Chapter 17

The Digital Revolution

and the Global
E-marketplace
Introduction
This chapter looks at
Innovations that led
to the digital
revolution
Convergence and the
disruptive nature of
Internet technology
E-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 University
1947: The transistor was invented
1950s: Invention of the silicon chip
1970s: 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
unveiled
1984: Apple introduced the Macintosh
1993: 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 time
1973: The creation of a cross-network protocol; the
true birth of the network of networks, the Internet
1993: Tim Berners-Lee invented URL, HTML and
Http. Also the first commercial browser was created
Web users in 1993: 600,000
Web users in 2003: 580,000,000 (estimated)

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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 dilemma
Value network
Sustaining technologies
Disruptive technologies

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Innovator’s Dilemma
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 industry
Cost structure that dictates the margins
needed to achieve profitability
Boundaries are defined by the unique
rank ordering of the importance of
various product attributes
Each network has its own metrics of
value
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Sustaining Technologies
Incremental or radical innovations that
improve product performance
Most new technologies developed by
established companies are sustaining in
nature
The vast majority of innovations are
sustaining in nature
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Disruptive Technologies
Redefine performance
New entrants to an industry
Enable something to be done that was
previously deemed impossible
Enable new markets to emerge

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Global E-commerce
In 2003, global e-commerce revenues stood at $1.6
trillion and growing
Every 48 hours, Yahoo records more than 24
terabytes of data about its users’ online habits—
equivalent of all the information contained in all the
books in the Library of Congress
Between 2003 and 2006, the number of Internet
users in China increased from 68 million to 123
million; in Shanghai, Beijing and Guangzhou,
one-third of all residents use the Internet
Japan has about 60 million Internet users, and
accounted for $1.6 billion in online revenue in 2004
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Global E-Commerce
Can be divided into three broad
categories
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
Classified by purpose
Promotion sites that promote goods or
services
Content sites that provide news and
entertainment
Transaction 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
mix
Can be developed inhouse or by an
outside firm

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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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Websites
Things to consider when creating a
global Website
Localize the Website in the native language
and business nomenclature of the target
market
Should reflect local culture, customs, and
aesthetic preferences
Privacy
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Websites
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
simultaneously
Bandwidth determines the range of
frequencies that can pass over a
transmission channel

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Broadband
Creates opportunities for streaming
audio, video, and media
Online gaming
Online education
Medical diagnosis and treatment
E-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 PDAs
Wi-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 annually
European cellular providers have formed a
consortium called Simpay to offer M-commerce
services to 250 million cellular subscribers
In 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
The next big thing for the
telecommunications industry
Has the potential to render the current
telecommunications infrastructure
obsolete
Currently accounts for only 3% of total
global calling
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Looking Forward
To the final exam!

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