Global Marketing, 6e (Keegan/Green) Chapter 15 Global Marketing and the Digital Revolution 1) Websites such as Facebook, MySpace, and

YouTube are collectively referred to as Web2.0. TRUE Diff: 2 Page Ref: 458 2) The integrated circuit and the concept of binary code permitted the development of the personal computer (PC) TRUE Diff: 2 Page Ref: 460 3) IBM was the first company to develop a personal computer. FALSE Diff: 2 Page Ref: 460 4) The popularity of personal computers received a boost in the late 1970s with the introduction of digital photography software. FALSE Diff: 2 Page Ref: 460 5) The popularity of personal computers received a boost in the late 1970s with the introduction of the first spreadsheet software. TRUE Diff: 2 Page Ref: 460 6) The Internet's origins can be traced back to the defense department in the United States. TRUE Diff: 2 Page Ref: 460 7) Vint Cerf and Bob Kahn are credited with creating a "network of computer networks," otherwise known as the Internet. TRUE Diff: 2 Page Ref: 460 8) Tim Berners-Lee is the Internet pioneer who devised URL, HTML, and http and made the World Wide Web possible. TRUE Diff: 2 Page Ref: 460- 461 9) The Chinese government, alarmed by the free flow of information across the Internet, closely monitors the content on Web sites that its citizens access. TRUE Diff: 2 Page Ref: 461 10) Recently, China, India, Brazil, and the EU have taken the position that since the Internet is global; no single country should be in control. TRUE Diff: 2 Page Ref: 462 11) According to a recent "digital opportunity index" published by the United Nations, South Korea leads the world in providing its citizens with access to information and communications technologies (ICT). TRUE Diff: 2 Page Ref: 462 12) "Convergence" is a term that describes a world in which the telecommunications, consumer
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electronics, computer, and entertainment industries are entering each others' markets. TRUE Diff: 2 Page Ref: 463 13) In France, industry deregulation has resulted in vastly improved broadband service for consumers. TRUE Diff: 2 Page Ref: 462 14) Kodak has easily made the transition from industry leadership in chemical-based photography to industry leadership in digital photography. FALSE Diff: 2 Page Ref: 463 15) Ironically, Motorola, a key player in the cell phone business, could have been first to market with a cell phone camera. TRUE Diff: 2 Page Ref: 463 16) Originally, Sony was a consumer electronics company best known for innovative products such as transistor radios and Trinitron televisions. TRUE Diff: 2 Page Ref: 463 17) According to industry estimates, by 2010, annual sales of camera-equipped cell phones will reach one billion. TRUE Diff: 2 Page Ref: 464 18) According to innovation expert Clayton Christensen, the creation of the Internet represented a disruptive technology for Dell Computer. FALSE Diff: 2 Page Ref: 464 19) A well-managed company that pays attention to and responds to the needs of established customers may be confronted by the innovator's dilemma. TRUE Diff: 2 Page Ref: 465 20) According to innovation expert Clayton Christensen, the value network for the personal computer industry is different from the value network for mainframe computers. TRUE Diff: 2 Page Ref: 465 21) According to innovation expert Clayton Christensen, a sustaining technology is an incremental or radical innovation that improves product performance. TRUE Diff: 2 Page Ref: 465 22) The industries dominant firms with reputations as well-managed firms lead in developing and/or adopting sustaining technologies. TRUE Diff: 2 Page Ref: 465 23) An innovation that is disrupting to one firm can be sustaining to another firm. TRUE Diff: 2 Page Ref: 465 24) Worldwide revenues for business-to-business (B2B) e-commerce surpass worldwide revenues for business-to-consumer (B2C) e-commerce. TRUE
