Topic 7 E Commerce in Current Trend

� INTRODUCTION

This topic begins by offering definitions of electronic commerce, followed by an investigation of business models and the dimensions of electronic commerce covered in this topic. Specifically, this topic discusses electronic commerce over the Internet along the following dimensions:

� Business-to-consumer

� Business-to-business

� Consumer-to-consumer. To support your studies of business models, and later topics, you will create your own LAUNCHcast Internet broadcast station at Launch.com (<http://www.launch.com/>). As a registered user at Launch.com you will review the application of Internet business models used in this innovative electronic commerce application. This service is free.

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77LEARNING OUTCOMES

By the end of this topic, you should be able to:

1. Outline definitions and dimensions of electronic commerce todayand discuss the different perspectives involved in each of them.

2. Outline generic business models for electronic commerce, anddiscuss their application.

3. Discuss and evaluate how Internet technologies and applicationsare driving and inhibiting the growth of electronic commerce.

4. Outline emerging electronic commerce enabling technologies andevaluate their influence on future developments.

� E-Commerce

� TOPIC 7 E-COMMERCE 180

The topic then moves on to discuss the inhibitors and drivers for electronic commerce development from the perspective of companies. The discussion focuses on the application of electronic commerce technology to create drivers for growth. The final section makes a deliberate move away from traditional channels and access devices for electronic commerce to look at what the future may hold. Three emerging trends in Internet technology are highlighted in this section:

� Internet enabled devices

� Ubiquitous computing

� Wearable computers Begin by reviewing the objectives for this topic.

THE AGE OF ELECTRONIC COMMERCE

The world is now immersed in the age of electronic commerce and the speed of change in all aspects of our lives is staggering. This first section of the topic offers definitions of electronic commerce and discusses associated dimensions and business models.

What is electronic commerce?

To begin, it is useful to define what is meant by the now broadly used term Âelectronic commerceÊ. It is becoming more difficult to define electronic commerce because it has become the standard term for describing all forms of transaction made over networks, not just those via the Web through online stores. Roger Clarke maintains an extensive collection of electronic commerce related materials on the Web, including a set of definitions related to online commerce. He defines electronic commerce as:

ÂThe conduct of commerce in goods and services, with the assistance of telecommunications and telecommunications-based tools.Ê (SSource: Clarke, R (2000) ÂRoger ClarkeÊs EC definitionsÊ <http://www.anu.edu.au/people/Roger.Clarke/EC/ECDefns.html>)

TOPIC 7 E-COMMERCE � 181

Business America, in an article entitled ÂDefying definitionÊ, offers this definition of electronic commerce:

ÂOften referred to as simply e-commerce, business that is conducted over the Internet using any of the applications that rely on the Internet, such as e-mail, instant messaging, shopping carts, Web services, UDDI, FTP, and EDI, among others. Electronic commerce can be between two businesses transmitting funds, goods, services and/or data or between a business and a customer.Ê

(SSource: Webopedia (2004) <http://www.webopedia.com/TERM/e/electronic_commerce.html>)

These are useful ways to define electronic commerce as they highlight the broader sense in which businesses use telecommunications technology to conduct business, beyond the use of the Internet alone. For example, many businesses use telephone sales as a telecommunications tool for conducting business. You will see many variations of the term Âelectronic commerceÊ used in the readings. Broadly speaking, all the variations of the term may be included within the definitions above. Specifically, this topic focuses on the use of the Internet for conducting business transactions and the applications that enable these transactions to take place. The next section explores the various dimensions that exist within these definitions of electronic commerce.

Dimensions of electronic commerce

Within electronic commerce there are a number of dimensions. In June 2000 the Organisation for Economic Co-operation and Development (OECD) presented an illustration of the major electronic commerce dimensions, presented in the next figure.


Figure 7.1: Electronic commerce and broader Internet applications

(SSource: Coppel, J (2000) ÂE-commerce: Impacts and policy challengesÊ, Economics Department Working Papers No. 252, Organisation for Economic Co-operation and

Development, 4, Fig. 1) The two shaded areas, business-to-business and business-to-consumer, have demonstrated the fastest growth in the last few years. In the coming years it is expected that the additional application areas highlighted in this figure will become more dominant. For example, the Malaysian government currently has an extensive initiative underway to interconnect all its government databases and information sources, integrating the use of personal identification cards that are designed to connect with the network. The intention is that the Malaysian population will use these cards to interact with the government in such areas as driving licence issuing, and they may even use them at airports to enter the country, using turnstile-type gates with the cards. This example presents an infrastructure initiative, but how the influence on society and the applications that will run across the network will evolve will take a number of years to emerge. In these topics you will focus on business-to-business, business-to-consumer and consumer-to-consumer commerce and will discuss the implications that all the dimensions in Figure 7.1 raise. Before exploring the variety of business models that are used within these dimensions, review the next figure, which presents an overview of the three dimensions under discussion.


