Chapter 10

The Twelve Themes of the New Economy

o Knowledge is everything — from smart clothes to smart roads.
o Digital not analog — email, not post office.
o Virtual means physical things can become virtual — from virtual ballot boxes
to the virtual job.
o Molecularization of old organizations are replaced by dynamic clusters of
individuals.
o Internetworking through clusters networks rather than hierarchies.
o Disintermediation of the middle functions between consumers and producers
are being eliminated through digital networks.
o Convergence Computing, communications, and content industries are
converging to become the leading economic sector.
o Innovation Obsolete your own products. If you don't do it first, your
competitors will... If it isn’t broke, break it before your competitors do.
o Prosumption;

a consumer active in a product's development and production through

customization combining production and consumption.

o Immediacy becomes a key driver — just in time is everything.

o Globalization with transnational systems.
o Discordance issues are rising due to as unprecedented social conflicts.

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 Shift1: From Analog to Digital
• The existing analog signals of the old economy has shifted to the digital
signal of the new economy.
• Digitization not only improves quality and enables interactivity, it provides
the foundation for a whole new world of computer and networked based
applications as well as enabling fundamentally new approaches to find and
manage information
Shift2: From traditional semi-conductor to microprocessor
technology
• High performances processing for the high-performance organization
• Microprocessor has inherently shown better performance than the
traditional semi-conductor technology
• Enables to operate powerful applications in an organization

Shift3: From host to client/server computing

• Network centric computing for the internet worked enterprise

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 • Client/server computing for the dynamic client/customer service
organization
• Apart from the reduction of IT costs using client/server
computing also helps to direct the enterprise to be responsive
• Also, it facilitates to change server structure behind the client
without affecting the client and vice versa

Shift4: From garden path BW to information gateway

New economy is enhanced with broadband communication for the
networked economy
• Many companies are competing for the price of building and
operating the carriage
• Carriage is the physical structure of the highway composed of
networks, software and switching device

Shift5: From dumb access device to information appliance

• TV is the one of the dumbest appliance ranking on the home
appliance
• In new economy, the dumb access device is shifted to information
appliance
• Those information appliances are highly used for different
purpose like: business application, education, entertainment,
home shopping video conferencing
Shift6: From separate data, text, voice and image to
multimedia
• In old economy static media like data, text, voice and image are
communicated independently in an isolated manner
• In new economy, the concept of multimedia has emerged
• With the real-time animation, the users can fully interact with the
moving environment
• Multimedia also enables the genuine interactivity, 3D navigation
and photorealism

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Shift7: From proprietary to open system
• Open system for an open world
• Open system is characterized by interoperability and portability

Shift8: From dumb to intelligent network

• With the emergence of new economy there has been the shift of network
from dumb to intelligent
• Hypermedia, hypertext, hotlinks, knowbots /softbots, etc are the dominant in
network in new economy

Shift9: From craft to object computing

• Rapidly deployable software for the rapidly changing world
• Because of the old approach there is the limit in reusability of the software.
• Thus in new economy object computing has emerged, which rather than
creating large, complex, tightly intertwined software programs,
programmers creates the chunks of software called objects.

Shift10: From GUIs to MUIs, MOOs, MUD, MOLEs, AVATARs

and VRs
• New collaborative environment for a new economy
• Multi-user interface typically refers to an operating system that allows
concurrent access by multiple users on the system. For example, on UNIX
operating systems, two users can log in to the system at the same time.
• Multi-user domain (MUD), object oriented (MOO) is a virtual reality system
in which several users are connected at one time. Users from around the
world log in to use this object-oriented database system, which is stored on a
remote server.
• MOOs are interactive systems that can be used to develop educational and
other collaborative systems (software). These multi-user systems are
programmable and can be accessed over a network
• A multi-user dungeon (MUD) is both a style of role-playing game. MUD
was modeled after earlier text-based adventure games and became a popular
game to play over Telnet, an early commercial Internet.
• Multi-user dungeons are sometimes referred to as multi-user dimensions or
multi-user domains.
• The definition of an avatar is something visual used to represent non-visual
concepts or ideas, or is an image that is used to represent a person in the
virtual world of the Internet and computers.

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 • An example of an avatar is an icon you use to represent you on an Internet
forum.
• Virtual reality is an artificial environment that is created with software and
presented to the user in such a way that the user suspends belief and accepts
it as a real environment. On a computer, virtual reality is primarily
experienced through two of the five senses: sight and sound.

