Detailed Chapter Outline
7.1 What Is the Internet?
7.2 The Evolution of the Internet
7.2.1 The Internet
Today
7.2.2 The Structure
of the Internet
7.2.3 Internet2
7.3 The Operation of the Internet
7.3.1 Accessing
the Internet
7.4 Services Provided by the Internet
7.4.1 Communications
Services
7.4.2 Information
Retrieval Services
7.5 The World Wide Web
7.5.1 Browsers
7.5.2 Off-line Browsers
7.5.3 Search Engines
7.5.4 Push Technology
7.5.5 Information
Filters
7.5.6 Clipping Services
7.5.7 Personalized
Web Servies
7.5.8 Collaborative
Filtering
7.5.9 Web Authoring
7.6 Internet Challenges
7.6.1 New Technologies
7.6.2 Internet Regulation
7.6.3 Internet Expansion
7.6.4 Internet Privacy
7.7 Intranets
The New Internet Business Model
If you are a knowledgeable investor who chooses your
own stocks, bonds, and mutual funds, then switching to an electronic-broker
(E-broker) can give you tremendous savings over what you have been paying
a traditional discounter, or one of the big Wall Street “full-service”
brokers that prefer to deal face to face. As brokers expand their
online product lines, you can save even more money.
However, online trading is not for everyone, particularly
anyone who enjoys the hand-holding that professionals can provide.
Behind E-brokers’ cheap commissions are hidden fees, periodic service outages,
sometimes poor telephone support, and in some cases, poorly designed and
slow Web sites that make it difficult to confirm if, when, and at what
price a trade went through.
Charles Schwab believes he can harness the power
of the Internet to create a firm that delivers the kind of advice and services
that investors want. Schwab started his company in the 1970s in the
depths of a bear (downward trending) market. At that time, investors
were angry with their brokers, who were not only giving bad advice, but
were also charging high fees. Schwab positioned his firm as an “un-broker.”
His goal was to give top-notch service but not push products or make recommendations
on which stocks to buy.
His strategy worked well during the long bull (upward
trending) market that followed. In the 1990s, Schwab customer accounts
more than tripled, customer assets grew by a factor of ten, revenues grew
by a factor of six, and net income rose by a factor of fourteen.
However, in 1998, although daily trades have jumped by 60%, commission
income is up only 23%, revenue growth has slowed to 13% and profit gains
have slowed to just 2%. The reason for the slowdown is that competition
from both deep-discount Internet brokers and full-service investment firms
is keener than ever. Commission rates are collapsing while expenses
are rising rapidly.
In response to these business pressures, Charles
Schwab developed a new strategy build around the Internet. The new
Schwab mission is to coach people on investing through the Internet.
The firm contends that more attention and service will keep customers happy
and that they will stay with Schwab. People who make at least four
trades per month and maintain $50,000 in their account qualify for the
Schwab Active Trader Service. Schwab Priority Service requires $500,000
in assets, with no trading requirements. Customers in these two services
have access to their own Web pages, including a powerful sorting tool called
Stock Screener, which allows users to find stocks according to different
criteria. Other perks include access to initial public offerings
and online interviews with top executives such as Intel Corporation’s Andrew
Grove and Dell Computer Corporation’s Michael Dell.
Schwab’s strategy relies on moving as many of its
customers as it can onto the Internet. The more they go online for
routine business -- such as checking balances, requesting quotes, or making
trades – the less the staffing needs at service centers and branches.
Schwab’s Web site earns its highest ratings on “customer confidence” but
it does not rate well in “ease-of-use” and the company is working diligently
on its Web site to make it attractive and easy to use for Schwab customers.
Source: “Remaking Schwab.” Business
Week; May 25, 1998; pp. 122-129.
Question: Trace the evolution of Schwab’s
strategy from the founding of the company to the present. How have
developments in information technology affected Schwab’s strategy?
Which comes first, strategy or technology? That is, should strategy
drive technology choices, or should new developments in technology drive
strategy choices?
Question: What are the risks in moving from
a traditional business model to an Internet-based business model?
Question: Go to Schwab’s Web site (www.schwab.com)
and evaluate the site for ease-of-use, attractiveness, and your confidence
in using the site.
The Schwab case illustrates the impact that the Internet has on all of us. On one hand, the Internet allows Schwab to change its strategy and business model to keep costs down, while attracting new customers and retaining old ones. On the other hand, customers can, conveniently and inexpensively, access their accounts as well as information about stocks, bonds, and mutual funds at the Schwab Web site on the Internet. This chapter will discuss how the tremendous impact of the Internet on individuals, businesses, and our entire society in general.
WHAT IS THE INTERNET?
The Internet, which is the largest computer network
in the world, is actually a network of networks. These interconnected
networks exchange information seamlessly by using open, non-proprietary
standards and protocols. The Internet is a collection of more than
200,000 individual computer networks owned by governments, universities,
nonprofit groups, and companies. These networks utilize the same
standards and therefore constitute the Internet. These networks are
connected via high-speed, long-distance, backbone networks.
Thus, the Internet forms a massive electronic communications
network among businesses, consumers, government agencies, schools, and
other organizations worldwide. Equally important, the Internet has
opened up exciting new possibilities that challenge traditional ways of
interacting, communicating, and doing business.
The Internet rivals the great inventions of our
time. Gutenberg’s invention of the printing press took books out
of ecclesiastical libraries and placed them in everyone’s hands.
The telephone system allows people to communicate instantaneously with
each other. The Internet is now merging these technologies, bringing
people and information together without any middlemen (e.g., publishers)
necessitated by books or the primarily one-to-one synchronous limitations
of the telephone system. The Internet is a new communications dimension
– an electronic, virtual world where time and space have almost no meaning.
In 1990, Alvin Toeffler (Powershift) stated that “…electronic networks
form the key infrastructure of the 21st century, as critical to business
success and national economic development as the railroads were in Morse’s
era.” The Internet provides this key infrastructure.
The Internet also provides a true democratic communications
forum, and has produced a “democratization of information.” That
is, the Internet handles everyone’s communications the same way, whether
you are a university student or the CEO of a Fortune 500 company.
It is the worth of what you say that determines who is willing to listen,
not your title. In most cases, users are free to say what they want
on the Internet, when they want. The Internet is an open and sharing
environment that is remarkably free of censorship, a tribute to its roots
in the academic and research communities.
A Coup on the Internet
During the coup attempt that spelled the end of the
Soviet Union in August 1991, a small e-mail company with an Internet connection
was one of the few unrestricted communications media left. The government
appeared to be jamming the radio stations and tried to ban all newspapers.
Soviet television programmed old movies and opera. Attempts were
made to cut off the Western media.
That e-mail carrier, Relcom (RELiable COMmunications)
was a small network by Western standards, supplying just under 400 organizations
with e-mail access mainly by dial-up access to telephone lines. Subscribers
typically connected to Relcom using personal computers and their own modems,
which gave them Internet access in an indirect way.
With Gorbachev and glasnost under arrest, Relcom’s
team of entrepreneurs and technicians keyboarded and posted releases in
both English and Russian from the banned newspapers and news agencies,
Boris Yeltsin’s defiant decrees (hand-delivered from his headquarters),
and man-in-the-street reports from their subscribers. Major Western
news sources such as AP and CNN began using Relcom. At the same time,
Relcom’s Internet connection became a key source of news on the coup for
the Soviet people. Relcom staffers asked for and got massive amounts
of e-mail from outside the country, including news from CNN. As one
of Relcom’s subscribers wrote later, “When the dark night fell upon Moscow,
Relcom was one source of light for us. Thanks to these brave people
we could get information and hope.”
There were days of intense danger at first.
Relcom’s computer was only a mile from KGB headquarters. “Don’t worry,
we’re OK,” wrote one of Relcom’s staffers, “though angry and frightened.
Moscow is full of tanks and military machines – I hate them. Now
we transmit information enough to put us in prison for the rest of our
lives.”
What got Relcom through to the outside world?
Sheer courage was part of it. Also, the staff set up a diffused network
with reserve nodes and secret locations, and the authorities never caught
up with them. And beyond that, there was the Internet.
Source: http://sunsite.nstu.ru/win/rus/tutor/bggn/chapter1.html
Question: How does the availability of information
affect totalitarian regimes?
THE EVOLUTION OF THE INTERNET
The Internet began as one network, called the ARPANET.
The ARPANET was a 1969 U.S. government experiment in packet-switched networking
(packet-switched networks were discussed in Chapter 6). ARPA was
the Department of Defense (DoD) Advanced Research Projects Agency, and
later became DARPA, the Defense Advanced Research Projects Agency.
The ARPANET originally linked a largely technical audience composed of
the military, government agencies, and academic researchers and scientists.
The original goals of the project were to allow researchers to share computing
resources and exchange information, regardless of their locations, and
to create a resilient, fault-tolerant, wide area network for military communications.
The original ARPANET split into two networks in the early 1980s, the ARPANET
and Milnet (an unclassified military network), but connections between
the two networks allowed communication to continue.
Access to the ARPANET in the early years was limited
to the military, defense contractors, and universities doing defense research.
Cooperative, decentralized networks such as UUCP, a worldwide UNIX communications
network, and USENET (User’s Network) originated in the late 1970s, initially
serving the university community and later serving commercial organizations.
In the early 1980s, more networks, such as the Computer Science Network
(CSNET) and BITNET began providing nationwide networking to the academic
and research communities. These networks were not part of the Internet,
but special connections were made to allow the exchange of information
between the networks. The National Science Foundation Network (NSFNET)
originated in 1986, and linked researchers across the country with five
supercomputer centers. The seamless internetworking of all these
networks gave rise to the Internet we know today.
