Impact of Internet N Business

The Impact of the Internet on Business
Current Uses of the Internet
The Internet has a wide variety of uses. It provides an excellent means for disseminating information and communicating with other people in all regions of the world. While the greatest use of the Internet has been sharing information, other sources of use are rapidly developing. For instance, chat rooms, a space where people can go to discuss an assortment of issues, and Internet Commerce, which connects buyers and sellers online. The following are other examples of current Internet uses:
1. Technical Papers
Originally, the Internet was only used by the government and universities. Research scientists used the Internet to communicate with other scientists at different labs and to access powerful computer systems at distant computing facilities. Scientists also shared the results of their work in technical papers stored locally on their computer system in ftp sites. Researchers from other facilities used the Internet to access the ftp directory and obtain these technical papers. Examples of research sites are NASA and NASA AMES.
2. Share Company Information
Commercial companies are now using the Web for many purposes. One of the first ways that commercial companies used the Web was to share information with their employees. Sterling Software's Web page informs employees about such things as training schedules and C++ Guidelines. There is also some information which is company private and access is restricted to company employees only. Another company example is Sun Microsystems which similarily contains general information about the Sun Microsystems company.
3. Product Information
One of the ways businesses share information is to present their product information on a Web page. Some examples are: Cray Research, Sun Microsystems, Hewlet Packard, and GM's Pontiac Site. The Web provides an easy and efficient way for companies to distribute product information to their current and potential customers.
4. Advertising
Along these lines, companies are beginning to actually advertise online. Some examples of different ways to advertise online are Netscape's Ad Page. Netscape has a list of advertising companies. They also use a banner for advertisements on their Yahoo Web Page. Starware similarly uses banner advertisement. These advertisements are created in the established advertising model where the advertising is positioned between rather than within editorial items. Another type of advertising focuses on entertaining the customers and keeping them at the companies' site for a longer time period. Some of the more interesting of these are: * MCI with a soap opera/ detective story. * Ragu Soap Opera, Italian art, prizes, etc. * Stoli Puzzles, submit drink receipes, prizes, etc. * Miller Genuine Draft Discussions on various topics such as music scene in Austin.
The advantages of each method of advertising will be discussed in more detail in the section on strategic risks and target markets.
5. Business & Commerce on the Net
Commercial use restrictions of the Internet were lifted in 1991. This has caused an explosion of commercial use. More information about business on the Internet can be found at the Commerce Net. This site has information such as the projected growth of advertising on the Internet and online services. Commercial Services on the Net has a list of various businesses on the Internet. They are many unusual businesses listed here such that you begin to wonder if they are legitimate businesses. This topic is discussed in more detail in the section on risks and consumer confidence. Business and Commerce provides consumer product information. The Federal Trade Commission is also quite concerned about legal business on the Internet.
WWW users are clearly upscale, professional, and well educated compared with the population as a whole. For example, from CommerceNet's Survey (CommerceNet is a not for-profit 501c(6) mutual benefit corporation which is conducting the first large-scale market trial of technologies and business processes to support electronic commerce via the Internet) as of 10/30/95 : * 25% of WWW users earn household income of more than $80,000 whereas only 10% of the total US and Canadian population has that level of income. * 50% of WWW users consider themselves to be in professional or managerial occupations. In contrast, 27% of the total US and Canadian population categorize themselves to have such positions. * 64% of WWW users have at least college degrees while the US and Canadian national level is 29%.
CommerceNet's study also found that there is a sizable base of Internet Users in the US and Canada. With 24 million Internet users (16 years of age or older) and 18 million WWW users (16 years of age or older), WWW users are a key target for business applications. Approximately 2.5 million people have made purchases using the WWW. The Internet is, however, heavily skewed to males in terms of both usage and users. Access through work is also an important factor for both the Internet and online services such as America Online and CompuServe. For an example of the size of the market, the total Internet usage exceeds online services and is approximately equivalent to playback of rented videotapes.
6. Magazines
Magazines are starting to realize that they can attract customers online. Examples of magazines now published online are Outside, Economist, and Business Week. These magazines are still published in hard copy, but they are now also available online. Many of these publications are available free sometimes because of the time delay (i.e. publications online are past issues) or usually to draw in subscribers for a free initial trial period. Some of these publications may remain free online if advertisers pay for the publications with their advertisement banners.