Figure 7.2: Dimensions of online commerce

(SSource: Rao, B (1999) ÂEmerging business models in online commerceÊ, 3, Table 1, <http://www.ite.poly.edu/people/brao/RT99.htm>)

Did you notice the wide variation in the value of the market potential for each of these dimensions? This market potential is a key factor in the development of electronic commerce over the next few years. Business-to-consumer commerce is now well established and it is difficult to find a new niche that is not already exhibiting high levels of competition. The revenue streams for consumer-to-consumer commerce are the most limited of the three, being largely based on complimentary advertising and marketing opportunities. Although the value of the potential market varies, there is general agreement that business-to-business commerce exhibits revenue potential unsurpassed along other dimensions.


To emphasize this, Morgan Stanley Dean Witter have produced the following illustration of the potential of business-to-business commerce compared to the phases of development electronic commerce has passed through.

Figure 7.3: Potential value of business-to-business commerce

(SSource: Morgan Stanley Dean Witter (2000) The Technology Primer · Volume VII) Market potential valuations have been a key factor in the recent craze to invest in Internet oriented companies. Although the investment hype had warn off and financial market values had fallen by mid-2000, the long-term potential is still considered to be strong. The high levels of investment during this period injected a lot of money into Internet businesses, and despite the high number of Internet business failures, the overall effect has been to fuel the development of existing electronic commerce applications and fund the development of new ones. This boost in funding helps the adoption and application of Internet technologies that will foster the coming developments in electronic commerce, covered in the final section of this topic. With the rapid growth of electronic commerce, competition for business becomes stronger almost every day as more businesses attempt to cash in on this market potential. One of the distinguishing factors that will differentiate those that fail from those that succeed is the implementation of a successful Internet business model.


Electronic commerce business models

As electronic commerce developed as a distinct academic discipline, business researchers attempted to identify distinct types of business models in use. As is the nature of continuous change, these models and the taxonomies (classifications) of models suggested by these researchers have required constant updating. This is complicated by the fact that these models operate in different markets, at different levels and often across markets, resulting in a number of different variations in their application. The next reading presents one of the most comprehensive taxonomies of business models available on the Web. Nine distinct models are outlined with a wide range of supporting examples across each of the dimensions.

Do you agree with RappaÊs definition of an electronic commerce business model? If Âa business model is a method of doing business by which a company can sustain itself · that is, generate revenueÊ, why are so many major businesses on the Internet not making any money? Are these companies not using business models appropriate for the Internet? It is difficult to address these questions since there are no proven business models for electronic commerce on the Internet, just as there are no proven business models that will always win outside of the Internet world. Even the author himself, Rappa, only offers this taxonomy of business models as one view and highlights that there are a number of variations on these.

Rappa, M (2000) Â Business models on the WebÊ<http://ecommerce.ncsu.edu/business_models.html>

Read the introduction to business models down the centre of the page first. Then, review only the first paragraph describing each of the nine business models. You will explore these further in the next activity.

Particularly, you should note the definition of a business model presented by Rappa and decide whether you agree with it.

READING 7.1


Attempt to apply some of these business models to your own organization in the next activity.

In this activity you will explore the nine distinct models presented in the Rappa reading.

Consider the questions from two perspectives:

� the organization as a consumer · for example, in areas such as purchasing office supplies and other business services that you might use

� the organization as a provider of electronic commerce resources · for example, you may see potential for offering business-to-consumer or business-to-business commerce services, depending on your type of business.

Go to Reading 7.1 again and review the short overviews at the beginning of each of the nine models outlined. Explore the associated links for examples of each if you wish.

� Begin by reviewing your organizationÊs current electronic commerce activity and attempt to identify this with the specific business models outlined. If your organization has not yet delved into the world of electronic commerce, you have the opportunity to consider the opportunities in the next questions.

� How might these generic business models be used by your own organization individually, or used to enhance current electronic commerce activities?

� What combination of the generic models might be more appropriate for your organization for the two perspectives? Why specifically would this combination be more appropriate for your organization? One example could be an online service that manages customer data and offers online tools to support customer service.

� Why do think it is important to combine the models to suit your individual needs?

ACTIVITY 7.1


It is likely in this activity that although you could find value in the use of some of the individual business models, there was potential for greater value to the company by using a combination of the models. This is an important consideration as you explore the potential application of these models. As Figure 7.2 indicates, there are hybrid players that operate across the dimensions of electronic commerce, as there are advantages to be gained for consumers and businesses. For example, an online consumer storefront may be closely integrated with an online stock data management solution, enabling the store to provide details of whether stock is held from the data source used internally by an organization.

Discussion The Launch.com website linked below represents a quite different and innovative use of Internet technology for business-to-consumer electronic commerce, based on iBeam Internet broadcasting solutions. Launch.com: <http://www.launch.com/> Activity overview In this activity, review and evaluate how the different business models are integrated into the Launch.com website and become your own Internet broadcaster. Do this on your own first and then address the suggested discussion topics that are intended to broaden the discussion to explore some of the new electronic commerce business opportunities that these technologies enable. Become a registered user The best way to understand the range of services offered by Launch.com is to become a registered user so that you are able to explore the site fully from the perspective of a consumer. To register as a user, navigate to the homepage, select ÂJoin FreeÊ at the bottom of the page and follow the online instructions. You should read the privacy policy and terms and conditions linked at the bottom of the sign-up page before registering. You will be required to enter some personal details including a valid email address.