The Internet Today
The number of computers and networks connected to
the Internet continues to grow rapidly. These computers and networks
have been set up voluntarily to conform to the Internet’s set of nonproprietary
standard protocols. The power of the Internet rests in this uniform,
open architecture. In 1998, less than two percent of the world’s
adults had access to the Internet. However, at the beginning of the
21st century, it is estimated that 750 million people will have access
to the one million networks that will comprise the Internet.
The Internet is international, with users on all
continents, including Antarctica. Per capita incomes limit the number of
Internet users in the developing world, as the costs of personal computers
and Internet connections are prohibitively high for most of the population.
That is, countries with a higher gross domestic product per person will
have higher rates of personal computer ownership and higher Internet adoption
rates.
Therefore, Internet growth is expected to continue
to be high in what the Gartner Group calls “Internet leaders,” countries
such as Finland, Germany, the rest of Scandinavia, the U.S., and the United
Kingdom. Countries such as Brazil, China, and Malaysia have the potential
to experience rapid Internet growth as their economies develop and access
limitations ease.
In addition to the relative wealth of countries, political, cultural,
and regulatory barriers have slowed the rate of Internet adoption in some
countries. Russia, Africa, and China have very limited numbers of
Internet users, although China is preparing to connect all the country’s
universities, institutions, grade schools, and research organizations by
year 2000. Censorship still limits content in some parts of Asia,
such as Singapore and Vietnam. Germany, for instance, caused CompuServe
to suspend its service there temporarily because of regulations governing
adult content. Japanese consumers apparently are slower to embrace
the Web because of a preference for domestic technology. In France,
expansion has been hampered by a preference for the local Minitel system.
Although not comparable to the Web, Minitel’s content is entirely in French.
In Germany, there is a tremendous surge of online
activity at 9:00 PM every night, because at that time, German phone rates
drop by half. Internet subscriptions are growing at 30 percent annually,
even though high rates push up the average outlay to $75 per month, three
times a U.S. rate that allows unlimited Internet access on free local lines.
In both home and business applications, analysts estimate that Europe is
about four years behind the U.S. in Internet usage. In Germany, France,
and Britain, barely one-fifth of homes have personal computers, while in
the U.S. almost half of the homes have them. Internet usage is 7
percent in Germany, 6 percent in Britain, and 2 percent in France, compared
with 25 percent in the U.S.
Should Governments Control the Internet?
In 1998, the first test case attempting to apply
France’s language law to the Internet ended in failure. An appeals
court tossed out a suit against the Georgia Institute of Technology on
a legal technicality. Two state-approved agencies promoting the use
of the French language filed a complaint in 1996 against Georgia Tech’s
French campus for using English along on its Web site. They based
their case on 1994 legislation requiring that all advertising in France
be in French. The legislation has been severely criticized abroad
as cultural arrogance and a vain attempt to regulate human conduct by decree.
The law attempted to make the public use of words such as “cheeseburger”
and “airbag” punishable by up to six months in prison. The scope
of the legislation was later limited to advertising by the Constitutional
Council of France, which ruled that its wider provisions violated the French
Revolution’s Declaration of the Rights of Man.
The rulings have left open the question of whether
the language law can be brought to bear on the Internet. A spokesperson
for Georgia Tech stated that the Internet is not a national organization
but by its nature a global organization. The university asserted
that to enforce particular language restrictions violated freedom of expression.
While Internet champions say the Web should be free of national restraints,
many governments have asserted their authority over cyberspace to try to
block pornography or silence political dissent.
Source: www.news.com/News/Item/Textonly/0,25,21646,00.html?pfv
(CNET, April 29, 1998)
Question: Should governments have control
over the Internet or should it remain unregulated? Why or why not?
Therefore, the Internet is global, but outside the
United States, it is viewed as mainly U.S.-centric, with the vast majority
of sites in English and the vast majority of content generated in the U.S.
In 1998, 72 percent of the world’s Internet users and 60 percent of all
Internet host computers were in the United States. However, in 2000,
the IDC estimates that the United States will have just less than 50 percent
of the world’s Internet users.
In 1998, 90 percent of the content on the Web was
in English. Most current software allows transmission only of characters
from Western European languages. An existing standard – Unicode –
allows a character set of 65,000 characters, which is sufficient to represent
most human languages. Unicode, however, is not widely implemented
on the Internet.
The Structure of the Internet
Currently, the U.S. government pays only a small
percentage of Internet costs. Commercial communications companies
now largely provide the physical network backbone of the Internet.
The U.S. government continues to contribute some funds to essential administrative
processes, such as standards development and domain name system (DNS),
through contracts. The National Science Foundation (NSF) also pays
for certain high-performance portions of the network backbone.
The rest of the Internet infrastructure is supplied by backbone
providers, such as ANS and MCI (parts of WorldCom), BBN Planet (part of
GTE), Sprint, UUNet/WorldCom, and others. Businesses and individual
subscribers connect to the Internet through access providers. In
some cases, the access provider also may be a large backbone provider,
and in other cases, it will be a smaller (often local) compay connecting
to a backbone provider. Both backbone and access providers are referred
to as Internet Service Providers (ISPs). ISPs are discussed later,
in the section on “Accessing the Internet.” Service providers charge
customers for various combinations of bandwidth, traffic, and access time.
Backbone networks must be connected to one another
and to access providers. The various backbone networks that compose
the Internet transmit information to one another on a reciprocal basis,
meaning that each carrier agrees to transport traffic originating on another
carrier’s network, historically without charge. Data transmission
on the backbone networks is not currently metered according to usage volume,
time, or distance. However, this practice is beginning to change
because of growing application demands for bandwidth and the need to finance
expansions in network capacity to accommodate increasing Internet traffic.
Internet2
The academic research community, which the Internet was originally intended to serve, found that system too slow for data-intensive applications such as transmitting supercomputer model data or telemedicine. In 1996, a consortium of universities began establishing a faster network with limited access devoted exclusively to research purposes. Announced in October 1996, Internet2 grew from 34 to more than 110 U.S. research universities in one year. Internet2 is capable of transmitting gigabits (billions of bits) of information per second. Gigabit transmission speeds mean that the contents of an entire encyclopedia can be transmitted in less than three seconds.
THE OPERATION OF THE INTERNET
The set of rules used to send and receive packets
from one machine to another over the Internet is known as the Internet
Protocol (IP), which operates at the network layer of the seven-layer ISO-OSI
model discussed in Chapter 6. Other protocols are used in connection
with IP, the best known of which is the Transport Control Protocol (TCP),
which operates at the transport layer of the ISO-OSI model. The IP
and TCP protocols are so commonly used together that they are referred
to as the TCP/IP protocol used by most Internet applications.
The Internet, a packet-switching network, breaks
each message into packets. Each packet contains the addresses of
the sending and receiving machines, as well as sequencing information about
its location relative to other packets in the message. Each packet
can travel independently across various network interconnections.
Therefore, packets may utilize different paths across the Internet and
arrive out of sequence. When all packets arrive at the receiving
computer, they are reassembled into the complete message.
Each computer on the Internet has an assigned address,
called the IP address, that uniquely identifies it from the other computers.
The numbers have four parts, separated by dots. For example, the
IP address of one computer may be 135.62.128.91.
Most computers also have names, which are easier
for people to remember than IP addresses. These names are derived
from a naming system called the Domain Name System (DNS). Controversy
exists over who should be in charge of registration and administration
of domain names on the Internet, the relationship between trademarks and
domain names, the assignment of popular names, and the creation of new
domain names. Domain names have commercial value in themselves.
Network Solutions Inc. (NSI) is a company that was awarded the tasks
of registering Internet domain names and maintaining these Internet addresses
in 1995. The company is a contractor to the National Science Foundation.
Prior to 1995, the NSF was responsible for domain names. NSI’s initial
policy was to register names on a first-come, first-served basis.
This policy, however, produced the possibility that a new company might
register a domain name associated with an established firm before the established
firm did. The policy resulted in contested names, legal actions,
and a new NSI policy. The new policy stated that if a company proves
a legal right to a domain name registered by another company, then NSI
will “turn off” the domain name in question. The NSI’s monopoly on
domain name assignments (and the accruing profits) has come into question.
An international group has proposed a worldwide registration system governed
by a nonprofit association in Switzerland, with disputes moderated by the
World Intellectual Property Association.
Domain names consist of multiple parts, separated
by dots, and are translated from right to left. For example, consider
the name software.ibm.com.
Com is the name of the top-level specification or
the zone. The rightmost part of an Internet name is its top-level
specification. Com means that this is a commercial site. There
are 12 other top-level specifications, the last seven of which were added
in 1997 because the demand for names increased so dramatically.
edu – educational sites;
mil – military sites;
gov – government sites;
net – networking organizations;
org – organizations;
firm – businesses and firms;
store – businesses offering
goods for purchase;
info – information service
providers;
web – entities related to
World Wide Web activities;
arts – cultural and entertainment
activities;
rec – recreational activities;
nom – individuals.
Finishing our example, ibm is the name of the company and software
is the name of the particular machine within the company.
Accessing the Internet
There are three main ways to connect to the Internet.
These methods include connecting via a LAN server, connecting via SLIP/PPP,
or connecting via an on-line service.
Connect via LAN server. This approach
requires the user’s computer to have specialized software called a communications
stack, as it provides a set of communications protocols that perform the
complete functions of the seven layers of the OSI communications model.
LAN servers are typically connected to the Internet at 56 Kbps or faster.
This type of connection is expensive, but the cost can be spread over multiple
LAN users.