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25) Apple's iTunes Music Store was a global transaction site effective day one of its launch. FALSE Diff: 2 Page Ref: 467 26) Proctor & Gamble Far East Inc., the consumer products company's operation in Japan, is using the Web to build its portfolio of brands in the region. TRUE Diff: 2 Page Ref: 467 27) The Web address of Proctor & Gamble Far East Inc. is shufufufu.com which is Japan's first virtual community for women; with shufu meaning housewife, and fufufu, the sound of women's laughter. TRUE Diff: 1 Page Ref: 467 28) The strategic insight behind Procter & Gamble's successful shufufufu.com Web site was that Japanese housewives feel isolated. TRUE Diff: 2 Page Ref: 467 29) Amazon.com is perhaps the most successful example of the global audience-transaction business model. TRUE Diff: 2 Page Ref: 468 30) Cybersquatting is the practice of registering a particular domain name for the express purpose of reselling it to the company that should rightfully use it. TRUE Diff: 2 Page Ref: 470 31) "Paid Search Advertising" refers to a growing trend whereby companies pay to have their ads appear when users type certain search terms. TRUE Diff: 2 Page Ref: 469 32) Localizing a Web site in native language can be done by translating a Web site from the home-country language. FALSE Diff: 2 Page Ref: 471 33) A German language Web site requires more than double the capacity of an English language site. TRUE Diff: 2 Page Ref: 471 34) The EUs regulations for e-commerce are among the world's most strict. TRUE Diff: 2 Page Ref: 472 35) Bandwidth determines the range of frequencies that can pass over a given transmission channel. TRUE Diff: 2 Page Ref: 473 36) Streaming media represents a huge market opportunity for the video game industry. TRUE Diff: 2 Page Ref: 474
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37) Gamers in different locations, even different countries, compete against each other using PCs, Xbox, or PlayStation consoles. TRUE Diff: 2 Page Ref: 474 38) Bluetooth works over shorter distances than Wi-Fi technology and consumes more power than Wi-Fi. FALSE Diff: 2 Page Ref: 474 39) Telematics refers to a car's ability to exchange information about the vehicle's location or mechanical performance. TRUE Diff: 2 Page Ref: 475 40) VoIP has the potential to render the current telecommunications infrastructure, consisting primarily of twisted copper and fiber optic cable, obsolete. TRUE Diff: 2 Page Ref: 478 41) Publishers of newspapers and magazines are facing downturns in readership and some are going bankrupt as people spend more time online. A device that may help lure subscribers back is: A) VoIP. B) GPS. C) Kindle. D) Napster. E) SMS. C Diff: 2 Page Ref: 478-479 42) In the 1950s, which company used transistor technology licensed from Bell Labs to develop the transistor radio? A) Nokia B) Sony C) Panasonic D) RCA E) Sanyo B Diff: 2 Page Ref: 459 43) Vincent Atanasoff and Clifford Berry are pioneers in the digital revolution. What contribution did they make? A) They invented the transistor. B) They invented the spreadsheet. C) They invented the first digital computer. D) They invented the silicon chip. E) They invented the Internet. C Diff: 2 Page Ref: 459 44) Robert Noyce and Jack Kilby are pioneers in the digital revolution. What contribution did they make? A) They invented the transistor. B) They invented the spreadsheet.
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C) They invented the first digital computer. D) They invented the silicon chip. E) They invented the Internet. D Diff: 2 Page Ref: 459-460 45) Which of the following digital revolution pioneers created a "network of networks" that is now known as the Internet? A) Robert Noyce and Jack Kilby B) Vincent Atanasoff and Clifford Berry C) Vint Serf and Bob Kahn D) Steve Jobs and Steve Wozniak E) Tim Berners-Lee C Diff: 2 Page Ref: 460 46) Which of the following pioneers of the digital revolution developed URL, http, and HTML thus paving the way for the World Wide Web? A) Robert Noyce and Jack Kilby B) Vincent Atanasoff and Clifford Berry C) Vint Serf and Bob Kahn D) Steve Jobs and Steve Wozniak E) Tim Berners-Lee E Diff: 2 Page Ref: 460 47) ________ is the term that refers to the merging of different industries such as computers, photography, and motion pictures. A) Value networks B) Convergence C) Disruptive technology D) Telematics E) Agnostic marketing B Diff: 2 Page Ref: 463-464 48) A key player in the cell phone business who could have been first to market with a cell phone camera is: A) Ericsson. B) Samsung. C) Motorola. D) Sprint. E) AT&T. C Diff: 2 Page Ref: 463 49) According to the innovator's dilemma: A) the computing power of a microprocessor doubles every 18 months. B) markets that don't exist can't be analyzed. C) well-managed companies that listen and respond to needs of established customers may miss opportunities to innovate. D) regulation of e-commerce activities will increase at a rate that is directly proportional to the growth of e-commerce revenues.
