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1.5 Using the New Paradigm of E-business

1.5.1 The Interoperable Network

In the early nineties a strong concentration on the computer market appeared, the so-called Wintel (composed of the software Windows and the hardware Intel) monopoly was at its height. In order to exchange information with business partners everyone was forced to use the same operating system, the same word processor and the same hardware.

With the introduction of the Internet, incompatible devices have learned to talk to each other. This allows interchanging products and integrating processes. This is achieved through the use of digital technologies based on open standards. Moving everything to the same basis started to converge networks, markets, products, technologies and business processes.

The convergence of the networks was the first segment. Telephones, broadcast networks, satellite and wireless networks are now all able to send and receive digital signals. Sending information from a mobile phone to a standard telephone network is possible. It has become totally transparent to the user, which networks are used to route a phone call. A phone call from the United States to Asia may be routed through satellite networks, the Internet and normal telephone networks.

Through the Internet several regulated monopolies face competition from those who used to be in different markets. Suddenly telephone companies, cable television operators and power supply companies have become competitors to offer access to the Internet and web site owners and television broadcasters start to offer competitive products. Market boundaries are breaking down, just as geographical boundaries have started to collapse.

More and more products are now available in digital form: audio signals, such as voice and music, video signals such as television and video broadcasts, textual information, such as books, magazines and news. All these pieces of information from other media have been moved to a new medium, the computer platform, where databases, computer software, such as office applications and games were in use. Through the use of networks, which all evolved into the Internet, all these types of information could be easily transmitted to any place in the world.

Different types of technologies, such as printers, computers, cameras and mobile phones, are moving closer together to offer the users a wider area of appliances. Using a mobile phone to communicate with a digital camera and a printer without a computer as an intermediary is already possible. The Inter-net makes it possible.

By digitizing processes, different types of processes in a value chain are integrated into a seamless process. A digital process can be much easier mass-customized by using digital feedback from the customer. Through the feedback mechanism it is also possible to streamline processes much more easily than it would have been possible in the real world.

The convergence brings many new opportunities for start-up companies and many uncertainties for established companies. Start-ups will use the new technologies to implement new processes and products, while many traditional companies will try to convert their current success to the digital world without enhancement. A dictionary in book form and on the Internet will use the same base of data, but presentation and functionality will be very different than if a company just replicates the book by providing a web page with all the content. The Internet-based dictionary will have search and link capabilities that exceed the cross-indexing features a book can provide. Some companies do not add these new functionalities the Internet offers, in good faith their current set of features are satisfying the needs of their customers. Start-ups will see their opportunity to get into the dictionary market and will win market share by offering new digital products. These new products mean new uses, new customers and new ways of doing business. Traditional companies focus on the opportunity to expand their business, but start-ups focus on the novelty of the Internet and its possibilities.

1.5.2 The New Economy

Digital business is causing an upheaval that is shaking the foundations of traditional business. More and more companies recognize the opportunity the Internet offers and start to establish an online presence with a sound business model behind it. Increased revenues and additional customers who return voluntarily to the company are drivers that bring more and more companies to digitize their offerings. Through the Internet it is possible to invent new and innovative ways to add value to existing products and services without necessarily spending a lot of money.

Over the last few years the Internet has established itself as a mainstream medium. With the publication of the Starr report on Monica Lewinsky, which was released first on the Internet, everyone was made aware of this in the traditional media. Television news broadcasts were showing online excerpts, as no other information was available. Many sites replicated the report and newspapers printed parts of it.

Internet technologies are advancing to support commercial transactions and in addition to this, new commercial transactions have been invented by these new Internet technologies. Companies need to move fast in this New Economy. But speed is not the only factor that is important to succeed in electronic business. Careful planning and execution are just as important as moving on quickly. This requires the combination of a variety of skills and disciplines, many of which are new and unfamiliar. Computer companies, advertising agencies, Internet providers and service providers come together and act on an equal level of expertise. In the industrial age, every company had expertise in one field. In the information age, every company has a lot of expertise in its own field and at least some expertise in the fields of the others.

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Last Update: November 17, 2020