Connect via Serial Line Internet Protocol/Point
to Point Protocol (SLIP/PPP). This approach requires that users
have a modem and specialized software that allows them to dial into a SLIP/PPP
server from a service provider at a cost of approximately $30 per month
or less.
Connect via an on-line service. This
approach requires a modem, standard communications software, and an on-line
information service account with a provider. The costs include the
on-line service fee, a per-hour connect charge, and where applicable, e-mail
service charges.
One of the first on-line services, CompuServe, was
launched in 1979. Prodigy and AOL (American On-Line) followed with
offerings targeted toward home computer users. This focus contrasted
with the Internet’s original orientation, which was geared to the academic
and research community, and that of on-line research services such as Lexis-Nexis
(a division of Reed Elsevier), which target large corporations.
Internet service providers (ISPs) were established
to provide connectivity, not content. Many ISPs now offering dial-in
Internet access to consumers initially were set up to provide dedicated
Internet connections to educational and commercial organizations.
Others (such as NetCom) began by supplying dial-in access to Internet-connected
time-sharing systems (before the Web). UUNet started by providing
dial-up connections for routing of e-mail and Usenet news (discussion groups
devoted to specialized areas of interest) between non-Internet-connected
sites. The number of ISPs grew rapidly following widespread use of
the Web and now includes major telecommunications service providers as
well.
Differences between ISPs and on-line services (OLSs)
have diminished over time. Offering access to the Web became an effective
way for OLSs to attract and retain customers, particularly non-technical
customers who found dealing with a consumer-oriented OLS easier than dealing
with an ISP. As OLSs have evolved, they have repositioned themselves
as ISPs that also offer access to value-added services or content not available
elsewhere. At the same time, OLSs have made much of their content
available to anyone using the Web, not just to their subscribers.
OLS content has become more integrated with the rest of the Web via hypertext
links to Web sites outside the OLSs’ own content.
Today, consumers can connect to the Internet
using either an OLS or a traditional ISP to access the Internet for e-mail
and Web sites. For example, AOL calls itself an “Internet On-Line
Service,” and both Microsoft Network (MSN) and Prodigy have been relaunched
as Internet services. MSN is now an ISP with some proprietary content.
Previous owners IBM and Sears sold Prodigy in May 1996, to International
Wireless, who renamed Prodigy as Prodigy Internet. New users can
access Prodigy Internet through a standard Internet ISP connection rather
than through a proprietary access network.
Some differences remain between OLSs and ISPs.
OLSs can provide content, while ISPs typically offer little or no content
of their own. In addition, OLS membership structure and billing systems
allow subscribers to be charged for particular content via a debit to the
subscriber’s monthly bill. In contrast, ISPs are set up to bill only
for Internet connectivity, so subscribers must make separate arrangements
with Web site operators to pay for access to any fee-based content.
The number of ISPs continues to grow around the
world, with eventual consolidation occurring among ISPs, OLSs, and telecommunications
service providers. Gartner Group estimates that there were approximately
3000 European ISPs at the end of 1998. In 1997, the Indian government
privatized Internet access in the country. Videsh Sanchar Nigam has
been the sole ISP, with 40,000 subscribers. The National Association
of Software and Service Companies predicts that the number of ISPs in India
will grow to 125 by the year 2000.
SERVICES PROVIDED BY THE INTERNET
The Internet provides three major types of services: communications, information retrieval, and the World Wide Web. Communications services include electronic mail, USENET newsgroups, LISTSERVs, chatting, Telnet, Internet telephony, and Internet FAX. Information retrieval services include gophers, Archie, WAIS, file transfer protocol (FTP), and Veronica. The World Wide Web, with such great importance for electronic commerce (discussed in Chapter ___), as well as for information search and retrieval, will be discussed as a separate topic.
Communications Services
Electronic Mail (e-mail). The Internet
is the most important e-mail system in the world because it connects so
many people and organizations. E-mail is a method of sending an electronic
message between individuals and is not limited to simple text messages.
Users can embed sound and images in their messages, and attach files that
contain text documents, spreadsheets, graphs, or executable programs.
Not all networks use the same e-mail format, so
a computer called a gateway translates the format of the e-mail message
into the format that the next network can understand. Each gateway
computer reads the “To” line of the e-mail message and routes the message
closer to its destination.
Electronic mail is one of the most important communication
tool in organizations today. The primary advantages of e-mail are
that it can:
send and receive messages
very quickly;
improve the efficiency of
communications by eliminating delays caused from playing “telephone tag”;
conduct paperless communication;
connect to the network from
any location with a telephone line (using portable computer and modem and
connect to the network with wireless technologies;
send messages to many others
simultaneously;
trace any correspondence
(who sent what to whom, when, etc.);
communicate with millions
of people worldwide;
work easily with others
on the same task;
rapidly access information
stored in databases in many locations;
send anything you can create
or view on a personal computer, including images, voice, video, audio,
film clips, text, maps, and animation;
contain a good word processing
text editor and a spell checker;
allow you to color documents
in many combinations;
retrieve messages from your
in-box, bulletin boards, and other electronic devices;
search for a document by
a key word or key words;
allow employees to ignore
time zones and geographical distance;
use “return receipt,” which
notifies you when the recipient actually retrieves a message;
print, prioritize, forward,
and store messages;
send a group reply; i.e.,
reply to everyone who received your current message;
create different folders
and archives to keep track of your electronic mail;
create public bulletin boards
where everyone in the organization can post and view messages;
share text messages and
application files across computer platforms;
deliver and receive faxes;
send copies of messages;
schedule meetings.
Electronic mail does have disadvantages, such as
the following:
It does not provide for
face-to-face communication and therefore, you lose the richness and context
(e.g., body language and facial expressions) of such communication.
Some e-mail software is
not user-friendly.
Confidentiality and privacy
cannot be assured.
USENET Newsgroups (Forums). Usenet
is a protocol that delineates how groups of messages can be stored on and
sent between computers. Following the Usenet protocol, users send
e-mail messages to the Usenet server machine, which gathers information
about a single topic. Users can log onto the server to read messages
or have the computer automatically download messages to be read at the
users’ convenience. The major categories of the Usenet are:
comp – computer hardware,
software, and protocol discussions; (e.g., comp.protocols.tcp-ip)
misc – topics that do not
fit anywhere else, such as job hunting, investments, real estate, and fitness;
(e.g., misc.education)
news – groups that deal
with USENET software, network administration, and informative documents
and announcements; (e.g., news.announce.newsgroups)
rec – recreational subjects
and hobbies, such as aviation, games, music, and cooking; (e.g.,
rec.arts.books)
sci – topics in the established
sciences, such as space research, logic, mathematics, and physics; (e.g.,
sci.space.space-station)
soc – groups for socializing
or discussing social issues or world culture; (e.g., soc.women)
talk – debates and discussions
on various current events and issues, such as politics, religion, the environment,
etc; (e.g., talk.politics.mideast)
alt – alternative group
of discussions that are not carried by all USENET sites; some are controversial,
others are not; not considered one of the major USENET categories; (e.g.,
alt.fan.dave_barry or alt.fishing)
biz – business-related groups.
(e.g., biz.comp.services)
Usenet provides a forum for interested users on
the Internet. This forum is divided into newsgroups. Usenet
newsgroups are international discussion groups in which people share information
and ideas on a particular topic. Topics span the imagination, from
medicine to college football to the space station. Approximately
30,000 newsgroups exist on the Internet.
Discussion takes place on electronic bulletin boards where anyone can
post messages for others to read. Newsgroups are organized in a hierarchy
by general topic. Each general topic has many subtopics. As
members post messages and reply to messages, they create discussion threads.
Etiquette is important when participating in a newsgroup
discussion or conversation (a thread). There are certain things you
should do when first joining a newsgroup discussion.
Read the Frequently Asked
Questions for the newsgroup. Doing this will save you from asking
obvious questions and wasting the time of everyone in the discussion.
Read the discussion for
some time before joining. Doing this will give you a sense of the
group and the discussion.
Be considerate of the feelings
of others by being polite. Do not use strong or inflammatory language,
as there could be legal implications.
Do not offer personal information
about yourself.
Do not post copyrighted
material to the newsgroup and be extremely careful about downloading copyrighted
material to your computer.
LISTSERV. LISTSERVs are another type
of public forum that allows discussions to be conducted through predefined
groups, but uses e-mail mailing list servers instead of bulletin boards
for communications. If users find a LISTSERV topic in which they
are interested, they may subscribe. After that, through e-mail, they
will receive all messages sent by all others concerning that topic.
If users post a message to the LISTSERV, it will be sent to all others
on that LISTSERV.
Chatting. Chatting allows two or more
people who are simultaneously connected to the Internet to hold live, interactive,
written conversations. Internet Relay Chat (IRC) is a general chat
program for the Internet. Chat groups are divided into channels,
each assigned its own topic of conversation.
Chatting is the most-used Internet application,
behind e-mail. Few services can build big audiences more quickly
than chat. However, translating that viewership into advertising
dollars remains difficult. For example, users engaged in an interesting
chat session are unlikely to click on a banner ad that would take them
away from their chat room, essentially defeating advertisers’ purpose for
buying the ad space in the first place. Typically, advertising in
chat rooms follows a sponsorship model used in television. Marketers
will sponsor an entire room focused on a particular topic. At WebChat,
for instance, Web publisher JamTV sponsors music chat rooms.
Telnet. Telnet allows users to be on
one computer while doing work on another. Telnet is the protocol
that establishes an error-free link between the two computers. Users
can log on to their office computers while traveling or from their homes.
Also, users can log in and use third-party computers that have been made
accessible to the public, such as using the catalog of the U.S. Library
of Congress.
