MP3 / MD740 Strategy & Information Systems Sept. 15, 2004 Computing Hardware – Moore's Law, Hardware Markets, and Computing Evolution Network Effects, Standards, and Competition: The Microprocessor Market, Operating Systems and Computer Hardware Markets

Topics Covered Components of an Information System –Changing IS landscape & managerial implications Hardware –Moore’s Law & the Evolution of Computing Competition Network Externalities –Defined, Strategic Importance, Examples The Microprocessor Market –Intel vs. the Competition Operating Systems & Hardware Markets –Competition Among Operating Systems and Computing Platforms –The Linux Challenge

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Massive System Projects Regulation & Deregulation Globalization The Internet Skills Crunch Mergers & Acquisitions Technical Advances

5 Components of an IS Data Procedures Software Hardware People Information Systems Information Systems

Source: Intel Corp.

Types of Computers (the distinction is blurring) Personal / Microcomputers –single-user, usually single processor, compact –desktop, laptop, palmtop, PDA, specialized Mid-range Systems (Servers) –may have more than one microprocessor, typically multi-user & focused on a functional area or task (marketing, plant management, web server). –Vintage midranges (proprietary OS): IBM AS/400, DEC VAX –Servers (UNIX/Win): Intel-based, Dell, HP, IBM, Sun

Types of Computers (cont.) Mainframes (IBM) –large, expensive computer, supports multiple user groups, terminals, run several applications at once. –costly: support staff, air conditioning, software –secure: centralized programs & data are relatively easy to backup, maintain, upgrade, and monitor Super Computers (NEC, IBM, Hitachi, HP, Intel, Cray) –massively parallel and/or clustered –used to solve problems requiring long, difficult calculations (e.g.airline scheduling, advanced modeling - biotech, weather, risk management) –evolution to grid computing…

Network Externalities (a.k.a. Network Effects, Metcalfe’s Law) A product or service becomes more valuable as its installed base expands Why do consumers care about installed base? –Exchange opportunities –Stability –Extrinsic, complementary benefits More Exchange Opportunities More Members

Why are Markets for Network Goods Different? Market competition occurs very early and is particularly fierce Markets are ‘tippy’ and subject to bandwagons Markets exhibit monopolistic tendencies The ‘best’ technology or highest quality product doesn’t always win

Software Operating Systems control hardware and provide an environment in which applications execute Application Programs end-user program that performs a specific function Individual examples: word processor, spreadsheet. Collections of apps: Office (suite), SAP R/3 (ERP) Applets small application programs which execute within a larger environment (e.g. Java applets within browser) operating system applications

Competition in the OS Space Personal Computers Windows XP Apple Mutli-User Systems Windows 2000 Windows Server 2003 Unix (Sun, IBM, HP / Compaq) Linux Consumer Devices Windows Mobile Ultimate TV Xbox Tablet PC Windows XP Media Center Edition Palm (handheld) Liberate (set top) Sony Microsoft Competition

The Microsoft Stimulus Package Microsoft will return $9 billion to individual investors that hold the stock (excluding all the institutions & funds). The Bush child tax credit returned $14 billion. Bill Gates has pledged all $3.4 billion to his charitable foundation.

Comments from Windows Source Code private\genx\shell\inc\prsht.w: // we are such morons. Wiz97 underwent a redesign between IE4 and IE5 private\shell\ext\ftp\ftpdrop.cpp: // We have to do this only because Exchange is a moron. private\shell\shdoc401\unicpp\desktop.cpp: // We are morons. We changed the IDeskTray interface between IE4 private\shell\browseui\itbar.cpp: // should be fixed in the apps themselves. Morons!.