(14-Jan) - Class 1 Notes/Study Guide: Introduction to MIS and Course

Terms Disruption - A disruptive innovation is an innovation that helps create a new market and value network, and eventually goes on to disrupt an existing market and value network (over a few years or decades), displacing an earlier technology. Disruptive technology - Same as above (something that comes out and disputes the market; not always beneficial e.g., Amazon. Netflix and the newspaper); something that does a job for customers in a way thats cheaper/better than the previous way Microprocessor (aka Semi-Conductor) - an integrated circuit that contains all the functions of a central processing unit of a computer. (computer chips). It's basically the "brains" of the computer. Study Exercises and Questions Is technology only to add efficiency and improvement? Please explain the other side of how technology affects the world and business. - Not necessarily. Sometimes technology acts as a disruptor that may negatively affect other businesses i.e. email affecting USPS disruption increases as pace of innovation increases Go Google "Moore's Law" and in your own words describe what it means in lay terms.-Essentially number of transistors on integrated circuits doubles every two years with no additional cost OR that the cost of technology decreases with time. However, we could experience the death of Moore's law in the future due to the power necessary to run a computer chip without it overheating as well as a possible end to the amount that these chips can "shrink"and allow for more room on the chip. (16-Jan) - Class 2 Notes/Study Guide: Innovators Dilemma & Creative Destruction

Terms Innovators Dilemma-When New Technologies Cause Great Firms to Fail, generally referred to as The Innovator's Dilemma, is the most well-known work of the Harvard professor and businessman Clayton Christensen. (i.e. Kodak and the digital camera) HARVARD PROFESSOR INFORMATION IS NOT NECESSARY TO KNOW FOR THE TEST?? stuck in thinking one way, scared to innovate and try new things, too much concern on current needs > Cross side exchange derives from two-sided markets ] Network markets comprised of two distinct categories of participant, both of which that are needed to deliver value for the network to work (e.g., video game console owners and developers of video games).Staying Power / Lock-in- (long term viability) of a product or service is particularly important for consumers of technology products. Like when you buy a MAC OS, your investment over time greatly exceeds the initial price paid for the operating system. A user invests in learning how to use a system, buying and installing software, entering preference, or other data, creating files all of which mean that if a product isn't supported anymore, much of this investment is lost. Cross-side exchange benefit- When an increase in the number of user on one side of the market (like console owners) creates a rise in the other side (software developers). two-sided marketsSwitching Cost- The cost a consumer incurs when moving from one product to another they can strengthen the value of network effects as a strategic asset. the more a user has invested in products, the less likely they are to leave. Complementary Benefits- those products or services that add additional value to the network such as how to books, software, and feature add ons, even labor. (Ex. House Netflix) Feedback Loops- more people are buying, more people are selling (more people buy Xbox, more Xbox games made, less PS3 games made, less people buy PS3, then back to more people buying Xbox)