Internet telephony. Internet vendors
are providing products that emulate traditional Public Switched Telephone
Network (PSTN) applications. Internet telephony lets users talk across
the Internet to any personal computer equipped to receive the call – even
around the world – for the price of only the Internet connection.
Phone-to-phone Internet telephony carriers began operating commercially
for the first time in late 1997. This is an application that does
not rely on personal computers but instead uses local dial-up numbers to
route long-distance calls over a packet-switched backbone network.
Because these services do not require customers to purchase or operate
any equipment beyond ordinary telephones, they circumvent several of the
barriers to effective Internet telephony.
The Pros and Cons of Internet Telephony (Voice Over IP)
The prospect of saving up to 70 percent on long distance
bills is enough to make most network managers take a hard look at voice
over IP (VoIP). However, VoIP does have problems. First, the
quality of VoIP calls is inferior to telephones because of latency and
jitter. Latency is delay during the transmission process. Jitter
occurs when large amounts of data clog networks at certain times of the
day. Too much latency and jitter, and callers tend to hear one out
of every four or five words. Also, although for domestic long distance
service, VoIP costs as little as three or four cents per minute, most large
companies can negotiate long distance services for less than five cents
per minute. Despite the problems, the VoIP market is predicted to
approach $1 billion by the year 2002.
Many companies, attracted by cost savings, are implementing
VoIP. Intrek Corporation built a call center application with VoIP.
The company processes credit card transactions for about 10,000 Web sites
and handles two million credit card transactions per month. Its call
center receives up to 30,000 calls per day from customes who have purchased
goods and services over the Internet and have billing questions.
Intrek uses Push-to-Talk technology, which works like this. An online
customer clicks on the Push-to-Talk button on his or her personal computer
screen, which creates a voice connection to a call center agent at Intrek.
The technology makes the voice connection without terminating the customer’s
initial Internet session or waiting for a call back on another telephone
line. The system also lets customers give credit card numbers using
their voice rather than typing in the number.
Chick-fil-A wants its remote employees to dial in
over the Internet. Under its existing system, about 760 Chick-fil-A
(www.chickfila.com) restaurants use an 800 number to dial into the company’s
data center to submit sales information and exchange e-mail, but it is
expensive. Chick-fil-A is negotiating with national Internet Service
Providers to offer each restaurant a local phone number. The goal
is to have a system that lets store managers and headquarters communicate
without huge long distance charges. The company plans to conduct
all its business between the restaurants and headquarters via the Internet,
including paychecks, which will be cut locally at each store.
Sources: DePompa, Barbara. “Too Many
Hang-Ups.” Internet Week, August 10, 1998; pp. 37-39.
Masud, Sam. “Get Connected.” Internet
Week, January 19, 1998; pp. 53-55.
Question: What will the effects of VoIP be
on traditional telecommunications companies that offer long distance?
Internet FAX. The use of the Internet
for real-time fax transmissions is emerging as an application that may
signal a shift of traditional analog communications from the telephone
companies to the packet-switched Internet. This application is useful
because faxes can be sent long distances at local telephone rates and delivery
can be guaranteed through store-and-forward mechanisms.
Faxing is one of the top forms of communication
in the business world. Some 400 billion pages will be faxed worldwide
in 1998, and that number is predicted to grow to 800 billion pages by the
year 2000. With 100 million fax machines worldwide generating a telephone
bill of more than $100 billion per year, companies spend 40% of their yearly
phone bills on faxing.
Most fax machines are group resources, shared by several users
who are unwilling to put up with the inconvenience of faxing. They
do not like having to print out a document, pick it up at the laser printer,
walk down the hall to the fax machine, and finally see the fax go through.
Faxes are not secure or encrypted, nor are they private. They usually
lie on a desktop for all to see.
An Internet-based fax service from an Internet service provider
connects desktop computers and standard fax machines to a fax server located
within the ISP’s network. The same service can also connect desktop
e-mail to the ISP’s fax servers so that faxes can be originated as easily
as sending an e-mail. Internet fax offers many advantages to businesses:
Eliminate fax modems and
LAN fax servers;
Take advantage of low Internet
transmission charges;
Eliminate the “fax machine
commute”;
Deliver documents as faxes
or as e-mail attachments;
Fax directly from popular
desktop applications as easy as printing;
Get hardcopy input capability
with desktop scanner;
Encryption keeps faxes private
and secure;
Private fax inbox versus
public departmental fax machine;
Status of live faxes and
broadcasts is available online;
Fax send and receive history
is available online;
Electronic fax inbox never
misses a fax;
Itemized billing for easier
tracking;
24-hour per day access to
received faxes;
Access through standard
Web browser from anywhere in the world.
Streaming Audio and Video. Streaming
allows Internet users to see and hear data as it is transmitted from the
host server instead of waiting until the entire file is downloaded.
For example, RealNetworks’ RealAudio allows a Web site to deliver live
and on-demand audio over the Internet and can work over connections as
slow as 14.4 Kbps.
Streaming video has other applications, including
training, entertainment, communications, advertising, and marketing.
Streaming audio and video are being used to deliver market sensitive news
and other “live” status reports to stock traders, to brief sales people
on new products, to deliver corporate news to employees, and to view TV
commercials for approval.
Streaming audio enables the broadcast of radio programs,
music, press conferences, speeches, and news programs over the Internet.
In the future, streaming audio and Internet telephony use will overlap
and complement one another. Streaming audio and video vendors include
Apple (QuickTime), Microsoft (ActiveMovie), RealNetworks (RealVideo), VDOnet,
Vivo (Vivo Events), Vosaic, and the Worldwide Broadcasting Network.
The Internet offers personalized radio. Imagine
Media, Inc. has a Web-based audio service that selects the songs it plays
based in part on its users’ tastes, creating customized music channels
that are likely to serve up a listener’s favorite song. Imagine Radio,
Inc. (www.imagineradio.com) says that listeners decide what they want to
hear.
This personalization paves the way for long-term
business opportunities for Imagine Media by giving the company a vehicle
for collecting detailed databases that eventually are used for targeted
advertising and also to help record companies identify potentially lucrative
audience niches for their artists.
Imagine Radio works like this. From the Web
site, the listener selects one of 20 channels focusing on specific genres
such as new rock. Using a custom tuner built on top of RealNetworks
Inc.’s RealPlayer, random algorithms are used to select a song from a list
of 80 songs offered on the channel. The listener rates a song on
a scale of one to 10 while it is playing. The information is stored
locally on the listener’s tuner. New ratings are applied to songs
the next time a selection is made from the channel. Songs ranked
highly by the listener are given a heavier weight in the random sample,
increasing the likelihood that they will be selected for play.
The Beastie Boys on the Internet
The Beastie Boys are happily giving their songs away
over the Internet and their record company is not pleased. Record
companies are struggling to contain growing Internet-based piracy, made
easier by an audio-compression format called MP3. With this format,
fans can copy their favorite songs from compact discs as MP3 files on their
computers and then post them on the Internet. There, the songs can
be easily downloaded and played on any number of freely available music-playing
software programs. In its assault on pirated music, the Recording
Industry Association of America has already shut down scores of sites offering
free downloads, usually by threat of a lawsuit.
On the other hand, record companies are planning
to move to the Web. Time Warner Inc. and others are working with
IBM on a system that will allow music to be delivered online without being
copied. In these efforts, the point is control. Music executives
warn that if left uncontrolled, digital distribution will threaten intellectual
property and “the whole economics of the music industry will go away.”
From the Beastie Boys’ standpoint, giving away a
free single on the Internet will only help album sales. The band
believes that the record-buying public is more technologically advanced
and more involved with the Web than the people at the record companies.
When fans download Beastie Boys MP3 files from the Beastie Boys’ Web site,
they are asked to submit their e-mail addresses, which are a valuable marketing
tool. The band collected more than 100,000 names in three months.
Also, the band authorized only the MP3 release of only live versions of
its songs, the type of material that would appeal only to diehard fans
but that is not likely to cut into sales of studio recordings.
After the disagreements between the band and their
record company, their album sold 700,000 copies in the first week and had
eventual sales of 3 million copies.
Source: Shapiro, Eben. “The Beastie
Boys Get Into an Internet Groove, and Their Label Frets.” The Wall
Street Journal, December 15, 1998; pg. 1.
Question: Is it right for the Beastie Boys
to be able to release their songs over the Internet? Who owns the
songs, the band or the record company? That is, whose intellectual
property are the songs?
Question: What will happen to record stores
when the technology becomes available to release songs digitally over the
Internet and they cannot be copied?
Real-Time Audio and Video. In real-time audio and video, the source is live or only slightly delayed. Real-time audio and video applications include point-to-point conversations between two people; conferences among more than two people; collaborative “white boarding” and shared hypermedia documents; live broadcasts of news, talk shows, or sporting events; and broadcasts of music and concerts. Real-time audio and video vendors include Intel (Video Phone), Microsoft (NetMeeting), and White Pine Software (CU-SeeMe).
Information Retrieval Services
Information retrieval allows users to access thousands
of huge library catalogs that are on-line through the Internet, as well
as thousands of databases that have been opened to the public by corporations,
governments and government agencies, and nonprofit organizations.
In addition, many users download free, high-quality software made available
by developers over the Internet.
The Internet is a voluntary, decentralized collection
of networks with no central listing of sites and no central listing of
the data located at those sites. Therefore, users have a large problem
finding what they need from the massive amounts of information available
via the Internet. This section discusses five methods of accessing
computers and locating files. The section on the World Wide Web discusses
additional information-retrieval methods.
