Chapter 9 Enhanced Version Infrastructure Exhibits/Tables October 22, 2000

Chapter 9 Enhanced Version

Infrastructure

Exhibits/Tables

October 22, 2000

ZOP-BOK-Figures-4-18-00

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Exhibit 9-1: Network and Media Convergence

Telephone

DSL

Cable Modem

Satellite

Wireless

Print (Newspapers/ Magazines)

Television

Radio

Music

Motion Pictures

DigitalConvergence

DigitalConvergence


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Supporting Slide 9-A: Media Convergence to a Digital Platform

Newspapers

Magazines

Television

Radio

Music

Motion Pictures

Personal Computers

Handheld Computers

PCS Phones

Wireless Printers

Household Devices

Digital PlatformDigital Platform

1970’s 1980’s 1990’s 2000’s 2010’s 2020’s


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Supporting Slide 9-B: Marketshare of Personal Computer

Manufacturers of PCs Shipped in the United States and Worldwide

— 2nd Quarter 1999

United States

Dell 16.6%

Compaq 16.5%

IBM 8.1%

Gateway 7.8%

Hewlett-Packard 7.8%

Others 43.3%

Source: International Data Corporation (September 1999)

Worldwide

Dell 10.9%

Compaq 14.4%

IBM 9.0%

Hewlett-Packard 6.4%

NEC / Packard Bell 4.9%

Others 54.3%


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Supporting Slide 9-C: PCMicroprocessors: Marketshare (First

Quarter 2000)

Source: “High Demand For, Chips Lift Intel Earnings”, Wall Street Journal , April 19, 2000


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Table 9-1: Number of US Computer Users and US Internet

Households — 1994 to 1999

InternetUsers

PercentComputer

HouseholdsPercent

1994 - - - -

1995 - - 33.2 34.0%

1996 8.5 8.6% 38.2 39.1%

1997 14.5 14.5% 44.0 44.0%

1998 24.4 24.2% 47.8 47.3%

1999 28.0 27.5% 51.9 51.0%

2000e 32.0 31.3% 55.1 53.8%

2001e 35.3 34.2% - -

2002e 44.0 42.5% - -

Source: US Department of Commerce. 1999. Cited in The New York Times 2000 Almanac, .

US Computer Users and US Internet Households — 1994 to 1999

(Millions)


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Table 9-2: PC Operating Systems Marketshare in 1999

Source: http://www.mycomputer.com. Cited in Lake, David. 2000. Microsoft dominates PC operating systems. Industry Standard, 3 April.


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Exhibit 9-2: How Information Transfers Over The Internet

Computers on the Internet work together to transfer information back and forth around the world.

Download and Upload You download information from other computers on the Internet.You upload information to other computers on the Internet.

BackboneThe Internet backbone is a set of high-speed data lines connecting major networks all over the world.

RouterA router regulates traffic on the Internet and picks the most efficient route for each packet. A packet may pass through many routers before reaching its destination.

TCP/IPTransmission Control Protocol / Internet Protocol (TCP/IP) is a language computers on the Internet use to communicate with each other. TCP/IP divides information into packets and sends the packets independently across the Internet. When information arrives at the intended destination, TCP/IP ensures that all the packets arrived safely and reassembles the original information.

PacketsInformation over the Internet is broken down into smaller pieces called packets.

Source: Whitehead, Paul and Ruth Maran. 1997. Teach yourself the Internet and the World Wide Web visually. Indianapolis: IDG Books Worldwide, Inc.