Platform- Products and services that encourage others to offer complementary goods. a great strategy because those firms will spend their time and money to enhance your offerings. Ipad leading to other companies to build and sell speaker docksNetwork Effects Questions and Exercises: Consider the three parts that make up network effects and then use this to assess why people use Facebook more than Google+. What could Google do to increase network effects? How did Netflix help increase its own? Consider barriers to entry and how you want barriers to exist (i.e. high or low) when you are trying to attract and then when you are trying to retain customers. The three parts of Network effects are exchange, staying power, and complementary benefits. More people are on Facebook and therefore has more exchange and value to the users. Google could lower the switching cost by bringing all your fb friends over or something. Netflix offered online streaming and delivery. You want barriers to be low when customers are entering your company, but want them to go up as soon as they are in so that they are locked in. ex phone contracts, 2 years Staying Power and Switching Cost are talking about the same thing essentially except it depends on whose perspective youre considering. Please explain what is meant by this statement. Staying power deals with how a company keep their customers instead of losing them to another business. If the competing businesses have a high switching cost (aka its a pain in the ass to switch, contracts or if you have a lot of their products already) then the customers will stay with the original company. If the competing business can lower that switching cost (ex. offering for pay for the fee to break contract, offer no contract plans for phone then customers may choose to switch).The higher the switching cost your customers have from your business, the more staying power you have. In other words, its what a company does in order to keep customers from switching to a different companies product. ( so many compliments built by people outside of Apple). Apples app store has over 775,000 apps in their store. They encourage people to develop apps by giving away software developer kits so that people can create their own apps. This is brilliant strategy because apple gets the benefits from other peoples works and doesnt have to spend money on developing since consumers do it for themselves. Is Groupon an example of a one-sided market or a two-sided market? Whats the difference between one and two sided markets? What about AOL Instant Messenger? How does growth or monetization of a network change when you are two-sided versus one-sided.Groupon is a two sided market. More users means more deals, which leads to more users. AOL instant messenger is a one sided market. One sided markets derive most of their value from single class of users.example: IM Two sided markets derive their value from two classes of users. example: eBay (feedback loop) Markets where network effects are at play experience what kind of competition? How are feedback loops a contributor to this? vicious competition, they are constantly causing buyers and sellers to increase, decrease, feed off of each other, and adjust to what is happening.WHY IS THIS?? How can a product with less technical functionality end up being the overall winner over a better product? and don't just tell me because of network effects. Because customers are either already using something that the new product would be a complementary benefit to and they would have no switching cost or difficulties adding the product, or the worse product already has more users so it is more valuable to customers. What are different methods noted in class and in text of how one can acquire network effects? Can you spot the method if I gave you an example of a companys strategy? Blue Ocean Strategy-Wii- targeted a new audience by offering less violent games that female and family can play envelopment- Apple (mp3, cameras,... into one product: iphone) seed the market (blu-ray) leverage viral promotion (skype, facebook feedback) distribution channels- DirecTV offering DVR with subscriptions (ultimately got rid of Tivo by leveraging distribution channels) complementary benefits Incumbents constantly innovate to create a moving target and block rival efforts to access your network (apple try to block access to its own system) for large firms with well known followers, make preannouncement (microsoft)

(4-Feb) - Class 7 Notes/Study Guide: Software Ecosystem (Traditional vs Open Source)

Microsoft Case and Software Today Terms: Software / Hardware Ecosystem- hardware= equipment that processes the data to create information aka the actual computer. software= step by step instructions that convert data into information Software Suite- a software product offered commercially by a third party Operating System (OS)- provides a common set of controls for managing computer hardware, making it easier for users to interact with computers and for programmers to write application software. also designed to give programmers a common set of commands to consistently interact with the hardware. Monopoly- a market where there are many buyers but only one dominant seller TCO (Total Cost of Ownership)- All of the costs associated with the design, development, testing, implementation, documentation, training and maintenance of a software system.

Microsoft and Software Learning Objectives: What is TCO (Total Cost of Ownership) about and how does it relate to switching cost? This relates to switching costs because TCO takes into consideration all the components of a computer that would be worth their money, on the business and public side. What is the model of the hardware/software ecosystem entail? What are its layers? What does control over certain layers provide in terms of competitive advantage, staying power, and network effects? IS THIS KONAS ECOSYSTEM MODEL??? Explain what network effects strategies Microsoft took to become the major leader in the OS Market, Productivity Software (i.e. Office), and the browser market (e.g. Internet Explorer) Partnering with IBM increased its Exchange, Platforms encouraged complimentary benefits from ISV, there was high switching cost with bundling, and upgrades created lock-ins. Explain why network effects determine whether an Independent Software Vender (aka ISV) would prefer to make a Windows-compatible application over a Mac-compatible application. Because more people use windows devices and it would have more value due to the more users (Windows has higher Exchange)Open Source Terms: Open source software (OSS)- software that is free and where anyone can look at and potentially modify the code (when the source is open, it is public, meaning that the people can access and edit the code via the internet) EX: Android LAMP (Linux Apache MySQL Perl/Python/PHP) - software bundle that is a free, open source software program. this is how firms can run completely on OSS aka this is how Facebook and YouTube run Marginal cost - the extra cost of producing one more unit of output Scalability - Refers to ability to handle increasing workloads or to be easily expanded to manage workload increases. In a software context, systems that are scalable, often require significant rewrites or the purchase or development of entirely new systems Total cost of ownership (TCO)- a measure of the full cost of owning a product or service (typically computing hardware and/or software)

