Kip Becker, Ph.D Boston University

GLBTRADE@BU.EDU

HTTP://WWW.BU.EDU/GLOBAL

Productivity in Goods and Services 1960 - 94

(Annual Index of output per Person – Hour, 1960=100)

Ratio Scale

100120140

160180200220240

260280300

Commercial Goods Sector

Commercial Services Sector

Will the internet increase service productivityWill the internet increase service productivity ?

IS EBUSINESS A BRIDGE IS EBUSINESS A BRIDGE FROM OLD WAY OF FROM OLD WAY OF

BUSINESS TO NEW OR BUSINESS TO NEW OR JUST ANOTHER TOOL?JUST ANOTHER TOOL?

IN GROUPS

WEBONOMICS

Technology-mediated exchanges between parties as well as electronically-based intra- or inter-organizational activities that facilitate such exchanges

LETS TAKE A LOOK AT DIFERENT ATTRIBUTES

Understanding E-commerce: Understanding E-commerce: Organizing ThemesOrganizing Themes

Technology: Development and mastery of digital computing and communications technology

Business: New technologies present businesses and entrepreneurs with new ways of organizing production and transacting business

Society: Intellectual property, individual privacy, and public policy

Lets Look At 4 InfrastructuresLets Look At 4 Infrastructures

1.1. Technology infrastructureTechnology infrastructure: This is both an enabler and driver of change.The hardware backbone of computers, routers, servers, fiber optics, cables, modems, etc. provide half of the technology equation.The other half includes the software and communication standards including the core protocols for the www.

2.2. Capital InfrastructureCapital Infrastructure:: Deals with getting the money to launch new businesses and finding the right people to build the business plan and seek funding sources.

3.3. Media infrastructureMedia infrastructure:: The e-commerce managers must make choices about the types of media employed(e.g., print, audio , video), the nature of the media and editorial policy(including style, content, look and feel).

4.4. Public Policy InfrastructurePublic Policy Infrastructure:: All the decisions related to strategy, technology, capital and media are influenced by laws and regulation, i.e., public policy decisions. It not only affects specific business but also direct and indirect competitors.

4 Infrastructures4 Infrastructures

A BRIEF HISTORYA BRIEF HISTORY

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

• Great advances made in network technology 1960s• To connect computers &permit transfer of information

locally, many organizations installed Local Area Networks. LAN technology limited distance

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

• (WHY DO THIS ?)

THE WEB PROGRESSES

1989–1991: Web “invented” - Tim Berners-Lee at CERN

1993: Marc Andreesen /Others at NCSA create Mosaic, Web browser with GUI that runs on Windows, Macintosh, or Unix

1994: Andreessen, Jim Clark found Netscape; create first commercial Web browser, Netscape Navigator

August 1995: Microsoft introduces Internet Explorer, its version of Web browser

Lets take a look at some of the early players

Communication Formats similar Development WWWCommunication Formats similar Development WWW

• Like internet radioradio began as communication medium • Really the first WWW• Early medium known as wireless telegraphy/ telephony; radio’s

point-to-point wireless messaging ARMY CONTROL• Demand for radio broadcasting surged in 1922 - shifted from a

point-to-point communication tool to broadcast medium

• During 1920s, all 48 states in the US had at least one radio station• By 1925, 27 of the original 48 stations were out of business

• Revenue sources such as programming subsides from radio-set sales, radio taxes, generalized goodwill for corporate sponsors and advertising emerged as new revenue generation models

• The pay for service revenue model allowed radio to compete with telegraph and cut the price of telegraph by 30% FAMILIAR ?

• BUT THEN WHAT HAPPENED?

1912 Titanic WW1 US Navy rights to airwaves

1919 RCA - Revenue Model

1922 576 stations - open to all - By 1925?

NOT ONLY THE DOT COM’S HAD DIFFICULTIES

The Web Got Ahead of ItselfThe Web Got Ahead of ItselfBUT first quarter of 2001, online sales only about 1

percent of all retail sales

WHAT ARE SOME REASONE

why Americans weren’t ready to do more Web business:

– Poor service and high prices

– Too much to choose from

– Inconsistent technology

BUT THENBUT THEN.. WEB SALES SURGED.. WEB SALES SURGED

The Growth of B2C E-commerceThe Growth of B2C E-commerce

SOURCES: Based on data from U.S. Census Bureau, 2007

The Growth of B2B E-commerceThe Growth of B2B E-commerce

SOURCES: Based on data from U.S. Census Bureau, 2007

The Growth of Web The Growth of Web ContentContent

SOURCE: Based on data from Google Inc., 2007.

