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Chapter 1


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  • 1. Copyright © 2010 Pearson Education, Inc.
    business. technology. society.
    Sixth Edition
    Kenneth C. Laudon
    Carol Guercio Traver
  • 2. Copyright © 2010 Pearson Education, Inc.
    Chapter 1
    The Revolution Is Just Beginning
    Copyright © 2007 Pearson Education, Inc.
    Slide 1-2
  • 3. Copyright © 2010 Pearson Education, Inc.
    The Internet
    Worldwide network of computer networks built on common standards
    Created in late 1960s
    Services include the Web, e-mail, file transfers, etc.
    Can measure growth by looking at number of Internet hosts with domain names
    Slide 1-3
  • 4. Copyright © 2010 Pearson Education, Inc.
    The Growth of the Internet, Measured by Number of Internet Hosts with Domain NamesFigure 1.3, Page 23
    Slide 1-4
    SOURCE: Internet Systems Consortium, Inc., 2009.
  • 5. Copyright © 2010 Pearson Education, Inc.
    The Web
    Most popular Internet service
    Developed in early 1990s
    Provides access to Web pages
    HTML documents that may include text, graphics, animations, music, videos
    Web content has grown exponentially
    2 billion Web pages in 2000
    At least 40–50 billion pages today
    Slide 1-5
  • 6. Copyright © 2010 Pearson Education, Inc.
    E-commerce Trends 2009–2010
    New business models based on social technologies, consumer-generated content, and services
    2009 a flat year, but growth expected to resume in 2010
    Broadband and wireless access continue to grow
    Mobile e-commerce begins to take off
    Traditional media losing subscribers
    Slide 1-6
  • 7. Copyright © 2010 Pearson Education, Inc.
    The First 30 Seconds
    First 15 years of e-commerce
    Just the beginning
    Rapid growth and change
    Technologies continue to evolve at exponential rates
    Disruptive business change
    New opportunities
    Slide 1-7
  • 8. Copyright © 2010 Pearson Education, Inc.
    What is E-commerce?
    Use of Internet and Web to transact business
    More formally:
    Digitally enabled commercial transactions between and among organizations and individuals
    Slide 1-8
  • 9. Copyright © 2010 Pearson Education, Inc.
    E-commerce vs. E-business
    Digital enablement of transactions and processes within a firm, involving information systems under firm’s control
    Does not include commercial transactions involving an exchange of value across organizational boundaries
    Slide 1-9
  • 10. Copyright © 2010 Pearson Education, Inc.
    Why Study E-commerce?
    E-commerce technology is different, more powerful than previous technologies
    E-commerce bringing fundamental changes to commerce
    Traditional commerce:
    Passive consumer
    Sales-force driven
    Fixed prices
    Information asymmetry
    Slide 1-10
  • 11. Copyright © 2010 Pearson Education, Inc.
    Unique Features of E-commerce Technology
    Global reach
    Universal standards
    Information richness
    Information density
    Social technology
    Slide 1-11
  • 12. Copyright © 2010 Pearson Education, Inc.
    Web 2.0
    Applications, technologies that allow users to:
    Create and share content, preferences, bookmarks, and online personas
    Participate in virtual lives
    Build online communities
    YouTube, Photobucket, Flickr, Google, iPhone
    MySpace, Facebook, LinkedIn
    Second Life
    Slide 1-12
  • 13. Copyright © 2010 Pearson Education, Inc.
    Types of E-commerce
    Classified by market relationship
    Business-to-Consumer (B2C)
    Business-to-Business (B2B)
    Consumer-to-Consumer (C2C)
    Classified by technology used
    Peer-to-Peer (P2P)
    Mobile commerce (M-commerce)
    Slide 1-13
  • 14. Copyright © 2010 Pearson Education, Inc.
    Origins & Growth of E-commerce
    Baxter Healthcare
    Electronic Data Interchange (EDI)
    French Minitel (1980s videotext system)
    None had functionality of Internet
    1995: Beginning of e-commerce
    First sales of banner advertisements
    Since then, e-commerce fastest growing form of commerce in the United States
    Slide 1-14
  • 15. Copyright © 2010 Pearson Education, Inc.
    The Growth of B2C E-commerceFigure 1.4, Page 25
    Slide 1-15
    SOURCES: eMarketer, Inc., 2009a; U.S. Census Bureau, 2009b; authors’ estimates.