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Supporting Slide 9-D: Point- Counterpoint: The Microsoft Case

Microsoft should be broken upMicrosoft should be broken up

A break-up will assure that future anti-trust abuses will reoccur in the future

A break-up will increase innovation within the industry

New products and services will emerge in the future, strengthening the economy

A break-up will assure that future anti-trust abuses will reoccur in the future

A break-up will increase innovation within the industry

New products and services will emerge in the future, strengthening the economy

Microsoft should not be broken upMicrosoft should not be broken up

Microsoft did not harm the consumer through price fixing tactics

A breakup will lead to chaos as the Windows operating system will be less of an uniform platform

A breakup will hurt many of the independent contractors who support Microsoft products

Microsoft did not harm the consumer through price fixing tactics

A breakup will lead to chaos as the Windows operating system will be less of an uniform platform

A breakup will hurt many of the independent contractors who support Microsoft products


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Exhibit 9-3: Growth in Internet Host Computers and Major E-

Commerce Developments

100

1,000

10,000

100,000

1,000,000

10,000,000

100,000,000

1982 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98*

Number of Hosts

(Log Scale)

Note: *New methodology used in January 1998Source: OECD. 1998.

1969 Internet /

ARPAnet created 1989WWW HTML

language created

1991NSF lifts restrictions on

commercial use of internet

1994 Netscape releases navigator browser

1995 Dell, Cisco, and Amazon begin to aggressively use internet for

commercial transactions

1993Mosaic browser invented at University of Illinois is released to public


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Exhibit 9-4: Web Browser Market Share (1994 to 2000)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Dec-94 Jun-95 Dec-95 Jun-96 Dec-96 Jun-97 Dec-97 Jun-98 Dec-98 Jun-99 Dec-99 Jun-00

NavigatorInternet ExplorerOther

Evolution of the Web Browser Market (%)

Source: Acknowledge, Dataquest, ZD Market Intelligence, Zona Research, and casewriter estimates.


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Exhibit 9-5: IDC Predicts 179 Million Americans Online by 2003

50

100

150

200

1999 2000 2001 2002 2003

CommerceNet/NielsenCyber Dialogue (Aggressive)Cyber Dialogue (Conservative)International Data Corp.Jupiter / NFO

U.S. Online Population Forecasts by Researcher

Population(Millions)

Source: Companies Listed.


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Table 9-3: What Users Do Online

Percentage Of Users Who Say They Go Online For Each Of The Following At Least Once A Month

E-mail 96%

Use Search Engine 88%

Research Products / Services 72%

Local Content 58%

Online Directory 58%

E-greeting / Postcards 55%

Download Free Software 54%

Daily News 51%

Instant Message 51%

Contest Sweepstakes 49%

Travel Research 47%

Online Chat 45%

Health Sites 45%

View Classified 43%

Music Sites 40%

Create of View Personal Web Pages 40%

Work Research 40%

Play Games 38%

Check Stocks / Quotes 37%

Source: Wall Street Journal. 1999. A wide net, 6 December.


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Table 9-4: Factors Users Say Will Increase Their Overall Internet Use

Factors Users Say Will Increase Their Overall Internet Use

Increased Transfer Speed 65%

More Security of Personal Information 40%

Increased Speed of Establishing aConnection

40%

Greater Reliability of Technology 33%

Easier to Navigate 32%

More Audio / Video 20%

Greater Breadth of Information /Entertainment

18%

Easier to Use 16%

Greater Breadth and Quality ofShopping

8%

Other 12%

Nothing Would Increase My InternetUsage

11%

Source: Wall Street Journal. 1999. A wide net, 6 December.


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Exhibit 9-6: Worldwide E-Commerce Projections

0

200

400

600

800

1,000

1,200

1997 1998 1999 2000 2001 2002 2003

($B

illio

n)

Source: International Data Corporation. 1998.

Worldwide Commerce on the Web

Total worldwide sales of products via the Web, excluding securities and brokerage transactions


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Table 9-5: Top Internet Service Providers in the United States

(December 1999)

Top Internet Service Providers in the United States (December 1999)

America Online 18.0 Million

EarthLink/MindSpring 3.0 Million

MSN 1.9 Million

AT&T Worldnet 1.6 Million

NetZero 1.1 Million

Prodigy 1.0 Million

WebTV 0.8 Million

@home 0.7 Million

Bell South 0.7 Million

Source: Jupiter Communications, December 1999

Source: Bloomberg


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Exhibit 9-7: Possible Internet Connection Methods

Source: Adapted from E-Business technology forecast (1999), published by PricewaterhouseCoopers’ Technology Centre, Menlo Park, CA.