Digital Economy

Digital economy refers to an economy that is based on digital computing technologies. The digital
economy is also sometimes called the Internet Economy, the New Economy, or Web Economy.

It is the worldwide network of economic activities enabled by information and

communications technologies (ICT). It can also be defined more simply as an
economy based on digital technologies.

Three main components of the 'Digital Economy' concept can be identified:

• e-business infrastructure (hardware, software, telecoms, networks, human capital, etc.),

• e-business (how business is conducted, any process that an organization conducts over
computer-mediated networks),
• e-commerce (transfer of goods, for example when a book is sold online).
The other components of digital economy
The digital economy consists of various components, key among which
include
1. Government;
2. Policy and regulation
3. Internet,
4. The world wide web (WWW)
5. Electricity infrastructure
6. Telecommunication industry
7. Digital service providers
8. E-business and e-commerce industry
9. Information and knowledge management systems
10. Intellectual property rights
11. Human capital and knowledge workers

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 12. Research and development

1. Government
Governments are an important component of the digital economy by virtue
of their traditional role in providing primary funding for a country’s
communications infrastructure. They also have an important role to play in
sustaining infrastructure development and improving e-readiness.
2. Policy and Regulation

ICT or telecommunication policies are fundamental in the digital economy.

A conducive business environment is necessary for firms to thrive and
benefit from ICTs. This requires a transparent, open and competitive
business framework; clear, independent rules of law that are applicable to
all firms; mechanisms for the easy set up and dissolution of businesses;
transparent, simple and accessible corporate regulation; and equal and
stable legal treatment for national and cross-border transactions (OECD,

E-commerce
E-commerce (electronic commerce or EC) is the buying and selling of goods
and services, or the transmitting of funds or data, over an electronic network,
primarily the internet. These business transactions occur either as business-
to-business, business-to-consumer, consumer-to-consumer or consumer-to-
business. The terms e-commerce and e-business are often used
interchangeably. The term e-tail is also sometimes used in reference
to transactional processes for online shopping.
E-commerce is conducted using a variety of applications, such as email,
online catalogs and shopping carts, EDI (Electronic data interchange)
, File Transfer Protocol, and web services.

Categories of e-commerce

As with traditional commerce, there are four principal categories of e-

commerce: B2B, B2C, C2B and C2C.

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• B2B (Business to Business) — This involves companies doing business with
each other. One example is manufacturers selling to distributors and
wholesalers selling to retailers.
• B2C (Business to Consumer) — B2C consists of businesses selling to the
general public through shopping cart software, without needing any human
interaction. This is what most people think of when they hear "e-commerce."
An example of this would-be Amazon.
• C2B (Consumer to Business) — In C2B e-commerce, consumers post a project
with a set budget online, and companies bid on the project. The consumer
reviews the bids and selects the company.
• C2C (Consumer to Consumer) — This takes place within online classified ads,
forums or marketplaces where individuals can buy and sell their goods.
Examples of this include Craigslist, eBay and Etsy.

Internet economy

The Internet economy refers to business conducted through

markets whose infrastructure is based on
the Internet and World Wide Web

An Internet economy differs from a traditional economy in a number

of ways, including: communication, market segmentation,
distribution costs, and price.

The impact of the Internet economy

The Internet is making economic activity more efficient, faster,
and cheaper, and extending social interaction in unparalleled
ways. Increasingly, the largest productivity gains for businesses
come from using online networks in some form.
The Internet has also brought unprecedented user and consumer
empowerment as well as opportunities for new innovative and
social activities. Individuals have greater access to information,
which facilitates comparisons and creates downward pressure on
prices. Internet users are extremely active, creating
new content themselves and interacting in new ways.
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The Internet is quickly permeating all economic and social
domains, and most public policy areas. For instance, e-
government has become the prime tool for supporting
government functions and interaction with citizens and
businesses. Healthcare systems are increasingly making use of
the Internet and online networks to increase affordability, quality
and efficiency, through electronic patient record systems, remote
patient monitoring and healthcare delivery, along with improved
diagnostics and imaging technologies. Educational performance
is found to be correlated with home access to, and use
of, computers. Moreover, environmentally-friendly technologies
based on the Internet in buildings and transport systems and
alternative power generating systems can help address climate
change and improve energy efficiency.
The influence of the Internet is inherently global; helping to forge
closer integration of our economies and societies. Moreover, as
the Internet expands even further it can help the economic and
social development of people of all countries.