class 1 the network economy

8/9/2019 Class 1 the Network Economy

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5013

ManagementInformation Systems


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The NetworkEconomy


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The New Economy

Also called The network economy, the knowledge

economy, the Web/Internet economy, etc. A controversial issue

The imortance o! knowledge

"igh tech o!ten relaces humancommunication and brainower

Electronic transactions


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The Network Economy

The advent was !oreseen in 1#$# by%eter &rucker Teacher, writer, consultant, thinker, and

lecturer on the contemorary organi'ation Wall (treet )ournal editor and !re*uent

"+ contributor


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The Network Economy

-onnected World

Increasing Web tra!!ic

Novice users ac*uire comuters The number o! eole with mobile

Internetenabled devices eceeds the

number o! landline Internet users New web articiants

Web bots, intelligent agents, mobile ob0ects,

etc.


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The Network Economy

-onnected World

oore2s 3aw

4ryder5s 3aw 6ilder2s 3aw

etcal!e5s 3aw

+ell2s 3aw


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The Network Economy

The observation made in 1#$7 by 6ordonoore, co!ounder o! Intel.

The number o! transistors er s*uare inch onintegrated circuits had doubled every year

since the integrated circuit was invented. oore redicted that this trend would continue

!or the !oreseeable !uture. In 8917, it is 8: ;$ months.

Initially, most eerts, including oore himsel!,eected oore5s 3aw to hold !or decades. oore recently stated that this trend is unlikely

to continue !orever. -urrently, the growth slowed down, but

scientists elore new materials and concets.


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The Network Economy

Kryder's Law The density o! the storage area o! a magnetic disk

increases much !aster than the increase in the -%alue

As the number o! nodes increases

linearly, the value o! the network growseonentially

The network2s value is derived !rom

lentitude E.g., as volume o! online transactions

increases, the cost o! every transaction

diminishes


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The Network Economy

Eonential >alue Metcalfe's Law

obert etcal!e !ounded ;-om

-ororation and designed the Ethernetrotocol !or comuter networks

etcal!e5s 3aw states that the

use!ulness, or utility, o! a networke*uals the s*uare o! the number o!

users

Network


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The Network Economy

Bells Law The birth and death o! comuter

classes

-omuter class B a set o! comuterswithin a articular rice range with uni*ue

caabilities 3ess eensive alternative to the reviously

widely used class o! comuters Aears aroimately every 19 years

The new class threatens to the revious class The revious class takes action, changes, and

eventually disaears


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The Network Economy

Bells Law The birth and death o! comuter classes

1#$9s B main!rames

1#D9s B microcomuters 1#9s B %-s

1##9s B Web services, cloud and grid

comuting

8999s B Notebooks, netbooks, handheld

devices and mobile email

8919s B Tablet comuters e.g., i%adC

=uture B odular comutersF
http://www.youtube.com/watch?v=r-ox90oXq8chttp://www.youtube.com/watch?v=r-ox90oXq8c


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The Network Economy

3i!esan o! Innovation

In -anada and the


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The Network Economy

The (miling -urve

The valueadded otential in an IT

industry is di!!erent !rom that in the

older sectors, such as agriculture,natural resources, and manu!acturing The greatest value is catured in the

beginning G&, idea generation,concet, I%C and the end marketing,

brand, serviceC o! the value chain. The

lowest value is catured in the middle o!

the value chain roductionC.


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The Network Economy

The (miling -urve

&ownside B high revenues high

cometition


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The Network Economy

Increasing eturns

A!ter the dotcom crash, some

individuals have become Hdotcomaverse2


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The Network Economy

&ecreasing %rices

-onsumers may count on suerior

*uality !or less rice over time

(cientists !ind way to get more out o!

less material -omuters, cars, electronic devices,

bandwidth, etc.


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The Network Economy

In!ormation is the king

The value o! accurate and timely

in!ormation increases I! you have er!ect in!ormation, the

best deal is guaranteed

Technology may emower the user


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The Network Economy

In!ormation is the king (hoing bots B rice comarison

engines

%er!ect in!ormationhttJ//www.booksrice.com

#D99D;;D$8

Evendors tend to commoditi'e o!!erings Name, delivery otions, shiing time

(ingle !ree cometition market with 'ero

longterm ro!it B %rice wars

Evendor bots
http://www.booksprice.com/http://www.booksprice.com/


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The Network Economy

%eole eect !ree

=reeware or at least trial versions o!

so!tware rograms are taken !orgranted

6et a roduct !or !ree and ay !or

service or suort E.g., )ava language


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The Network Economy

"igh &eendency In a linked economy, the !ate o! an

organi'ation deends on other

comanies in the suly value chain,their cometitors, and the eternal

environment

Krgani'ations have to become highlyadative

ecent World Economic -risis


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The Network Economy

"igh ate o! &islacement

The agricultural era B industrial era

%eole have to change ro!essions

-omanies have to change roduct

lines and restructure


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The Network Economy

(ummary

-onnected world

Eonential value o! a network

3i!esan o! innovation

The smiling curve Increasing returns

&ecreasing rices >alue o! in!ormation

%eole eect !ree

&eendency

&islacement

class 1 the network economy

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