  • 16. Copyright © 2010 Pearson Education, Inc.
    The Growth of B2B E-commerceFigure 1.5, Page 28
    Slide 1-16
    SOURCES: U.S. Census Bureau, 2009a; authors’ estimates.
  • 17. Copyright © 2010 Pearson Education, Inc.
    Technology and E-commerce in Perspective
    The Internet and Web: Just two of a long list of technologies that have greatly changed commerce
    E-commerce growth will eventually cap as it confronts its own fundamental limitations.
    Slide 1-17
  • 18. Copyright © 2010 Pearson Education, Inc.
    Potential Limitations on the Growth of B2C E-commerce
    Expensive technology
    Sophisticated skill set
    Persistent cultural attraction of physical markets and traditional shopping experiences
    Persistent global inequality limiting access to telephones and computers
    Saturation and ceiling effects
    Slide 1-18
  • 19. Copyright © 2010 Pearson Education, Inc.
    E-commerce: A Brief History
    1995–2000: Innovation
    Key concepts developed
    Dot-coms; heavy venture capital investment
    2001–2006: Consolidation
    Emphasis on business-driven approach
    2006–Present: Reinvention
    Extension of technologies
    New models based on user-generated content, social networking, services
    Slide 1-19
  • 20. Copyright © 2010 Pearson Education, Inc.
    Early Visions of E-commerce
    Computer scientists:
    Inexpensive, universal communications and computing environment accessible by all
    Nearly perfect competitive market and friction-free commerce
    Lowered search costs, disintermediation, price transparency, elimination of unfair competitive advantage
    Extraordinary opportunity to earn far above normal returns on investment—first mover advantage
    Slide 1-20
  • 21. Copyright © 2010 Pearson Education, Inc.
    Insight on BusinessThe Internet Investment RollercoasterClass Discussion
    What explains the rapid growth in private investment in e-commerce firms in the period 1998–2000? Was this investment irrational?
    What was the effect of the big bust of March 2000 on e-commerce investment?
    What is the value to investors of a company such as YouTube which has yet to show profitability?
    Why do you think investors today would be interested in investing in or purchasing e-commerce companies? Would you invest in an e-commerce company today?
    Slide 1-21
  • 22. Copyright © 2010 Pearson Education, Inc.
    Assessing E-commerce
    Many early visions not fulfilled
    Friction-free commerce
    Consumers less price sensitive
    Considerable price dispersion
    Perfect competition
    Information asymmetries persist
    First mover advantage
    Fast-followers often overtake first movers
    Slide 1-22
  • 23. Copyright © 2010 Pearson Education, Inc.
    Predictions for the Future
    Technology will propagate through all commercial activity
    Prices will rise to cover the real cost of doing business
    E-commerce margins and profits will rise to levels more typical of all retailers
    Cast of players will change
    Traditional Fortune 500 companies will play dominant role
    New startup ventures will emerge with new products, services
    Number of successful pure online stores will remain smaller than integrated offline/online stores
    Growth of regulatory activity worldwide
    Influence of cost of energy
    Slide 1-23
  • 24. Copyright © 2010 Pearson Education, Inc.
    Understanding E-commerce: Organizing Themes
    Development and mastery of digital computing and communications technology
    New technologies present businesses with new ways of organizing production and transacting business
    Intellectual property, individual privacy, public welfare policy
    Slide 1-24
  • 25. Copyright © 2010 Pearson Education, Inc.
    The Internet and the Evolution of Corporate ComputingFigure 1.9, Page 44
    Slide 1-25
  • 26. Copyright © 2010 Pearson Education, Inc.
    Insight on SocietyPrivacy Online: Does Anybody Care?Class Discussion
    What techniques of privacy invasion are described in the case?
    Which of these techniques is the most privacy-invading? Why?
    Is e-commerce any different than traditional markets with respect to privacy? Don’t merchants always want to know their customer?
    How do you protect your privacy on the Web?
    Slide 1-26
  • 27. Copyright © 2010 Pearson Education, Inc.
    Academic Disciplines Concerned with E-commerce
    Technical approach
    Computer science
    Management science
    Information systems
    Behavioral approach
    Information systems
    Slide 1-27
  • 28. Copyright © 2010 Pearson Education, Inc.
    Slide 1-28
    All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America.
    Copyright © 2010 Pearson Education, Inc.  
    Publishing as Prentice Hall