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E) innovations are copied soon after they are discovered. C Diff: 2 Page Ref: 464-465 50) Which of the following is one of Clayton Christensen's principles of disruptive innovation? A) Companies depend on customers for resources. B) Small markets don't satisfy the growth needs of large companies. C) Markets that don't exist can't be analyzed. D) Technology supply may not equal market demand. E) all of the above E Diff: 2 Page Ref: 465 51) In every industry, companies are embedded in a(n) ________, which has a cost structure associated with it that dictates the margins needed to achieve profitability. A) innovator's dilemma B) transaction C) URL D) value network E) digital network D Diff: 2 Page Ref: 464-465 52) Which of the following principles of disruptive innovation pertains to the notion of agnostic marketing? A) Companies depend on customers for resources. B) Small markets don't satisfy the growth needs of large companies. C) Markets that don't exist can't be analyzed. D) Technology supply may not equal market demand. E) A company's capabilities define its weaknesses. C Diff: 2 Page Ref: 465 53) "Small markets don't solve the growth needs of large companies" and "markets that don't exist can't be analyzed" are two principles of disruptive innovation. These principles are integral to: A) the five forces model. B) the flagship model. C) strategic intent. D) the innovator's dilemma. E) the innovator's dream. D Diff: 2 Page Ref: 465 54) ________ booked over the Internet represents the largest e-commerce category. A) Hotels B) Reading materials C) Restaurants D) Travel E) Computers D Diff: 2 Page Ref: 466 55) Web sites can be classified by purpose as represented by the term:
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A) matrix sites. B) international sites. C) geographic sites. D) promotion sites. E) regional sites. D Diff: 2 Page Ref: 467 56) Web sites that provide news and entertainment and support a company's PR efforts are known as: A) company site. B) transaction sites. C) promotion sites. D) content sites. E) cyber sites. D Diff: 2 Page Ref: 467 57) Amazon.com, the leading Internet bookseller, allows users to purchase books, CDs, and other products on line. Amazon.com is primarily a ________ site: A) promotion B) content C) transaction D) execution E) cyber C Diff: 2 Page Ref: 467 58) Which of the following best describes Apple Computer's iTunes Music Store at the time of its launch in 2003? A) domestic audience/information and support services B) domestic audience/transactions C) global audience/ information and support services D) global audience/ transactions E) none of the above B Diff: 2 Page Ref: 467-468 59) Which of the following best describes the Web site for Godin Guitars? A) domestic audience/information and support services B) domestic audience/transactions C) global audience/ information and support services D) global audience/ transactions E) none of the above C Diff: 2 Page Ref: 467-468 60) Online bookseller Amazon.com would best be described as exemplifying which type of Web site? A) domestic focus, provider of information, support, and service B) domestic focus, emphasis on retail transactions C) global focus, provider of information, support, and service D) global focus, emphasis on retail transactions
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E) none of the above D Diff: 2 Page Ref: 467-468 61) "Shufufufu.com" is Procter & Gamble's online virtual community for women in: A) Singapore. B) China. C) India. D) Japan. E) South Korea. D Diff: 2 Page Ref: 467 62) Unilever is using the Internet to: A) distribute coupons to consumers. B) sponsor sweepstakes on a global basis. C) allow consumers to watch digitized versions of television ads on their PCs. D) archive its TV ads so local country managers can incorporate existing footage in ads. E) allow consumers to buy products on-line. C Diff: 2 Page Ref: 467-468 63) Visitors to the Web sites for the following company are not given the opportunity to buy. A) Prada B) Gucci C) Burberry D) Godin E) all of the above E Diff: 2 Page Ref: 468-469 64) Digitas and SBI.Razorfish are: A) popular Internet auction sites in Japan. B) leading interactive media agencies. C) European companies with highly rated Web sites. D) competing standards for wireless connectivity. E) popular digital media products. B Diff: 2 Page Ref: 469 65) Which of the following is a critical issue for a company whose management intends to engage in e-commerce? A) privacy B) credit card fraud in developing countries C) ensuring that logos and other brand identity elements are consistent with local preferences D) ensuring a company's ASCII system supports a particular language E) all of the above E Diff: 2 Page Ref: 469-470 66) The practice of registering a particular domain name for the express purpose of reselling it to the company that should rightfully use it is called: A) gray market. B) piracy.
