Topic 7 E Commerce in Current Trend

Topic X E-Commerce
7
LEARNING OUTCOMES
By the end of this topic, you should be able to:
1.
Outline definitions and dimensions of electronic commerce today

and discuss the different perspectives involved in each of them.
2.
Outline generic business models for electronic commerce, and

discuss their application.
3.
Discuss and evaluate how Internet technologies and applications

are driving and inhibiting the growth of electronic commerce.
4.
Outline emerging electronic commerce enabling technologies and

evaluate their influence on future developments.
INTRODUCTION
This topic begins by offering definitions of electronic commerce, followed by an

investigation of business models and the dimensions of electronic commerce
covered in this topic. Specifically, this topic discusses electronic commerce over
the Internet along the following dimensions:
Business-to-consumer
Business-to-business
Consumer-to-consumer.
To support your studies of business models, and later topics, you will create your
own
LAUNCHcast
Internet
broadcast
station
at
Launch.com
(<http://www.launch.com/>). As a registered user at Launch.com you will
review the application of Internet business models used in this innovative
electronic commerce application. This service is free.
180 X TOPIC 7 E-COMMERCE
The topic then moves on to discuss the inhibitors and drivers for electronic
commerce development from the perspective of companies. The discussion
focuses on the application of electronic commerce technology to create drivers for
growth.
The final section makes a deliberate move away from traditional channels and
access devices for electronic commerce to look at what the future may hold.
Three emerging trends in Internet technology are highlighted in this section:
Internet enabled devices
Ubiquitous computing
Wearable computers
Begin by reviewing the objectives for this topic.
THE AGE OF ELECTRONIC COMMERCE

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

To begin, it is useful to define what is meant by the now broadly used term
electronic commerce. It is becoming more difficult to define electronic
commerce because it has become the standard term for describing all forms of
transaction made over networks, not just those via the Web through online
stores.
Roger Clarke maintains an extensive collection of electronic commerce related
materials on the Web, including a set of definitions related to online commerce.
He defines electronic commerce as:
The conduct of commerce in goods and services, with the assistance of
telecommunications and telecommunications-based tools.
(S
Source: Clarke, R (2000) Roger Clarkes EC definitions
<http://www.anu.edu.au/people/Roger.Clarke/EC/ECDefns.html>)
TOPIC 7 E-COMMERCE W 181
Business America, in an article entitled Defying definition, offers this definition

of electronic commerce:
Often referred to as simply e-commerce, business that is conducted over
the Internet using any of the applications that rely on the Internet, such as
e-mail, instant messaging, shopping carts, Web services, UDDI, FTP, and
EDI, among others. Electronic commerce can be between two businesses
transmitting funds, goods, services and/or data or between a business and
a customer.
(S
Source: Webopedia (2004)
<http://www.webopedia.com/TERM/e/electronic_commerce.html>)
These are useful ways to define electronic commerce as they highlight the
broader sense in which businesses use telecommunications technology to
conduct business, beyond the use of the Internet alone. For example, many
businesses use telephone sales as a telecommunications tool for conducting
business.
You will see many variations of the term electronic commerce used in the
readings. Broadly speaking, all the variations of the term may be included within
the definitions above. Specifically, this topic focuses on the use of the Internet for
conducting business transactions and the applications that enable these
transactions to take place.
The next section explores the various dimensions that exist within these
definitions of electronic commerce.
Dimensions of electronic commerce

Within electronic commerce there are a number of dimensions. In June 2000 the
Organisation for Economic Co-operation and Development (OECD) presented an
illustration of the major electronic commerce dimensions, presented in the next
figure.
Figure 7.1: Electronic commerce and broader Internet applications

(S
Source: Coppel, J (2000) E-commerce: Impacts and policy challenges, Economics
Department Working Papers No. 252, Organisation for Economic Co-operation and
Development, 4, Fig. 1)
The two shaded areas, business-to-business and business-to-consumer, have

demonstrated the fastest growth in the last few years. In the coming years it is
expected that the additional application areas highlighted in this figure will
become more dominant.
For example, the Malaysian government currently has an extensive initiative
underway to interconnect all its government databases and information sources,
integrating the use of personal identification cards that are designed to connect
with the network. The intention is that the Malaysian population will use these
cards to interact with the government in such areas as driving licence issuing,
and they may even use them at airports to enter the country, using turnstile-type
gates with the cards.
This example presents an infrastructure initiative, but how the influence on
society and the applications that will run across the network will evolve will take
a number of years to emerge. In these topics you will focus on business-tobusiness, business-to-consumer and consumer-to-consumer commerce and will
discuss the implications that all the dimensions in Figure 7.1 raise.
Before exploring the variety of business models that are used within these
dimensions, review the next figure, which presents an overview of the three
dimensions under discussion.
Figure 7.2: Dimensions of online commerce

