department of management and information systems msu j. p. shim professor of mis...
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Department of Management and Information Systems
MSU
J. P. ShimProfessor of MIS
Internet Business Model, Wireless Mobile
Technology, and Video Streaming
Computer vs. Auto IndustryComputer vs. Auto Industry “If GM(General Motors) had kept up with technology like the
computer industry has, we would all be driving $25 cars that got 1000 miles to the gallon” – Bill Gates at COMDEX
“If GM had had developed technology like Microsoft, we would all be driving cars with the following characteristics” (GM issues a press release)
For no reason whatsoever, your car would crash twice a day The airbag system would ask “Are you sure?” before
activating Occasionally your car would die on the freeway for no
reason. You’d just calmly accept this, restart your car, and then drive on
Wireless business – model for telecomWireless business – model for telecom
Wireless telecom industry, like PC industry, is a thriving model of the kind of market that can produce innovation and valuable services
LG Electronics CEO at CTIA Wireless trade show – a working mother controlling a home air conditioner, washing machine, refrigerator and other appliances via a mobile phone
Wireless “hotspots” heat upWireless “hotspots” heat up Several yrs ago, we recognized that a
commoditized market for Wi-Fi, driven by mass consumer adoption of home networking, would drive the broader enterprise market
It’s logical to extend coverage outside the home and office to public spaces (Starbucks, McDonald’s, now KOA Kampgrounds nationwide, laundromat with Hotspots?
For cautious enterprise IT professionals, Wi-Fi hotspots will pay a role in business technology plans
Business Model
Change
Environment
Performance
•Components and linkage•Dynamics
•Current performance•Sustainable competitive advantage?•Competitive analysis
•Industry value drivers•Macro environment•Opportunities and threats
•Evolution of Internet•Strategic change •Macro change
The Internet and the General Manager The Internet and the General Manager INCUMBENTS INCUMBENTS vs. vs. NEW ENTRANTNEW ENTRANT
Potential Disadvantages for IncumbentsPotential Disadvantages for Incumbents
1. Dominant Managerial Logic Each manager brings to each decision a set of biases, beliefs, and assumptions about the market
2. Competency Trap Competency trap - an inability to shed old successful
ways of doing things and to embrace new ones.
3. Fear of Cannibalization and Loss of Revenue Offering these new products means the cannibalization
of existing ones. 4. Channel Conflict Channel conflict often occurs because existing sales
forces and the distributors fight hard against the new channel
Potential Disadvantages for Potential Disadvantages for IncumbentsIncumbents
5. Political Power– The ability to have one’s preferences or inclinations
reflected in any actions taken in the firm or organization.
6. Co-Opetitor Power
They are powerful and are the primary source of revenues for a firm.
7. Emotional Attachment Managers were promoted to their top position because of the
valuable contributions they had made to the invention and commercialization of an existing technology or to existing business models.
Incumbents AdvantagesIncumbents Advantages
1. Complementary Assets
– Brand name, distribution channels, client relations, important clients, marketing, manufacturing
2. Technology is easy to imitate
Business Model
5-CsCoordinationCommerceCommunityContentCommunication
Environment
Performance
10 Internet Properties-Mediating technology-Universality-Network externalities-Distribution channel-Time moderator-Information asymmetry shrinker-Infinite virtual capacity-Low cost standard-Creative destroyer-Transaction-cost reducer
Profits and the Internet: 7 misconceptionsProfits and the Internet: 7 misconceptionsMIT Sloan Mgt Review, summer 2001 (pp.44-53)MIT Sloan Mgt Review, summer 2001 (pp.44-53)
“Managers aiming to capitalize on the Internet to achieve profitable growth need to understand the full implications of the strategies they choose”
“In particular, managers must be alert to seven widely held misconceptions”
