Transcript Goals of the Course - Cornell Computer Science

NBA 600: Session 1
Goals, Ground Rules, Overview
21 January 2003
Daniel Huttenlocher
Goals of the Course
 Develop an understanding of how IT
affects the competitive landscape
– Impact on competitive forces
– Peculiarities of digital goods and services
– Productivity paradox
• The “new economy” debate
– Increased value to the customer
• Capturing some of that value
– Network effects and small worlds
– Electronic commerce and marketplaces
– Open source and its implications
2
Goals of the Course
 Knowledge of how IT is being and can be
used to strategic advantage
– In conjunction with or separate from
operational uses
 Ability to understand new technologies
and their applications
– Sorting through the techno-speak
– Balancing the hype and the naysayers
 Ability to generalize and synthesize from
cases and examples
3
Modes of Learning
 Lectures about technical topics and
principles or generalizations
 Case discussions about specific industries
or companies
 Readings for each class session
– Both book chapters and original source
material (academic articles to news pieces)
 Student group presentations
– Cases or trends/analysis
 Written assignments and papers
4
Expectations of You
 Show up to class on-time and prepared
– Material on courseinfo site
http://courseinfo.cit.cornell.edu/courses/nba600/index.html
 Engage in class discussion
– I will cold call if necessary (bring name cards)
– Be sensitive to dominating a discussion
 Be considerate of others
– No side discussions, newspapers, noisy devices
– Always treat others with respect in discussions
 Have fun and share your insights!
5
Expectations of Me




Same as for you, plus …
Identify pertinent and informative material
Prepare lectures and discussion questions
Help guide the discussion
 This is a first-time course so it is likely to
be rough around the edges
– Especially in terms of following the syllabus
 I welcome feedback
– The end of the semester is too late!
6
Assignments
 There will be a final group project
presentation and write-up
– Groups of 3 students
– The same group will also prepare a case during
the semester
– Groups must be formed by Monday Feb 3
• I will assign the remaining students to groups
 There will be individual written
assignments about every two weeks
– Specific topics/questions will be given
7
Grading






