Market for e-Business : Case of “HP Exists e-business Software Market (July 15, 2002)”

HP in the past two years has made a big push into the e-business software market to better compete against its two principal rivals, IBM and Sun Microsystems, high-end computer makers that have more extensive software portfolios, but since then decided to discontinue the core pieces of its NetAction product line, which in included application-server software designed for Web transactions, and related software for building Web services, technology that allows companies to interact and conduct business via the Internet.

Back to the history, HP spent $470 million in October 2000 to acquire Bluestone Software, a small company that competed against IBM, Sun and Oracle, to build up its application server software arsenal. However, its turn out that the HP owns only 4 percent of the application server market, far behind market share leader of BEA and IBM.

Peter Blackmore, executive vice president of HP's enterprise systems group, said the company has suffered heavy losses with its own e-business software. He says that many of the assets HP has will be given up. As quoted, Blackmore says "We move to a partnership model and then make that part of the business, avoid the losses we have and make the overall software business profitable."

HP will refocus its software strategy on three technologies that manage software: HP OpenView, used to manage and monitor the health of businesses' computer systems; HP Utility Data Center, used to simplify management of sprawling data centers; and HP OpenCall, used by telecommunications service providers to offer telephony and Internet services to customers

As from the case of HP, we could relate the failure with the theory exposed below. The market analysis include the thorough understanding about our customer: who they are, their characteristics, and why they are likely to buy from our business. The process of writing the market analysis requires you to define your target markets and analyze how we will position our product or service to arouse and fulfill their needs in order to maximize sales.

In a full-scale business plan the market analysis is part of the marketing plan section, which includes:

• Market analysis: a definition and description of prospective customers, including target markets, size and structure of the customer base, and growth prospects.
• Pricing strategy: setting the price of the product or service based on methods such as cost-plus pricing, demand pricing, and competitive pricing; and the use of innovative pricing strategies such as penetration pricing, flexible pricing, and market skimming.
• Promotion plan: the communication channels you will use to make the customer aware of your product/service and convince them to purchase (e.g., advertising, on-line demonstration videos, packaging). Promotion also includes tracking your customers (e.g., confirming who are your customers and how did they hear about you) and encouraging them to purchase again.
• Distribution plan: the distribution channel you will use to move the product or service to the customer (e.g., direct sales, wholesale distributors, brokers) and, if necessary, back again (e.g., returns).
• Demand forecast: estimates of product or service sales, based on the market analysis and assumptions about the effectiveness of the pricing, promotion, and distribution strategies.

However, HP failure to enter the application server market could be one or some of those reasons. It is quite clear that HP did a lot of great research and development, but had failed to transfer the technology from the lab to the field. Even though HP acquired good technology, but as a hardware company, it is just did not work to try to drive out software infrastructure. Often it is best to focus on our core competency.

Impact of the Internet : Economic implications of e-commerce

OVERVIEW

Business and economy are inextricably linked with the development and implementation of new technology. While e-commerce clearly has a positive impact on the business sector, doubts have been raised about its impact on the macroeconomic growth and development.

The information revolution aided by the revolution in the telecommunications and institutional innovations had initially promised to change the nature of the market altogether. Today market is a place where there is no intermediaries between a seller of a good and its final buyer to the mutual benefit of both parties (Sengupta, 2004). The Internet and its enabled technologies (especially electronic commerce) have caused the costs of many kinds of market mterachon to plummet (Saloner, 2001). Not only cost reduction, e-commerce has the potential to stimulate growth and employment in industrialized as well as developing countries. Further, e-commerce allows economics agents (both buyers and sellers) to interact more effectively by creating new market opportunities (Mukhopadhyay, 2002). Thus, e-commerce has strong economic implications at both micro and macro level.

E-COMMERCE AND ECONOMIC GROWTH

While e-commerce clearly has a positive impact on the business sector, doubts have been raised about its impact on the macroeconomic growth, and productive growth (2) in particular. The US, which leads the world in IT and e-commerce, has had a notable economic performance, particularly in terms of productive growth, since 1995. But, the same was not happened with the developing countries as they failed to catch up technologically with the industrialized world.

IMPACT OF E-COMMERCE ON ECONOMY

Business and the economy are inextricably linked with the development and implementation of new technology (Tassabehji, 2003). Growth and development of any modern economy has been recognized by many economic theorists, such as Kondratieff, Schumpeter, Mensch and Porter, to be based on innovation of new technology. Mensch stressed that only technological innovations can overcome depression and that government must implement an aggressive innovation policy to stimulate the search for new and basic innovation. Further, Porter (1990), emphasizes that the prosperity and competitive advantage of a nation is no longer as a result of a nation's natural resources and its labour force, but rather the ability of its industry to innovate and upgrade. This can be seen as a disruptive technology on a macro environmental level. Continuous growth of e-commerce is expected to have deep impact on structure and functioning of economies at various levels and overall impact on macro-economy.

IMPACT ON COST, PRICE AND COMPETITION

The e-commerce lowers costs because the Internet lowers selling search costs as well as, by allowing seller to communicate product information cost effectively to potential buyers, and by offering sellers new ways to reach buyers through the targeted advertisement and one-on-one advertising. Thus it is helpful in reducing the search costs on both the sides. By reducing search costs on both sides of the market, it appears likely that buyers will be able to consider more product offering and will identify and purchase products that better match their needs, with a resulting increase in economic efficiency.

But the reduction in the cost combined with new capabilities of technology can set off more complex market dynamics (Bakos, 2001).E-Commerce technologies have the potential to significantly increase competition by increasing consumers' choice of products and traders (ACCC, 2001). However, some of the distinguishing characteristics of the e-commerce set up also have the potential for creating the monopoly power in the certain lines of products.

CONCLUSION

The emergence and rapid growth of Internet and E-Commerce has strong implications on economic and social activities. It is quite possible that these new technologies might transform the future of economic and societal landscape.

At the general level, there are two types of potential economic gains from the use of E-commerce and IT enabled technologies. First, are the gains in efficiency, both in static and dynamic. Static gains are one-time, and come from more efficient use of scarce resources, allowing higher consumption in the present. Dynamics gains come from higher growth, potentially raising the entire future stream of consumption and population. Efficiency gains of e-commerce also come about through the enabling of new digitized goods and services. The second type of potential benefits comes from cost reduction.

As e-commerce transcendens the barriers of geographical boundaries, the concept like the place of transactions and place of consumption become immaterial. With the emergence and growth of digital money in the economy, the chances of frauds have also increased. Another most difficult issue is the planning regarding the adoption and implementation of e-commerce technology in the various economic activities. In nutshell, with the e-commerce based economic models, there is little to lose and more to gain.

Source:

"Economic Implication of e-Commerce"

Indian Journal of Economics and Business, Dec, 2007 by Sumanjeet: http://findarticles.com/