Frontiers of Electronic Commerce

Frontiers of Electronic Commerce

by Ravi Kalakota, Andrew B. Whinston

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The complete introduction to many facets of electronic commerce; this book makes use of todays technology to solve business communications & computer-intensive business problems. Illustrates the radical developments in areas of electronic cash, secure electronic payments, & funds transfers. Describes the changes taking place in online advertising, real-time promotion


The complete introduction to many facets of electronic commerce; this book makes use of todays technology to solve business communications & computer-intensive business problems. Illustrates the radical developments in areas of electronic cash, secure electronic payments, & funds transfers. Describes the changes taking place in online advertising, real-time promotion & new product introduction. Introduces new technologies such as structurered & compound documents, software agents & mobile computing, networked multimedia databases, firewalls & encryption.

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An introduction to the emerging technology of electronic commerce. Part I details the workings of network infrastructure and discusses consumer and organizational applications of the Internet. Part II overviews the technologies and regulations involved in designing electronic commerce applications, focusing on the World Wide Web. Part III deals with technologies such as software agents, broadband technology, and mobile and cellular networks. For students, investors, executives, managers, and other business professionals. Annotation c. Book News, Inc., Portland, OR (

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DIANE Publishing Company
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Every individual or company that wants to make money and become the next Microsoft needs to understand the market potential, business implications, and technological foundations of electronic commerce. Recently, the CEO of a very large retail organization in Hong Kong asked us, "What is this electronic commerce everybody is talking about? How does it affect my organization's way of doing business? What sort of technical and business skills are needed to be successful?" These questions are not unique to one firm or one industry.

Clearly, companies and consumers are discovering that global networking and other technological innovations are powerful assets if used as competitive weapons in their day-to-day activities. These activities range from being entertained and educated by material on the USENET and World Wide Web to building a business serving customers on the Internet. These activities also permeate organizations where increased demands for the efficient collection, dissemination, and processing of information are evident because of various economic factors--global competition and other market forces--and consumer demands for high service and improved quality. These demands are forcing companies to integrate previously isolated "islands of automation" into coherent weapons.

This book is an introduction to the many facets of electronic commerce and is aimed at any person who wants to understand the changes taking place. It explains what electronic commerce is and what the various business strategies and management issues are, and it describes pertinent technology standards and protocols. The first part of the book is devoted to the networkinfrastructure and the second to business-related issues. In the third part of the book, we explain the key technological ideas that form the bedrock for the applications.

It can be argued that consumers or business professionals are not interested in technology per se but in solutions to their problems. In emerging topics like electronic commerce, however, business and technological issues are becoming increasingly inseparable. To truly understand available solutions and to choose the correct strategy for a given environment and application, there must also be some understanding of the underlying technology. It is also important to understand the implications of technological trends, as they will affect the management qualifications or skills that are needed, the character of jobs that will be created, and the type of high-tech training or credentials needed in the coming years.

It is often difficult to write a book about a fast-moving subject. Describing the past is relatively easy. Predicting the future with reasonable accuracy is possible if the discussion is based on a good understanding of the fundamentals. The real problem with the analysis of the present is that it tends be be out of date, and significant new developments are taking place almost every day in electronic commerce. We have tried to make the description of the present as robust as possible without tieing it too closely to any particular product or development. Our goal is simple: to provide a single source for persons interested in electronic commerce. Articles in magazines and newspapers can give a more up-to-date picture of events, but sometimes there is need for a book to pull everything together, to act as a single source of reference, and to separate the forest, trees, and wood.


This book is written for business professionals--students, investors, executives, developers, managers, and other professionals--seeking an understanding of the fit between electronic commerce technology and business applications. It can also serve as a text or professional reference for educators and business school students.

The style has been tailored to bring out the key points and reach those who feel intimidated by the jargon found in the current literature. The typical reader is assumed to have a background in technology that corresponds to the audience that reads the technology sections in popular newspapers such as the New York Times, Wall Street Journal, or Investor's Business Daily or weekly magazines such as Business Week, Time, or Newsweek. A number of chapters are of more general interest, and some portions of the book necessarily get technical. Readers with a casual interest can safely skip the technical chapters and still enjoy the rest of the book.

We also hope to reach engineers and other technology-oriented individuals, as many of the issues and problems raised are directly related to the design of software for business applications. A clearer understanding of the business issues will result in better system design and implementation.