Source: Rao, B (1999) Emerging business models in online commerce, 3, Table 1,
(S
<http://www.ite.poly.edu/people/brao/RT99.htm>)
Did you notice the wide variation in the value of the market potential for each of
these dimensions? This market potential is a key factor in the development of
electronic commerce over the next few years.
Business-to-consumer commerce is now well established and it is difficult to find
a new niche that is not already exhibiting high levels of competition. The revenue
streams for consumer-to-consumer commerce are the most limited of the three,
being largely based on complimentary advertising and marketing opportunities.
Although the value of the potential market varies, there is general agreement that
business-to-business commerce exhibits revenue potential unsurpassed along
other dimensions.
To emphasize this, Morgan Stanley Dean Witter have produced the following
illustration of the potential of business-to-business commerce compared to the
phases of development electronic commerce has passed through.
Figure 7.3: Potential value of business-to-business commerce

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

As electronic commerce developed as a distinct academic discipline, business
researchers attempted to identify distinct types of business models in use. As is
the nature of continuous change, these models and the taxonomies
(classifications) of models suggested by these researchers have required constant
updating.
This is complicated by the fact that these models operate in different markets, at
different levels and often across markets, resulting in a number of different
variations in their application.
The next reading presents one of the most comprehensive taxonomies of business
models available on the Web. Nine distinct models are outlined with a wide
range of supporting examples across each of the dimensions.
READING 7.1
Rappa, M (2000) Business models on the Web
<http://ecommerce.ncsu.edu/business_models.html>
Read the introduction to business models down the centre of the
page first. Then, review only the first paragraph describing each of
the nine business models. You will explore these further in the next
activity.
Particularly, you should note the definition of a business model
presented by Rappa and decide whether you agree with it.
Do you agree with Rappas definition of an electronic commerce business model?

If a business model is a method of doing business by which a company can
sustain itself that is, generate revenue, why are so many major businesses on
the Internet not making any money? Are these companies not using business
models appropriate for the Internet?
It is difficult to address these questions since there are no proven business
models for electronic commerce on the Internet, just as there are no proven
business models that will always win outside of the Internet world. Even the
author himself, Rappa, only offers this taxonomy of business models as one view
and highlights that there are a number of variations on these.
Attempt to apply some of these business models to your own organization in the
next activity.
ACTIVITY 7.1
In this activity you will explore the nine distinct models presented in
the Rappa reading.
Consider the questions from two perspectives:
the organization as a consumer for example, in areas such as

purchasing office supplies and other business services that you
might use
the organization as a provider of electronic commerce resources

for example, you may see potential for offering business-toconsumer or business-to-business commerce services, depending
on your type of business.
Go to Reading 7.1 again and review the short overviews at the

beginning of each of the nine models outlined. Explore the associated
links for examples of each if you wish.
Begin by reviewing your organizations current electronic

commerce activity and attempt to identify this with the specific
business models outlined. If your organization has not yet delved
into the world of electronic commerce, you have the opportunity
to consider the opportunities in the next questions.
How might these generic business models be used by your own

organization individually, or used to enhance current electronic
commerce activities?
What combination of the generic models might be more

appropriate for your organization for the two perspectives? Why
specifically would this combination be more appropriate for your
organization? One example could be an online service that
manages customer data and offers online tools to support
customer service.
Why do think it is important to combine the models to suit your

individual needs?
It is likely in this activity that although you could find value in the use of some of
the individual business models, there was potential for greater value to the
company by using a combination of the models.
This is an important consideration as you explore the potential application of
these models. As Figure 7.2 indicates, there are hybrid players that operate across
the dimensions of electronic commerce, as there are advantages to be gained for
consumers and businesses.
For example, an online consumer storefront may be closely integrated with an
online stock data management solution, enabling the store to provide details of
whether stock is held from the data source used internally by an organization.
ACTIVITY 7.2
Discussion
The Launch.com website linked below represents a quite different and
innovative use of Internet technology for business-to-consumer
electronic commerce, based on iBeam Internet broadcasting solutions.
Launch.com: <http://www.launch.com/>
Activity overview
In this activity, review and evaluate how the different business models
are integrated into the Launch.com website and become your own
Internet broadcaster. Do this on your own first and then address the
suggested discussion topics that are intended to broaden the
discussion to explore some of the new electronic commerce business
opportunities that these technologies enable.
Become a registered user
The best way to understand the range of services offered by
Launch.com is to become a registered user so that you are able to
explore the site fully from the perspective of a consumer.
To register as a user, navigate to the homepage, select Join Free at the
bottom of the page and follow the online instructions. You should read
the privacy policy and terms and conditions linked at the bottom of
the sign-up page before registering. You will be required to enter some
personal details including a valid email address.
By registering with the site you will have your own LAUNCHcast
broadcast station created for you as one of the benefits of membership.
This is Launch.coms most notable feature, allowing you and other
broadcasters to influence the content of your personal broadcast station.
Note the extensive opportunities for rating tracks, artists and albums,
throughout the site.
To use your new LAUNCHcast station you will need to enable cookies
in your browser. This is important as many of the personalization
features are based on the use of cookies. In addition, you will need
WindowsMedia Player 7 and the latest Macromedia Flash Shockwave
plug-in. As part of the registration process a step is included to help test
whether you have the right plug-ins in your browser and where to
download them if you do not.
Note that this site uses streaming media and, due to bandwidth
limitations, you may notice some degradation in the ability to receive
uninterrupted audio streams during the evening, as Internet traffic is
highest at this time.
You are now set up as a registered user of Launch.com with your own
online audio broadcast station that you may choose to promote on the
Internet. Remember, though, that LAUNCHcast is only one of the
services offered at the site and that it is also possible to buy music and
interact directly with other users through the chat and discussion
features, for example.
Application of business models
Next, focus specifically on the application of the business models
discussed in this section. Launch.com is an attempt to make available
commercially protected music within the Digital Millennium Copyright
Act law, designed for the Internet. Launch.com may be termed a hybrid
player as it operates across business-to-consumer and consumer-toconsumer dimensions of electronic commerce.
Review and evaluate the site based on the Rappa taxonomy of business
models:
Which of the generic business models does this site integrate and
which do you think is the dominant model adopted?
There is detailed feedback on this question at the end of the topic.