7 7 misconceptionsmisconceptions 1. “The First-Mover Advantage” Misconception
Being first can give a company a frontier-pushing aura (Apple); can generate free publicity and valuable brand recognition (Amazon &
Yahoo); can provide a bigger opportunity to lock in customers (AOL): The Importance of Being the BEST; The Limits of Preemption (the early bird gets the worm) – later entrants can induce buyers to switch by
offering better products : Dell (PC-business), Cisco (data com and router business), Siebel Systems (CRM software) were second or third to market
2. The “Reach” Misconception The more reach a company attempts, the greater the risk it runs of
undermining fit (Fit is essential to a company’s health and future success)
Greater reach might lead to profitable growth, but it must be undertaken in a manner that preserves fit
7 7 misconceptionsmisconceptions 3. The “Customer Solutions” misconception A company goes beyond providing a simple product or
service and offers customers access to valuable complements Specialization will become more widespread (solutions and
focus) Intel, Charles Schwab, Toyota have enjoyed enviable success
– “what business should we be in?” 4. “The Internet Sector” misconception A company must identify the specific Internet sector or
sectors in which it is operating – Infrastructure(Sun, Intel), Applications (Oracle, SAP), Portals (AOL,Yahoo), Content (AOL, CNN, WebMD), Services (Amazon, E*Trade), Exchanges (eBay)
7 7 misconceptionsmisconceptions 5. The Misconception of “Best-of-Breed-Partner Leverage” To resolve the tensions between reach and fit and between
solutions and focus, managers are increasingly opting for a partner-leverage strategy (with other companies)
Without aligned interests, joint value creation remains a strategic hope rather than a business reality
6. The “Born Global” misconception Must first be successful at home, then move outward in a
manner that anticipates and genuinely accommodates local differences (MTV, Wal-Mart, Honda)
Users must trust the company to conduct business on its site
7 7 misconceptionsmisconceptions
7. The “technology-is-strategy” misconception
Technology is a driver of business strategy
Technology and strategy are strong complements, not substitutes
product advantage (Amazon, Nokia, Sony, Schwab)
Mobile WirelessMobile Wireless Economy Economy Cell phone subscribers have passed the one billion
mark CTIA’s semi-Annual wireless industry survey
results showed 140,766,842 subscribers ,as of 12/02
While the wearable device that includes Mobile phone, Voice recognition, Palm computing, Web browser, Wi-fi radio, Bluetooth, Video camera, Streaming video, and a GPS receiver hasn’t come to market yet, early adopters in some parts of the globe are enamored with evolving technology
The NetworkThe Network
MobileStation(MS)
Base StationControllers(BSC)
Mobile SwitchingCentre(MSC)
Public SwitchedTelephone Network
AuC EIRHLRVLR
Base TranscieverStations(BTS)
SS7(signaling system #7)
For Wireless LAN: IEEE 802.11b, 11a, 11g
Types of m-services (m-Types of m-services (m-commerce)commerce)
Regular phone services/callsE-mailText messagingInternetShoppingTicketingM-bankingGamesStock trading
Table 1: Handphone owners and their m-commerce experience in five countries
Handphone owner
m-co
mm
erce
exp
erie
nce
Japan No(n=5)
Yes(n=141)
Finland No(n=1)
Yes(n=87)
Korea No(n=7)
Yes(n=143)
Hong Kong No(n=5)
Yes(n=110)
USA No(n=10)
Yes(n=76)
Yes
0(0%) 132(90.4%)
1(1.1%) 86(97.9%)
0(0%) 135(90%)
1(.9%) 105(91.3%)
2(2.3%) 56(65.1%)
No
5(3.4%) 9(6.2%)
0(0%) 1(1.1%)
7(4.7%) 8(5.3%)
4(3.4%) 5(4.4%)
8(9.3%) 20(23.3%)
http://www.decisionsciences.org/newsletter/vol34/34_5/34_5ecom.pdf
Hong Kong, Japan and Korea combined (20-30 age group)
0
10
20
30
40
50
<6 mo. 6 mo. every yr. every 2 yrs. 3-5 yrs.
Handset Replacement Time
% o
f mob
ile p
hone
use
rs
Hong Kong,Korea, andJapan
Finland and USA ( >30 years old)
0
10
20
30
40
50
<6 mo. 6 mo. every yr. every 2 yrs. 3-5 yrs.Handset replacement time
% o
f mob
ile
phon
e use
rs
Finland
USA
Mobile Handset Replacement Rate Under 30 age group vs. over 30 age group
0
10
20
30
40
50
<6 mo. every 6 mo. every yr. every 2 yrs. 3-5 yrs.
