CS155a E Commerce Lecture 4 Jan 23 2003 Archetypal Internet Businesses Netscape and Amazon HTTP Hypertext Transfer Protocol Application Application FTP HTTP NFS Session Transport TCP Internet UDP IP Host to network Ethernet Presentation ATM TCP IP model Transport Network Data link Physical OSI model Standard protocol for web transfer Request response interaction Request methods GET HEAD PUT POST DELETE Response Status line additional info e g a web page HTML Hypertext Markup Language Language in which web pages are written Contains formatting commands Tells browser what to display and how to display TITLE Welcome to Yale TITLE The title of this page is Welcome to Yale B Great News B Set Great News in boldface A HREF http www cs yale edu index html Yale Computer Science Department A A link pointing to the web page http www cs yale edu index html with the text Yale Computer Science Department displayed What does http www cs yale edu index ht ml mean Protocol Host Domain Name Local File http www cs yale edu index html Late 1990 WWW HTTP HTML Browser invented by Tim Berners Lee Mid 1994 Mosaic Communications founded later renamed to Netscape Communications Summer of 1995 Market share 80 August 1995 Windows 95 released with Internet Explorer January 1998 Netscape announced that its browser would thereafter be free the development of the browser would move to an open source process Estimated Market Share of Netscape 100 80 60 Nov 1998 AOL buys Netscape 40 20 1994 1995 1996 1997 1998 1999 2000 2001 NOTE data are from different sources and not exact Perfectly Captures the Essence of Internet Business Enormous power of Internet architecture and ethos e g layering stupid network open standards Must bring new technology to market quickly to build market share Internet is the distribution channel First via FTP then via HTTP using Netscape Downloadable version available free and CD version sold Uses Many Internet Business Models esp those that involve making money by giving away an information product Complementary products esp server code Bundling Communicator includes browser email tool collaboration tool calendar and scheduling tool etc One learning curve integration compatibility etc Usage monitoring Datamining strategic alliances Installed base Active installed base Browser as Soul of the Internet New layer Note Internet architectural triumph Portal business Early electronic marketplace Necessity of strategic alliances Positive transfers to customers Temporarily Killed R D efforts in user interfaces Pluses and Minuses of Network Effects Initial Metcalf s Law based boom Initial boom accelerated by bundling complementary products etc Market share lock in high market cap high switching costs Network effects strong for browser but weak for any particular browser Exposed the True Nature of Microsoft 1995 Navigator released MS rushes IE to market 1996 Version 3 0 of IE no longer technically inferior Openness and standardization begets commoditization MS exploits advantage with strategic allies Windows Contracts with ISPs to make IE the default Incents OEMs not to load Netscape products Exclusive access to premium content from e g Star Trek 1998 MS halts browser based version of these strategies under DoJ scrutiny of its contracts with ISPs Internet ERA Anti Trust Questions are Still Open Can consumers benefit from full integration of browser and OS How to prevent pre emptive strikes on potential competitors in the Windows monopoly universe post desktop era technical Solution Remember DoJ case was not about protecting Netscape Definitions of ECommerce Electronic commerce is a set of technologies applications and business processes that link business consumers and communities For buying selling and delivering products and services For integrating and optimizing processes within and between participant entities What is B2C B2C Commerce Interactions relating to the purchase and sale of goods and services between a business and consumer retail transactions Novelty is that retail transaction is done on the Internet rather than in a brick and mortar store location All the customer needs is a browser Technical evolution of B2C from brick and mortar model not new A Different Approach to Location Retailing In 1886 a jeweler unhappy with a shipment of watches refuses to accept them A local telegraphy operator buys the unwanted shipment Uses the telegraph to sell all the watches to fellow operators and railroad employees Becomes so successful that he quits his job and started his own enterprise specializing in catalog sales Name Richards Sears of Sears Roebuck Revenue Models Sell goods and services and take a cut just like B M retailers e g Amazon E Trade Dell Advertising Ads only original Yahoo Ads in combination with other sources Transaction fees Sell digital content through subscription e g WSJ online Economist Intelligence Wire First Generation B2C Main Attraction Lower Retail Prices B2C Pure Plays could eliminate intermediaries storefront costs some distribution costs etc Archetype www amazon com Amazon com Full Name Amazon com Inc Employees 7 200 Stock Price 22 10 at close December 17 2002 52 Wk Range 9 03 to 25 00 2001 Sales 3 12 B Sales growth 33 Internet s largest retailer Best known for books CDs DVDs and Videos Brand Strength Source U S Bancorp Piper Jaffray July 24 2000 Main Lines of Business Retail Broad product range from textbooks to household tools Shopping Mall Individuals and companies pay Amazon com to offer their products on its site Overseeing other websites Has invested in some of them Broad range of offerings from prescription drugs to wedding planning 2001 Sales 54 Books music video 71 North America Amazon com History Founded 1994 Website launched July 1995 1997 IPO 3 million shares 54 0 million Moves to cement the Amazon com brand Becomes the sole book retailer on America Online s public website and on Netscape s commercial channel History continued 1998 Expansion Launched online CD and video stores Began selling toys and electronics Bought online booksellers in the UK and Germany Bought Internet Movie Database Expanded online services buying Junglee comparison shopping and PlanetAll address book calendar reminders Attracted so much attention that its market capitalization equaled the combined values of profitable bricks and mortar rivals Barnes Noble and Borders Group even though their combined sales were far greater than Amazon s History continued 1999 More Expansion Raised 1