File transfer protocol (FTP). FTP enables
users to access a remote computer and retrieve files from it. After
users have logged on to the remote computer, they can search the directories
that are accessible to FTP to search for the files they want to retrieve.
Archie. Archie is a tool that allows
users to search the files at FTP sites. It regularly monitors hundreds
of FTP sites and updates a database (called an Archie server) on software,
documents, and data files available for downloading. If users click
on a listing from an Archie server, it will take them to another computer
system where relevant files are stored. Once there, the Archie server
may allow users to continue their searches for files until they locate
what they need. Archie database searches use subject key words, such
as “Clinton,” “impeachment,” or “network computers.” The Archie database
will return lists of sites that contain files on these topics.
Gophers. Most files and digital information
that are accessible through FTP are also available through gophers.
A gopher is a computer client tool that enables users to locate information
stored on Internet gopher servers through a series of hierarchical menus.
Each gopher server contains its own system of menus listing subject-matter
topics, local files, and other relevant gopher sites. When users
access gopher software to search on a specific topic and they select an
item from a menu, the server will automatically transfer them to the appropriate
file on that server or to the selected server wherever it is located.
Once on that server, the process continues. Users are presented with
more menus of files and other gopher site servers that might be of interest.
Users can move from site to site, narrowing their searches, and locating
information anywhere in the world.
Veronica. Veronica (Very Easy Rodent-Oriented
Netwide Index to Computer Archives) provides the capability of searching
for text that appears in gopher menus. When the user enters a key
word, Veronica will search through thousands of gopher sites to find titles
containing that keyword. It places these files on a temporary menu
on the local server, so users can browse through them.
Wide Area Information Servers (WAIS).
WAIS also allows users to locate files around the Internet. WAIS
is the most thorough way to locate a specific file, but it requires that
users know the name of the databases they want to search. After users
specify database names and key identifying words, WAIS searches for the
key words in all the files in those databases. When the search is
complete, users obtain a menu listing all the files that contain the key
words.
THE WORLD WIDE WEB
The technology underlying the World Wide Web (called
WWW, W3, or the Web) was created by Timothy Berners-Lee, who in 1989 proposed
a global network of hypertext documents that would allow physics researchers
to work together. This work was done at the European Laboratory for
Particle Physics (known by its French acronym CERN) in Geneva, Switzerland.
The Web is a system with universally accepted standards
for storing, retrieving, formatting, and displaying information via a client/server
architecture. The Web handles all types of digital information, including
text, hypermedia, graphics, and sound, and uses graphical user interfaces
so it is very easy to use.
The Web is based on a standard hypertext language
called Hypertext Markup Language (HTML), which formats documents and incorporates
dynamic hypertext links to other documents stored on the same or different
computers. HTML was derived from the more complex Standard Generalized
Markup Language (SGML), a text-based language for describing the content
and structure of digital documents. HTML is a simpler subset of SGML
and incorporates tables, applets, text flow around images, superscripts,
and subscripts.
Using these hypertext links (hypertext links are
typically blue, bold, and underlined), the user points at a highlighted
word, clicks on it, and is transported to another document. Users
are able to navigate around the Web freely with no restrictions, following
their own logic, needs, or interests.
Offering information through the Web requires establishing
a home page, which is a text and graphical screen display that usually
welcomes the user and explains the organization that has established the
page. In most cases, the home page will lead users to other pages,
with all the pages of a particular company or individual being known as
a Web site. Most Web pages provide a way to contact the organization
or the individual. The person in charge of an organization’s Web
site is called a Webmaster.
To access a Web site, the user must specify a uniform
resource locator (URL), which points to the address of a specific resource
on the Web. For instance, the URL for Microsoft is http://www.microsoft.com.
HTTP stands for hypertext transport protocol, which is the communications
standard used to transfer pages across the Web. HTTP defines how
messages are formatted and transmitted and what actions Web servers and
browsers should take in response to various commands. Www.microsoft.com
is the domain name identifying the Web server storing the Web pages.
Many people believe that the Web is synonymous with the Internet,
which is not the case. The Internet functions as the transport mechanism,
and the Web is an application that uses those transport functions.
Other applications also run on the Internet, with e-mail being the most
widely used.
Browsers
Users primarily access the Web through software applications
called browsers. At a minimum, a browser is capable of communicating
via HTTP, managing HTML, and displaying certain data types, such as GIF
(Graphics Interchange Format) and JPEG (Joint Photographic Experts Group)
for graphics and Microsoft Windows WAV for sound.
At first, the Web was text only. Then, in
1992, researchers at the National Center for Supercomputing Applications
at the University of Illinois developed Mosaic, the first graphical Web
browser. The Mosaic browser provided a graphical front end that enabled
users to point-and-click their way across the Web, a process called surfing.
Web browsers became a means of universal access because they deliver the
same interface on any operating system under which they run – Windows,
Windows NT, OS/2, MacOS, or UNIX.
The emergence of commercial, graphical browsers
that access documents written in HTML created a mass medium that allowed
large numbers of people without sophisticated computer skills not only
to access information, but also to publish their own content on the Internet.
New users could enjoy direct, interactive access to the Internet’s contents
without having to use system commands or contend with terminal emulators.
HTML is easy to learn, and it is easy to develop authoring tools for the
language. Aided by desktop publishing tools that produce HTML pages
from standard documents and Internet connection kits, users set up their
Web sites and communicate with millions of other Web users worldwide.
The race between Microsoft and Netscape to provide
the richest possible user experience by introducing proprietary extensions
to standards, and then trying to get those extensions adopted as standards,
has been the source of many new browser capabilities. This situation
has been extremely beneficial for users, providing them with highly capable
applications at almost no cost.
Microsoft’s strategy is to minimize the importance
of the browser as a distinct application by building browser functionality
directly into its latest operating systems (Windows 98 and Windows 2000).
Netscape’s strategy is to make the browser the core of a compelling suite
of applications for corporate users. Netscape has pursued the approach
of developing a Web-based suite of communications services, including groupware
offerings for intranets.
Netscape Communicator. Netscape added
significant functionality and embedded its Navigator browser in the Communicator
suite to emphasize the latter’s new role in corporate environments.
Communicator is not just a browser like its Navigator predecessor.
It is a multipurpose suite that handles news, e-mail, audio and videoconferencing,
and more. The Communicator suite includes Navigator 4.0, Composer
(HTML authoring tool), Messenger (an e-mail client), Collabra (a group
discussion client), and Conference (a collaboration client), and Calendar
(group calendaring).
Microsoft Internet Explorer. Faced
with the tremendous lead in the browser marketplace that Netscape established,
Microsoft embarked on a strategy to gain market share and penetrate the
installed base. It gave Internet Explorer away for free and bundled
it with the Windows operating systems. This approach was successful
but also resulted in scrutiny by the U.S. government.
In October 1997, the Justice Department accused
Microsoft of violating a 1995 antitrust consent decree and filed a petition
in a federal court to prevent the company from requiring personal computer
manufacturers to bundle Microsoft’s Internet browser software with Microsoft’s
Windows operating systems. At issue was whether Microsoft tried to
monopolize the Internet browser software business by refusing to let PC
makers license the Windows operating systems unless they also ship their
PCs with Internet Explorer. Microsoft maintained that Internet Explorer
was an enhancement of Windows, not a separate product, and that the company
therefore was not violating its antitrust settlement. According to
Microsoft, Internet Explorer’s tight integration with Windows offers users
the advantage of “one-stop computing.”
Offline Browsers
Off-line browsers (or pull products) enable a user to retrieve pages automatically from Web sites at predetermined times, often during the night. The ForeFront Group’s WebWhacker and Traveling Software’s WebEx are offline browsers that allow users to define a group of sites by their URLs and then download text and images from those sites to their local storage. Webwhacker and WebEx let users determine how much of a Web site to retrieve – title pages only, any linked pages, or all pages.
Search engines
Search engines are programs that return a list of
Web sites or pages (designated by URLs) that match some user-selected criteria
such as “contains the words new, automobile, buy.” To use one of
the publicly available search sites, the user navigates to the search engine’s
site and types in the subject of the search. Table ___ gives the
URLs for some popular Internet search sites.
Alta Vista www.altavista.com
eXcite www.excite.com
Infoseek www.infoseek.com
Inktomi www.hotbot.com
Lycos www.lycos.com
Open Text www.opentext.com
WWW Worm www.cs.solorado.edu/www
WebCrawler www.webcrawler.com
Yahoo! www.yahoo.com
Search engines for large numbers of Web pages, such
as those that attempt to cover the entire Internet, do so by maintaining
databases that model the Web’s structures. Through a combination
of information-trolling robots that collect information automatically about
Web pages and developer registration, search engines select a large number
of Web sites to be indexed. Their databases are then populated with
information about the contents of each page deemed useful. The Internet
search site Yahoo!, the largest U.S. search site by volume, served an average
of 50 million page views per day in the same month. Many Web sites
have search engines within them. Also, some engines search not only
Web pages, but also Gopher sites, FTP resources, or Usenet news groups.
Search engines select pages for inclusion in their
databases in two primary ways:
Web crawlers – These traverse
the Web automatically, collecting index data as depth-first, following
only the links that are deemed relevant to a topic, or breadth-first, collecting
the entire network of links from a given starting point regardless of the
page contents. Web crawlers are called spiders, ants, robots, bots,
and agents.
Registration – Most search
sites allow Web developers to register their sites or pages by submitting
a form. This process enables developers to ensure that their sites
eventually will be included in the search index.
When a user enters a search query, the engine searches
its database for relevant Web pages. It assembles a list of pages
sorted by “relevance” or other, user-specified weighting factors.
Some sites also remove redundant references to pages from the list.