Pure Pure Vs.Vs. Partial Electronic Commerce Partial Electronic Commerce

– THREE DIMENSIONS the process [physical / digital] the product (service) sold [physical / digital]; the delivery agent (or intermediary) [physical / digital]

– TRADITIONAL COMMERCE all dimensions are physical

– PURE EC all dimensions are digital

– PARTIAL EC all other possibilities include a mix of digital and

physical dimensions

NETWORKS TO NETWORKS

OR

ORGANIZED CHAOS

THE INTERNETINFRASTRUCTURE

Who Runs It?How does it Run?

– Electronic data interchange (EDI) over Value Added Networks (VANs)

– Extranets– Electronic funds transfer (EFT)– Integrated messaging systems– Shared databases– Electronically-supported supply

chain management

Types of Interorganizational Systems

1. A global networked environment is known as the

2. A counterpart within organizations, is called an

3. An extends intranets so that they can be accessed by business partners.

EC CONNECTIONS EC CONNECTIONS

– Is INTERNET and W3 same thing?

Internet

Intranet

extranet

What are Characteristics allow shared access of data What are Characteristics allow shared access of data 1. Unique identification each computer

network of millions of computers - thousands networks..

Important each computer be uniquely identified

Internet Protocol(IP) address. 198.108.95.145

2. Human-friendly addressingDomain Name System(DNS) gave address recognizable letters & words instead of IP address. bu.edu/GoGlobal

3. Packet SwitchingRemedy delays associated unequally sized data transfers, instead of transferring files in their entirety, whole files broken into data packets before transferred over network

4. Routing Dedicated, special-purpose computers which serve as an intermediary between

networks. Route packets efficiently through networks and are building blocks of the internet. Packets used TCP software insures safe delivery of packets

Internet ProtocolsInternet ProtocolsProtocols - A set of rules that determine how two computers

communicate with one another over a network– The protocols embody a series of design principles

Inter-operableInter-operable— the system supports computers and software from different vendors. For e-commerce this means that the customers or businesses are not required to buy specific systems in order to conduct business.

LayeredLayered— the collection of Internet protocols work in layers with each layer building on the layers at lower levels.

SimpleSimple— each of the layers in the architecture provides only a few functions or operations. This means that application programmers are hidden from the complexities of the underlying hardware.

End-to-EndEnd-to-End— the Internet is based on “end-to-end” protocols. This means that the interpretation of the data happens at the application layer and not at the network layers. It’s much like the post office.

ONE OF THE MOST IMPORTANT PROTOCOLS ONE OF THE MOST IMPORTANT PROTOCOLS

TCP/IP TCP/IP Solves the global internetworking problemSolves the global internetworking problem

Transmission Control Protocol (TCP)– Ensures that 2 computers can communicate with

one another in a reliable fashionInternet Protocol (IP)

– Formats the packets and assigns addresses packets are labeled with the addresses of the sending

and receiving computers

– 1999 version is version 4 (IPv4)Version 6 (IPv6) has just begun to be adopted

– WILL ALLOW 1 QUADRILLION COMPUTERS TO BE CONNECTED TO INTERNET!! THIS IS THE HOME “SYSTEM” NETWORK

NETWORK OF NETWORKSNETWORK OF NETWORKS

WHAT CONSITITUTES THE NETWORKS?WHAT CONSITITUTES THE NETWORKS? NSPs

– “BACKBONE” NETWORK SERVICE PROVIDERS\ MCI, PSINET ETC. NAPs

– NETWORK ACCESS POINTS/ PACIFIC BELL NAP IN SANFRANCISCO & AMERITEC NAP CHICAGO

ISPs– INTERNET SERVICE PROVIDERS– EXCHANGE DATA NSPs AT NAPs

ROUTERS MAPS TO INTERNET FOR PACKETS TO FOLLOW/ CISCO MAJOR

PROVIDER OF HIGH SPEED ROUTERS

2001: Jan 30 Egypt lost 70% + ½ western 2001: Jan 30 Egypt lost 70% + ½ western India's outbound crashed downing India's outbound crashed downing outsourcing industry. 75m from Algeria to outsourcing industry. 75m from Algeria to Bangladesh disrupted or cut off. Feb 1 Cable Bangladesh disrupted or cut off. Feb 1 Cable cut west of Dubai Middle East service again cut west of Dubai Middle East service again severly disrupted.severly disrupted.

END OF END OF INFRASTRUCTYREAND INFRASTRUCTYREAND

HISTORY HISTORY