Class participation 15%
Individual written assignments 40%
Group case 15%
Final project write-up 20%
Final project presentation 10%
What’s an A?
– The class and I learn from you
 Regrades will only be considered within
one week of an assignment being returned
– Hand in a concise explanation to me
8
Overview of Syllabus - 1
 Basics of Internet, Web and their use
 Internet and “new economy” debate
– Is there such a thing and does it matter
 Economics of IT investment
– Productivity paradox
 Information and customer ownership
– SABRE airline reservations, Fedex tracking
 Rise, fall and return of e-commerce
– Giants: Amazon, Dell direct; Mom & Pop
– Digital vs. physical goods
9
Overview of Syllabus - 2
 Markets, commerce and pricing
– Dynamic pricing vs. discovery (McNealy wrong)
– ECN’s, crossing networks, Optimark
 Online communities
– The real value of eBay
 Digital content
– Versioning, pricing
– Britannica, NYT, WSJ, stock quotes
 Digital rights management (DRM)
– Legal: fair use, DMCA and beyond
– Technical and social: Darknets, mixed alliances
10
Overview of Syllabus - 3
 Open source vs. proprietary software
– When OSS works and why
– Implications for software vendors, customers
 Network effects
– Demand-side economies of scale, lock-in
– Dominant player economics, tipping points
 Small worlds
– Implications for technology, marketing and
digital content
– Emerging trends – “smart mobs”
 IT and organizational structure
11
Quick Poll (You, Peers)
 How often do you use the Internet (email,
IM/messaging, file sharing, Web)?
– Nearly every waking hour, 2-3 times a day,
daily, 2-3 times a week, weekly, less often
 Rank the importance of the following to
you (can be equal)
– Email, IM/messaging, file sharing, Web
 What are their importance relative to to
the following
– TV, periodicals, books, cell phone, land-line
phone
12
Pew Internet Poll
 “Yes”, “no” or “don’t know” for each:
– If you needed information from a government
agency, would you expect to be able to get it
from the agency’s Web site?
– If you needed reliable information about health
or medical conditions, would you expect to be
able to get that information online?
– If you needed information about a product or
wanted to buy a product from a store, would
you expect to be able to do so on the store’s
Web site?
– If you needed reliable, up-to-date news, would
you expect to be able to find it online?
13
Use of Internet and Web
 Shared experience
– About 2/3 of Americans are Internet users
• About 108MM actively use from home (Nielsen)
 ¼ of those have broadband access
– Many visit the same Web sites (Netratings)
 Credibility, immediacy, navigability
– Pew study indicates majority of people expect
to find info on the Web and turn there
• Govt. info: 65% expect (82% of users)
• Health info: 67% expect (81% of users)
• Product info: 63% expect (79% of users)
• News: 69% expect (85% of users)
14
Growth of Internet and Web
 Can estimate use through polling
– Commercial: Nielsen Netratings
• How often use, how connected, where visit
• About 220M active users worldwide; 12% growth
– Scientific: Pew Internet Study
 Hard to get any reasonable estimates of
actual traffic*
– “Doubling every x” claims were largely untrue
– Very structure of the Internet is highly
decentralized
* Either packets on Internet or hits to Web sites
15
Main Internet Applications
 Web – HTTP protocol
– Most things you view in a Web browser
 File sharing – KaZaA, Gnutella, Napster, …
– Proprietary applications “peer to peer”
 Email – SMTP, POP, IMAP, …
– User to server and server to server
 File transfer – FTP
– Most downloads
 Instant messenger – AIM, YIM, …
 Streaming audio, video
16
Usage of Internet Applications
 Different applications on the Internet
– Each has a different protocol or set of rules on
top of TCP/IP
 In general difficult to estimate use of
different protocols/applications
– Many separate networks
 Universities have recently needed to
prioritize different protocols
– Otherwise certain “recreational” uses
completely saturate network
 Has side effect of providing usage data
17
Cornell Commodity OC3 Usage
 About 10 terabytes per week
– 10 times the monthly usage of national NSFnet
in 1992 when commercial use started
18
Reflect: On Staying Informed
 Where do people get information today?
– Personal or work
– At home, at office, elsewhere
– News, govt., health, product, work, gossip
 How do people exchange information
directly with one another today?
– Friends, family or coworkers
– At home, at office, elsewhere
– Face-to-face, email, IM, gaming…
 How are these changing?
19
Reflect: Value vs. Revenue
 Many of the Internet based services that
people rated as valuable are not currently
generating much revenue
– How can the value be captured by service
providers?
• Contrast instant messaging with short-text
messages in Japan
 Arguably many AOL subscribers pay largely for
AIM so maybe text messaging generates revenue
 As more services move online or move
digital what are revenue opportunities?
20
Thought Experiment
 Creating a “mom & pop” Web business
– Say goal of $1-2MM annual revenue
 What are users willing to pay?
– $25/yr, $50/yr, $100/yr, $250/yr
 What percentage of Internet population
are possible users (out of 180MM in US)?
– 1%, .1%
 What percent of those will sign up?
– 10%, 1%
 Case: Chess Club – online games/rankings
21
Summing Up
 Goal: understand business implications of
computing, communication technology
– With or without prior technology background
– Material covering technology and use,
discussion of strategic business value
 Overview of topics to be considered
– Subject to modification during semester
 Some basic observations on use of
Internet and Web
– Current disconnect of value and revenue
 Administrative matters and expectations
22
Next Time
 More about structure of Internet
– Services, where things are heading
– Implications for businesses and strategy
– Credibility in online businesses
 Readings
–
–
–
–
Pew Internet Report
Stanford Website credibility paper
Geo-location: determining where users are
If not familiar with Porter’s “5 forces”
• Chapter 1 of Competitive Strategy by Michael
Porter, Free Press, 1980 (not online)
23