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C) copyright violation. D) cybersquatting. E) patent violation. D Diff: 2 Page Ref: 470 67) The domain name for Amazon company in Germany is: A) Amazon.co.ge. B) Amazon.co.de. C) Amazon.de. D) Amazon.gy. E) Amazon.gr. C Diff: 2 Page Ref: 470 68) Ideally, each country-specific site should reflect all of the following except: A) local culture. B) language usage. C) customs. D) English translations. E) aesthetic preferences. D Diff: 2 Page Ref: 470 69) In developing countries like Malaysia and Thailand, government initiatives are aimed at : A) preventing piracy. B) controlling computer usage. C) promoting Microsoft business. D) putting as many PCs as possible in the hands of ordinary citizens. E) preserve existing organizational culture. D Diff: 2 Page Ref: 472 70) Which of the following constitutes a major threat to Microsoft? A) convergence B) freeopen source software C) Bluetooth D) short message service (SMS) E) Voice over Internet Protocol (VoIP) B Diff: 2 Page Ref: 472 71) Which of the following is not a product or service offered by Microsoft? A) operating systems (OS) B) software applications C) Web browser D) digital media player E) free open source software E Diff: 2 Page Ref: 472 72) A broadband communication system is one that has sufficient capacity to carry simultaneously which of the following? A) multiple voice
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B) data C) video D) music E) all of the above E Diff: 2 Page Ref: 472-473 73) As a result of the digital revolution, a variety of companies in all parts of the world are developing a new generation of products, services, and technologies; which include all of the following except: A) broadband network. B) mobile commerce. C) wireless connectivity. D) smart cell phones. E) land line connectivity. E Diff: 1 Page Ref: 473-475 74) Broadband offers companies the telecommunication capability to do all of the following except: A) streaming audio. B) streaming video. C) streaming media. D) streaming sales. E) compressed video. D Diff: 2 Page Ref: 473-475 75) Streaming media represents a huge market opportunity for all of the following except: A) video game industry. B) online gaming. C) game publishers. D) Internet portals. E) telematics. E Diff: 2 Page Ref: 474 76) The reason why broadband access is slower in the United States compared to South Korea is: A) the language barrier B) the lack of technical know-how C) the population density D) the lack of service providers E) security concerns C Diff: 2 Page Ref: 473-474

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77) ________ -commerce is one of the significant marketing opportunities made possible by the digital revolution. A) Multinational B) Mobile C) Multisegment D) Marginal-cost E) Multilingual B Diff: 2 Page Ref: 474 78) Wi-Fi, or wireless fidelity, permits laptop and PDA users to establish high-speed wireless connections to the Internet via: A) infrared rays. B) magnetic rays. C) hot spots. D) laptop warriors. E) modem. C Diff: 2 Page Ref: 474-475 79) Bluetooth is gaining popularity in Europe compared to Wi-Fi due to all but one of the following advantages: A) less power consumption. B) well suited to use with cell phones. C) works over shorter distances. D) can be used in automobiles. E) can be incorporated into home appliances. C Diff: 2 Page Ref: 474-475 80) Songs that the caller hears when he or she places a call to another mobile subscriber is referred to as: A) ring tones. B) true tones. C) real tones. D) master tones. E) ring back tones. E Diff: 2 Page Ref: 477 81) According to various statistics, South Korea leads the world in providing its citizens with access to information and communications technologies. Discuss how Korea could lead the world in technology and why the United States has taken a relatively slow start, particularly in spreading the broadband technology. South Korea leads the world in broadband penetration with 68 connections per 100 households. According to one consultant, Koreans tend to be early adopters of technology and, more significantly, are fast followers. They are always conscious of the need not to get left behind by the Japanese and the young have a great desire to conform to the gadget carrying norm of their peers. Several factors help explain broadband's relatively slow start in the United States. First of all, one-quarter of the U.S. population lives in rural areas; which mean that broadband is more expensive to roll out than in densely populated nations, such as South Korea. Also, U.S. telecom companies were reluctant to invest in broadband lines because of concerns that the U.S. Federal Communications Commission would force them to
