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20110814 An Introduction to Economics of Communications
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20110814 An Introduction to Economics of Communications


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Lecture Notes of An Introduction to Economics of Communications on August 14, 2011

Lecture Notes of An Introduction to Economics of Communications on August 14, 2011

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  • 1. 1 Pornprom Ateetanan Deputy Director NSTDA Academy http://www.NSTDAacademy.compornprom [dot] ateetanan [at] nstda [dot] or [dot] th @pornprom 2
  • 2. Agenda1. Your Lecturer2. Course Syllabus3. Q&A about the course4. Collaborative Tools5. Lectures • The Network Economy • Technology Matters • Open Source Software (Optional) 3 Your Lecturer• What would you like to know about me? • • • • 4
  • 3. Interests1. ICT • ICT for Public/ Education/Business Services Delivery • Technology Adoption2. Science & Technology • Technology for Green Practices3. Social Media 5 …ƒ†‡› …ƒ†‡› ƒ ƒ†˜ƒ…‡† –”ƒ‹‹‰ ƒ” ‘ˆ –Š‡ ™ƒ• ‡•–ƒ„Ž‹•Š‡† ™‹–Š ƒ •–”‘‰ ‹–‡–‹‘ –‘ ™‡ƒ˜‡ ’”ƒ…–‹…ƒŽ ‘™Ž‡†‰‡ ‹–‘ –Š‡ Šƒ‹ •‘…‹‡–› 6
  • 4. Š”‡‡ Žƒ‰•Š‹’ ‡”˜‹…‡• š‡…—–‹˜‡ †—…ƒ–‹‘ ”‘‰”ƒ ”‡‡ ”ƒ…–‹…‡• ”‘‰”ƒ ”‘ˆ‡••‹‘ƒŽ –ƒ†ƒ”† ••‡••‡– šƒ‹ƒ–‹‘ ƒ• ƒ –‘‘Ž ˆ‘” ‹’”‘˜‹‰ ƒ—ˆƒ…–—”‹‰ ‡”˜‹…‡• ‡…–‘” • ”‘†—…–‹˜‹–› 7Žƒ‰•Š‹’ ‡”˜‹…‡•
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  • 9. –ƒ†ƒ”† —–Š‘”‹œ‡† ”‘‡–”‹… ‡•–‹‰ ‡–‡” 8 8
  • 10. Outline of ITPEC Briefing of ITPEC and METI Information Technology Professionals Examination Council Information Technology Professionals Examination Council (ITPEC for short) is the organization for promoting the standard of IT professionals throughout the Asian countries. It was formed on November 11, 2005 to co-ordinate the efforts of member countries in the implementation of the IT Professionals Examination in Asia. The council is currently comprised of members from 7 countries the Philippines,Ministry of Economy, Trade and Industry (METI) Thailand, Vietnam, Myanmar, Malaysia,of Japan is supporting the IT Professionals Mongolia, and Japan.Examination activities through ITPEC. 9 Com m on Inform System / Embedded System Career/Skill Fram ework Vender Side / User Side Independent Advanced professional examinations Stra Info rmation Techno logy Systems Architect Examin ation Proj ct Manager Examination Ne tw Exa Da ta Exa Emb Exa Info rmation Security Specialist Man Info rmation Techno logy Service Systems Auditor Exam ination amina tion amina tion amina tion ategist Examina tion nager Examination je work Specialist Examination abase Sp ecialist bedde d Systems Specialist Level 4 (NW) (PM) (SM) (DB) (SC) (SA) (ES) (SA) (ST) Level 3 Applied Information Technology Engineer Examination (AP) Level 2 Fundamental Information Technology Engineer Examination (FE) Level 1 Information Technology Passport Examination ( IP) 10
  • 11. 11 Examination Site Rajamangala University of South-East Asia University: Technology Krungtep: RMUTK (Bangkok) SAU (Bangkok) National Science and Development Agency: NSTDA (Pathumthani) Rajabhat Rajanagarindra University: Rajamangala University of RRU (Chachengchao)Technology Thanyaburi: RMUTT (Pathumthani) Prince of Songkla University:PSU (Phuket) Prince of Songkla University:PSU (Hat Yai) 12
  • 12. Certificate Giving Ceremony 13–Š‡” Šƒ…‡‡– ‡”˜‹…‡•
  • 13.  ‘—•‡ ”ƒ‹‹‰
  • 14. ”‘ˆ‡••‹‘ƒŽ ”ƒ‹‹‰ 14 14
  • 15. . @NSTDAAcademy T. 0 2642 5001-10 F. 0 2642 5014 . @pornprom 15 Course Objectives1. To understand and apply Economics principle with Computer Information Systems2. To understand definitions, theories, and frameworks of Computer Information Systems, ICT Adoption and its relation with Economics3. To discuss on Computer Information System and its applications4. To encourage analytical thinking and writing 16