Suggested discussion
Taking into consideration your analysis of business models in the
previous questions, post your comments to the discussion board based
on the following questions:
Do you think that the revenue generating features of the site could be
improved? How, specifically?
What other revenue generating activities and features might the site
adopt?
Could Launch.com benefit from including features offered by

competitors, such as Live365 (<http://www.live365.com/>)?
Would these opportunities be improved if Launch.com were made

available easily on a wider range of Internet enabled devices? What
specifically might the benefits be?
Remember that this is intended as an opportunity to interact with your

fellow students who bring to the course a wide range of skills and
experience. Make the most of the opportunity and contribute to, and
comment on, the submissions of other students.
ELECTRONIC COMMERCE DRIVERS AND

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

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

In this section, I will highlight a piece of annual research conducted by
CommerceNet (<http://www.commerce.net/>) that focuses on investigating
barriers and inhibitors to electronic commerce perceived by companies.
Review the top ten barriers and inhibitors for business-to-business and businessto-consumer commerce for 1999, in the next figure.
Global Top 10 Barriers & Inhibitors 1999: Business-to-Business Perspective
1.
Culture [problems changing corporate culture]
2.
Interoperability between e-commerce applications and with legacy systems
3.
Organization
4.
Executive awareness
5.
User authentication and lack of public key infrastructure
6.
Lack of standards
7.
Lack of knowledge or qualified personnel
8.
Interoperability with eCommerce sites of complementary companies
9.
Trust and risk
10.
International access and trade barriers
Global Top 10 Barriers & Inhibitors 1999: Business-to-Consumer eCommerce

1.
Security and encryption
2.
Trust
3.
Ability to make and receive payments
4.
Culture
5.
6.
Business models
7.
8.
Cost justification
9.
Customers cant find me
10.
Figure 7.4: B2B and B2C barriers and inhibitors to EC in 1999

Source: Terry, S (1999) Barriers and Inhibitors 1998-99, CommerceNet.
(S
<http://www.commerce.net/research/reports/1999/99_18_r.html>)
Although results vary between surveys, the two top tens in the above figure
highlight the most commonly cited barriers and inhibitors to Internet electronic
commerce for companies. Notice that many of these are based around technology
application issues, such as secure payment transaction technologies and public
key infrastructure.
In most cases it is not that the technology to address these inhibitors does not
exist, but that it is not considered easily and cost effectively available to the
companies in this survey. For example, many countries, are only just beginning
to implement public key infrastructures to support electronic commerce and
consumers are not yet fully aware of how this affects the security of the
transactions that they make via the Internet.
The next section specifically investigates the technologies that are becoming more
easily available to address these barriers and inhibitors.
Technology trends transforming business

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

The choice of software applications and tools for developing sophisticated
electronic commerce solutions is becoming much wider, reducing the need to
develop totally custom built applications. These are also more focused on
enhancing interoperability with legacy systems and between vendor systems,
addressing two of the top ten concerns for business-to-business commerce in
Figure 7.5.
Read the first part of the summary in the next reading and notice the emphasis
towards technologies for working more closely with customers and enhancing
interoperability between systems.
READING 7.2
(1999) PricewaterhouseCoopers E-Business technology forecast highlights
trends transforming business today, PricewaterhouseCoopers.
http://www.pwcglobal.com/extweb/ncpressrelease.nsf/docid/2F18
DAF6F3BF95778525679C000677EE
Section I: E-Business platforms and applications
It is evident that the general trend is moving away from simply providing online
catalogues and secure transaction capabilities towards much closer integration
with companies internal systems and customers. Examples are the moves
towards provision of real-time inventory systems integrated with online
catalogues, and more of a focus on long-term relationships with customers,
supported by technology for interaction.
In particular, it is important to highlight the increasing role that the Extensible