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lease the lines to rival service providers. South Korea's digital future includes much more than simply broadband connection. Policy makers are aggressively pursuing applications for radio frequency identification tags (RFID). The South Korean government is spending nearly $ 300 million to build an RFID research center which will be a part of an even more ambitious effort, i.e. the construction of a ubiquitous city on a 1,500 acres man-made island near the Incheon Free Economic Zone. Korea being a smaller country, such activities promoting technologies are possible rapidly. Diff: 2 Page Ref: 462, 463, & 466 82) The Internet's powerful capabilities and increasing importance have resulted in a backlash that manifests itself in various ways. Giving examples, explain how this statement can be true. The Internet has become a powerful tool whose capabilities are not yet fully explored. Since it has multifaceted applications there is a considerable backlash based on what it can and cannot do. For example, the Chinese government, alarmed by the free flow of information across the Internet, closely monitors the content on Web sites that its citizens access. In addition, policy makers in some countries are concerned about U.S. control of the Internet. The nonprofit Internet Corporation for Assigned Names and Numbers (Icann) is based in Marina del Ray, California. Icann maintains a database of Web addresses, approves new suffixes for Web addresses and performs other behind-the-scenes procedures that are critical for keeping the Internet functioning properly. Icann's advisory body includes international members, but the U.S. Department of Commerce retains veto power over all decisions. For example, after Icann tentatively approved the domain name.xxx for pornography sites, Commerce blocked the decision. Recently, China, India, Brazil, and the EU have taken the position that since the Internet is global, no single country should be in control. Accordingly, these nations are seeking to have the United Nations assume a role in Internet governance. Privacy is another issue. As companies become more adept at using the Internet to gather, store, and access information about customers, privacy issues are becoming a focal point of concern among policy makers and the general public. In the EU, for example, a privacy protection directive was established. Diff: 2 Page Ref: 460-462 83) What is Convergence? What kind of challenges does it present? The digital revolution is causing dramatic changes in industry structures. Convergence is a term used to refer to the coming together of previously separate industries and product categories. New technologies affect the business sector(s) in which a company competes. For example, Sony was a consumer electronics company best known for innovative products such as transistors radios, Trinitron televisions, VCRs and other stereo components, and the Walkman line of personal music players. Then, Sony entered new businesses acquiring a record company and a motion picture studio. These acquisitions did not represent convergence because they occurred in the early days of the digital revolution. Motion pictures, recorded music, and consumer electronics were still separate industries. Today, however, Sony is in the "bits" business: its core businesses incorporate digital technology and involve digitizing and distributing sound, images, and data. Companies are faced with challenges of changing, acquiring and moving on with technologies. If not, companies like Kodak and Motorola did not converge and they are finding it hard to come up with a competitive model. Diff: 2 Page Ref: 463-464 84) Describe the principles developed by Christensen in order to help managers recognize the innovator's dilemma and develop appropriate responses to environmental change. To help
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managers recognize the innovator's dilemma and develop appropriate responses to environmental change, Christensen has developed the following five principles of disruptive innovations: 1. Companies depend on customers and investors for resources. The best innovations are userdriven. Paradoxically, however, if management listens to established customers, opportunities for disruptive innovation may be missed. 2. Small markets do not solve the growth needs of large companies. Small organizations cannot easily respond to the opportunities for growth in a small market. This fact may require large organizations to create independent units to pursue new technologies. 3. Markets that do not exist cannot be analyzed. Christensen recommends that companies embrace agnostic marketing. This is the explicit assumption that no one company personnel, not the company's customers can know whether, how, or in what quantities a disruptive product can or will be used before they have experienced using it. 4. An organization's capabilities define its disabilities. 