ACTIVITY 7.2


By registering with the site you will have your own LAUNCHcast broadcast station created for you as one of the benefits of membership. This is Launch.comÊs most notable feature, allowing you and other broadcasters to influence the content of your personal broadcast station. Note the extensive opportunities for rating tracks, artists and albums, throughout the site. To use your new LAUNCHcast station you will need to enable cookies in your browser. This is important as many of the personalization features are based on the use of cookies. In addition, you will need WindowsMedia Player 7 and the latest Macromedia Flash Shockwave plug-in. As part of the registration process a step is included to help test whether you have the right plug-ins in your browser and where to download them if you do not. Note that this site uses streaming media and, due to bandwidth limitations, you may notice some degradation in the ability to receive uninterrupted audio streams during the evening, as Internet traffic is highest at this time. You are now set up as a registered user of Launch.com with your own online audio broadcast station that you may choose to promote on the Internet. Remember, though, that LAUNCHcast is only one of the services offered at the site and that it is also possible to buy music and interact directly with other users through the chat and discussion features, for example. Application of business models Next, focus specifically on the application of the business models discussed in this section. Launch.com is an attempt to make available commercially protected music within the Digital Millennium Copyright Act law, designed for the Internet. Launch.com may be termed a hybrid player as it operates across business-to-consumer and consumer-to-consumer dimensions of electronic commerce. Review and evaluate the site based on the Rappa taxonomy of business models:

� Which of the generic business models does this site integrate and which do you think is the dominant model adopted?


ELECTRONIC COMMERCE DRIVERS AND INHIBITORS

The first part of this topic has covered dimensions and business models for electronic commerce, and you have seen how important it is to adopt suitable business models to compete, but that there are no winning business models. This part of the topic investigates the trends, inhibitors and drivers in the business environment that are affecting the development of electronic commerce and the technologies that are enabling the subsequent transformation in the way that businesses operate. Note that this section focuses on the company perspective for the barriers and inhibitors to electronic commerce, but does not include the societal and economic barriers that exist. Here, the focus is on a discussion of technologies that are helping companies to overcome barriers and inhibitors to the development of electronic commerce activity.

There is detailed feedback on this question at the end of the topic. Suggested discussion Taking into consideration your analysis of business models in the previous questions, post your comments to the discussion board based on the following questions:

� Do you think that the revenue generating features of the site could be improved? How, specifically?

� What other revenue generating activities and features might the site adopt?

� Could Launch.com benefit from including features offered by competitors, such as Live365 (<http://www.live365.com/>)?

� Would these opportunities be improved if Launch.com were made available easily on a wider range of Internet enabled devices? What specifically might the benefits be?

Remember that this is intended as an opportunity to interact with your fellow students who bring to the course a wide range of skills and experience. Make the most of the opportunity and contribute to, and comment on, the submissions of other students.


Begin by exploring the megatrends in the electronic commerce business environment, to set the context for the discussion.

Internet-enabled megatrends

Internet technology for electronic commerce has now reached a new level of sophistication for sharing and collaboration over networks, but the consequences have significant impacts on all aspects of how businesses currently operate. Review the megatrends in the figure again and consider the enormous impact that these trends have on changing an organizationÊs corporate culture, business operations and market channels. Are you experiencing these Internet-enabled trends in your own organization? What impacts are they having specifically? Add to this the implications of needing to upgrade network infrastructures, data management tools and other aspects of technology necessary to implement new business information systems, and it is difficult for any organization to keep pace with competitors. These megatrends essentially represent the forces driving change towards a future where Internet focused electronic commerce is an embedded part of any organizationÊs operations, and where there is interaction with customers in new and interactive ways. The next section briefly looks at the barriers and inhibitors that are thought to exist for companies trying to adapt and transform themselves around these trends.

Barriers and inhibitors to electronic commerce

In this section, I will highlight a piece of annual research conducted by CommerceNet (<http://www.commerce.net/>) that focuses on investigating barriers and inhibitors to electronic commerce perceived by companies. Review the top ten barriers and inhibitors for business-to-business and business-to-consumer commerce for 1999, in the next figure. Global Top 10 Barriers & Inhibitors 1999: Business-to-Business Perspective

1. Culture [problems changing corporate culture]

2. Interoperability between e-commerce applications and with legacy systems

3. Organization


4. Executive awareness

5. User authentication and lack of public key infrastructure

6. Lack of standards

7. Lack of knowledge or qualified personnel

8. Interoperability with eCommerce sites of complementary companies

9. Trust and risk

10. International access and trade barriers Global Top 10 Barriers & Inhibitors 1999: Business-to-Consumer eCommerce

1. Security and encryption

2. Trust

3. Ability to make and receive payments

4. Culture

5. User authentication and lack of public key infrastructure

6. Business models


8. Cost justification

9. Customers canÊt find me



Figure 7.4: B2B and B2C barriers and inhibitors to EC in 1999

(SSource: Terry, S (1999) ÂBarriers and Inhibitors 1998-99Ê, CommerceNet. <http://www.commerce.net/research/reports/1999/99_18_r.html>)

Although results vary between surveys, the two Âtop tensÊ in the above figure highlight the most commonly cited barriers and inhibitors to Internet electronic commerce for companies. Notice that many of these are based around technology application issues, such as secure payment transaction technologies and public key infrastructure. In most cases it is not that the technology to address these inhibitors does not exist, but that it is not considered easily and cost effectively available to the companies in this survey. For example, many countries, are only just beginning to implement public key infrastructures to support electronic commerce and consumers are not yet fully aware of how this affects the security of the transactions that they make via the Internet. The next section specifically investigates the technologies that are becoming more easily available to address these barriers and inhibitors.