CLIENTSERVER

Basic Rate ISDN

Basic Rate ISDN

Frame RelayFrame Relay

SMDSSMDS

ISDNISDN

Low-end Server

Low-end Server

Midrange Server

Midrange Server

MainframeMainframe

Wireless DataWireless Data

DSLDSL

CableModem

CableModem

Warehouse Robot

Warehouse Robot

PCPC

HandheldHandheld

KioskKiosk

T1, Fractional T1

T1, Fractional T1

T3,Fractional T3

T3,Fractional T3

Analog Modem

Analog Modem

SatelliteSatellite

ATM

INTERNET


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Exhibit 9-8: Relative Speed of Various Types of Internet

Connections

Telephone

ISDN

DSL

Cable 3 to 4 Megabits per second

1.5 Megabits per second

128 Kilobits per second

56 Kilobits per second


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Exhibit 9-9: Certain Applications More Dependent on Broadband

Video-on-Demand

Multiplayer Games

Software Distribution

Adult Content

Traditional Graphics

Enhanced Graphics

Streaming Audio

Streaming Video

IP Telephony

Free High Price

High

Low

Ability to charge for applications

Utility of broadband connection

Source: Jupiter Communications


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Supporting Slide 9-E: 26 Million Consumers to Be Added to

Broadband

1999 2000 2001 2002 2003

Existing dial-upsubscribers (atbeginning of year)

36.89 42.39 47.23 49.51 48.14

New to dial(throughout the year)

6.02 6.22 4.85 2.75 2.01

Graduates tobroadband(throughout the year)

1.61 2.57 3.79 5.29 4.88

Total dial-up at year-end (1+2-3)

41.29 46.04 48.29 46.98 45.27

Existing broadband (atbeginning of year)

0.75 2.67 5.91 11.25 19.26

New to broadband (atbeginning of year)

0.24 0.53 1.26 2.27 3.25

Total broadband atyear-end

2.60 5.77 10.97 18.80 27.39


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Table 9-6: How Users Access the Web Worldwide

1998 1999 2001 2002 2003

Source: IDC 1999.


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Supporting Slide 9-F: Point-Counterpoint - Attributes of Cable vs.

DSL

Attribute Cable DSC

Claimed Downstream Speeds: 36 Mbps 8 Mbps

Currently OfferedDownstream Speeds:

10 Mbps 1.5 Mbps

Currently OfferedUpstream Speeds:

2 Mbps 384 Kbps

Monthly Service Price: $40 (10 Kbps downstream) $39 – $80 (384 Kbps downstream)

$100 – $200 (1.5 Mbps downstream)

Fixed Installation Price: $75 – $175 $300 – $500

Point-Counterpoint Problem of shared connectivity.Limited amount of bandwidthavailable to the network. As moresubscribers use network, decreasedavailable bandwidth per user

Network security. Possibility of othernetwork users being able to accessyour files

Cable was the first to marketeconomical broadband access.Upcoming deregulation hearings mayslow cable growth

Current DSL services expensive toset up require significant technicalwork at residence

DSL can only be offered to homesless than 18K feet from the centraloffice. Difficult to market since nopattern to which houses are greaterthan 18K feet from central office

Future video on demand technologyexpected to require at least 7 Mbps.DSL data transfer capabilities maybecome dated

Attributes of Cable vs. DSL Service in the United States


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Supporting Slide 9-G: Point- Counterpoint: Which ISPs will win?

