to companies and their customers when completing e-commerce transactions– Passwords: Identify who is trying to access a

website or part of a website

– Encryption: Encodes and decodes information transmitted over the Internet

– Public Key Infrastructure: Encryption software uses pieces of additional software called keys to ensure that only the creators and the intended recipients can access it

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Securing Companies from External AttackSecuring Companies from External Attack

• Screening Routers– Can screen packets and determine, not only, whether

they can forward a packet, but also, whether they should forward it

• Proxy Servers– Their primary purpose is to forward packets on behalf of

PCs on a company’s internal network to the Internet

• Firewalls – Is essentially a computer (or specialized appliance) that

sits between the Internet and anything a company wants to protect (such as a Web server or internal network)

2-33FirewallFirewall

• What is a firewall?

p. 563 Fig. 11-7 Next

Security system consisting of hardware and/or software that prevents unauthorized network access

2-34Attacks into your server hard driveAttacks into your server hard drive

• What are viruses, worms, and Trojan horses?

p. 558 Next

VirusVirus is a potentially damaging computer program

WormWorm copies itself repeatedly,

using up resources

and possibly shutting down computer or

network

Trojan horseTrojan horse hides within or looks like

legitimate program until

triggered

PayloadPayload (destructive event) that is

delivered when you open file, run infected program, or boot computer with infected disk

in disk driveCan spread and

damage files

Does not replicate itself on

other computers

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2-36Computer Viruses, Worms, and Trojan HorsesComputer Viruses, Worms, and Trojan Horses

• What is an antivirus program?

p. 560 - 561 Fig. 11-4 Next

Identifies and removes computer viruses

Most also protect against worms and Trojan horses

2-37Computer Viruses, Worms, and Trojan HorsesComputer Viruses, Worms, and Trojan Horses

•How can a virus spread through an e-mail message?

p. 559 Fig. 11-2 Next

Step 1. Unscrupulous programmers create a virus program. They hide the virus in a Word document and attach the Word document to an e-mail message.

Step 2. They use the Internet to send the e-mail message to thousands of users around the world.

Step 3b. Other users do not recognize the name of the sender of the e-mail message. These users do not open the e-mail message. Instead they delete the e-mail message. These users’ computers are not infected with the virus.

Step 3a. Some users open the attachment and their computers become infected with the virus.

2-38Computer Viruses, Worms, and Trojan HorsesComputer Viruses, Worms, and Trojan Horses

• What are viruses, worms, and Trojan horses?

p. 558 Next

VirusVirus is a potentially damaging computer program

WormWorm copies itself repeatedly,

using up resources

and possibly shutting down computer or

network

Trojan horseTrojan horse hides within or looks like

legitimate program until

triggered

PayloadPayload (destructive event) that is

delivered when you open file, run infected program, or boot computer with infected disk

in disk driveCan spread and

damage files

Does not replicate itself on

other computers

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Fulfillment: Bricks-and-MortarFulfillment: Bricks-and-Mortar

• Includes all steps necessary to distribute the company’s products. Examples:– Wal-Mart: the creation of distribution

network of regional warehouses, trucks, and retail stores

– Fingerhut: the building of relationships with suppliers and creation of a system to deliver purchased items to customers

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Fulfillment: e-CommerceFulfillment: e-Commerce

• Issues Facing e-commerce fulfillment:– Customer Demand for Transparency– Many Activities and Parties– Multiple systems– Capacity Utilization