Introduction to Information Systems

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The Baltimore Sun, Sunday, 30 July 2000
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The InternetToday and Tomorrow

• Professor John Sagi
• Anne Arundel Community College
• Arnold, Maryland, USA

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• Whats the Internet?
• How Did It Start?
• Who Owns It?
• How Does it Work?
• Who Uses It?
• eCommerce
• What are the Issues?
• Where is the Future?

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Whats the Internet?

• A self-regulated network connecting other
  computer networks around the globe.

(Turban et al., 2002)
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Comparing Two Economies

• Industrial Economy
• Steam Engine
• Railroad enabler
• Centralized work
• Farms Factories

• Knowledge Economy
• Computer
• WWW enabler
• Decentralized work
• Products Services

Photos Corbis Collection
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1996 Asian Currency Crisis

• Network Externalities

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Average WWW User

• 6 Sessions per Week
• 6 Unique sites visited
• 33 Page Views per Session
• 202 Page Views per Week
• 3 Hours Per Week
• 31 Minutes per Session
• 56 Seconds per Page

Source Business 2.0 June 13, 2000, Photo Corbis
Collection
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Internet Uses

• Telnet Telecommunications Network
• Usenet User Network
• FTP File Transfer
• WWW World wide Web
• eMail Electronic Mail Service

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Source Industry Standard, Feb 14, 2000
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Moores LawSmaller

• Computer chips are halving in price and doubling
  in power every 18 months.

Power
power time2
Time
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Metcalfs LawRicher

• The sum value of a network increases as the
  square of the number of members.

Value
value members2
Members
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Guilders LawFaster

• Total bandwidth of communications systems will
  triple every 12 months.

Speed
speed 3 years
Years
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How Did it Start?

• Innovation Phase 1961-1974
• Institutional Phase 1975-1995
• Commercial Phase 1995 - Present

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Who Owns the Internet?
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ISP
ISP
ISP
NAP
NAP
ISP
NAP
ISP
NAP
NSP
ISP
MAE
MAE
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European ISPs

• T-Online 8.7M AU, FR, GE, IT, PO, SP, SW
• Tiscali 7.0M BE, DE, FR, GE, IT, NE, SP,
  SW, UK
• Wanadoo 5.0M BE, FR, NE, SP, UK
• AOL Europe 4.6M FR, GE, NE, UK

Industry Standard 14 May 2001
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How Does it Work?
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Ethernet Frames
Bytes
4
6
6
2
46-1500
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Datagram
Preamble
Type
CRC
Destination
Source
IP Datagram encapsulated in Ethernet Frame
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IP Datagram
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140.12.113.0
255.255.113.0
255.255.113.1
FF074B128236
FF745932CC1F
255.255.113.12
255.255.113.15
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SYSTEM COMPONENTS

• COMPUTERS
• TERMINALS Input / output devices
• COMMUNICATIONS CHANNELS
• PROCESSORS Modems, multiplexers, front-end
  processors
• COMMUNICATIONS SOFTWARE

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Internet ISO Reference Model

• Layer 5 Application
• Layer 4 Transport
• Layer 3 Internet or Network
• Layer 2 Network Interface or Data Link
• Layer 1 - Physical

TCP
IP
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PROTOCOL

• RULES PROCEDURES
• TO GOVERN TRANSMISSION
• BETWEEN COMPONENTS
• IN A NETWORK

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TCP/IP Protocols

• Layer 3 - Internet or Network
• IP Internet Protocol
• ICMP Internet Control Message Protocol
• ARP Address Resolution Protocol
• RARP Reverse ARP

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TCP/IP Protocols

• Layer 4 Transport
• TCP Transmission Control Protocol
• UDP User Datagram Protocol
• NVP Network Voice Protocol

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TCP/IP Protocols

• Layer 5 Application
• SMTP Simple Mail Transfer Protocol
• DNS Domain Name Service
• FTP File Transfer Protocol
• TELNET Telecommunications Network

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FIBER OPTICS

• SUPER CLEAR GLASS STRANDS
• FAST, LIGHT, DURABLE
• TRILLIONS OF BITS PER SECOND, FULL DUPLEX
• EXPENSIVE, HARDER TO INSTALL
• OFTEN USED AS BACKBONE OF NETWORKS

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FIBER OPTICS

• BACKBONE Fiber optics cable carries light
  signals to distribution nodes, which use copper
  wires to user
• DENSE WAVE DIVISION MULTIPLEXING (DWDM)
  Next-generation, uses many colors, (up to 160)
  each a channel, increases capacity of a fiber to
  6.4 terabits per second

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ORBITING SATELLITES
MICROWAVE TRANSMISSION
UPLINK
DOWNLINK
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INTEGRATED SERVICES DIGITAL NETWORK (ISDN)

• INTERNATIONAL STANDARD FOR TRANSMITTING VOICE,
  VIDEO, DATA
• OVER PUBLIC TELEPHONE LINES

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SPEEDS COST OF MEDIA
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Who Uses the Internet?
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PC and Internet Users In UK
(Source UK National Statistics Office)
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Internet Use In UK

• 76 Information about Goods and Services, and
  eMail
• 61 General browsing
• 38 Purchasing

(Source UK National Statistics Office)
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Internet Use in the UK

• 10.7 Million UK households have the Internet 42
• London and SE 48
• NE 32
• Wales 31
• Northern Ireland 31
• 55 of UK adults have accessed the Internet at
  one time or another.