  • 16. Course Description• Necessity of economics of communication and computer information systems adoption in enterprises.• The applications and convergence of wireless information system, database management, knowledge management, software requirements and software quality management, security of information system, human computer interface and human resource economics and Information technology for collaborative work. 17 Course Outline1. An Intro to Economics of communications2. Database management3. Software requirements management4. Mobile and wireless information system5. Security/privacy of information and information system6. Software quality management7. Knowledge management8. Human computer interface and human resource economics9. Information technology and collaborative work 18
  • 17. Collaborative Tools1. Facebook Closed Group • 55/2. Google Docs3. SlideShare.net4. New Social Media tools 19 Today’s Presentation 1. The Network Economy 2. Technology Matters 3. Open Source Software 20
  • 18. The New Economy• A controversial issue• The importance of knowledge• High tech often replaces human communication and brainpower• Electronic transactions 21 The Network Economy• The advent was foreseen in 1969 by Peter Drucker • Teacher, writer, consultant, thinker, and lecturer on the contemporary organization • Wall Street Journal editor and frequent HBR contributor 22
  • 19. The Network Economy 1. Connected World• Increasing Web traffic• Novice users acquire computes• New web participants • Web bots, intelligent agents, mobile objects, etc.• Moore’s Law• Gilder’s Law• Metcalfes Law 23 The Network Economy• The observation made in 1965 by Gordon Moore, co-founder of Intel.• The number of transistors per square inch on integrated circuits had doubled every year since the integrated circuit was invented.• Moore predicted that this trend would continue for the foreseeable future.• Currently, it is 18 - 24 months.• Most experts, including Moore himself, expect Moores Law to hold for at least another two decades. 24
  • 20. The Network Economy Gilder’s Law• The bandwidth of both wired and wireless networks has been continuously increasing• Follows the Gilder’s Law• Bandwidth grows three times as fast as the CPU speed• This trend facilitates the development of various innovative technologies, including wireless Internet access and mobile portals 25 The Network Economy 2. Exponential Value• As the number of nodes increases linearly, the value of the network grows exponentially• The network’s value is derived from plentitude • E.g., as volume of online transactions increases, the cost of every transaction diminishes 26
  • 21. The Network Economy 2. Exponential Value• Metcalfes Law• Robert Metcalfe founded 3Com Corporation and designed the Ethernet protocol for computer networks• Metcalfes Law states that the usefulness, or utility, of a network equals the square of the number of users 27 Metcalf’s Law Utility Utility = Users2 Users 28
  • 22. METCALFE’S LAWThe value of a network is proportional to the squareof the number of nodes on the network.Metcalfe’s law relates to the power of an interconnected network to enable collaborationand extend the reach of an organisation. We often forget that Internet is short for‘Interconnected network’The web followed what is known as Metcalfe’s law first stated by Bob Metcalfe, who wasco-founder and former chief executive of networking company 3Com. He was reputed tohave said in presentations made for the company:‘The power of the network increases exponentially by the number of computersconnected to it.Therefore, every computer added to the network both uses it as a resource whileadding resources in a spiral of increasing value and choice.’ (Dave Chaffey, April 2005). Dr. Michael D. Featherstone 29 What is the ‘Value’ of this network? V α N² V= Value of the network N=Number of nodes in the network Metcalfe’s Law relates the value of a digital network to the number of connections (or users or members) it has. 30