Markup Language (XML) and associated technologies are playing as a core
element of electronic commerce systems.
Extensible Markup Language (XML) is not a markup language like HTML, but
rather a metalanguage that allows application developers to define their own
markup languages. Extensible by definition, it specifies the syntax for tags, not
the tags themselves. XML is expected to hurdle HTMLs limitations and offer a
standard way to exchange data across the Internet, acting as a driver of electronic
commerce.
Not a replacement for HTML, XML is meant to augment HTML. HTML and
XML are both text-based languages derived from SGML. SGML (Standard
Generalized Markup Language) is a standard for how to specify a document
markup language or tag set. SGML is not in itself a document language, but a
description of how to specify one. Where HTML is an application of SGML, XML
is a subset. In other words, XML is a simplified, offshoot version of SGML.
While HTML describes how to present a documents data, XML defines the
datas actual content. For example, an HTML tag such as <H1> specifies a certain
font and size. XML, on the other hand, describes the content that appears within
the tags. By separating presentation from content, XML adds structure to
documents and allows them to be viewed on various devices without having to
be rewritten specifically for each device.
This platform independence capability is becoming even more important as the
ways in which users access the Internet extend to Internet-enabled devices, rather
than primarily traditional PC browser interfaces. You will see some of these new
access devices in the final part of this topic.
The extensibility of XML is where the greatest benefits may be achieved. Web
builders can create a set of tags specific to their tasks and then share them
throughout their industry. Several industries, such as real estate and health care,
have already taken advantage of XML.
XML will also improve searching capabilities on the Web. For instance, searching
for Jaguar on the Web will probably turn up thousands of documents about the
car. But what if you are looking for information about the cat? When XML
becomes ubiquitous, you will be able to find only those documents that match
your search, because the relevant pages could be marked up like this:
<ANIMAL>Jaguar</ANIMAL>
Imagine the possibilities of being able to define your own markup tags. Standard
HTML alone has always come under criticism for not being flexible enough. XML
changes all that, allowing designers to customize their tags to meet specific
needs.
Notice, though, that it is not a replacement for HTML, but is intended to extend
HTML's capabilities. HTML determines how the media objects will be displayed
on a page, while XML focuses on describing the content.
In the next activity you will review a website that uses XML to display content in
different ways to users.
ACTIVITY 7.3
Visit the XML tutorial at the following site.
Introduction to XML for Web developers:
<http://wdvl.internet.com/Authoring/Languages/XML/Tutorials/Intr
o/toc.html>
Then, address the following questions:
What do you see as one of the main advantages of using an XML

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

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

supporting long-term customer relationships.
Payment technologies
There are basically no physical boundaries limiting Internet business operations.
In practice, however, a major concern from the public is ensuring that online
transactions can be carried out securely. Neither online customers nor merchants
want to open themselves up to the risk of potential fraud.
As youve seen, the barriers and inhibitors to business-to-consumer electronic

commerce identified in Figure 7.5 are heavily oriented to online transaction
issues. In fact, four of the top five are related to payment technology:
Security and encryption
Trust
Ability to make and receive payments
These concerns about security have led to the application of cryptography to

ensure trustworthy transactions on the Internet. There has already been a
considerable amount of development work in this area, but an acceptable
solution will not be implemented overnight. For example, changes in legislation
are required for countries to implement public-key infrastructures to support
secure transaction technologies.
Read the following article for an overview of payment technologies transforming
electronic commerce in the next extract from the reading.
READING 7.3
(1999) PricewaterhouseCoopers E-Business technology forecast
highlights trends transforming business today, PricewaterhouseCoopers.
http://www.pwcglobal.com/extweb/ncpressrelease.nsf/docid/2F18
DAF6F3BF95778525679C000677EE
Section III: Payment technologies
It is evident that the Secure Sockets Layer (SSL) protocol has become the
dominant method for securing connections with consumers, but does not meet
all the requirements for payment transactions.
Despite the popularity of credit cards there are still a lot of new payment
technologies attempting to gain wider acceptance by vendors and users for
conducting electronic commerce. As the reading suggests, there will be
consolidation and the number of payment options will reduce, helping to
standardize payment technologies.
Public key cryptography is another form of online security that is gaining in
importance. In the following reading, we take a closer look at public key
infrastructures (PKI).
In this reading, the experience of Scotiabank is used as a case study to illustrate
how PKI technology was adopted in a business that requires high security.
Reading this article should help you be able to:
briefly describe the different levels of security
describe the elements of public key infrastructure
explain the advantages of using public key
discuss the potential applications of public key technology to future risk

