CIS 5-2

1.         Review of social process

            a.         Labors of love: examples!!!

2.         Continue

            a.         Birth of the "Internet"

                        i.         As the '70s and '80s advanced, many very different social groups found themselves in possession of powerful computers. It was fairly easy to link these computers to the growing network-of- networks. As the use of TCP/IP became more common, entire other networks fell into the digital embrace of the Internet, and messily adhered. Since the software called TCP/IP was public-domain, and the basic technology was decentralized and rather anarchic by its very nature, it was difficult to stop people from barging in and linking up somewhere-or-other. In point of fact, nobody *wanted* to stop them from joining this branching complex of networks, which came to be known as the "Internet."

                        ii.        In 1984 the National Science Foundation got into the act, through its Office of Advanced Scientific Computing. The new NSFNET set a blistering pace for technical advancement, linking newer, faster, shinier supercomputers, through thicker, faster links, upgraded and expanded, again and again, in 1986, 1988, 1990. This is when San Diego Supercomputer system became part of backbone.

                        iii.       Division of nodes into "domains:" gov, mil, edu, com, org and net.

                        iv.       In 1989, ARPANET expired, and NSFNET took over.

            b.         By 1995, all curbs on commercial use of the Net were lifted. In 1996, Net was completely privatized. kind began to emerge.

3.         Sociological Issues

            a.         Internet’s innovative force connected to its origins:

                        i.         Not developed out of existing industry, rather government and academia, therefore no established commercial interests

                        ii.        Spread powered (up to now) by "spontaneous" demand, rather than corporate marketing

                        iii.       At least until 1996, big corporations showed little interest. Allowed small, startups to take lead.

                        iv.       New business model: provide sample for free, "shareware," "demo," "crippleware." Example: Doom, followed by Netscape. Now see this for books online: first chapter available. Also new audio CDs.

            b.         Unlike telephone and TV, has no principle use. Dominant use is still open question, especially as bandwidth increases. More on this later.

            c.         As Net grows, intrinsic shortcomings will become more evident: can it really rival telephone or TV?

                        i.         Tied to PC, not user friendly, requires sophisticated, educated user.

                                    (1)       Advantages of TV over Web

                                    (2)       Digital Divide: * Issue of inaccessibility to poor rooted more here than in price of hardware or service

                                                (a)       Lack of user friendliness

                                                (b)       How do I use it?

                        ii.        Still very much an American, to lesser extent English language phenomenon

                                    (1)       English still dominant language, top user countries are English speaking, German and Scandinavian countries come next. strong second. Big boost for Hong Kong and Singapore.

                                    (2)       Changing rapidly: half of all hosts now outside US

                        iii.       How to provide high-value-added services

                                    (1)       Security, reliability, speed.

                                    (2)       Temptation to change character of Internet: witness cable.

                        iv.       * Basic question: can Net solve these problems and yet maintain its present advantages: openness, dynamism, freedom from domination by a handful of powerful companies and/or governments?

I. Electronic commerce
A. Challenge is to develop profitable business model in environment hostile to profitability.
1. Every node is equal
2. Labors of love abound
B. Web:
1. Pure ebusiness vs. bricks & mortar, hybrid: clicks and mortar
2. Fate of location: death of distance
3. lowers cost of entry, better customer info, easy price comparison, increased pressure on agents and intermediaries; lower distribution costs; global reach; new payments techniques
C. Distance shopping: question of culture and tax structure. Big U.S. advantage here.
1. Again, computer associated products lead.
D. Lower entry barriers. Reduces cost of marketing and customer information. Websites easy and cheap.
1. If product is in bits, reduces distribution costs incredibly. Electronic delivery.
2. Especially software and games.
E. Better customer information:
1. Fewer mistakes if customers enter own information
2. Development of global niche markets
3. Catalogues: easy searchability; size doesn’t matter. Built-in order taking.
F. More efficient markets.
1. Price comparison made much easier.
2. Lowers location advantage, especially for established firms.
3. Better information makes for better markets
G. Pressure on agents, intermediaries: travel agents, real estate agents, insurance, dating services.
1. Disintermediation, reintermediation
H. Evolving business models:
1. Freeware, shareware, crippleware, demoware.