Search results are returned as a list of relevant pages that then can be
retrieved via hyperlinks. Different engines can produce results that
vary widely, ranging from not finding critical pages (poor recall) to finding
hundreds of thousands of documents with few that are relevant (poor precision
ratio).
Metasearch engines automatically enter search
queries into a number of other search engines and return the results.
Examples of metasearch sites include All4one, Metacrawler, and Starting
Point. For Macintosh users, the latest operating system (MacOS 8.5)
comes with Sherlock, which Apple calls the Internet search detective.
Users can type in their requests, in plain English, and Sherlock accesses
many other Internet search engines simultaneously. The results are
returned, ranked by relevance. Users can also download free “plug-ins”
that expand Sherlock’s reach to other search engines and other Internet
content, from news centers to retailers. Sherlock can also find files
that are in the users’ hard drives, by title or by content.
Push Technology
As the amount of information available on the Internet
grows, new mechanisms for delivering it to consumers are being developed.
Since its inception, the Web has been based on a “pull” model of information
access. In this model, the Web user must actively seek out information
by specifying a page to be “pulled down” to the desktop by typing in a
URL, following a hot link, or using the search results from a Web search
site. However, an alternative “push” model of information delivery
has emerged. In this model, information is “pushed” to the user’s
desktop automatically by a process running on either the user’s desktop
or a network server.
Passively placing content on a Web site and waiting
for people to come browse is not well-suited to establishing and fostering
strong relationships with customers or prospects. The concept of
content push addresses the fact that with millions of Web sites available
for browsing, the only way to guarantee that users receive certain content
is to send or “push” it to them. Push client packages typically are
given away free, and the companies that publish them rely on advertising
for revenue.
One of the earliest products embodying the push
model was the PointCast Network from PointCast (www.pointcast.com).
PointCast developed software that uses the Web browser as a platform and
displays news and other information on the user’s screen. The user
can customize the information to be displayed by creating a personal interest
profile. PointCast’s SmartScreen technology allows the PointCast
client software to run as a screen saver, creating an electronic billboard
that displays information on the screen when the computer is not in use.
PointCast makes its client software available as
a free download from the Internet and has licensed news and other informational
content (such as stock price quotations, sports scores, and weather forecasts)
from a variety of sources. This information is distributed for free
from PointCast’s Web site.
Push technology is useful in the workplace, in the
consumer market, and as a mechanism for software distribution. In
the workplace, push technology can provide timely, prioritized distribution
of information over a corporate network. For example, the software
can be oriented to different departments to focus attention on important
communications. In the consumer market, push technology can enhance
traditional Web advertising. Users no longer need to find advertisements;
instead, the user’s attention can be directed to the advertisements.
In addition, the quality of the presentations can be improved by tuning
the software specifically to the user’s platform and connection speed.
Finally, push technology can be used for software delivery and updates.
Information Filters
Information filters are automated methods of sorting
relevant from irrelevant information. These filters help people access
information with more precision; that is, the filters help people reduce
information overload. As the information available over the Internet
continues to grow, users increasingly need to narrow the content through
which they wish to search.
Programs to screen out adult content from Web browsers, intended
for home markets, began to appear commercially in 1997. Examples
of Internet screening software include CyberPatrol, Net Nanny, Solid Oak
Software’s CyberSitter, and Spyglass’ SurfWatch. These programs prevent
access to a list of sites deemed unacceptable by the company providing
the software.
In response to concerns and to preempt possible
federal regulation, AOL, Disney, Microsoft, Netscape, and other companies
are supporting the Platform for Internet Content Selection (PICS), a specification
for labeling Web content. PICS embeds labels in HTML page headers
to rate different Web sites. Microsoft’s Internet Explorer browser
and Netscape’s Navigator browser allow parents to block categories and
set a password.
A more active method of filtering information uses
agents. The goal of agents is to create applications that automatically
carry out tasks for users without their intervention, other than initial
configuration and updating with new requests.
Clipping Services
The number of publications, traditional and electronic, available on-line continues to increase. In digital format, publications are easily amenable to efficient or automated clipping. For example, Excite offers NewsTracker, a free clipping service. Users can track up to 20 news topics and retrieve articles from a database of more than 300 publications. Excite generates revenue by advertising.
Personalized Web Services
Personalization refers to the use of information about the user, information about activity during the current or previous visits to a Web site, the type of browser, or browser preference settings to generate Web content that is personalized. The ability to let a site visitor define a custom home page is a type of personalization because this home page is generated dynamically, based on the user’s previous setup. This feature has become a requirement of any on-line news service, appearing in the Web sites of publications ranging from The Wall Street Journal to Wired.
Collaborative Filtering
Collaborative filtering is a category of personalization services exemplified by Firefly Network (formerly Agents), an advertising-support Web site. Upon registering in Firefly (www.firefly.com), the user’s ratings of films and music of various kinds are combined with other users’ preferences to predict the new user’s tastes and offer other music and movies he or she might like. The longer an individual uses Firefly, the more accurate the predictions become, and consequently, the more personalized the information on the site.
Web Authoring
Web sites have become important creative media with
the added benefits of multimedia and dynamic database-driven content.
Tools for page and site design range from ASCII text editors to full-featured,
integrated development environments.
The limiting factor that underlies all layout and design tools
is what the most commonly used Web browsers can display. Standard
HTML, which is constantly evolving and being extended with proprietary
enhancements by browser vendors, is the common denominator. Graphics
files in the CompuServe Graphics Interchange Format (GIF) format are common,
as are graphics in the Joint Photographic Experts Group (JPEG) format.
Browsers can be extended with additional capabilities through plug-in applications
and software components that are able to display other types of content,
ranging from text formatted more richly than HTML allows, to animated graphics,
audio tracks, and video clips. Popular web authoring tools include
Adobe’s PageMill, FutureTense’s Texture, Kobixx Systems’ Ezine Publisher,
Microsoft’s FrontPage, Netscape’s Navigator Gold and Composer, and RandomNoise’s
Coda.
Cascading Style Sheets (CSSs) are an enhancement
to HTML that add page layout features to Web documents. A CSS acts
as a template that defines the appearance or style (such as size, color,
and font) of an element of a Web page, such as a box. Once it has
been defined, the CSS is invoked with specific content (such as the text
to be displayed in the box), creating a graphic element that can be placed
on the page.
Dynamic HTML (DHTML) is a set of extensions
to HTML that allows Web pages to be updated in response to actions taken
by the user, without the need to re-connect to the Web server to download
a new version of the page. For example, data in a table could be
re-sorted at the user’s request, or new visual elements (such as a pop-up
text box) could appear when the mouse is positioned at a particular point
on the page.
Extensible Markup Language (XML) is another
method for describing the markup of different types of documents and a
data format for structured document interchange on the Web. XML is
a subset of SGML. Unlike HTML, however, XML allows user-defined tags
and attributes to provide greater control over presentation characteristics
and application functionality. XML supports Unicode, thus providing
support for most of the world’s written languages. In addition, XML
is much better than HTML at drawing data from heterogeneous data sources
and displaying that data in a consistent format.
Voice Markup Language. Expensive 900
telephone numbers designed to serve information may become extinct.
Motorola produces a new technology that will allow Internet users to request
Web content and information via any telephone. Voice Markup Language
(VoxML) lets users request data in real voice requests; users do not have
to push any Touch-Tone numbers. Once requested, the voice commands
are translated into Web requests and returned to the user as common speech.
Virtual Reality Modeling Language (VRML).
VRML is used to create three-dimensional worlds through which users can
navigate within their Web browsers using a mouse or other device.
VRML applications include virtual business or shopping districts, special
interest communities, and entertainment arcades.
INTERNET CHALLENGES
Internet challenges include making the Internet more suitable for electronic commerce transactions (discussed in chapter ___), the rapid evolution of new technologies, evolving standards and regulatory frameworks, the growing need for additional bandwidth, and concerns about privacy.
New Technologies
Vendors are adopting new technologies more rapidly than many users and customers can implement them. For example, one of the most popular Web browsers is Netscape’s Navigator. According to Zona Research, Navigator was installed on more than 70 million computers around the world in 1998. Many of the most innovative sites on the Web use java applets, interactive three-dimensional graphics, and video and audio clips. However, a large percentage of Navigator users are still on Version 1.x, which does not support any of these technologies. To access these Web sites and take advantage of their innovative content, users must have Navigator Version 3 or later. The same is true for Microsoft’s Internet Explorer, which requires users to have Version 2 or better to run java applets. Although a massive upgrade of Web browsers clearly is needed for users to access the most innovative Web sites, that is not occurring as rapidly as Microsoft, Netscape, and others are pushing the technology into the marketplace.
Internet Regulation
Technical organizations, such as the Internet Engineering
Task Force and the World Wide Web Consortium, and others have played an
important role in the evolution of the Internet and the Web. These
organizations are not formally charged in any legal or operational sense
with responsibility for the Internet; however, they define the standards
that govern the Internet’s functionality. Hardware and software vendors
also have been instrumental in submitting specifications for consideration
to standards bodies and in creating de facto standards of their own.
Recent government attempts to regulate the content
of Internet-connected computers have generated concerns about privacy,
security, and the legal liability of service providers. Some content
providers have addressed these issues with filters, ratings, and restricted
access; however, it is difficult to regulate content across international
borders. Regulation of services such as gambling also has been debated.
Internet Expansion
The Internet was not designed to provide a mass-market
interchange of high-density information. As a result, the massive
growth of Internet traffic has strained some elements of the network.
The strains manifest themselves as slowdowns in retrieval time, unreliable
transmission of streamed data, and denial of service by overloaded servers.