management.
READING 7.4
Read the attached article Using public-key infrastructures for
security and risk management, which is extracted from IEEE
Communications Magazine, September 1999, pages 7173.
As you can see from these two articles, standardization for payment technologies
across the Internet is another key factor in the ability to address the barriers and
inhibitors identified above. Essentially, the underlying technologies have now
matured, but the underlying infrastructure is not yet fully in place.
Once the secure payment technology infrastructure is set in place it is envisaged
that users and companies concerns will begin to be addressed and inhibitors
will become drivers.
Overall, there is no doubt that rapid advances in the application of existing and
emerging Internet technologies can be primary inhibitors and drivers in the
future of electronic commerce. Much of the problem relates to the current lack of
suitable infrastructures and common standards for conducting business via the
Internet, but these are beginning to be set in place.
In summary, this discussion of drivers and inhibitors has highlighted:
the important driving force that growth in the number of Internet users and
subsequent projections for growth in market values represent
the megatrends in electronic commerce that are transforming the way that
companies conduct business
the barriers and inhibitors that are hampering the development of electronic
commerce adoption and development by companies
the technologies that are enabling and driving development to overcome

these barriers and inhibitors.
To conclude this part of the topic, attempt the next activity that explores
inhibitors and drivers of electronic commerce in your own organization.
ACTIVITY 7.4
From the perspective of your own organization, attempt to identify the:
barriers and inhibitors to the adoption of electronic commerce in
your company
technology trends affecting your business and helping to overcome
these barriers and inhibitors.
Attempt to identify at least four points for each of these.
Rank the technology trends affecting the organization based on the
potential impact on conducting business in your industry.
Rank the inhibitors with the ones you think will be most difficult to
overcome at the top.
Based on these rankings, attempt to identify action that the
organization might take to make the most of the emerging
technologies and make recommendations for action to overcome the
highest ranking inhibitors.
Finally, consider the impact that the adoption of new technologies might
have on the operations and management of your company.
Do you think your company is ready for major technological
change?
Would you implement new technology requirements quickly or
incrementally? Why?
One of the factors that complicates a companys ability to address the inhibitors
and make the most of drivers is that a whole new wave of Internet enabled
appliances and devices are starting to come onto the market. This heightens the
need for platform independent presentation tools, such as XML, and is changing
the dynamics of electronic commerce as new business channels emerge to
compete in.
The next and final part of this topic explores the technology trends that are
heralding the new wave of Internet-enabled devices.
ELECTRONIC COMMERCE TECHNOLOGY TRENDS

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

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

For wireless devices, you have seen that the technology experiencing the fastest
development is WAP (Wireless Application Protocol), which allows the devices
to view specially formatted Internet content. Other wireless handheld devices,
such as the Palm handheld computers, are also gaining increasing popularity.
Content and services for these devices are emerging rapidly. High-traffic sites,
including Amazon.com, Yahoo and ZDNet, already provide wireless content and
services. Pinpoint.com (<http://www.pinpoint.com/>) has developed a search
engine technology that scours WML (Wireless Markup Language, the XMLbased, wireless equivalent of HTML) documents.
Although WAP service providers may not make much money until there are
more WAP enabled phones in peoples hands, the long-term business potential
looks good for wireless electronic commerce generally.
A surprise in these developments has been the sudden popularity of a competing
technology to WAP i-mode. The next article from the New Scientist chronicles
the dramatic growth seen in Japan.
READING 7.5
Liesbeth, E (2000) iMode to challenge Wap in Europe, Network
News, Oct 18.
This reading can be downloaded at: <http://www.vnunet.com/
News/1112684/>
This reading highlights a key factor for the success and growth of wireless
electronic commerce in the future, providing the content and services users want.
As the reading highlights, i-mode does not have all the technological potential of
WAP, but it seems it is possible to use it successfully as a channel for electronic
commerce that looks to grow very fast in Japan as new content and services are
added almost daily.
Overall, the trend and potential opportunities for wireless electronic commerce
are strong, but indications of what new wireless technologies will dominate
certain markets will take some time to become clear.
One of the reasons for this is that wireless is only a small part of the picture and
potential opportunities for opening new channels for conducting electronic
commerce with consumers go beyond wireless enabled devices, covered in the