Technology trends transforming business

In June 1999 PricewaterhouseCoopers, the global professional services firm, released a report exploring trends in the use of technology for electronic commerce. This section explores these and their influence as drivers of electronic commerce via the Internet. Summaries of two key parts of the report will be used in this section as the basis of discussion:

� Section I: E-Business platforms and applications

� Section III: Payment technologies E-Business platforms and applications The choice of software applications and tools for developing sophisticated electronic commerce solutions is becoming much wider, reducing the need to develop totally custom built applications. These are also more focused on enhancing interoperability with legacy systems and between vendor systems, addressing two of the top ten concerns for business-to-business commerce in Figure 7.5. Read the first part of the summary in the next reading and notice the emphasis towards technologies for working more closely with customers and enhancing interoperability between systems.

It is evident that the general trend is moving away from simply providing online catalogues and secure transaction capabilities towards much closer integration with companiesÊ internal systems and customers. Examples are the moves towards provision of real-time inventory systems integrated with online catalogues, and more of a focus on long-term relationships with customers, supported by technology for interaction.

(1999) ÂPricewaterhouseCoopersÊ E-Business technology forecast highlights trends transforming business todayÊ, PricewaterhouseCoopers. http://www.pwcglobal.com/extweb/ncpressrelease.nsf/docid/2F18DAF6F3BF95778525679C000677EE Section I: E-Business platforms and applications

READING 7.2


In particular, it is important to highlight the increasing role that the Extensible Markup Language (XML) and associated technologies are playing as a core element of electronic commerce systems. Extensible Markup Language (XML) is not a markup language like HTML, but rather a metalanguage that allows application developers to define their own markup languages. Extensible by definition, it specifies the syntax for tags, not the tags themselves. XML is expected to hurdle HTMLs limitations and offer a standard way to exchange data across the Internet, acting as a driver of electronic commerce. Not a replacement for HTML, XML is meant to augment HTML. HTML and XML are both text-based languages derived from SGML. SGML (Standard Generalized Markup Language) is a standard for how to specify a document markup language or tag set. SGML is not in itself a document language, but a description of how to specify one. Where HTML is an application of SGML, XML is a subset. In other words, XML is a simplified, offshoot version of SGML. While HTML describes how to present a documentÊs data, XML defines the dataÊs actual content. For example, an HTML tag such as <H1> specifies a certain font and size. XML, on the other hand, describes the content that appears within the tags. By separating presentation from content, XML adds structure to documents and allows them to be viewed on various devices without having to be rewritten specifically for each device. This platform independence capability is becoming even more important as the ways in which users access the Internet extend to Internet-enabled devices, rather than primarily traditional PC browser interfaces. You will see some of these new access devices in the final part of this topic. The extensibility of XML is where the greatest benefits may be achieved. Web builders can create a set of tags specific to their tasks and then share them throughout their industry. Several industries, such as real estate and health care, have already taken advantage of XML. XML will also improve searching capabilities on the Web. For instance, searching for ÂJaguarÊ on the Web will probably turn up thousands of documents about the car. But what if you are looking for information about the cat? When XML becomes ubiquitous, you will be able to find only those documents that match your search, because the relevant pages could be marked up like this:

<ANIMAL>Jaguar</ANIMAL>


Imagine the possibilities of being able to define your own markup tags. Standard HTML alone has always come under criticism for not being flexible enough. XML changes all that, allowing designers to customize their tags to meet specific needs. Notice, though, that it is not a replacement for HTML, but is intended to extend HTML's capabilities. HTML determines how the media objects will be displayed on a page, while XML focuses on describing the content. In the next activity you will review a website that uses XML to display content in different ways to users.

This has given you an overview of what XML is and why it is an important driver for the next phase of development of Internet electronic commerce. If you wish to investigate the application of XML technology in more detail, the Further references section at the end of this topic includes application case examples from IBM and popular XML reference and developer community sites. Overall, platforms and applications for enabling and driving electronic commerce are becoming more sophisticated, as the customer becomes the focus of attention and customers become more demanding. To meet these demands and support organizations in adopting electronic commerce, the development tools are providing more options for developing

Visit the XML tutorial at the following site. Introduction to XML for Web developers:

<http://wdvl.internet.com/Authoring/Languages/XML/Tutorials/Intro/toc.html> Then, address the following questions:

� What do you see as one of the main advantages of using an XML based website presentation?

