eCommerce Framework - Part 2 CPS 181s Jan 14, 2003

Impact 1: Economics of Growth  Increasing “speed of adoption”  Far outdistances other technology growth  Scale and velocity reshapes economic growth

Impact 2: Blurring of Industry Boundaries  Old categories breaking down  “Last mile” to consumer homes see a blur of alternative telecommunications networks

Impact 3: Transformation of Social Structure and Society  Transforming  learning  group communications  scientific interchange  how society functions  Ubiquitous Website addresses

Opportunities for Wealth Creation  Even Today There are Market Capitalization Opportunities for New Economy Players  consumer products  financial markets  middleware enabling commerce  services  advertising

6 Business to Business eCommerce Projection

Business to Business eCommerce Projections in Millions ( )

8 Internet as Mass Medium — North American Adoption Curves North American Users / Households (MM) * Launch of HBO in 1976 used to estimate the beginning of cable as an entertainment / advertising medium Radio TV CableCommercial Internet 50 Million Users / Households Years to Reach 50 MM Users Radio: 38 years TV: 13 yearsCable*: 10 years Commercial Internet: 5 years Internet Adoption Rates Versus Other Mediums Internet Adoption Rates Versus Other Mediums

Estimated Savings from eCommerce

eCommerce Decision-making Process  Identify:  Customer groups to serve  Compelling set of benefits, differentiating “value proposition”  Communication effectiveness  Content Look and feel Level of community Personalization  Organization structure Business services Application services  Potential partners Capabilities  Shareholders  Metrics

eCommerce Strategy  Managerial task of eCommerce strategy  Framing the market opportunity  Business model  Customer interface  Market communications and branding  Implementation  Metrics

Fulfillment Systems Customer Interface On-lineOff-line Yahoo! Amazon.com BN.com McDonalds Egghead Where to Play On-Line and Off-Line

Market Infrastructure  Opportunities and Constraints  Network Infrastructure  Media Infrastructure  Two Forms of Convergence  Publics and Policies

Media Convergence to a Digital Platform Telephone/DSL Cable Broadcast Radio & TV Satellite Wireless Print (Newspapers and Magazines) Television Radio Music Motion Pictures Digital Convergence Digital Convergence Network Infrastructure Network Infrastructure Media Infrastructure Media Infrastructure

A Framework for eCommerce Framing the Market Opportunity Business Model Implementation Evaluation: Metrics and Valuation Media Infrastructure Network Infrastructure e-commerce Strategy Market Infrastructure Customer Interface Publics and Politics Market Communications and Branding

Point Counterpoint: Who Will Win? Online vs. Offline On-line will winOff-line Will Win Off-line companies can’t easily cannibalize their own businesses Off-line companies stock does not allow them to adequately incentivise key new economy talent Off-line companies move too slowly Key elements of business (e.g. business design, strategy, value proposition) are different in the New Economy “innovator’s Dilemma”: Focusing on current customer needs causes companies to divert focus from new technologies Market will not tolerate blue chip companies running loss-making businesses Off-line companies may face a channel conflict Schwab has become a leading player in the on-line brokerage industry Companies with established market leadership have key assets such as relationships with customers, suppliers, deep industry knowledge and experienced management Established companies have deep pockets Off-line companies have established and trusted brands Off-line companies can create spin-out businesses with new culture, processes, funding, etc. There have been other technology revolutions –From 1894 to 1903, there were 20,000 telephone companies that started in the U.S.

eCommerce Organizing Themes  Technology: Infrastructure  Development and Mastery of Digital Computing & Communications Technology  Business: Basic Concepts  New Technologies Present Businesses and Entrepreneurs with New Ways of Organizing Production and Transacting Business  Society: Taming the Juggernaught  Global Nature of eCommerce Poses Public Policy Issues of Equity, Equal Access, Content Regulation, and Taxation

“The Rest...of the Story”  Market Opportunity Analysis  Business Models  Customer Interface  Market Communications & Branding  Implementation  Infrastructure & Technology  Database & Datamining  Venture Capital  Intellectual Property and Copyright  Performance Metrics  Media Convergence, Ethical, Social, and Political Issues

Case Study Planetall.com  Some industry analysts view PlanetAll as a "virtual community" company, and otheres see it as a virtual or physical community enabler. What business is PlanetAll really in?  Should PlanetAll pursue a branded or an OEM strategy in positioning its service with alliance partners and users? Can it do both at the same time?  What factors drive user perceptions of PlanetAll's value? How effective has PlanetAll been in aiding current and potential users to realize that full value?  If positioning a firm's value proposition is a combination of segmentation and differentiation, what is the right positioning for PlanetAll in end-user markets? Propose a positioning statement of 25 words or less that you believe would aid PlanetAll in communicating key benefits and illustrating the value of its service.  What could PlanetAll as a business be worth?