next section.
Net appliances
Although wireless devices offer mobile convenience, they are far from the only
consumer electronics devices that provide Internet connectivity to enhance the
opportunities to reach consumers through electronic commerce.
We can expect more and more devices that contain a microprocessor, from your
car to your digital camera, will have some sort of Internet connection.
Although Internet-enabled devices will have an increasing influence on channels
for conducting electronic commerce, there is also another wave of technological
development growing that goes a stage beyond the utilization of these new
access device types. It is known as ubiquitous computing.
Ubiquitous computing, or calm technology, is a paradigm shift where technology
becomes virtually invisible in our lives. Instead of having a desktop or laptop PC,
the technology you use would be embedded in your environment.
Imagine a world with hundreds of wireless computing devices of different sizes
in the same room. In order to bring this type of computing out into the
environment, among the things that would need rethinking are user interfaces,
displays, operating systems, networks, and wireless communications.
This rethinking demands a radical departure from the tradition of putting
machines out for our use, and having us adapt to them. Instead, in the world of
ubiquitous computing, technology will be implicit in our lives, built in to the
things we use, including the spaces. The proponents of this technology hold that
this type of computing will be a more natural tool, and thus a more powerful and
effective one for us to use.
Applications
Now that ubiquitous computing has been defined, what are some uses
envisioned by its proponents and authors? In 1991 Mark Weiser, thought of as
the founder of what is termed ubiquitous computing, wrote an article for
Scientific American entitled The computer for the 21st century. In it, Weiser
described the multiple computers in a room as tabs, pads and boards, which
roughly correspond to active Post-It notes, sheets of paper, and white boards and
bulletin boards.
A good description of these items can be found in the article Some computer
science issues in ubiquitous computing:
<http://www.ubiq.com/hypertext/weiser/UbiCACM.html>
These computers serve many functions as people come in and out of the rooms.
The people themselves could be tracked by active badges (based on infrared
sensors) or other devices, and email could be forwarded automatically to
wherever the person is.
Other scenarios presented in the article include the coffee starting at your request
when the alarm wakes you, seeing electronic trails left by people passing
through the neighborhood, and automatically transmitting a quote from a
newspaper to the office with the swipe of a pen over the newspaper.
Not only will developments in ubiquitous computing open up new channels for
electronic commerce, but they also have the potential to have a significant impact
on electronic commerce business models. With the closer integration of the
network with a users environment it is possible to envisage many new and
innovative business applications, but as yet it is not clear what these will be.
With these definitions and examples, we have an idea of what ubiquitous
computing is, and what it hopes to achieve. Rather than attempting to predict the
long-term future for the ubiquitous computing philosophy, the next section
investigates the latest developments in the practical application of ubiquitous
computing concepts, through home networking.
Home networking
The arrival of all the new Net-ready devices will fuel rapid growth in home
networking. Technologies such as the HomePNA (Home Phoneline Networking
Association) 2.0 standard (which allows 10-Mbps connections over existing
telephone wiring), the 802.11b 11-Mbps wireless LAN standard, and the
increasingly pervasive, high-speed, always-on connections of DSL and cable have
provided the foundation to build upon.
As a result, the Yankee Group predicts that home networks will mushroom from
some 650,000 in existence today to more than 10 million by 2003. As Malaysia
constructs new residential buildings, integration of cabling to support broadband
network services is already a reality. As home networking technologies become
more standardized, there is no doubt that these technologies will be increasingly
integrated into new buildings.
Wearable computers
Some inventors and other theorists not only believe you could wear a computer;
they believe there is no reason why you should not. Assuming you remembered
to wear it, a wearable computer would always be available.
Some wearable computers are basically desktop or notebook computers that have
been scaled down for body wear. Others employ brand new technology, and
both general and special purposes are envisioned.
Among the challenges for making wearable computers a reality are:

how to minimize their weight and bulkiness
how and where to locate the display
what kind of data entry device to provide.
These are the issues that are surrounding the development of wearable
computers, and commercial products are beginning to emerge onto the consumer
market slowly, as it has been difficult to overcome all these inhibitors.
Some of the applications envisioned for wearable computers include:
Augmented memory, a concept originated by Thad Starner and being

developed by Bradley Rhodes at the MIT Media Lab, in which as you enter a
room, your wearable computer could sense the people present and remind
you of their names or personal history, or a scheduler could whisper the time
of an important meeting in your ear, or a remembrance agent could look for
related documents by observing the words you were typing.
Immediate access to important data for anyone whose occupation requires

mobility, such as real estate agents, rural doctors, fire and police
professionals, lawyers in courtrooms, military personnel, stock brokers, and
many others.
The ability to take notes immediately for example, for reporters,

geologists, botanists, vendor show representatives, and field service repair
personnel.
A major interest in computers you can wear has grown out of the ubiquitous
computing philosophy, gathering its own momentum and its own particular
goals. In the explanation of what a wearable is, the MIT Wearables Group
(<http://www.media.mit.edu/wearables/>) suggests:
A persons computer should be worn, much as eyeglasses or clothing