� What difference does using XML make for the users of a website?

There is feedback on this activity at the end of the topic.

ACTIVITY 7.3


platform independent solutions, focused on collaboration, sharing and supporting long-term customer relationships. Payment technologies There are basically no physical boundaries limiting Internet business operations. In practice, however, a major concern from the public is ensuring that online transactions can be carried out securely. Neither online customers nor merchants want to open themselves up to the risk of potential fraud. As youÊve seen, the barriers and inhibitors to business-to-consumer electronic commerce identified in Figure 7.5 are heavily oriented to online transaction issues. In fact, four of the top five are related to payment technology:

� Security and encryption

� Trust

� Ability to make and receive payments

� User authentication and lack of public key infrastructure These concerns about security have led to the application of cryptography to ensure trustworthy transactions on the Internet. There has already been a considerable amount of development work in this area, but an acceptable solution will not be implemented overnight. For example, changes in legislation are required for countries to implement public-key infrastructures to support secure transaction technologies. Read the following article for an overview of payment technologies transforming electronic commerce in the next extract from the reading.

(1999) ÂPricewaterhouseCoopersÊ E-Business technology forecast highlights trends transforming business todayÊ, PricewaterhouseCoopers. http://www.pwcglobal.com/extweb/ncpressrelease.nsf/docid/2F18DAF6F3BF95778525679C000677EE Section III: Payment technologies

READING 7.3


It is evident that the Secure Sockets Layer (SSL) protocol has become the dominant method for securing connections with consumers, but does not meet all the requirements for payment transactions. Despite the popularity of credit cards there are still a lot of new payment technologies attempting to gain wider acceptance by vendors and users for conducting electronic commerce. As the reading suggests, there will be consolidation and the number of payment options will reduce, helping to standardize payment technologies. Public key cryptography is another form of online security that is gaining in importance. In the following reading, we take a closer look at public key infrastructures (PKI). In this reading, the experience of Scotiabank is used as a case study to illustrate how PKI technology was adopted in a business that requires high security. Reading this article should help you be able to:

� briefly describe the different levels of security

� describe the elements of public key infrastructure

� explain the advantages of using public key

� discuss the potential applications of public key technology to future risk management.

As you can see from these two articles, standardization for payment technologies across the Internet is another key factor in the ability to address the barriers and inhibitors identified above. Essentially, the underlying technologies have now matured, but the underlying infrastructure is not yet fully in place. Once the secure payment technology infrastructure is set in place it is envisaged that usersÊ and companiesÊ concerns will begin to be addressed and inhibitors will become drivers. Overall, there is no doubt that rapid advances in the application of existing and emerging Internet technologies can be primary inhibitors and drivers in the future of electronic commerce. Much of the problem relates to the current lack of

Read the attached article ÂUsing public-key infrastructures for security and risk managementÊ, which is extracted from IEEE Communications Magazine, September 1999, pages 71�73.

READING 7.4


suitable infrastructures and common standards for conducting business via the Internet, but these are beginning to be set in place. In summary, this discussion of drivers and inhibitors has highlighted:

� the important driving force that growth in the number of Internet users and subsequent projections for growth in market values represent

� the megatrends in electronic commerce that are transforming the way that companies conduct business

� the barriers and inhibitors that are hampering the development of electronic commerce adoption and development by companies

� the technologies that are enabling and driving development to overcome these barriers and inhibitors.

To conclude this part of the topic, attempt the next activity that explores inhibitors and drivers of electronic commerce in your own organization.

From the perspective of your own organization, attempt to identify the: � barriers and inhibitors to the adoption of electronic commerce in

your company � technology trends affecting your business and helping to overcome

these barriers and inhibitors.

Attempt to identify at least four points for each of these. � Rank the technology trends affecting the organization based on the

potential impact on conducting business in your industry. � Rank the inhibitors with the ones you think will be most difficult to

overcome at the top. � Based on these rankings, attempt to identify action that the

organization might take to make the most of the emerging technologies and make recommendations for action to overcome the highest ranking inhibitors.

Finally, consider the impact that the adoption of new technologies might have on the operations and management of your company.

� Do you think your company is ready for major technological change?

� Would you implement new technology requirements quickly or incrementally? Why?

ACTIVITY 7.4


One of the factors that complicates a companyÊs ability to address the inhibitors and make the most of drivers is that a whole new wave of Internet enabled appliances and devices are starting to come onto the market. This heightens the need for platform independent presentation tools, such as XML, and is changing the dynamics of electronic commerce as new business channels emerge to compete in. The next and final part of this topic explores the technology trends that are heralding the new wave of Internet-enabled devices.