Open Source Questions: What does it mean for something to be open source? What are some examples of open source software and even some non-software related things? The public can edit and adjust it. Wikipedia and android, IBM How have low marginal costs, network effects, and switching costs combined to help create a huge and traditional (SW?) industry? How could OSS be a threat to the traditional SW industry? If OSS is free then what is gained by using it and funding the projects that contribute to it? Who is coding for free? People who work for corporations How do you make money off of it? Companies have consulting contracts, support help What are benefits of taking an open source approach to building anything (not just software) and tie in your answer with the concepts of crowdsourcing, the group brain, and cognitive diversity? The benefits are that in the end you will have the best product you can have because so many people have contributed to it. And not just one person who doesnt interact with the customers and know what they want. What are the risks and/or concerns of using OSS? Who are main contributors to the code of OSS? How is this different than perception of OSS code.People who work for corporations. Everybody thought that OSS coding was for nerds. Why would a company building tablets choose Android (an open source Operation System) over building their own or paying to license Windows Mobile OS? How does this choice affect the pricing of their tablet? It will be cheaper than the other two options, so the tablet will be priced cheaper.Strategies for Competing in Markets with Network Effects Move early (Yahoo! Auctions in Japan) Subsidize product adoption (PayPal) Leverage viral promotion (Skype; Facebook feeds) Expand by redefining the market to bring in new categories of users (Nintendo Wii) or through convergence (iPhone). (Blue ocean strategy) Form alliances and partnerships (NYCE vs. Citibank) Establish distribution channels (Java with Netscape; Microsoft bundling Media Player with Windows) Seed the market with complements (Blu-ray; Nintendo) Encourage the development of complementary goodsthis can include offering resources, subsidies, reduced fees, market research, development kits, venture capital (Facebook fbFund). Maintain backward compatibility (Apples Mac OS X Rosetta translation software for PowerPC to Intel) For rivals, be compatible with larger networks (Apples move to Intel; Live Search Maps) For incumbents, constantly innovate to create a moving target and block rival efforts to access your network (Apples efforts to block access to its own systems) For large firms with well-known followers, make preannouncements (Microsoft)NOTE: All examples are from last section of the Network Effects chapter

(11-Feb) Notes/Study Guide Day 9 - Apple Case and Hardware EcosystemHardware Ecosystem Terms Hardware -- physical components (non-software) Moores Law- affects amount of E-waste Computer Architecture (4 parts of computer): 1) processing (CPU) - for processing commands2) input- from a keyboard, or a floppy, a hard friv tec to input both commands and data3) output - to a monitor, a printer, etc4) memory - place an actual program and or data that the CPU uses MUST reside E-waste -- discarded or obsolete technologyHardware Ecosystem Questions and Exercises: Be able to list the major components of computer architecture. Be able to classify commonly seen computer parts as input, output, storage, or processing devices. Know the purpose of each. What are positive and negative global impacts of Moores Law? e-waste, technology improves our lives, but not the environment Can you explain what the three basic layers of the ecosystem are and how Microsofts strategy differed from Apple in terms of what parts of the ecosystem is completed within? applications, operating system, and hardware. Microsoft has open apps and hardware, while Apple only has open apps (closed hardware and OS). When it comes to the ecosystem, Apple followed a similar strategy in the mobile phones and tablets that it did in desktops by controlling the hardware layer. How was that strategy different than Microsoft and explain how this gives some advantages to Apple. By keeping the hardware and OS closed, they had complete control in the end product. Therefore, they were able create optimal product (e.g. very slick, less buggy) for a high-end market. For desktops, Microsoft prefered to make profit by licensing their OS, and not deal with the huge barriers to entry of making their own hard-ware (= less risk). What is the difference between Open and Closed standards when looking at the potential for new entrants, the potential for rivalry, and the potential for profit. In Open systems the potential for new entrants and rivalry both increase because so many people can create the same product; however it causes potential for profit to decrease because of all the competition. Should Apple care that Android has a bigger market share in the mobile phone market? Yes or no? Why? No because Apple has something unique and no one can touch it. While Android competition within itself keeps increasing, Apple can sit back and not worry about it. The market seems to be going toward Android because of the variety, but all the competition within will soon bring it crashing down.