  • 23. Metcalf’s Law 400 350 300 250 Value of network Individual network value 200 Community network value 150 100 50 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Size of network 31 The Network Economy 3. Lifespan of Innovation• Ideas spread really fast• Hard to achieve a sustainable competitive advantage• Continuous innovation 32
  • 24. The Network Economy 4. Increasing Returns• After the dot-com crash, some individuals have become ‘dot-com averse’• Under investing vs. over investing • E.g., continuous investing in a market leader will make it stronger and weaken the competitors 33 The Network Economy 5. Decreasing Prices• Consumers may count on superior quality for less price over time• Scientists find ways to get more out of less material • Computers, cars, electronic devices, computer memory, etc. 34
  • 25. The Network Economy 6. Information is the king!• The value of accurate and timely information increases• If you have perfect information, the best deal is guaranteed• Technology may empower the user 35 The Network Economy 6. Information is the king!• Shopping bots – price comparison engines • Perfect information • Try to search for one of course textbooks • E-vendors tend to commoditize offerings • Name, delivery options, shipping time • Single free competition market with zero long-term profit – Price wars • E-vendor bots 36
  • 26. The Network Economy 7. People expect free• Freeware or at least trial versions of software programs are taken for granted• Get a product for free and pay for service or support • E.g., Java language, Open Source Software,, LibreOffice, Joomla, Wordpress 37 The Network Economy 8. High Dependency• In a linked economy, the fate of an organization depends on other companies in the supply value chain, their competitors, and the external environment• Organizations have to become highly adaptive 38
  • 27. The Network Economy 9. High Rate of Displacement• The agricultural era – industrial era• People have to change professions• Companies have to change product lines and restructure 39 The Network Economy Summary1. Connected world2. Exponential value3. Lifespan of innovation4. Increasing returns5. Decreasing prices6. Value of information7. People expect free8. Dependency9. Displacement 40
  • 28. Technology Matters! Technological evolution, choice, transfer, and adaptation 41Two intertwined technological forcesThe Moore’s law –the acceleration of computing power doubles about every 18 months One of Intel’s cofounders the faster, smaller, and cheaper digital devicesThe Metcalfe’s law—the extending connectivity squares the network utility The inventor of Ethernet and the 3Com’s founder v=n², v=utility, n=the number of connected nodesReach and Richness contributed by wireless and broadband 42
  • 29. Hardware innovation• Processor Storage: exponential growth • The speed value attributed by the Moore’s law bypassed the constraints of Rock’s law• Handheld wearable IT devices • Miniaturization pervasiveness — ubiquitous connectedness of embedded systems between and within home, office, and any entities. 43 Software creativity• From proprietary to Portability Interoperability • The platform/structural organizer of value network • Portable programming languages • Software/Data can interacts each other smartly under a delegation world • Distributed objects and standards• Manipulating the One-way/Two-way compatibility • The middleware/converter innovation—the purpose of leveragability vs. the strategy of cannibalization 44