ELECTRONIC COMMERCE TECHNOLOGY TRENDS

Until recently the Internet has been principally accessed via traditional PC browser interfaces. This has had a strong influence on the design and features of electronic commerce applications, but this situation is changing fast. Not only is it becoming possible to access the Internet at faster speeds, enabling the delivery of more complex applications and media, but it is also becoming easier to access the Internet via different types of device, such as mobile phones. This has been discussed in the previous topics of this module, and in this section you will see some of the opportunities that faster access speeds and enhanced accessibility enable. In particular, the focus is on the emerging range of devices that might be used to access the Internet for electronic commerce in the near future. Although some of these may have familiar interfaces with users such as scaled down browsers for use with wireless devices, there will also be a move to embed Internet access into our daily lives without a traditional browser interface. This is described as a move to ubiquitous computing, and the discussion focuses on developments in home networking. To conclude you will explore the potential future for wearable computers. Begin by exploring the range of Internet enabled devices that are becoming available within consumer markets and the potential influence they may have on the growth and development of electronic commerce.

Internet enabled devices

Today, the vast majority of Internet connected devices are traditional computers. That balance is poised to shift, with cellular phones blazing the trail, as many consumer electronic devices become Internet enabled.


Wireless mobile phones and handhelds For wireless devices, you have seen that the technology experiencing the fastest development is WAP (Wireless Application Protocol), which allows the devices to view specially formatted Internet content. Other wireless handheld devices, such as the Palm handheld computers, are also gaining increasing popularity. Content and services for these devices are emerging rapidly. High-traffic sites, including Amazon.com, Yahoo and ZDNet, already provide wireless content and services. Pinpoint.com (<http://www.pinpoint.com/>) has developed a search engine technology that scours WML (Wireless Markup Language, the XML-based, wireless equivalent of HTML) documents. Although WAP service providers may not make much money until there are more WAP enabled phones in peopleÊs hands, the long-term business potential looks good for wireless electronic commerce generally. A surprise in these developments has been the sudden popularity of a competing technology to WAP · i-mode. The next article from the New Scientist chronicles the dramatic growth seen in Japan.

This reading highlights a key factor for the success and growth of wireless electronic commerce in the future, providing the content and services users want. As the reading highlights, i-mode does not have all the technological potential of WAP, but it seems it is possible to use it successfully as a channel for electronic commerce that looks to grow very fast in Japan as new content and services are added almost daily. Overall, the trend and potential opportunities for wireless electronic commerce are strong, but indications of what new wireless technologies will dominate certain markets will take some time to become clear. One of the reasons for this is that wireless is only a small part of the picture and potential opportunities for opening new channels for conducting electronic

Liesbeth, E (2000) ÂiMode to challenge Wap in EuropeÊ, Network News, Oct 18. This reading can be downloaded at: <http://www.vnunet.com/ News/1112684/>

READING 7.5


commerce with consumers go beyond wireless enabled devices, covered in the next section. Net appliances Although wireless devices offer mobile convenience, they are far from the only consumer electronics devices that provide Internet connectivity to enhance the opportunities to reach consumers through electronic commerce. We can expect more and more devices that contain a microprocessor, from your car to your digital camera, will have some sort of Internet connection. Although Internet-enabled devices will have an increasing influence on channels for conducting electronic commerce, there is also another wave of technological development growing that goes a stage beyond the utilization of these new access device types. It is known as ubiquitous computing.

Ubiquitous computing

Ubiquitous computing, or calm technology, is a paradigm shift where technology becomes virtually invisible in our lives. Instead of having a desktop or laptop PC, the technology you use would be embedded in your environment. Imagine a world with hundreds of wireless computing devices of different sizes in the same room. In order to bring this type of computing out into the environment, among the things that would need rethinking are user interfaces, displays, operating systems, networks, and wireless communications. This rethinking demands a radical departure from the tradition of putting machines out for our use, and having us adapt to them. Instead, in the world of ubiquitous computing, technology will be implicit in our lives, built in to the things we use, including the spaces. The proponents of this technology hold that this type of computing will be a more natural tool, and thus a more powerful and effective one for us to use. Applications Now that ubiquitous computing has been defined, what are some uses envisioned by its proponents and authors? In 1991 Mark Weiser, thought of as the founder of what is termed ubiquitous computing, wrote an article for Scientific American entitled ÂThe computer for the 21st centuryÊ. In it, Weiser described the multiple computers in a room as tabs, pads and boards, which roughly correspond to active Post-It notes, sheets of paper, and white boards and bulletin boards.


A good description of these items can be found in the article ÂSome computer science issues in ubiquitous computingÊ:

<http://www.ubiq.com/hypertext/weiser/UbiCACM.html> These computers serve many functions as people come in and out of the rooms. The people themselves could be tracked by active badges (based on infrared sensors) or other devices, and email could be forwarded automatically to wherever the person is. Other scenarios presented in the article include the coffee starting at your request when the alarm wakes you, seeing Âelectronic trailsÊ left by people passing through the neighborhood, and automatically transmitting a quote from a newspaper to the office with the swipe of a pen over the newspaper. Not only will developments in ubiquitous computing open up new channels for electronic commerce, but they also have the potential to have a significant impact on electronic commerce business models. With the closer integration of the network with a userÊs environment it is possible to envisage many new and innovative business applications, but as yet it is not clear what these will be. With these definitions and examples, we have an idea of what ubiquitous computing is, and what it hopes to achieve. Rather than attempting to predict the long-term future for the ubiquitous computing philosophy, the next section investigates the latest developments in the practical application of ubiquitous computing concepts, through home networking. Home networking The arrival of all the new Net-ready devices will fuel rapid growth in home networking. Technologies such as the HomePNA (Home Phoneline Networking Association) 2.0 standard (which allows 10-Mbps connections over existing telephone wiring), the 802.11b 11-Mbps wireless LAN standard, and the increasingly pervasive, high-speed, always-on connections of DSL and cable have provided the foundation to build upon. As a result, the Yankee Group predicts that home networks will mushroom from some 650,000 in existence today to more than 10 million by 2003. As Malaysia constructs new residential buildings, integration of cabling to support broadband network services is already a reality. As home networking technologies become more standardized, there is no doubt that these technologies will be increasingly integrated into new buildings.