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Internet Use in the UK

• Household Access
• Dial-Up 94.7
• DSL 5.3

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Internet Use in the UK

• Free Unlimited Access 30
• Cost Unlimited Access 35
• Billed Limited Access 19
• Other 16

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Electronic Commerce
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The UK government has set itself the target of
becoming the best environment in the world to do
eCommerce

• Source UK National Statistics, Internet
  connectivity, 18 Jul 2002

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Top 10 Countries
1998
2002

• US - 37.4
• Japan - 2.0
• Germany - 1.7
• U.K. - 1.4
• Canada - 1.4
• Australia - 1.4
• France - 0.4
• Italy - 0.4
• Netherlands - 0.4
• Sweden - 0.3

• US - 409.0
• Germany - 62.8
• U.K. - 47.6
• Japan - 28.8
• France - 28.5
• Canada - 19.9
• Italy - 18.1
• Netherlands - 12.6
• Sewden - 8.7
• Spain 8.0

Source Industry Standard, Feb 14, 2000
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In 2000

• Online retail sales were 25.8B, 0.8 of total
  sales of 3.2T.
• Internet advertising was 1.9B, or 4 of all
  advertising.
• Online airline bookings accounted for 9 of all
  reservation sales.
• Online stock sales were 18M of the total 60M.

Source Robert. Washington Post, Feb 24, 2001
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At Christmas, 2000

• Despite cooling economy bad weather, e-tail
  sales met expectations.
• Largest Internet retailer, Amazon.com, shipped
  31M items, compared to 20M the previous
  Christmas.
• Overall e-tail holiday sales doubled to 8.7B
  (WSJ Dec 27, 2000)
• Winners Amazon, Yahoo, WalMart
• Losers eToys, Buy.com

Source USA Today, Dec 28, 2000
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And now

• Strong business tool
• American Airlines .10 e-ticket, 12 paper
• Supports Brick Mortar stores
• Wal-Mart, Gap, Best Buy, Lands End
• Shakeouts
• Furniture.com. MotherNature.com, Pets.com
• More interactive personal
• EddieBauer, FAO, 24 hour service
• Faster and pricier connectivity
• Mobile, Wireless
• Globality
• Yahoo outside US orders up 600, 340M users

Source USA Today, Dec 28, 2000
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Average Shopper

• Youngsters - 45 and under
• Affluent - 50,000 annual household income
• Male
• Employed - managers, supervisors
• Educated - 66 college grads
• Parents - children under 18
• Catalog shoppers

Source Direct Marketing Assn, in USA Weekend, 31
Mar 2000
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Online Buyers

• Median Age 37 41
• Household 59k 64k
• Married 51 58
• College Grad 56 41
• Male 69 50

PC Almanac 2000
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Online Sales

• Books Computers
• CDs Books
• Computers CDs
• Airline tickets Electronics
• Videos Toys

PC Almanac 2000
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National Requirements

• Telecommunications Infrastructure
• Customer Access
• Business Preparedness
• Regulatory Environment
• Financial Transactions
• Acceptable Products
• Distribution Systems

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Three Models
The Economist, Feb 3, 2001

• Centralized warehouses, virtual shelves.
• Same packing handling costs regardless of
  productPushes higher revenue items, electronics.
• Now linked with Toys-R-Us.

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Three Models
The Economist, Feb 3, 2001

• Large staff, sells ads.
• Happy Users More O/L Time
• Targeted Ads More Adv Revenue
• Better Ads Happier Users

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Three Models
The Economist, Feb 3, 2001

• Virtual, unlimited capacity,
• Few staff.
• Slow to expand,
• Linked with AutoTrader

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Traditional Commerce Push
New Marketing
New eCommerce Pull
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April 14, 2000. The end of the dot.com
era. More than 1 trillion in market
capitalization was lost. Dotcom stocks of every
description crashed
Source Fast Company, August 2000
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Small Business

• 6 of 10 Small Businesses are Online
• 1 in 3 Small Businesses Sell on the Net
• 1 in 5 Small Businesses Buy Online
• 1 in 4 See Revenues from the Net
• Retail and Real Estate Dominate

Source The Industry Standard, July 31, 2000
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Common Net Fallacies

• Every Dot.Com is profitable.
• Most havent made any money yet.
• The Web is Worldwide.
• Almost half of all users are in the US.
• A lot of commerce is being done on the Web.
• Only 1 of all commerce is Web-based.