MSO/TelecommMSO/Telecomm

Will be able to provide consumers with faster connect times through either cable modems or DSL

One stop shopping for consumers - added to current cable or phone bill

Will be able to provide consumers with faster connect times through either cable modems or DSL

One stop shopping for consumers - added to current cable or phone bill

Standalone IndependentsStandalone Independents

Open system of ISP choice on either cable or telephone systems will help standalone independent ISPs to continue to grow

Other attributes, such as customer service, will be more important in consumer’s choice of ISPs

Open system of ISP choice on either cable or telephone systems will help standalone independent ISPs to continue to grow

Other attributes, such as customer service, will be more important in consumer’s choice of ISPs


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Exhibit 9-10A: Transformation of the Computer Industry

IBM DEC Sperry Univac

Wang

Sales and Distribution

Application Software

Operating System

Computer

Chips

THE OLD VERTICAL COMPUTER INDUSTRY — CIRCA 1980

Source: Grove, Andrew S. 1996. Only the paranoid survive. New York: Currency Doubleday.


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Exhibit 9-10B: Transformation of the Computer Industry

Source: Grove, Andrew S. 1996. Only the paranoid survive. New York: Currency Doubleday.



Operating System

Computer

Chips

Retail Stores Superstores DealersMail Order

Word Word Perfect Etc.

DOS and Windows OS/2 Mac UNIX

Compaq DellPackard

BellHewlett Packard

IBM Etc.

Intel Architecture Motorola RISCs

THE NEW HORIZONTAL COMPUTER INDUSTRY - CIRCA 1996


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Exhibit 9-10C: The Expanded Horizontal Computer Industry —

Circa 1999

Source: Gates, Bill. 1999. Business @ the speed of thought. New York: Warner Books.

THE NEW HORIZONTAL COMPUTER INDUSTRY - CIRCA 1996

Chips


Databases

Financial Systems

Network Infrastructure

Network Integrators


Operating Systems

Retail Stores Superstores Dealers Mail Order

IBM Microsoft Oracle Others

Baan JD Edwards SAP Others

Cisco 3 Com Lucent Others

Entex INS Vanstar Wang

Word Word Perfect Etc.

DOS and Windows OS/2 Mac Unix Linux

Computer Compaq Dell Packard BellHewlett Packard

Etc.

Intel Architecture Motorola AND Etc.


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Table 9-7: Changes In the Value of the New Economy

The 10 Biggest Market Value Losers

(Billions Lost)Coca Cola $52.3Bank of America 51.1Proctor and Gamble 48.6Ford Motor 27.9Gillette 24.2Xerox 23.8Unilever 17.1Allstate 14.9McDonald’s 14.2Emerson Electric 10.2

TOTAL MARKET LOSS $284.3

Note: Period between May 1, 1999 and March 9, 2000

The 10 Biggest Market Value Winners

(Billions Gained)Cisco $293.3Oracle 198.1Intel 192.5Nokia 161.2LM Ericsson 126.9Sun Microsystems 123.6Nortel Networks 120.8Microsoft 106.5Texas Instruments 106.3EMC 78.2

TOTAL MARKET GAIN $1,507.4

Source: Byrne, John A. and Debra Sparks. 2000. What’s an old-line CEO to do? Business Week, 27 March.

URL: http://businessweek.com/2000/00_13/b3674109.htm


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Exhibit 9-11: Overview of Basic Internet E-Business Architecture

Payment Gateway

Payment Gateway

Buyer Storefront System Back Office System

Web Commerce Server

Web Catalog

Enterprise Firewall

Inte

rnet

Bank

Enterprise Firewall

Seller

Order Processing Fulfillment System

Order Processing Fulfillment System

Accounting SystemAccounting System

Source: Adapted from E-Business technology forecast (1999), published by PricewaterhouseCoopers’ Technology Centre, Menlo Park, CA.