Wearable computers

Some inventors and other theorists not only believe you could wear a computer; they believe there is no reason why you should not. Assuming you remembered to wear it, a wearable computer would always be available. Some wearable computers are basically desktop or notebook computers that have been scaled down for body wear. Others employ brand new technology, and both general and special purposes are envisioned. Among the challenges for making wearable computers a reality are:

� how to minimize their weight and bulkiness

� how and where to locate the display

� what kind of data entry device to provide. These are the issues that are surrounding the development of wearable computers, and commercial products are beginning to emerge onto the consumer market slowly, as it has been difficult to overcome all these inhibitors. Some of the applications envisioned for wearable computers include:

� Augmented memory, a concept originated by Thad Starner and being developed by Bradley Rhodes at the MIT Media Lab, in which as you enter a room, your wearable computer could sense the people present and remind you of their names or personal history, or a scheduler could whisper the time of an important meeting in your ear, or a Âremembrance agentÊ could look for related documents by observing the words you were typing.

� Immediate access to important data for anyone whose occupation requires mobility, such as real estate agents, rural doctors, fire and police professionals, lawyers in courtrooms, military personnel, stock brokers, and many others.

� The ability to take notes immediately · for example, for reporters, geologists, botanists, vendor show representatives, and field service repair personnel.

A major interest in computers you can wear has grown out of the ubiquitous computing philosophy, gathering its own momentum and its own particular goals. In the explanation of what a wearable is, the MIT Wearables Group (<http://www.media.mit.edu/wearables/>) suggests:


ÂA personÊs computer should be worn, much as eyeglasses or clothing are worn, and interact with the user based on the context of the situation. With heads-up displays, unobtrusive input devices, personal wireless local area networks, and a host of other context sensing and communication tools, the wearable computer can act as an intelligent assistant, whether it be through a Remembrance Agent, augmented reality, or intellectual collectives.Ê

This seems even more like science fiction than ubiquitous computing, but the applications do seem practical and it is not until they are tested with consumers that one can really assess how well they work to meet user needs. As this is an emerging and rapidly changing market, it is difficult to provide reliable links to specific products online. Wearable computer product options and users will increase as new products come to the market, but it is difficult at this stage to determine how electronic commerce will be enabled through wearable computers. It is certain that ways will be implemented though. Wearable computing seems perhaps less intrusive than the ÂinvisibleÊ computers of ubiquitous computing, for we decide to wear them or not. With ubiquitous computing, we can be tracked, among other things, albeit for helpful purposes. However, the same capabilities can be used for less honourable purposes, which raises major concerns about ubiquitous computing and networked wearables.

IP multicast technology

You have seen in a number of instances in this topic how accessing information and interactive communications are essential for conducting e-commerce. Effective information retrieving technologies are therefore crucial for e-commerce. IP multicast technology is an emerging network technology that can greatly improve the efficiency of providing such information. YouÊll be reading a concise article that describes some of the networking implications of multicasting in e-commerce in this section. This article should help you to:

� describe different categories of service provided by e-commerce;

� explain the advantages of the content aggregation and dissemination model;

� briefly describe multicast technology; and

� illustrate the challenges in achieving pervasive multicast usage.


The final section of the article sets out a case study in which multicast technology was deployed as part of a successful e-commerce system in use today.

This topic has introduced you to electronic commerce on the Internet and the technologies that are affecting the future. You have seen that there are no winning business models on the Internet that will ensure success, but that a good combination of business models can result in innovative and successful electronic commerce operations. Many of the factors inhibiting and driving the adoption of electronic commerce in organizations are related to the rapid development of new technology and the potential opportunities of networking. You saw how inhibitors such as interoperability with legacy systems are being overcome by the application of platform independent technologies, such as XML. Overall, many of the inhibitors to the adoption of electronic commerce are already being addressed, but it takes time to implement the infrastructure that is necessary to support electronic commerce activity. The last section highlighted the emerging trends in the use of technology that will enable electronic commerce to grow through new access devices in the near future. Overall, the message is that electronic commerce is experiencing yet another growth phase, as the next level of infrastructure for secure transactions is set in place globally. The forecasts indicate that there will be no slowdown in the growth of electronic commerce over the next few years and we can expect to see many changes, not only in the technologies that are used, but also in the effect philosophies such as ubiquitous computing may have on our daily lives.

Read the attached article, ÂNetwork implications of multicast in electronic commerceÊ, which is extracted from IEEE Communications Magazine, September 1999, pages 78�82.