What You Will Learn

We go beyond merely describing the latest technology; we examine in detail the underlying concepts and show how the pieces fit together in business applications. These applications will give you a practical understanding of how to exploit the synergy (and avoid the pitfalls) of the new technology.

This book covers a lot of ground and caters to diverse individual interests:

  1. For senior executives it lays out the key players--their capabilities and limitations--in the strategic convergence of technology (e.g., telecommunications, computing, and databases) and business (e.g., manufacturing, entertainment, and banking).
  2. For marketing executives it describes the radical changes taking place in advertising, real-time promotion, and new product introduction.
  3. For manufacturing and production executives it describes the implications of changes taking place in EDI and its role in supply chain management and integrated logistics.
  4. For the finance and accounting executive it lays out the developments in the area of electronic currency, secure electronic payments, and remittance, which form the basis for buying or selling products and services in the electronic world.
  5. For IS executives it introduces new technologies (e.g., structured and compound documents, software agents and mobile computing, networked multimedia databases, and security and encryption) that must be mastered to support their companies' entry into the world of electronic commerce.
  6. For entrepreneurs it describes various lucrative niches that are emerging such as interactive catalogs, CD-ROM publications, and targeted on-line newsletters and magazines.

Our examples and discussion unabashedly relate to the current business environment, management practices, systems, and programs. Our aim is to show that, when properly employed, these technologies offer astute managers new options for lowering costs, restructuring work flows, streamlining operations, and redefining their strategic focus. Those who ignore the opportunities, in contrast, will surely sacrifice competitive advantages to their more farsighted rivals.


This book is divided into three parts. Chapters 1 through 5 discuss the network infrastructure. We begin by introducing the concept of electronic commerce and the various types of consumer and organizational applications (Chapter 1). The Information Superhighway (I-way), which serves as the network infrastructure for electronic commerce, is introduced in Chapter 2. We compare and contrast the various network infrastructure alternatives: the various types of on-ramps being built for the Information Superhighway. We also discuss the immediate future and provide guidelines for experimenting with various access methods. The Internet, from its genesis in the 1960s to its rapidly changing configuration today, is then surveyed (Chapter 3), before we walk the potential implementor or user through the existing options for commercial Internet access (Chapter 4). Rounding off the discussion about network infrastructure are network and transaction security issues that concern both the individual consumer or the organization protecting its perimeter (Chapter 5).

Chapters 6 through 15 are a wide-ranging discussion of the business applications of the Information Superhighway and the Technologies, rules, and regulations involved in designing electronic commerce applications. We begin with the architectural framework for electronic commerce and focus on the World Wide Web as a technology infrastructure (Chapter 6). We then look at three broad applications of electronic commerce:

  • Consumer-oriented electronic commerce (Chapter 7) whose implementation requires on-line electronic payment systems (Chapter 8).
  • Inter-organizational electronic commerce (Chapter 9) whose implementation is based on the technology, protocols, and standards related to electronic data interchange (EDI) (Chapter 10).
  • Intra-organizational electronic commerce (Chapter 11), which is implemented on the concepts of corporate digital libraries and data warehouses (Chapter 12).

We then examine the emerging changes in marketing and advertising that have been facilitated by technology (Chapter 13). Chapter 14 discusses the development and implementation of electronic commerce interfaces, namely, interactive catalogs, directories, and information search and retrieval methods. We wrap up this section with an in-depth look at education on demand and issues related to intellectual copyrights (Chapter 15).

The last part of the book deals with the technological building blocks used in the construction of electronic commerce applications: software agents (Chapter 16); the Internet protocol suite with focus on Mobile IP, IP Multicast, and IPng (Chapter 17); and followed by desktop and broadband multimedia (Chapter 18). We take an in-depth look at emerging broadband telecommunications technology (Chapter 19) and mobile and cellular networks (Chapter 20). We conclude with a description of document technology: structured documents (Chapter 21) and active documents (Chapter 22).


Many people deserve our thanks for helping with this book. We are indebted to Susan Kutor who reviewed the manuscript and made innumerable corrections in structure, grammar, and style. We thank our reviewers: Wayne Hathaway, Jack Kessler, Edward Krall, Fred Patterson, Keith Porterfield, and Ting Vogel. We also thank our editors: Tom Stone, Debbie Lafferty, and Juliet Silveri. Acting on all of the comments we received was painful but has made this a better book. Of course, we bear the blame for any errors, not these intrepid readers.

Ravi Kalakota
Andrew Whinston


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