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Supporting Slide 9-H: Leading Web Services

ServerNumber of Sites(As of April 1999)

Percent of Sites Surveyed

Apache 2,832,119 56%

Microsoft-IIS 1,164,132 23%

AOL (Netscape) – Entrerprise 253,660 5%

Rapidsite 94,808 2%

WebSitePro 79,615 2%

thttpd 66,211 1%

Stronghold 64,491 1%

WebSTAR 53,985 1%

Zeus 51,969 1%

NCSA 40,823 1%

Source: Bloomberg


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Supporting Slide 9-I: Web Server Market Share

0

10

20

30

40

50

60

70

80

90

100

Aug-95 Nov-95 Feb-96 May-96 Aug-96 Nov-96 Feb-97 May-97 Aug-97 Nov-97 Feb-98 May-98 Aug-98 Nov-98

ApacheMicrosoftNetscapeOther

Evolution of the Web Server Market (%)

Note: As of November 1, 1998, the sample consisted of more than 3,500,000 public Web sitesSource: Adapted from Netcraft Web Server Survey, http://www.netcraft.com/survey


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Supporting Slide 9-J: Leading Web Servers by Enterprise Size

>$1 Billion

$100-999 Million

$50-99 Million

$10-49 Million

Overall

0% 20% 40% 60% 80% 100%

25.7 26.4

28.1

15

28.4

27.5

27.6

16.6

18.5

17.6

17.3

30.8

35.5

39.6

35.9

Netscape Microsoft Apache Other

Note: Based on survey of 53,000 Web sites owned by U.S. businesses with annual revenues of $10 million or moreSource: Adapted from Internet Server Survey, SiteMetrics Corp. August 1998


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Exhibit 9-12: Digital Nervous System

Procurement Finance / Accounting / Control Supply Chain Management / Human

Resource Management

Procurement Finance / Accounting / Control Supply Chain Management / Human

Resource Management

Consumer relationship management / Selling chain management /

Supply chain management

Consumer relationship management / Selling chain management /

Supply chain management

Source: Gates, Bill. 1999. Business @ the speed of thought. New York: Warner Books.

BusinessReflexes

BusinessReflexes

StrategicThinkingStrategicThinking

Digital Nervous System

Digital Nervous System

CustomerInteractionCustomerInteraction

Basic OperationBasic Operation


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Supporting Slide 9-K: Enterprise Resource Planning

Enterprise Resource PlanningEnterprise Resource Planning

Source: Adopted from e-business: Roadshow for Success; Dr. Ravi Ka? And Marcia ?

Purchasing Material Management

Purchasing Material Management

Warehousing and Inventory

Management

Warehousing and Inventory

Management

Finished Product Distribution

Finished Product Distribution

Forecasting and Planning

Forecasting and Planning

Accounting / FinanceAccounting / Finance


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Exhibit 9-13: Customer Relationship Management

WebWeb Tele-centerTele-center Direct SalesDirect Sales RetailerRetailer ResellerReseller DistributionDistribution

Direct ChannelsDirect Channels

Customers and Prospects

Customers and Prospects

Indirect ChannelsIndirect Channels

Customer RelationshipManagement

Customer RelationshipManagement

Source: New York Times. 2000. Know thy customer, 14 February.


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Supporting Slide 9-L: Supply Chain Management

Market DemandMarket Demand

Resource and Capacity Constraints

Resource and Capacity Constraints

Real-Time Scheduling

Real-Time Scheduling

Supply Chain ManagementSupply Chain Management

Source: Adopted from e-business: Roadshow for Success; Dr. Ravi Ka? And Marcia ?


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Exhibit 9-14: E-Procurement

?Select

ProductCreate

RequisitionPurchase

Order

Supplier Fulfillment

Electronic Purchasing

Ship ProductReceiving

Accounts Payable

Route to Recipient

Approval Cycle

Submit Order

Approved

Source: Adapted from E-Business: Roadmap for success (1999) by Ravi Kalakota and Marcia Robinson. Reading, MA: Addison-Wesley Publishing.


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Table 9-5

IDC Predicts 179 Million Americans Online by 2003

50

100

150

200

1999 2000 2001 2002 2003

CommerceNet/NielsenCyber Dialogue (Aggressive)Cyber Dialogue (Conservative)International Data Corp.Jupiter / NFO

U.S. Online Population Forecasts by Researcher

Population($Millions)

Source: Companies Listed

Documents

Chapter 9 Enhanced Version Infrastructure Exhibits/Tables October 22, 2000