5. Technology supply may not equal market demand. Some products offer a greater degree of sophistication than the market requires. For example, developers of accounting software for small businesses overshot the functionality required by the market, thus, creating an opportunity for a disruptive software technology that provided adequate, not superior, functional and was simple and more convenient to use. Diff: 2 Page Ref: 465 85) What do you understand by e-commerce? How can the e-commerce activities be classified? The term e-commerce refers to the general exchange of goods and services using the Internet as a marketing channel. E-commerce activities can be divided into three broad categories: businessto-consumer (B2C or b-to-c), business-to-business (B2B or b-to-b), and consumer to consumer (or peer-to-peer or P2P). Many people associate e-commerce with well-known commerce service providers (CSPs) such as Amazon.com and Yahoo! Overall, B2B commerce constitutes the biggest share of the Internet economy and will likely continue to do so for the foreseeable future. About three-fourths of 2001 B-to-C revenue was generated in North America. Problems can arise when a transaction site that is not designed to serve foreign customers nevertheless attracts them. Customer service can be a problem when customers are located in different time zones. Diff: 2 Page Ref: 466-467 86) How can Web sites be classified? Show how different companies fall under different categories. Web sites can be classified by purpose: promotion sites provide marketing communications about a company's goods or services; content sites provide news and entertainment and support a company's PR efforts; and transaction sites are cyberspace retail operations that allow customers to purchase goods and services. In many instances, Web sites combine the three functions. Web sites can also be categorized in terms of content and audience focus. The Internet can be used as an advertising channel, as a PR tool, as a means of running a contest or sales promotion, and as support for the personal selling effort. A schematic diagram showing four quadrants can be visualized when categorizing web sites. In quadrant one the focus is on providing information and service to domestic or local-country customers. Quadrant 2 companies such as iTunes Music Store maintain transaction-oriented e-commerce sites with a domestic focus. Companies in both quadrants 1 and 2 do attract international traffic, but the focus is still local. Companies that initially fall into quadrants 1 and 2 can transition into quadrants 3 and 4; for example Apple's iTunes Music Store was rolled out in Germany, France, and the United Kingdom in 2004. In quadrant 3, the audience focus is global. Companies such as
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Federal Express and Gucci are already global in scope, and the Internet constitutes a powerful, cost-effective communication tool. In quadrant 4, companies seek e-commerce transactions with customers on a world-wide basis. Amazon.com is perhaps the most successful example of the global audience-transaction business model. Some products are inherently not suitable candidates for sale via the Internet. McDonald's does not sell hamburgers from its Web site, and Proctor & Gamble does not sell shampoo via the Internet. Diff: 2 Page Ref: 467-468 87) What are some of the issues that need to be addressed when setting up for global ecommerce? To fully exploit the Internet's potential, company executives must be willing to integrate interactive media into their marketing mixes. Web sites can be developed in-house, or an outside firm can be contracted. During the past few years, several interactive advertising sources have become available in different parts of the world. No matter which agency or source is selected there are several issues that must be addressed and taken into consideration when setting up for global e-commerce. This involves choosing the domain names, arranging payment, localizing sites, addressing privacy issues, and setting up a distribution system. A critical first step is registering a country-specific domain name. The Web site of choice will be the one which uses the language of the country and lists prices in the currency of the country. While registering a domain name is a relatively straightforward procedure in the United States, requirements vary in different countries. Also cybersquatting, the practice of registering a particular domain name for the express purpose of reselling it to the company that should rightfully use it is a problem. Payment can be another problem; in many countries credit card use is low or not very much prevalent. In such situations, e-commerce operators must arrange payment by bank check or other means. Another issue is credit card fraud which will also become a problem for ecommerce. Also, it is preferable to double check the translations used for the Web site. Direct translation from the home-country website may not work in many countries. Words also have different meanings and that should be taken into account. Another critical global e-commerce issue is privacy. There are some countries where the rules are strict and in some countries they are very much relaxed. Diff: 2 Page Ref: 469-472 88) Singapore and Korea offer large sums of money to private citizens and business to pay for broadband equipment and consulting services. However, the spread of broadband is very slow in the United States. Giving reasons for slow movement in the United States, explain