7. Newspapers
Some newspapers are beginning to publish online. The San Jose Mercury News is a full newspaper online, while the Seattle Times offers just classified ads and educational information. The Dow Jones Wall Street Journal publishes its front page online with highlighted links from the front page to complete stories. The Journal also provides links to briefing books, which provide financial information on the company, stock performance, and recent articles and press releases. For an example of a briefing book see, Netscape Briefing Book. This is all free by the Wall Street Journal during the trial period which should last until mid 1996.
8. Employment Ads
Companies are also beginning to list their employment ads online to attract talented people who they might not have been able to reach by the more tradition method of advertising in local papers. Sun Microsystems provides a list of job openings on the Internet. Interested parties can submit a resume or call to schedule an interview, which saves time for everyone involved. Universities can also help their students find jobs more easily by using job listings on the Internet. The University of Washington has a job listing site. Local papers can also make it easier for job searchers by creating a database search feature. The job searchers can select the type of jobs that they are interested in and the search will return a list of all the matching job openings. San Jose Mercury News is a good example of this approach. Country Investment Information
Thinking about investing in a particular country? Information on countries can be found online. For example, check out the graphical information (GDP, inflation, direct foreign investment, etc.) on Indonesia.
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While AOL users are currently accessing "Chat Rooms" to communicate with other people on the Internet, they are restricted to text-based communication or possibly an icon as their identity online. CUCME from Carneige Mellon provides a means for people to actually see other people online. However, network speed is once again a limiting factor. If a user is not directly connected to the Internet (most connections are via modem), then the image is extremely slow. This application will become more popular with increased network connections.
Strategic Risks Associated with Business Uses of the Internet
1. Targeting right market segments.
It is important for advertisers to spend their advertisement dollars wisely. They can achieve this by using appropriate methods of advertising and targeting the right market segments. Two different types of advertising are entertainment ads and traditional advertising. Entertainment ads focus on entertaining a customer whereas traditional advertising is more direct and usually positioned between rather than within editorial items. When the entertainment ads work well, they can be quite successful in drawing customers to their site; however, it is very easy for this type of ad to flop resulting in no one returning to visit the advertisement site after they see it once. Traditional advertising has better readership. It can also be used well in targeting the right market segments. For instance, the ESPN Sports page would be a good site to place ads by Gatorade and Nike. Sports minded people that might be interested in these products would be likely to access these pages. A good reference for researching this topic further is at Advertising Age.
2. Security
One of the main factors holding back businesses' progress on the Internet, is the issue of security. Customers do not feel confident sending their credit card numbers over the Internet. Computer hackers can grab this information off the Internet if it is not encrypted. Netscape and several other companies are working on encryption methods. Strong encryption algorithms and public education in the use of the Internet should increase the number of online transactions. After all, getting your credit card number stolen in every day transactions is easier. In addition, securing private company information and enforcing copyright issues still need to be resolved before the business community really takes advantage of Internet transactions. There are, however, currently some methods within Netscape for placing the information online yet restricting it to only certain people such as company employees.
3. Consumer confidence
Consumer confidence is essential for conducting business online. Although related to security, consumer confidence also deals with feeling confident about doing business online. For instance, can consumers believe that a company is legitimate if it is on the Internet, or could it be some kind of boiler room operation? Also, companies must be able to substantiate their advertising claims if they are published online. These are some of the issues that concern the Federal Trade Commission, as well as the future of Internet commerce. After all, if consumer confidence is low, businesses will not succeed.
4. Speed of network access
The speed of network access is a risk for businesses. If businesses spend a lot of money for fast network connections and design their sites with this in mind yet customers have lower speed connections, this may result in less consumers accessing their site. Less consumers accessing their site most likely results in lower profits which is in addition to the extra cost of the faster network connection. On the other hand, if the company designed for slower access yet customers have faster access, they could still lose out in profits.
5. Picking Wrong Industry Standards
Along these lines of picking industry standards, companies must also be sure that the Web Browser that they develop for is the standard. Otherwise, some of the features that they are using to highlight their site may not work. Currently the defacto standard is Netscape. There also needs to be a standard language that adds high quality features such as animation, so that software applications written for the Internet will run on all the different types of architectures customers may have. Major computer industry players have backed JAVA by Sun Microsystems. So while some areas are becoming standardized, companies must be alert to industry changes to avoid becoming obsolete in hardware, software, and data communications.
Conclusion
The Internet is a dynamic environment. While there are many risks involved with change, there can be many benefits. This paper has given some ideas on possible benefits and possible risks. Now it is up to each business to decide if the potential benefits outweigh the potential risks. Hopefully, we'll see you on the web