Chapter 17The Digital Revolution

and the Global E-marketplace

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Introduction

This chapter looks at

Innovations that led to the digital revolutionConvergence and the disruptive nature of Internet technologyE-commerce and website categories

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The Digital Revolution: A Brief History

1937 to 1942: World’s first electronic digital computer was developed at Iowa State University1947: The transistor was invented1950s: Invention of the silicon chip1970s: The decade for companies such as Atari, Commodore, and Apple

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The Digital Revolution: A Brief History

1981: IBM introduced its first personal computer (PC)1982: The 286 microprocessor was unveiled1984: Apple introduced the Macintosh1993: The creation of the Pentium processor

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The Digital Revolution:Additional Milestones

1969: The Internet can trace its origins (Defense Advanced Research Projects Agency)1972: E-mail was sent for the first time1973: The creation of a cross-network protocol; the true birth of the network of networks, the Internet1993: Tim Berners-Lee invented URL, HTML and Http. Also the first commercial browser was createdWeb users in 1993: 600,000Web users in 2003: 580,000,000 (estimated)137m internet users in CN in 2009

CN v US Internet Growth

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Estimated Internet usage. Data

source: Pew

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Industry Convergence

The coming together of previously separate industries and product categories

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Value Networks and Disruptive Technologies

Innovator’s dilemmaValue networkSustaining technologiesDisruptive technologies

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Innovator’s Dilemma

Staying committed to a current, profitable technology Failing to provide adequate levels of investment to new and possibly risky technologies Company is responding to the needs of established customers

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Value Network

Found in every industryCost structure that dictates the margins needed to achieve profitabilityBoundaries are defined by the unique rank ordering of the importance of various product attributesEach network has its own metrics of value

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Sustaining Technologies

Incremental or radical innovations that improve product performanceMost new technologies developed by established companies are sustaining in natureThe vast majority of innovations are sustaining in nature

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Disruptive Technologies

Redefine performanceNew entrants to an industryEnable something to be done that was previously deemed impossibleEnable new markets to emerge

The Structure of Scientific Revolutions (1962), by Thomas Kuhn, is an analysis of the history of science. Its publication was a landmark event in the sociology of knowledge, and popularized the terms paradigm and paradigm shift.

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Global E-Commerce

Business to business (B2B)Business to consumer (B2C)Consumer to consumer (peer-to-peer)

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Technology Forecast

Travel booked over the Internet represents the largest e-commerce category. Revenues totaled $68 billion in 2005 and are expected to reach $104 billion by 2010

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Websites

Promotion sites that promote goods or servicesContent sites that provide news and entertainmentTransaction sites allow consumers to purchase goods and services

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Categories of Websites

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Websites

Companies must be willing to integrate interactive media into the marketing mixCan be developed in-house or externally.

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Websites

Shopping on the Internet is no different than traditional sales channels. It’s all about trusting the brand and having a strong relationship with one’s customers.

—Ron Fry, Internet Business Manager, Lands’ End

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Global Websites

Localise the Website in the native language(s) and business nomenclature of the target marketShould reflect local culture, customs, and aesthetic preferencesPrivacy

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What makes a good website?

Technology and functionality—This category includes layout, ease of navigation, and print-out opportunities. Does the site offer interactive functions such as order forms and e-mail subscriptions?Content—This category includes e-mail address information for key people or corporate functions; corporate information such as mission, vision, and company history; and financial information such as quarterly reports in PDF or HTML format.

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Broadband

Has sufficient capacity to carry multiple voice, data, or video channels simultaneouslyBandwidth determines the range of frequencies that can pass over a transmission channel

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Broadband

Creates opportunities for streaming audio, video, and mediaOn-line gamingOn-line educationMedical diagnosis and treatmentE-commerce

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Mobile Commerce and Wireless Connectivity

Mobile commerce or M-commerce is the term for conducting commercial transactions using wireless handheld devices such as PDAsWi-fi (wireless fidelity) permits laptop and PDA users to establish high-speed wireless Internet connections Bluetooth uses less power than wi-fi, works well with cell phones, and covers shorter distances than wi-fi

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Smart Cell Phones

500 million cellular handsets are sold annuallyEuropean cellular providers have formed a consortium called Simpay to offer M-commerce services to 250 million cellular subscribersIn Norway, mobile operator Telenor ASA has teamed with a finance group to offer mobile purchases of flowers, compact discs, bus tickets, and food

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Internet Phone Service (VoIP)

The next big thing for the telecommunications industryHas the potential to render the current telecommunications infrastructure obsoleteCurrently accounts for only 3% of total global calling

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Most of Skype's usage, generates no revenue. Its free computer-to-computer calls (certain handsets and mobile devices can now be used as well) have become a hugely popular way of making international calls.

TeleGeography estimates that Skype's international traffic jumped by 41 percent in 2008 and topped 33 billion minutes of use, most of that in free calls. Traditional international calls grew only 12 percent in 2008.

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The GMS: A broad conceptualization of global marketing strategy & its effects.

Shaoming Zou; S Tamer Cavusgil Journal of Marketing; Oct 2002;

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If you are interested in Global Markets and have some experience you may do

well !

Methodology

US companies only. Pricing excluded Sample had to Export to JP or EU (LatAm excluded ?!) n= 434 business Units

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