The Internet’s mesh (or plex) design, with many
potential transmission paths, is in theory highly resistant to outages
caused by failed links. In practice, the Internet often is affected
by software problems.
A wide range of factors contributes to congestion
or slowdowns. These problems include improperly configured networks,
overloaded servers, rapidly changing Internet usage patterns, and too much
traffic for available bandwidth. Approaches to solve these problems
include installing high-speed transmission media to accommodate large amounts
of data; bigger, faster routers and more sophisticated load balancing and
management software to handle peak traffic periods; local caching of frequently
requested Web pages to improve response times; and more reliable tiers
of service for those willing to pay for them.
Internet Privacy
Netscape, Mosaic, and Internet Explorer browsers support “cookie” technology. A cookie is software that can be used to exchange information automatically between a server and a browser without a user seeing what is being transmitted. Cookies are useful in tracking users’ actions and preferences. This background information can then be used to customize the Web content that is given to the user.
INTRANETS
An intranet is a private network that uses Internet
software and TCP/IP protocols. In essence, an intranet is a private
Internet, or group of private segments of the public Internet network,
reserved for use by people who have been given the authority to use that
network. Companies increasingly are using intranets – powered by
internal Web servers – to give their employees easy access to corporate
information. Intranets also are an effective medium for application
delivery. Although communications traffic is restricted to corporate
LANs or WANs, key partners and suppliers often may be part of an extended
intranet as well. This outward-facing extension of an intranet is
often called an extranet.
Intranet software, called teamware, is an
add-on to groupware, used for team building, sharing ideas and documents,
brainstorming, scheduling, and archiving decisions to facilitate productivity.
Intranets present an alternative to existing groupware products such as
Lotus Notes. However, early intranet offerings have lacked some important
security features, document organization features, structured e-mail, and
workflow capabilities offered by Notes. Lotus has responded to the
rapid growth in the Internet and intranets by introducing its Domino server
software and its InterNotes Web Navigator browser. These products
allow Notes to act as a Web server and browser.
Web browsers increasingly are being used to access
many corporate applications because they provide a ready-made GUI client
and therefore offer an inexpensive means to develop new systems.
The most common applications on corporate intranets are:
policies and procedures;
document sharing;
corporate telephone directory;
human resources forms;
training programs;
search engines;
customer databases;
product catalogs and manuals;
groupware;
customer records;
document routing;
data warehouse and decision
support access.
With this number and variety of applications, intranet
security is critically important. Companies can prevent unwanted
intrusion into their intranets in several ways. The public key market,
the part of the security market that deals with protecting intranets from
outside intrusion and integrating them with the public network, has two
parts: encryption and certificate authorities. Encryption scrambles
outgoing data, while digital certificates are like electronic identification
cards, letting a business know that the person trying to access the intranet
is a valid user. ValiCert (www.valicert.com) is a leader in the certificate
authority market because it has established a database to see whether a
digital certificate it issued has expired. In addition, ValiCert
is the only company that is able to check the validity of any other vendor’s
certificate.
The industries in which public key security is starting
to gain momentum all have external forces driving adoption: financial
securities, where regulations require encryption; legal, where the courts
have said unencrypted e-mail is not covered by attorney-client privilege;
and health care, where security of electronically transmitted medical records
is paramount.
Another important way for companies to protect their intranets is with
the use of firewalls. A firewall is a device located between
a firm’s internal network (e.g., its intranets) and external networks (e.g.,
the Internet). The firewall regulates access into and out of a company’s
network. Firewalls permit certain external services, such as Internet
e-mail, to pass. Also, firewalls allow access to the Internet from
internal networks. A firewall can allow access only from specific
hosts and networks or to prevent access from specific hosts. Firewalls
can also allow different levels of access for different hosts.
For higher security, companies can implement assured
pipelines. A firewall examines only the header information of
a packet, but an assured pipeline examines the entire request for data
and then determines whether the request is valid.
NationsBank has developed an intranet that gives its 2000 sales associates
a complete picture of the relationship the bank maintains with business
customers that have more than $250 million in revenue. The sales
associates can view the entire customer relationship from a universal browser
interface, increasing cross-selling opportunities. By typing in a
single identifier, the associates can get a global customer overview, including
name, address, key officers, type of industry, phone numbers, and other
information. The associates can spend less time collecting data and
more time analyzing customers’ needs.
Philips Electronics North American, a $22.3 billion
maker of high-tech electronic components used to send blueprints – via
fax and Federal Express – between the customer-service, technical-service,
and product-design departments in Cambridge, Maryland, and Philips’ production
facilities in Matamoros, Mexico, as well as a warehouse in Brownsville,
Texas. The problems with the delivery system were reflected in Philips’
declining rate of on-time shipment. The solution was an intranet
between the various facilities and a computer-aided design system.
The intranet and the CAD system eliminated the mislabeling of products,
inaccurate manufacturing fulfillment, and many other areas of customer
dissatisfaction.
The value of Becton Dickinson, a $3 billion maker
of medical supplies and devices lies predominately in the knowledge of
its employees. Therefore, the company designed an intranet for knowledge
management that captured the combined wisdom of the company’s more than
19,000 employees. One example is a database of “best practices.”
This database is populated by information written by employees and serves
as a contact resource and corporate technical encyclopedia. Using
the “database of expertise”, anyone at the company can find an in-house
expert on the firm’s core competencies. Until the intranet, employees
had no systematic way to share knowledge among departments.
Rite Aid Corporation, an $11.4 billion drug-store
chain, developed an intranet that uses satellite transmissions to distribute
video, audio, and documents from its Camp Hill, Pennsylvania, headquarters
to its 4000 drugstores nationwide. To the stores, the company sends
customized background music; live, interactive video for employee training
and distance learning; and manuals and safety guideline documents.
Imagination Software Inc. (www.imaginationsoftware.com)
has an intranet application called Virtual Copier. Virtual Copier
captures any image as an electronic copy that users can output to any other
device or automatically attach to a software application through the menu
on a copy machine. Imagination Software is getting major copier,
fax, printer, and scanner manufacturers to agree to use its software to
make their devices communicate via an intranet.
Health Care on the Internet
Jeanette Brown reacted to the news that her mother
had inoperable colon cancer by going to the Internet. She was not
looking for support groups, but was hunting for facts about the disease
and its treatment. After a week of surfing the Internet via various
search engines, she found promising news. Someone had survived a
situation similar to her mother’s through a new type of surgery, called
cryosurgery, that uses nitroglycerin to freeze cancerous tumors.
Jeanette’s doctor had not heard of the treatment, so she found a specialist.
After two rounds of surgery, her mother’s tumor appears to be in remission.
The Internet is in the position to radically change
the doctor-patient relationship. Patients finally are getting their
hands on information that doctors did not know about or simply would not
hand over in the past. The Internet is giving patients the unvarnished
facts about their diseases. Armed with data they have found online
in medical journals, patients are walking into doctors’ offices and asking
about treatments and diseases some physicians may never have heard of or
considered. The Internet, therefore, is providing a fundamental shift
of knowledge from physicians to patients.
The Internet may bring another fundamental change.
For years, there has been an effort to bring health care into the computer
age, giving patients more access to data and improving and tracking treatments.
Until now, the healthcare system has resisted. Doctors’ offices remain
the last great bastions of notepads and paper files.
Many companies are launching services for consumers
– providing personalized news, risk assessment services, insurance, and
online drugstores. Startups PlanetRx (www.planetrx.com) and DrugStore.com,
Inc. (www.drugstore.com) are selling over-the-counter drugs, medical supplies,
and prescription drugs. The two firms plan to be one-stop health
shops, offering everything from expert advice to licensed pharmacists to
allowing users to keep personal records of their prescriptions on the site.
Competition is heavy from established drug store giants. Merck-Medco
Managed Care, which handles prescriptions for more than 51 million consumers,
allows members to order their refills electronically. Rite Aid not
only offers online refills but also reminds customers electronically when
their prescriptions need refilling.
However, dispensing health care over the Internet
has risks. Many patients worry about privacy when it comes to personal
medical data on the Internet. The biggest obstacle, though, is the
amount of bad medical information available. With an estimated 15,000
health sites, the amount of data that is just plain wrong or misleading
hurts the credibility of the other sites. The Health and Human Services
Department has launched a Web site (www.scipich.org) that teaches consumers
how to evaluate health sites.
The hope is that the Internet will link physicians,
patients, and insurers in a massive electronic nervous system. The
benefits would be tremendous, particularly because about one-third of the
$1 trillion spent on health care in the U.S. is wasted on unnecessary and
duplicated treatments.
Source: “A Cyber Revolt in Health Care.”
Business Week; October 19, 1998; pp. 154-155.
Question: How would you feel about having
your medical information on the Internet?
Question: What are the possible abuses that
can occur with health care on the Internet?
How Fragile is the Internet?
Mark Abene, one of the world’s best known computer
hackers, recently found his e-mail in-box stuffed with thousands of Internet
users’ secret passwords. Mr. Abene, whose pseudonym was Phiber Optik,
spent a year in jail after he and his cohorts in the Masters of Deception
gang were convicted of breaking into telephone networks. Now on probation,
Mr. Abene is working as a computer security consultant.
Mr. Abene was testing the software at an Internet
service provider. To check computers for security vulnerabilities,
experts attack them, a practice called “tiger teaming.” Mr. Abene
looked into the system’s “news servers,” which manage the Internet bulletin
boards called news groups. He ran a common hacker command through
the news servers, asking other systems to offer up their users’ passwords
and forward them to his e-mail address. When he checked his mail,
he found it flooded with password files. After he realized what had
happened, he posted his finding on various news groups, urging computer
administrators to shore up their systems against such “control-message”
breaches.
