CH2

 

Case Study 1

1.      Compare Pandora’s original business model with its current business model. Whats the difference between “free” and “freemium” revenue models?

Originally, they offered free music for a limited amount of time and then asked users to start paying the fee to continue using it. This doesn’t work if the user likes your product but not enough to pay for it. So instead they now use freemium, where it is free for all users but if you want the premium service, which has fewer limits on the user, you can pay them.

2.      What is the consumer value proposition that Pandora offers?

When a customer pays the fee they see that they get fewer usage limits, no advertisements, higher quality streaming music and a desktop app.

3.      Why did MailChimp ultimately succeed with a freemium model but Ning did not?

MailChimp succeeded because they just gave away the basics to entice the members to subscribe. They also believed that their free clients E-Mail list would grow and in turn the client that used the free version would pay for the enhanced product.

4.      What’s the most important consideration when considering a freemium revenue model?

A freemuim business model only makes sense to a company that has very low marginal cost. The profit maximizing businesses would recognize that they have to offer more to paying customers vs. those using the free product.

 

Projects

 

1.      Select an e-commerce company. Visit its Web site and describe its business model based on the information you find there. Identify its customer value proposition, its revenue model, the market space it operates in, who its main competitors are, any comparative advantages you believe the company possesses and what its market strategy appears to be. Also try to locate information about the company’s management team and organizational structure. (Check for a page labeled “the Company,”“About Us,” or something similar).

Petsmart is a B2C e-tailer. Its main customer value proposition is that it offers the broadest assortment of pet supplies at the lowest prices. Petsmart uses a sales revenue model: it operates in the specialty retail market space, and focuses on the pet supplies niche. Petsmart is the leading online pet supply company; many of its original online competitors, such as Pets.com and Petstore.com, have gone out of business. Its main competitors appear to be local pet stores and pet supply catalogs and Petsmart’s main comparative advantage is its brand name. Petsmart appears to be using a “bricks-and-clicks” market strategy: it started as a traditional pet supplies retailer with over 500 physical “superstores” and leveraged its brand to the online environment. Its marketing strategies include: pricing (low prices);providing interesting content and community on its Web site for its target market; affiliate marketing; and email marketing through free email newsletters. Information about Petsmart’s management team and organizational structure is available if the student follows the “Investor Relations” link from its “About Us” page.

 

2.       Examine the experience of shopping on the Web versus shopping in a traditional environment. Imagine that you have decided to purchase a digital camera (or any other item of your choosing). First, shop for the camera in a traditional manner. Describe how you would do so (for example, how you would gather the necessary information you would need to choose a particular item, what stores you would visit, how long it would take, prices etc.). Next, shop for the item on the Web. Compare and contrast your experiences. What were the advantages and disadvantages of each? Which did you prefer and why?

I shopped for a laptop. Shopping traditionally is a lot more legwork the shopping online. You have to drive from store to store, compare prices and capabilities and often deal with a sales associate that you don’t necessarily like. In fact a pushy sales associate can make the entire experience unbearable. On the other hand this gives you the chance to actually try out the product and see it in person.

Shopping online is convenient because you don’t have to leave the house and you can easily compare prices side by side by opening different widows. You’re also more likely to find deals online. However you are also trusting that the person on the other end isn’t trying to scam you with fake photos and descriptions. Also it’s hard to know you’ll really like the product without trying it out first.

 

Case Study 2

 

1.      Why does Akamai need to geographically disperse its servers to deliver its customers’ Webcontent?

Akamai needed to geographically disperse its server to deliver its customers web content as today’s internet have been facing many delays. The internet traffic in today’s broadband cable and DSL industry, the exceeding the capacity of routers at local ISP’s are not capable of holding up to the traffic that it receives. Akamai came up with a solution of edge networking by placing copies of content close to the user so that the content only have to move across country once and can be delivered to users from local servers. With Akamai storing copies of web content at different locations around the internet it can be easily retrieved in the form of nearby copy, making web pages load faster.

2.      If you wanted to deliver software content over the Internet, would you sign up for Akamai’s service? What alternatives exist?
Depending on where the traffic to my website comes from I would certainly make use of Akamai's service. If there is plenty of global attraction then I believe it's important to give them fast delivery times on your content. Those few seconds of faster content can make the difference between a loyal and passing client. The case gives no real alternative and I can't come up with one myself to be honest. Unless off course you wish to simply have a web page that loads much slower than your competitors. Perhaps the current success of cloud computing will bring some competitors to the market in which Akamai operates. However if most traffic comes from places near the server that I use I wouldn't make use of their service simply because the speed would already be acceptable. But I believe that any widespread e-service or internet content provider should make use of either Akamai's or a similar service.

3.      Do you think Internet users should be charged based on the amount of bandwidth they consume, or on a tiered plan where users would pay in rough proportion to their usage?
You could do it this way, but then you're talking about the issue that North America is having now with the concept of net neutrality. In this case companies could pay more for a better internet service and the ability to get a larger portion of internet usage. However this way ISP's could simply give these companies the highest speeds and leave the normal consumer with a much more sluggish experience unless they want to pay top dollar to their ISP for their internet connection. I believe equality is an important concept here where everybody should get the same speeds no matter what their usage is. Because once you start with paying for your bandwidth there is no knowing how far the ISP's will take it in augmenting their prices. For big business this could mean that they can offer amazingly fast content availability when using their service. But the run of the mill consumer would be facing slower connection and usage speeds for all other sites simply because the augmented ISP costs could ramp up insanely fast.

 

Projects

 

1.      Select two countries and prepare a short report describing their basic Internet infrastructure. Are they public or commercial? How and where do they connect to the backbones withing the United States?

In China public internet services are usually provided by provincial telecoms companies, which are sometimes traded between networks. They also have ten access points to the world’s internet backbone including points in Beijing, Shanghai and Guangzhou.

In Brazil most of the infrastructure for the internet is privately owned and utilizes fiber optic cables. It also currently has at least 25 IXP’s installed in the country.

2.      Investigate the Internet of Things. Select one example and describe what it is and how it works

A good definition is the network o physical devices, vehicles, buildings and other items embedded with electronics, software, sensors, and network connectivity that enables these objects to collect and exchange data.

One example is a TraKr device that is a small chip tag that can be used to track your belongings via an app on your cellphone.