are worn, and interact with the user based on the context of the situation.
With heads-up displays, unobtrusive input devices, personal wireless
local area networks, and a host of other context sensing and
communication tools, the wearable computer can act as an intelligent
assistant, whether it be through a Remembrance Agent, augmented
reality, or intellectual collectives.
This seems even more like science fiction than ubiquitous computing, but the
applications do seem practical and it is not until they are tested with consumers
that one can really assess how well they work to meet user needs.
As this is an emerging and rapidly changing market, it is difficult to provide
reliable links to specific products online.
Wearable computer product options and users will increase as new products
come to the market, but it is difficult at this stage to determine how electronic
commerce will be enabled through wearable computers. It is certain that ways
will be implemented though.
Wearable computing seems perhaps less intrusive than the invisible computers
of ubiquitous computing, for we decide to wear them or not. With ubiquitous
computing, we can be tracked, among other things, albeit for helpful purposes.
However, the same capabilities can be used for less honourable purposes, which
raises major concerns about ubiquitous computing and networked wearables.
IP multicast technology
You have seen in a number of instances in this topic how accessing information
and interactive communications are essential for conducting e-commerce.
Effective information retrieving technologies are therefore crucial for
e-commerce. IP multicast technology is an emerging network technology that can
greatly improve the efficiency of providing such information. Youll be reading a
concise article that describes some of the networking implications of multicasting
in e-commerce in this section.
This article should help you to:
describe different categories of service provided by e-commerce;
explain the advantages of the content aggregation and dissemination model;
briefly describe multicast technology; and
illustrate the challenges in achieving pervasive multicast usage.
The final section of the article sets out a case study in which multicast technology
was deployed as part of a successful e-commerce system in use today.
READING 7.6
Read the attached article, Network implications of multicast in
electronic
commerce,
which
is
extracted
from
IEEE
Communications Magazine, September 1999, pages 7882.
This topic has introduced you to electronic commerce on the Internet and the
technologies that are affecting the future.
You have seen that there are no winning business models on the Internet that
will ensure success, but that a good combination of business models can result in
innovative and successful electronic commerce operations.
Many of the factors inhibiting and driving the adoption of electronic commerce
in organizations are related to the rapid development of new technology and the
potential opportunities of networking. You saw how inhibitors such as
interoperability with legacy systems are being overcome by the application of
platform independent technologies, such as XML. Overall, many of the inhibitors
to the adoption of electronic commerce are already being addressed, but it takes
time to implement the infrastructure that is necessary to support electronic
commerce activity.
The last section highlighted the emerging trends in the use of technology that
will enable electronic commerce to grow through new access devices in the near
future.
Overall, the message is that electronic commerce is experiencing yet another
growth phase, as the next level of infrastructure for secure transactions is set in
place globally. The forecasts indicate that there will be no slowdown in the
growth of electronic commerce over the next few years and we can expect to see
many changes, not only in the technologies that are used, but also in the effect
philosophies such as ubiquitous computing may have on our daily lives.
FURTHER REFERENCES
The resources on this page are provided to support you in studying the topics in
this topic in more detail.
XML resources
The significance of XML has been highlighted in the topic. These resources
provide pointers to further sources of information on the technical application of
XML.
XML Zone
<http://www.xml-zone.com/>
XML.org
<http://www.xml.org/>
The XML Cover Pages
<http://www.oasis-open.org/cover/sgml-xml.html>
Further resources and links related to ubiquitous computing can be found on
Mark Weisers personal website.
<http://www.ubiq.com/hypertext/weiser/UbiHome.html>
In particular, the paper linked below was significant in promoting the concept of
ubiquitous computing in recent years.
Weiser, M and Seely, B (1996) The coming age of calm technology,
Xerox PARC.
<http://www.ubiq.com/hypertext/weiser/acmfuture2endnote.htm>
SUGGESTED FEEDBACK ON ACTIVITIES