  • 30. Trends of Telecommunication• From circuits to packets • TCP/IP protocol QoS challenges • DSP power IPv6 compensate VoIP problem for DiffServ• From electrical to optical transmission • From the core/backbone of network to the on-ramp/edge of network • Butter’s law: fiber’s capacity could double every 9 months—DWDM fiber capacity up to 57.6 terabits ps• Overcoming the last mile • Fixed access—xDSL, cable modem, microwave LMDS, M/LEO (medium-/low-earth orbit) satellite • Sub-aerial mobile systems—1G,2G,3G, WLAN, Wi-max, 4G, etc. 45 Telecommunication convergence• Connection between the fixed-line networks and the wireless networks • PSTN, CATV, LAN, xDSL, FTTH, power • GSM, CDMA, PHS, PCS, Wi-Fi, Wi-max, HomeRF, IrDA, satellite GPS, LMDS, cdma2000, WCDMA, TD- SCDMA• Connection between end devices and servers • PCs, NB, PDA, mobile phones, Home/office/personal appliances, vehicles • Telecom/mobile (virtual) network operators, CATV System operators, ISPs, WISPs,• Connection between decentralized contents and disperse transmission islands • HTML. XML languages • IP, IPng technologies 46
  • 31. Evolution of mobile standards CDMA2000 1x CDMA2000 1x EV DO CDMA2000 1x EVcdmaOne IS-95B IS-95C DV IS-95A GPRS EDGE GSM HSCSD PDC WCDMA PDC-P PHS 2G 2.5G 3G Main route Minor route 47 References Management Information Systems , James OBrien, George Marakas ,McGraw-Hill/Irwin; 9 edition ISBN-10: 0073376760, ISBN-13: 978-0073376769 Dertouzos, M. L. (1999), “The Future of Computing,” Scientific American, 281(2), August, pp15-26. Ackoff, R. (1967), “Management MISInformation Systems,” Management Science, 14(4), pp.147- 56. ITU 1999 Annual Report, “Challenges to the Network: Internet for Development,” 48
  • 32. References (cont.)Wade, Michael and John Hulland (2004), “Review: The Resource-Based View and Information Systems Research: Review, Extension and Suggestions for Future Research,” MIS Quarterly, Volume 28, Number 1, pp.107-143. Amit, R. and P. J. H. Schoemaker (1993), Strategic Assets and Organizational Rents,” Strategic Management Journal, vol.14, pp.33-46. Dierickx, I. and K. Cool (1989), “Asset Stock Accumulation and Sustainability of Competitive Advantage,” Management Science, vol.35, pp.1504-11. Wernerfelf, B. (1984), “A Resource-based View of the Firm,” Strategic Management Journal, vol.5, pp.171-180. 49 References (cont.)Venkatesh, Viswanath, Michael G. Morris, Gordon B. Davis, and Fred D. Davis (2003), “User Acceptance of Information Technology: Toward a Unified View,” MIS Quarterly, Volume 27, Number 3, pp.425-78. Bagozzi, R. P., and J. R. Edwards (1998), “A General Approach to Construct Validation in Organizational Research: Application to Measurement of Work Values,” Organizational Research Methods, 1(1), pp.48-87. 50
  • 33. References (cont.)Bharadwaj, Anandhi S. (2000), “A resource-based perspective on information technology capability and firm performance: An empirical investigation,” MIS Quarterly, Vol. 24, Iss. 1. Teece, D. J. (1998), “Capturing Value from Knowledge Assets: The New Economy, Markets for Know-how, and Intangible Assets,” California Management, Review, 40(3), pp.55-79 Peteraf, M. (1993), “The Cornerstones of Competitive Advantage: A Resource-based view,” Strategic Management Journal, vol.14, pp.179-91.Mata, Francisco J, William L. Fuerst, and Jay B. Barney (1995), “Information technology and sustained competitive advantage: A resource-based analysis,” MIS Quarterly, Vol. 19, Iss. 4. Castanias, R. P. and Helfat, C. E. (1991), “Managerial Resources and Rents,” Journal of Management, 17(1), pp. 155-71. Barney, J. C. (1986), “Strategic Factor Markets: Expectations, Luck, and Business Strategy,” Management Science, 32(10), pp.1231-41. 51 This Concludes Today’s Presentation Thank you for your attention 52