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Common Net Fallacies

• First to market is extremely important.
• Most first-movers arent in existence.
• The Web is huge, with 2.1 billion unique pages,
  growing at 7 million pages per day. (Information
  Week, Jul 17, 2000)
• Not all that impressive. 1.5 million books, but
  only about 10 useful.
• 150,000 useful book-equivalents 1 Borders
  Superstore. (Shapiro Varian. Information
  Rules.)

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Source Industry Standard, Feb 14, 2000
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• eCommerce Europe will surpass U.S. in e-commerce
  spending on consumer products in 2002. (Jupiter
  Communications)
• One Third of Belgians Purchase Online A third of
  all Belgian Internet users have already made a
  purchase online and nearly 43 percent said they
  intend on buying something in the next year.

(www.internetindicators.com)
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• Europeans Opt for LOCAL eMerchants. European
  consumers are increasingly buying from local
  vendors as opposed US vendors. (NUA/Jupiter
  Communications)
• By 2005, non-US Web users are forecast to
  comprise 700 million of the total one billion
  users. (NUA)

(www.internetindicators.com)
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What are the Issues?
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Issues

• Euro vs. US Internet Sales Tax (VAT)
• Protocol for Privacy Protection (P3P)
• Upper Level Domain Allocations (Trademarks,
  National Control)
• Intellectual Capital (Napster, MP3)
• Digital Divide (Haves, Havenots)
• Internet Access Fees (Per minute vs Open)
• Regional Morality (vs Global Citizenry)
• Data Ownership (Selling eMail addresses)

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UK Issues

• Nielson-Netratings study states the UK is
  seriously lagging behind Europe in broadband
  adaption.
• Only 9 of UK households have broadband, compared
  with 39 in Germany and 33 in Sweden.

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UK Issues

• EU Online Trade will surge from 77B Euros to 1
  Trillion in 2006.
• UK, Germany and France will transact 23 of all
  sales online!

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• An English message will not be understood by the
  growing number of non-English Web users, 35 of
  all users online today. (NUA)
• Business users on the Web are three times more
  likely to purchase when addressed in their native
  language. (Forrester Research)

(www.internetindicators.com)
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Where is the Future?
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visibility
Peak of Inflated Expectations
Plateau Of Productivity
DSL
WAP
ASPs
Smart cards
Java
Slope of Enlightenment
Bluetooth
Voice over IP
Digital Ink
Micropayments
Trough of Disillusionment
Quantum Computing
Technology Trigger
Source Gartner Group. In eCompany, Aug 2000
maturity
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The Future Buzz

• ASP Applications Service Provider
• XML Extended Markup Language
• ERP Enterprise Requirements Planning
• CRM Customer-Relationship Management
• B2A Business to Anyone
• WAP Wireless Application Protocol
• WML Wireless Markup Language
• Bluetooth
• E-signatures
• Pocket PCs

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IP V6

• Low level encryption
• Authentication
• Automatic configuration
• Can work alongside IPV4, inside packets

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Source IDC, in eCompany, July 2000
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Cell Phone Penetration

• Finland 66.7
• Sweden 57.8
• Hong Kong 57.7
• Denmark 49.9
• Japan 44.9
• United Kingdom 40.8
• France 36.4
• United States 31.0
• Germany 19.4

Scientific American, October 2000
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• UK Vodaphone Worlds largest mobile
  communications provider.
• Finland leads in m-commerce revenue.
• Japans NTT DoCoMo Worlds fastest growing and
  most profitable mobile Web and message service.
• Nokia 35 cell phone market share.

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• 1st Generation Analog
• 2nd Generation - Digital
• GSM Circuit Switched
• CDMA (Code Div Multiple Access)
• 9.6kbps
• In US CDMA2000 (Verison Wireless, Sprint PCS)
• 2.5th Generation
• GPRS (GSM Packet Radio Service)
• 115kbps, always on
• Due in Europe 2002
• 3rd Generation
• W-CDMA (Wideband, spread spectrum)
• 2Mbps/384kbps/128kbps

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Internet2

• Not for Profit Consortium
• Academia-Industry-Government
• Overall faster

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1995 EU Directive on Data Protection

• Prohibits transfer of personal data to nations
  with inadequate privacy protection laws.
• US safe harbor US Federal Trade Commission.

eCompany Now July 2001
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US Architectural and Transportation Barriers
Compliance Board

• US government sites
• Compliance by 21 June
• Software and Operating Systems Text with icons,
  keyboard commands
• Web sites Screen readers must read functions,
  no-color options, no-timeout options, all pics
  tagged.

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The InternetToday and Tomorrow

• Professor John Sagi
• Anne Arundel Community College
• Arnold, Maryland, USA

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