Course Coverage
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The Changes in the New Economics
Transformation of Business Practices
The Driving Forces of New Economy
The Market Structure of New Economy
The Nature of E-commerce
Internet Business Model
E-Marketing
E-Banking
Internet Auction
B2B business model
Internet IPR
Blog & Web 2.0
The Change in the New
Economy
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What does the new economy mean?
 1980s, the service industry
 1990s, the industries of technology base, fast
growth, and low inflation rate
The birthday of new economy—1995/08/09
 The memorial day of Netscape IPO
GNP growth rate—3.0% vs. 4.3%(non-agriculture
sector: 1.,7% vs. 2.8%)
Unemployment rate—6.6% vs. 4.8%
Inflation rate—3.3% vs. 2.3%
Four Dimensions of New
Economy
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Visible dimension
Borderless dimension
Cyber dimension
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Digital technological convergence is not
the sufficient condition.
Dimension of high multiples
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The scale of arbitrage & investment
High interrelatedness among above fours
Inter-networking
Open Network
 Infrastructure
 Protocol
 Open Access
 Two-way communications
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Run into the New Economy
Information flow across territories
 Customers lead producers
 Create paradise against paradigm—
challenge the intuition, abandon the
successful burden, new business innovation
 Evolutionary path—invisible loyalty assets
 Pay attention to personal identity
 Infrastructural facilitators—transportation,
telecommunication, finance
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Three Common Platforms
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Non-proprietary platform
 open access, exchangeability, transparency
 Scope and leveragability derived from compatibility
 Spontaneous extended order
English language penetrates
 70% data stored by English, 80% information
communicated by English
US $ currency—a trusty media for valuation
 US stock markets—free areas of international trade;
the attractor and buffer controller of global capitals
The Prosperity of New Economy
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Stock market
Venture capitals/capitalists
IPO (initial public offering) options
Flexibility of labor market
Operability of M & A
High speed of Technological changes
Continuous competition and capital investment
Technology marries finance
From the era of telephone into of media
Irrational exuberance?
 High risk, high return, high expectation
 Technological transition cycle
Is There a New Economy?
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Our economy is changing everyday, and in the sense
it is always “new.”
The deeper question is whether there has been a
profound and fundamental alteration in the way our
economy works that creates discontinuity from the
past. (NO! answered by Alan Greenspan)
The effects of human psychology
Expectation, confidence and commitment of the future
guide human actions now
In the period of prosperity—a virtuous cycle
In the period of recession—a vicious cycle
Is There a New Economy?
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The productivity of employee had increased
continuously.
The inflation rate and unemployment rate had
fallen for an unexpected period
However, a harbinger of a new economy or
just a hyped-up version of the old?
This question will be answered only with the
inexorable passage of time.
Migration from Marketplace to
Marketspace
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E-business revolution
 From data collection, transaction
arrangement, and relation delineation
 To leveraging influence, insight,
imagination and fees
 From bricks-and-mortar to click-andmortar
Clicks & bricks
Internet extension
 Merrill Lynch, Charles Schwab, Toys ‘R’
Us, Wal-Mart, B&N bookstore, etc.
 Amazon + Toys ‘R’ Us—combination into
the whole product, & complete service
 Integration between virtual clicks and
supporting bricks
 Dinners by parcel post?
 E.g., Webvan, HomeGrocer
 Survivability? Sustainability?
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Defining E-business
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Marketing, buying, selling, servicing, and
paying for products, services, and information
across (nonproprietary) network linkage an
enterprise and its prospects, customers,
agents, suppliers, competitors, allies, and
complementors.
Broadly encompassing the interactions of
B2B, B2C, C2C, and B2E, etc.
Motivations for e-Business
Evolution
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Huge growth in e-business
 Easy
to access to Internet
 Non-proprietary standard—TCP/IP, WWW/HTML,
etc.
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Big potential
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OECD, US$ 1 trillion after 2005 for EC
 By IDC, US$ 774 billion after 2002 for EC
 By III of Taiwan, NT$51.03 billion after 2005 for
Taiwan B2C scale; NT$6217.8 billion for B2B
scale
Growth in Dot-Coms
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Valuation in May 2000 / IPO
 E*trade—6,124%
 eBay—34,333%
 Yahoo!—228,667%
 Preview Travel—2,133%
 iVillage—267%
 Amazon—35,600%
Transition into dot-com
 Reuters—55% within a month
2004 Taiwan E-Commerce Profile
2005 Taiwan E-Commerce Profile
Some Interesting Phenomena
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50% revenue from investment of Internet
Infrastructure and application enabler of Internet
Much attention on dis-intermediation, however, 20%
revenue flows into new emergent intermediaries,
such as intelligent search agents, specialist agents
Most attention on B2C, however, most dollar on B2B
1/3 revenue of the new economy captured by ecommerce, while 2/3 of e-commerce captured by
Internet companies invested on intermediation
enablers
Some Interesting Phenomena
90% of Fortune 500 firms have Web
sites, but 5% of those sites make profits
 Most web sites of Internet companies
fail to attract customers continuously
 Electronic-oriented, networked firm is
just the necessary condition for
survival
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Distorted Market Signals
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Attracting the base of customers by heavy discounts
rather than true costs
Click-through is not the same as cash
Booming by the curiosity rather than utility
Revenue inflow from stocks rather prices
Enjoying subsidized inputs
Masking true costs but transferring them to
shareholders
Understatement of the need of capital for asset
building
The Illusion of Prosperity
Dot-Coms multiplied so rapidly because of
 Every low barriers to entry
 Raising capital without having to
demonstrate performance and viability.
 Just going through a period of transition
 Return to the fundamentals eventually
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A Return to Fundamentals
(by Michael Porter)
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Industry structure
 Five/six
forces analysis
 Competitors/complementarities
 Customers
 Suppliers
 Substitutes
 Entrants
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Sustainable competitive advantage
Operational effectiveness
 Strategic positioning
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Strategic Imperatives for eBusiness
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For dot-coms
 Benefiting from meeting/creating the customer
value—a valuable value-proposition
 Real differentiation
 Establishing proprietary assets
 Segmentation and trade-off between niches
For incumbents
 Existed valuable assets incorporated with
Internet technology for distinctiveness
The Waves of E-business
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Pioneers—Cisco, Netscape, Dell, Ernst & Young, Quicken,
etc.
The second wave
 Realistic operation, and valuation
 One or two dot-coms gain success in each sector, while
the rest struggle to survive
 Best integration between place and space
 Distinctions between B2B, B2C, C2C, etc., disappear
 Combine mobility, AAA (anything, anytime, anywhere)
 Basic principles of economics still be alive, but the
operation context had been changed
 Only user paranoids survive!