Replacement time
% o
f sur
vey
resp
onde
nts
<30yearsold
>30yearsold
Important factors for choosing a mobile phone
Factor
Japan
Korea
Hong
Kong
Finland
USA
Handset size/color screen appearance
1 5 1 4 2
Handset price/cost2 1 2 1 1
Speed3 3 3 6 6
Ease of Use4 8 4 5 5
Services available5 6 5 3 3
Brand name & popularity6 4 6 2 8
Memory7 7 7 7 4
Sturdiness of handset, quality of service
8 2 8 8 7
Important Concerns for Mobile Services
Factor Japan Korea Hong Kong Finland USA
Monthly fee of service 1 1 1 1 1
Security 2 2 2 2 2
Privacy 3 3 3 3 3
Will it be illegal soon to use a cellular phone with camera at public place? - without using camera flash light and camera sound/noise
Video and Audio-streamingVideo and Audio-streaming Corporate sectors continue to realize the benefits
that web casting offers. Top 1000 US companies will reach $2.8 billion in
2005 Microsoft, Real Networks, Akamai Technologies Health care, Pharmaceutical, Financial services
(adopting cost-saving uses of video-streaming) Online conferences, product promotion, and
investor disclosure sessions HorizonLive – the leading software platform for
live, web-based instruction (e.g., on-line MBA)
Packet passing TechnologyPacket passing Technology
The situation is fine for communications that are not time_sensitive, e.g.,
- Sending e-mail, Downloading filesIt is not appropriate for multimedia and
real-time communications that are time_sensitive, e.g.,
- Voice telephony, Video streaming, Real-time audio/videoconferencing
2 main vendors in the Internet 2 main vendors in the Internet Streaming MarketStreaming Market
Microsoft (Media Producer and Player) vs. RealNetworks (Real Producer/Real Player)
RealSystem G2 (7.0); RealOne -streaming media server software
SMIL (Synchronized Multimedia Integration Language) -to provide TV-like multimedia presentations
Windows Media Player 9 Microsoft Producer 2003 for Microsoft Office
PowerPoint 2003 (to synchronize audio, video, slides, and graphics)
Streaming TechnologyStreaming Technology
Several professional journals, including IEEE Transactions on Circuits and Systems for Video Technology (March 2001)
•In the streaming mode, a user plays the video content simultaneously while parts of the content are being received and decoded; “Streamed” means it is being displayed as it is being sent- Playback can be started very quickly
- Storage space is not needed on the client
- Network has not wasted resources by downloading the entire file
•In the download mode, a user downloads the entire video file and plays back the video file.
Different types of streamed Different types of streamed audio/video filesaudio/video files
“Live” – broadcasts to the streaming serve while the file is being encoded; Can view a live concert, commencement exercises, or class streamed the WWW
“Archived” – file is saved as a .rm(real media) data file while encoding. After encoding, the file is transferred to the streaming video server; Can view the file on demand
SMILSMIL (Synchronized Multimedia (Synchronized Multimedia Integration Language)Integration Language)
SMIL (pronounced “smile”) is similar to HTML, enables simple authoring of interactive audiovisual presentation.
•SMIL is recommended by the World Wide Web Consortium(W3C) for integration of independent multimedia objects with a synchronized multimedia presentation (XML-compliant format; 6/98 – officially introduced)•A SMIL file allows the placement of both different images and a PowerPoint file on different parts of the screen.
MBA MIS MBA MIS Class Class Schedule Schedule WebsiteWebsite
Business Telecom Term Project using SMIL
About e-Commerce using SMIL
Update Info on Real NetworksUpdate Info on Real Networks
10 MB Server (e.g.,bit rate 12 kbps)853 People
20 MB Server
40 MB
Unlimited
RealVideo provides smoother motion, sharper image quality and overall stronger viewer preference than Windows Media. (Source:KeyLabs,June 2002)
Video Streaming and SMIL-aided Video Streaming and SMIL-aided Approach Approach
Conclusions:
Video streaming and SMIL-aided approach provides more stimulation and productivity•Good quality (Internet 2; DSL)
•MIS, e-Business, and other business courses are no exception
•Increasing streaming penetration rates will provide a good foundation for implementing video streaming and SMIL-aided instruction
•Video streaming and SMIL-aided approach should supplement and support materials (e.g., class)