Introduction to Information Systems

ISOM 2010
Lecture 5: Digital Economy (IV)
Digital Goods, Working in the Digital World
Prof. Michael Zhang

Quiz I
March 16 (Wednesday)
This classroom, during class time

ISOM2010 - Copyright (c) Michael Zhang

Creative Way of Using IT

ISOM2010 - Copyright (c) Michael Zhang

Nature of the digital economy

Globalization
Digitization
Speed

New markets

Merger of
Product/service
Role of ideas

ISOM2010 - Copyright (c) Michael Zhang

2. Digitization of Goods

Suppose you are a musician

You spend $1000 to produce the first copy of
a CD

ISOM2010 - Copyright (c) Michael Zhang

Now you produce 10 copies of it

Suppose it costs $1 to make one copy

$(1000+10)/11=$91.8
Your Average Cost is ______________
$1
Your Marginal Cost is ______________
ISOM2010 - Copyright (c) Michael Zhang

Information Goods
What is the property of Information Goods?
Very difficult to
produce the first
copy
Very easy to
make copies

ISOM2010 - Copyright (c) Michael Zhang

Music

ISOM2010 - Copyright (c) Michael Zhang

Telephony

ISOM2010 - Copyright (c) Michael Zhang

10

News

ISOM2010 - Copyright (c) Michael Zhang

11

Many Others

Movies
Postal services
Radio broadcasting
Photography
Gaming
Phone directories
Stock quotes

ISOM2010 - Copyright (c) Michael Zhang

12

3. Speed
Dell
After implementing an information system to process supply chain
information
Production Cycle
Before:6 months
Now: 4 days

ISOM2010 - Copyright (c) Michael Zhang

13

Speed diffusion of tech

Years to reach 300M users:
Radio =80 TV
=50
Cable =27 Internet =5

ISOM2010 - Copyright (c) Michael Zhang

14
Source: King et al. (2002)

ISOM2010 - Copyright (c) Michael Zhang

15

ISOM2010 - Copyright (c) Michael Zhang

16

Diffusion of Knowledge: Science

ISOM2010 - Copyright (c) Michael Zhang

17

Diffusion of News: NY Times

ISOM2010 - Copyright (c) Michael Zhang

18

Diffusion of Opinions: Yahoo!Movies

ISOM2010 - Copyright (c) Michael Zhang

19

ISOM2010 - Copyright (c) Michael Zhang

20

4. Merger of Products & Services

ISOM2010 - Copyright (c) Michael Zhang

21

Merger of products/services
Product+Service

ISOM2010 - Copyright (c) Michael Zhang

22

Michael X Zhang

ISOM2010 - Copyright (c) Michael Zhang

23

ISOM2010 - Copyright (c) Michael Zhang

24

MIT on Google Map

ISOM2010 - Copyright (c) Michael Zhang

25

ISOM2010 - Copyright (c) Michael Zhang

26

5. The Role of Ideas

It took a 21-year-old a few minutes to
come up with an idea which has made
him more than one million dollars in
four months. So what's his secret?

--- BBC News

http://video.google.com/videoplay?docid=-1808410405919690244

ISOM2010 - Copyright (c) Michael Zhang

27

The Role of Ideas

Protection of intellectual property
Patents
Inventions (3 tests: New/Useful/Non-obvious)

Copyrights
Expression of an idea (not the idea itself)

Trademarks
A word, phrase or symbol used to identify a product
or business

Trade secrets
Inventions, kept secret by choice
ISOM2010 - Copyright (c) Michael Zhang

28

6. New Markets and Pricing

Digital markets have created new businesses
Travel
Orbitz
Expedia

Customer-to-customer exchanges and auctions

eBay
Yahoo auctions

Financial
Fidelity
eTrade
ISOM2010 - Copyright (c) Michael Zhang

29

Amazon means more choices

Amazon
>3,000,000 books

A large
bookstore
100,000 books

ISOM2010 - Copyright (c) Michael Zhang

30

Working in the Digital World

Digital world brings major changes in the
way individuals work
Phone, IM, email, Skype, Video conferencing
Digital white board at Boeing

Knowledge workers
Fastest growing and best paid

Telecommuting

ISOM2010 - Copyright (c) Michael Zhang

31

Digital Firm Corporate Culture

Time-sharing desks
Cookie rooms
Game rooms
Day care center
Laundry/shower rooms
Flexible working schedule
In terms of time
In terms of space

Stark contrast to the HK working culture!

ISOM2010 - Copyright (c) Michael Zhang

32

Trust -> Ethics

Set of principles of right conduct
Ethical vs. Legal
Major ethical issues
Piracy
Intellectual Property

Privacy

ISOM2010 - Copyright (c) Michael Zhang

33

Indian Call Center

ISOM2010 - Copyright (c) Michael Zhang

34

Glossary

Super Fight
As soon as possible
ASAP
Okey-Dokey
OK
Bon Jour
Good day
Very well
Oui Bien
Committing suicide
Taking a bath with a toaster
Please
Sil Vous Plais
Stop buying to protest
Boycott
Low voice
Inside voice
Movie industry in India
Bollywood

ISOM2010 - Copyright (c) Michael Zhang

35