Many people who sign on to the Internet each day
believe their privacy is safely guarded behind the secrecy of their passwords.
But passwords can be broken or otherwise breached, as evidenced by Mr.
Abene finding a hole in server software. While fixes for many potential
Internet security problems are often available, Internet operators have
difficulty keeping up with the Internet’s growing complexity.
Source: Sandberg, Jared. “Accidental
Hacker Shows Internet’s Fragility.” The Wall Street Journal; July
10, 1997; pg. B1.
Question: Do you feel confident using the
Internet now? Do you think that the Internet will have improved security
in the future to make you more confident?
Internet Addiction: Fact or Fiction?
According to the research firm, Jupiter Communications,
Inc., there will be more than 116 million Americans online by 2002.
Some researchers say five to ten percent of Internet users have the potential
for an addiction problem. In the words of one subscriber to an Internet
addiction support mailing list, “My marriage is breaking up because of
my husband’s addiction, which seems to have destroyed not only our marriage
but my husband’s personality, his values, his morals, his behavior, and
his parenting.” In another case, a therapist tells of one man who
threw his wife’s modem out the window in disgust at her refusal to log
off, only to have her beat him in retaliation.
One 24 year old Internet user says his online obsession
with Multi-User Dimension (MUD) games had a definite, negative impact on
his college career. He wrote that, at his peak, he was playing 11
hours a day. He did poorly in his classes because he would study
for 20 minutes and then “go MUD” for two hours, study for another 20 minutes,
then “MUD” for four hours, then go to sleep.
A researcher at the University of Pittsburgh studies
396 self-described “dependent” users of the Internet and 100 non-dependent
users. The dependent users spent an average of 38.5 hours per week
online, where the non-dependent users spent less than five hours.
Ninety percent of the dependent users said they suffered “moderate” or
“severe” impairment in their academic, interpersonal, or financial lives.
Eighty-five percent said they had suffered impairment at work.
In the workplace, increasing numbers of supervisors
discipline and even fire employees who spend too much time cruising pornographic
and other non-work-related sites. One secretary went to her Employee
Assistance Program for help with her inability to stay away from non-job-related
Internet sites. The office rejected her request on the grounds that
she did not suffer from a legitimate disorder. She was later fired
when system operators noted her heavy Internet use.
Source: Greene, R.W. “Internet Addiction.”
Computerworld; September 21, 1998; pp. 78-79.
Question: Do you think Internet addiction
is a real problem? Do you know anyone whom you think has this problem?
Question: Should companies add Internet addiction
to the list of workplace ailments their insurance covers (similar to repetitive
stress injury)?
Managing Your Own Retirement on the Internet
In recent years, employers have shifted the burden
for managing retirement funds to employees. But the employers have
not given their employees sufficient means to accomplish that task.
Financial Engines (http://app.financialengines.com) provides a service
for companies that went to give their employees sophisticated analytical
tools to plan and manage their retirement over the Internet.
The service consists of a Web site and database
of daily price and performance information for all U.S. stocks and mutual
funds. Using a java-based investment forecasting applet, users can
retrieve from the database current figures for their portfolio holdings
and make projections on how their portfolio will do under various hypothetical
economic scenarios. Assumptions about critical factors, such as inflation,
are generated by a simulation engine that is based on research by Stanford
University professor William Sharpe, a Nobel laureate in economics.
Source: “Retirement to the Web.” Information
Week, September 21, 1998; pp. 72-73.
Question: Would you feel comfortable managing
your own retirement portfolio? Would you rather have advice from
an expert you know?
America Online, The Leading Brand on the Internet
To understand the power of America Online (AOL),
talk to Larry Rosen, the founder of N2K, an online retailer that wants
to become the dominant seller of music on the Internet. In 1997,
he agreed to pay $18 million, almost twice his company’s revenue, to make
N2K the exclusive music retailer on AOL. He also sold a small stake
in his company to AOL at a favorable price. Rosen noted that he did
not have much negotiating power when he said, “When you see that 40 percent
of all online traffic is coming through AOL, you’ve got to be there.”
Chris Holden, CEO of Kesmai, supplied interactive
multiplayer games to AOL until 1998, when Kesmai was displaced by an AOL-owned
games company. Within weeks, 92 percent fewer people were using Kesmai’s
games, and its business collapsed. The company is now suing AOL,
alleging antitrust violations.
AOL has crushed its rivals, buying CompuServe and
Netscape, beating down Prodigy, fending off challenges from AT&T and
Microsoft, and embracing the Web. Today, AOL is the leading brand
on the Internet. In 1998, AOL collected revenues of approximately
$2.5 billion, with profits over $100 million. With CompuServe, AOL
captured about 60 percent of home use of the Internet. A new Internet
user signs up every two seconds, and the majority choose AOL.
With more than 11 million paying subscribers, AOL
reaches about as many homes as cable operators Time Warner or TeleCommunications
Inc., and AOL is adding more than 10,000 users per day. On weeknights
during prime time, the number of people logged on to AOL peaks at almost
700,000. Users spend an average of 51 minutes a day plugged into
AOL, up from 14 minutes in 1996. According to Nielsen, the minutes
on AOL come at the expense of television.
Subscribers spend time on AOL in the following ways:
17 percent surf the Internet;
20 percent chat;
23 percent exchange e-mail;
40 percent visit content
sites and shop.
On any given day, AOL subscribers send and receive
28 million e-mail letters and click 800 million times on a variety of Web
sites. Members track six million individual financial portfolios
and create 17,000 new ones daily. Members receive 60 million stock
quotes every 24 hours.
Source: Gunther, Marc. “The Internet
is Mr. Case’s Neighborhood.” Fortune, March 30, 1998; pp. 69-80.
Question: Do you think AOL is guilty of antitrust
violations? Relate the AOL case to the case of Microsoft? Does
success in the marketplace always mean companies are violating antitrust
legislation (that is, they are trying to create a monopoly)?
Question: Given that AOL is the leading brand
on the Internet, what is the effect on advertising rates?
Privacy on the Internet
When a U.S. Navy investigator concluded that Senior
Chief Petty Officer Timothy R. McVeigh was gay based on information obtained
from America Online, the incident caused a controversy over privacy on
the Internet. An AOL customer-service representative confirmed for
the investigator that the AOL name “Boysrch” was that of McVeigh.
The investigator had already obtained an AOL member profile that listed
McVeigh’s marital status as gay.
In 1997, the Social Security Administration suspended
a service that let people look up personal earnings, disability information,
and benefits estimates, because the public was concerned that the information
could be widely accessed. In 1998, AOL caused a public outcry after
it proposed giving member information to partners that could then telemarket
to AOL’s 11 million subscribers.
The Federal Trade Commission is beginning to randomly
check Web sites to see if site operators are posting privacy notices that
explain how personal information – such as e-mail addresses, shopping habits,
and consumer financial data – is being used and whether it is being protected
from unwarranted intrusion. A 1998 FTC check of the top 100 Web sites
revealed that only 43% displayed privacy policies. In particular,
an FTC check of 126 children’s commercial Web sites found that 86% collected
data about children, including e-mail addresses and telephone numbers,
most without seeking parental approval.
Web sites collect information with and without consumers’
knowledge. The most common way is through “clickstream” data; i.e.,
information about where people go within a site and the content they see.
Clickstream data are most commonly collected by cookies, or small data
files placed on users’ hard drives when they first visit a site.
When a user goes back to a site, the site’s computer server can read the
usage data from the cookies. That information is stored in a database
and can be used to target ads or content, based on the preferences tracked.
Another way to collect information is through registration (e.g., sites
such as Time Warner Inc.’s Pathfinder or Amazon.com).
At Barnes and Noble (www.BarnesandNoble.com), visitors
can have the online bookstore configured to show new titles in their favorite
genres. But with software provided by Firefly, Inc. and downloaded
from the bookstore site, individuals can choose to turn that feature off.
There are numerous bills in Congress in 1999 related
to Web privacy, ranging from laws to regulate spamming, or unsolicited
e-mail, to legislation restricting disclosure of subscriber information
by online services. Three possibilities exist:
The government should let
groups develop voluntary privacy standards but not take any action now
unless real problems arise.
The government should recommend
privacy standards for the Internet but not pass laws at this time.
The government should pass
laws now for how personal information can be collected and used on the
Internet.
Source: “A Little Privacy Please.” Business
Week; March 16, 1998; pp. 98-102.
Question: Is it ethical for marketing firms
to gather information on users without their knowledge even if the information
is only used for target marketing?
Question: Is it against first amendment rights
for the government to pass legislation regulating information collection?
Buying Co-ops on the Web
Suppose you want to buy a used Lexus 400 that is
coming off a 30-month lease. Leases expand and rationalize the market
for used cars, because one 30-month old Lexus 400 is similar to another.
Ask yourself how many people in the U.S. are just like you and want to
buy a Lexus 400 coming off a 30-month lease as precisely the same time.
How many buyers are there? One hundred? Five hundred?
Imagine if all the buyers could fine each other – all five hundred of them.
What would they do next? They would band together and form a used
Lexus buyers’ co-op right on the spot, on the Internet. Then they
would go straight to Lexus and negotiate a fleet sales price. Of
course, if the buyers are really smart, they will invite BMW, Mercedes,
and Cadillac to the auction.
Source: Karlgaard, Rich. “Digital Rules.”
Forbes; December 28, 1998; pg. 43.
Question: Do you think buyers’ co-ops on the
Internet are a good idea? Would you be willing to participate in
one? Would they work for most products? What problems do you
see?