READING 7.6


FURTHER REFERENCES

The resources on this page are provided to support you in studying the topics in this topic in more detail. XML resources The significance of XML has been highlighted in the topic. These resources provide pointers to further sources of information on the technical application of XML.

XML Zone

<http://www.xml-zone.com/>

XML.org

<http://www.xml.org/>

The XML Cover Pages

<http://www.oasis-open.org/cover/sgml-xml.html> Ubiquitous computing Further resources and links related to ubiquitous computing can be found on Mark WeiserÊs personal website. Ubiquitous computing

<http://www.ubiq.com/hypertext/weiser/UbiHome.html> In particular, the paper linked below was significant in promoting the concept of ubiquitous computing in recent years.

Weiser, M and Seely, B (1996) ÂThe coming age of calm technologyÊ, Xerox PARC. <http://www.ubiq.com/hypertext/weiser/acmfuture2endnote.htm>


SUGGESTED FEEDBACK ON ACTIVITIES

Activity 7.2

Which of the generic business models does this site integrate and which do you think is the dominant model adopted? As discussed, Launch.com is a hybrid player; that is it operates across B2C and C2C electronic commerce dimensions. It clearly does not conform to a single generic business model, but rather uses elements from a number of the models discussed in the Rappa reading, specifically:

� Advertising model

� Merchant model

� Affiliate model

� Community model It will be useful to review these generic business models again and consider to what extent each model is integrated at Launch.com. Referring to the Rappa reading, the following generic business models are the ones that would seem the most relevant. Advertising model This model is an extension of the traditional media broadcasting model, whereby advertising messages are mixed in with the content and services provided by the website. Launch.com uses banner ads in this way throughout the site. These banner ads promote a variety of organizations and services, but in general seem to focus on a younger and more musically inclined market. Current advertisers include CBS Sports, Right Guard, Mars Music, UGO.com, The Army and various musical artists. Music related services offered by advertisers include concert ticketing, musical instrument merchandising, music merchandising and competitions to win music-related prizes. Referring to the Rappa reading, the site uses a combination of the personalization and specialist portal advertising models, and because usage is without charge, the free model is also apparent. The personalization model features the ability for the consumer to customize, or in this case influence content and supports the specialist model in that the target user base is reasonably well defined. This feature would be significant in attracting advertisers that wish to target a specific consumer group.


Merchant model This model is based on the classical perception of wholesalers and retailers providing goods and services. It is possible to purchase a number of products from Launch.com including music, movies, games, used items, tickets and digital downloads. It is interesting to note that the Launch.com retail services are offered through a third party vendor (checkout.com). Launch.com is apparently a virtual merchant in that it does not have a Âbricks-and-mortarÊ storefront, and because the site deals with both conventional and Web-specific products it cannot be considered a true bit vendor. Community model This model is based on user loyalty following a high investment in time and emotion in the site. A user may be a regular contributor of content and/or money and the model provides opportunities for advertising, infomediary or specialized portal opportunities. This model is reflected in the LAUNCHcast broadcast service offered by Launch.com. While users do not contribute content in the traditional sense, they do have a significant influence over the content that is broadcast through their station and other stations. The LAUNCHcast user certainly makes an investment in time and emotion by listening to tracks and rating them as they see fit, and it is probable that this feature provides the primary mechanism for building user loyalty. As discussed under the advertising model, specialized portal opportunities are utilized at Launch.com and it is the ÂcommunityÊ aspect of the site that enables this. Affiliate model This model offers financial incentives to affiliated partner sites via purchase-point click-through to the merchant. Launch.com utilizes this model through its ÂundergroundÊ initiative · a pay-per-click service whereby the affiliate site currently earns $0.02 per hit. A variation adopted by Launch.com is the use of a user ÂtitleÊ dependent upon the number of click-throughs. This feature would further influence some users to promote Launch.com, by enhancing the userÊs profile when interacting with the Launch.com community. In conclusion, the Launch.com website can be seen as an implementation of a number of different and yet complementary generic business models. The community model is perhaps the most dominant for Launch.com, as it enables an innovative medium through which the user can both influence content and interact with others.


The community model provides the opportunity for the specialist portal advertising model to operate and would significantly affect user loyalty through the investment of time required. Although the merchant model and the affiliate model are also utilized, they are both of less significance than the community model, the model really setting the tone for the whole website.

Activity 7.3

What do you see as the main advantage of using an XML based website presentation? The ability to separate content and the way it is displayed is the main advantage of XML. Rather than a website having a single set of static pages to present content, XML provides the opportunity to present the same content in a number of different ways. This allows the content to be updated and presented without the need to change individual HTML page files. XML therefore provides specific advantages to website presenters in the way that content is described, stored and presented over the Web. What difference does using XML make for the users of a website? Although the pages look exactly the same in each of the three illustrations, the separation of content and how it is displayed means that the content can be made accessible by any platform. The significance of this may not be obvious at first, but consider the fact that Web content will increasingly be accessed in new ways, such as via dedicated Internet appliances.

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Topic 7 E Commerce in Current Trend