how broadband works? A broadband communication system is one that has sufficient capacity to carry multiple voice, data, or video channels simultaneously. Bandwidth determines the range of frequencies that can pass over a given transmission channel. For example, traditional telephone networks offered quite limited bandwidth compared with state-of-the art digital telephone networks. Consumer broadband service is typically available from cable TV companies or telephone companies via digital subscriber lines (DSL). In addition to faster download times and greater capacity, broadband offers other advantages. For example, it is always on and there is no need to access the Internet via phone dial-up service. Roughly one-third of American households currently have high-speed Internet access. Broadband Internet allows users to access streaming audio, streaming video, and streaming media. Although South Korea and Singapore offer businesses grants for broadband equipment and consulting services, the United States is relatively slow to start in having broadband spread broadly. The primary reason is that onequarter of the United States population lives in rural areas and thus broadband is more expensive to rollout than in densely populated smaller nations such as South Korea and Singapore. Also,
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U.S. Telecom companies were reluctant to invest in broadband lines because of concern that the U.S. Federal Communications Commission would force them to lease the lines to rival service providers. Diff: 2 Page Ref: 470-471 89) What is m-commerce and what are some of the technological innovations that fall under this type of commerce? Mobile commerce or m-commerce is the term for conducting commercial transactions using wireless handheld devices such as personal digital assistants (PDAs) and cell phones. Many companies are developing ways to provide Internet access without the need for a wired broadband connection. For example, wireless fidelity (Wi-Fi) permits laptop and PDA users to establish high-speed wireless connections to the Internet and corporate intranets via "hot spots" located in airports, cafes, or other public places. Wi-Fi networks have a limited range; an improved technology known as World Interoperability for MicroWave Access (WiMax) is being deployed in many parts of the world. A WiMax network can have a range of several miles making it superior to traditional Wi-Fi. In addition, mobile WiMax offers greater capacity and faster speeds than current mobile data networks; it is well suited for streaming music or video. Another mobile communication technology known as Bluetooth is gaining popularity in Europe; because it consumes less power than Wi-Fi, Bluetooth is well suited to use with cell phones. It, however, works over shorter distances than Wi-Fi. Bluetooth has been incorporated into automobiles and home appliances, such as microwaves and refrigerators. In the United States, TMobile also has deals with Borders bookstores, FedEx Kinko's business centers, Texaco service stations, and, of course, Starbucks and major airports. Current Wi-Fi technology commonly handles data, not voice. However, many industry observers expect that in the near future, hot spots will allow cell phones to switch to the Internet for telephone calls. Wireless technology is being used in other ways. In the automotive world, there is a trend toward 'telematics', which is a car's ability to exchange information about the vehicle's location or mechanical performance. Cars are also being equipped with online access so passengers can send and receive e-mails. A new generation of smart phones has already come to the market, such as iPhone by Apple. Diff: 2 Page Ref: 474-475 90) Considering the rapid changes that have taken place in technology, what is next on the horizon which will have an impact on global businesses? Internet telephone service seems to be the next big thing for the telecommunications industry. The technology, which is gaining popularity and acceptance, is known as "Voice over Internet Protocol (VoIP). In this technology the human voice can be digitized and broken into data packets that can be transmitted over the Internet and converted back into normal speech. If a call is placed to a conventional phone, it must be switched from the Internet to a traditional phone network; local telephone companies generally own the lines into residences and businesses. However, if the call is made between two subscribers to the same VoIP provider, it bypasses the traditional network altogether. The implications are that VoIP has the potential to render the current telecommunications infrastructure almost obsolete. However, VoIP currently accounts for only three percent of global calling. The potential for growth is therefore tremendous. In light of this potential, the stock prices have gone up considerably for this type of startup companies. The federal government classifies VoIP as an information service. Diff: 2 Page Ref: 475-479

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