Activity 7.2
Which of the generic business models does this site integrate and which do you
think is the dominant model adopted?
As discussed, Launch.com is a hybrid player; that is it operates across B2C and
C2C electronic commerce dimensions. It clearly does not conform to a single
generic business model, but rather uses elements from a number of the models
discussed in the Rappa reading, specifically:
Advertising model
Merchant model
Affiliate model
Community model
It will be useful to review these generic business models again and consider to
what extent each model is integrated at Launch.com. Referring to the Rappa
reading, the following generic business models are the ones that would seem the
most relevant.
Advertising model
This model is an extension of the traditional media broadcasting model, whereby
advertising messages are mixed in with the content and services provided by the
website. Launch.com uses banner ads in this way throughout the site. These
banner ads promote a variety of organizations and services, but in general seem
to focus on a younger and more musically inclined market.
Current advertisers include CBS Sports, Right Guard, Mars Music, UGO.com,
The Army and various musical artists. Music related services offered by
advertisers include concert ticketing, musical instrument merchandising, music
merchandising and competitions to win music-related prizes.
Referring to the Rappa reading, the site uses a combination of the personalization
and specialist portal advertising models, and because usage is without charge,
the free model is also apparent. The personalization model features the ability for
the consumer to customize, or in this case influence content and supports the
specialist model in that the target user base is reasonably well defined. This
feature would be significant in attracting advertisers that wish to target a specific
consumer group.
Merchant model
This model is based on the classical perception of wholesalers and retailers
providing goods and services. It is possible to purchase a number of products
from Launch.com including music, movies, games, used items, tickets and digital
downloads. It is interesting to note that the Launch.com retail services are offered
through a third party vendor (checkout.com).
Launch.com is apparently a virtual merchant in that it does not have a bricksand-mortar storefront, and because the site deals with both conventional and
Web-specific products it cannot be considered a true bit vendor.
Community model
This model is based on user loyalty following a high investment in time and
emotion in the site. A user may be a regular contributor of content and/or money
and the model provides opportunities for advertising, infomediary or specialized
portal opportunities.
This model is reflected in the LAUNCHcast broadcast service offered by
Launch.com. While users do not contribute content in the traditional sense, they
do have a significant influence over the content that is broadcast through their
station and other stations. The LAUNCHcast user certainly makes an investment
in time and emotion by listening to tracks and rating them as they see fit, and it is
probable that this feature provides the primary mechanism for building user
loyalty. As discussed under the advertising model, specialized portal
opportunities are utilized at Launch.com and it is the community aspect of the
site that enables this.
Affiliate model
This model offers financial incentives to affiliated partner sites via purchasepoint click-through to the merchant. Launch.com utilizes this model through its
underground initiative a pay-per-click service whereby the affiliate site
currently earns $0.02 per hit. A variation adopted by Launch.com is the use of a
user title dependent upon the number of click-throughs. This feature would
further influence some users to promote Launch.com, by enhancing the users
profile when interacting with the Launch.com community.
In conclusion, the Launch.com website can be seen as an implementation of a
number of different and yet complementary generic business models. The
community model is perhaps the most dominant for Launch.com, as it enables an
innovative medium through which the user can both influence content and
interact with others.
The community model provides the opportunity for the specialist portal
advertising model to operate and would significantly affect user loyalty through
the investment of time required. Although the merchant model and the affiliate
model are also utilized, they are both of less significance than the community
model, the model really setting the tone for the whole website.
Activity 7.3
What do you see as the main advantage of using an XML based website
presentation?
The ability to separate content and the way it is displayed is the main advantage
of XML. Rather than a website having a single set of static pages to present
content, XML provides the opportunity to present the same content in a number
of different ways.
This allows the content to be updated and presented without the need to change
individual HTML page files. XML therefore provides specific advantages to
website presenters in the way that content is described, stored and presented
over the Web.
What difference does using XML make for the users of a website?
Although the pages look exactly the same in each of the three illustrations, the
separation of content and how it is displayed means that the content can be made
accessible by any platform.
The significance of this may not be obvious at first, but consider the fact that Web
content will increasingly be accessed in new ways, such as via dedicated Internet
appliances.

Topic 7 E Commerce in Current Trend

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Topic 7 E Commerce in Current Trend

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Topic X E-Commerce

Outline definitions and dimensions of electronic commerce today

Outline generic business models for electronic commerce, and

Discuss and evaluate how Internet technologies and applications

Outline emerging electronic commerce enabling technologies and

This topic begins by offering definitions of electronic commerce, followed by an

180 X TOPIC 7 E-COMMERCE

Internet enabled devices

Begin by reviewing the objectives for this topic.

THE AGE OF ELECTRONIC COMMERCE

What is electronic commerce?

TOPIC 7 E-COMMERCE W 181

Business America, in an article entitled Defying definition, offers this definition

Dimensions of electronic commerce

182 X TOPIC 7 E-COMMERCE

Figure 7.1: Electronic commerce and broader Internet applications

The two shaded areas, business-to-business and business-to-consumer, have

TOPIC 7 E-COMMERCE W 183

Figure 7.2: Dimensions of online commerce

184 X TOPIC 7 E-COMMERCE

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

TOPIC 7 E-COMMERCE W 185

Electronic commerce business models

Do you agree with Rappas definition of an electronic commerce business model?

186 X TOPIC 7 E-COMMERCE

the organization as a consumer for example, in areas such as

the organization as a provider of electronic commerce resources

Go to Reading 7.1 again and review the short overviews at the

Begin by reviewing your organizations current electronic

How might these generic business models be used by your own

What combination of the generic models might be more

Why do think it is important to combine the models to suit your

TOPIC 7 E-COMMERCE W 187

188 X TOPIC 7 E-COMMERCE

TOPIC 7 E-COMMERCE W 189

There is detailed feedback on this question at the end of the topic.

Could Launch.com benefit from including features offered by

Would these opportunities be improved if Launch.com were made

Remember that this is intended as an opportunity to interact with your

ELECTRONIC COMMERCE DRIVERS AND

190 X TOPIC 7 E-COMMERCE

Begin by exploring the megatrends in the electronic commerce business

Barriers and inhibitors to electronic commerce

Culture [problems changing corporate culture]

Interoperability between e-commerce applications and with legacy systems

TOPIC 7 E-COMMERCE W 191

User authentication and lack of public key infrastructure

Lack of knowledge or qualified personnel

Interoperability with eCommerce sites of complementary companies

Trust and risk

International access and trade barriers

Global Top 10 Barriers & Inhibitors 1999: Business-to-Consumer eCommerce

Security and encryption

Ability to make and receive payments

User authentication and lack of public key infrastructure

Lack of knowledge or qualified personnel

Customers cant find me

Lack of knowledge or qualified personnel

192 X TOPIC 7 E-COMMERCE

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

TOPIC 7 E-COMMERCE W 193

Technology trends transforming business

Section I: E-Business platforms and applications

Section III: Payment technologies