Chapter 1 Enhanced Version Overview of E-Commerce Framework Exhibits/Tables October 21, 2000.

Chapter 1 Enhanced Version

Overview of E-Commerce Framework

Exhibits/Tables

October 21, 2000

CAS-COD-Prez-Date-CTL

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Table 1-1: Four Categories of e-Commerce

B2B

B2C

C2B

C2CConsumers

Business

And selling to...

Business originating from...

Business Consumers


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Supporting Slide 1-A:

Point Counterpoint: Valuations - Do they or don’t they make sense?

Point — CounterpointPoint — Counterpoint

Valuations Make SenseValuations Make Sense Valuations Do Not Make SenseValuations Do Not Make Sense

After the April 2000 NASDAQ slump, there has been an increased focus on path to profitability and revenue

– Lines are beginning to get drawn between winners and losers

Techniques such as real options valuation yield observed valuations

Investors are placing hundreds of billions of their money based on valuations

Network economics and information economics will combine to create highly profitable companies that dominate their industries

There is a high level of uncertainty leading to wide fluctuations

– NASDAQ fell by 30% in April 2000 Many companies do not demonstrate

profits for a long period of time, making it hard to value them

There is an inconsistency between assumptions made in the valuation of on-line and off-line companies

– On-line companies tend to assume high market share growth and not as severe impact of competition

There is often a “bending” of the accounting rules by on-line companies

Valuations are based on the number of customers and make the assumption that the economics of “monetizing” them will remain favorable

Many stocks tend to be moved by momentum


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Exhibit 1-1: Growth in Number of Internet Users

U.S. Online Population Forecasts by Researcher

Population (Millions)


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Supporting Slide 1-B

Growth in Number of Internet Users

U.S. Online Population Forecasts by Researcher

Population (Millions)

1999 2000 2001 2002 2003

CommerceNet /Nielsen

83.0 102.4 N/A N/A N/A

Cyber Dialogue 77.9 90.2 103.0 115.9 130.2

Cyber Dialogue(Aggressive)

74.5 83.0 90.5 99.1 109.4

Cyber Dialogue(Conservative)

74.5 83.0 90.5 99.1 109.4

InternationalData Corp.

82.0 109.0 131.0 154.0 179.0

Jupiter / NFO 100.1 115.6 129.8 144.2 156.7


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0

200

400

600

800

1000

1200

1999 2003

$Bill

ion

s

US World

Exhibit 1-2Business-to-Business e-Commerce Projections

Source: International Data Corporation.


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IDC

U.S. 1999: $50 billion

U.S. 2003: $634 billion

World 1999: $80 billion

World 2003: $1.1 trillion

B-to-B figures are generated bycombining small, medium and

large business as well asgovernment and education.

Includes products and servicespurchased for business end-

use. Counts EDI if the front-enduses a Web gateway (5 percent

to 10 percent of EDI)

Data gathered from the onlinebuyers’ perspective with local

analysts forecasting in 30countries

Supporting Slide 1-C

Business-to-Business E-Commerce Projections, In Millions (1996-2000)


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66,470

134,000

153,000

140,000

600

125

210

500

1 10 100 1,000 10,000 100,000 1,000,000

Forrester

Yankee Group

IDC

eStats

1996

2000

Supporting Slide 1-DBusiness-To-Business E-commerce Projections, In Millions (1996-2000)


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-20

0

20

40

60

80

100

12019

22

1926

1930

1934

1938

1942

1946

1950

1954

1958

1962

1966

1970

1974

1978

1982

1986

1990

1994

1998

E

Internet as Mass Medium — North American Adoption Curves

North American Users /

Households (MM)

* Launch of HBO in 1976 used to estimate the beginning of cable as an entertainment / advertising medium

Radio

TV

Cable CommercialInternet

50 Million Users / Households

Years to Reach50 MM Users

Radio: 38 yearsTV: 13 years Cable*: 10 years

Commercial Internet: 5 years

Exhibit 1-3: Internet Adoption Rates Versus Other Mediums


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Exhibit 1-4: Estimated Savings from e-Commerce


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Exhibit 1-5: Where to Play On-Line and Off-Line

Fulfillment Systems

CustomerInterface

On-line Off-line

Yahoo!

Amazon.com

BN.com

McD

on

ald

s

Eg

gh

e ad


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Exhibit 1-6: Media Convergence to a Digital Platform

Telephone/DSL

Cable

Broadcast Radio & TV

Satellite

Wireless

Print (Newspapers and Magazines)

Television

Radio

Music

Motion Pictures

DigitalConvergence

DigitalConvergence

NetworkInfrastructure

NetworkInfrastructure

MediaInfrastructure

MediaInfrastructure


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Exhibit 1-7: A Framework for Electronic Commerce

Framing the Market

Opportunity

BusinessModel

Implementation

Evaluation:Metrics

and Valuation

Media Infrastructure

Network Infrastructure

e-CommerceStrategy

Market Infrastructure

CustomerInterface

Publics and Politics

Market Communications

and Branding


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Supporting Slide 1-E:

Point Counterpoint: Who will win? Online vs Offline

Point — CounterpointPoint — Counterpoint

On-line Will WinOn-line Will Win Off-line Will WinOff-line Will Win

Off-line companies can’t easily cannibalize their own businesses

Off-line companies stock does not allow them to adequately incentivise key new economy talent

Off-line companies move too slowly Key elements of business (e.g. business

design, strategy, value proposition) are different in the New Economy

“innovator’s Dilemma”: Focusing on current customer needs causes companies to divert focus from new technologies

Market will not tolerate blue chip companies running loss-making businesses

Off-line companies may face a channel conflict

Schwab has become a leading player in the on-line brokerage industry

Companies with established market leadership have key assets such as relationships with customers, suppliers, deep industry knowledge and experienced management

Established companies have deep pockets

Off-line companies have established and trusted brands

Off-line companies can create spin-out businesses with new culture, processes, funding, etc. There have been other technology revolutions

– From 1894 to 1903, there were 20,000 telephone companies that started in the U.S.

Chapter 1 Enhanced Version Overview of E-Commerce Framework Exhibits/Tables October 21, 2000.

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