Week 2 - Chapter 4 & 5 Review

nonvolatile memory

a more permanent storage media like a hard disk or flash memory

Give examples of firms that have effectively leveraged the advancement of processing, storage, and networking technology.

Apple has benefitted from Moore's Law by leveraging the drop in flash memory prices. The high-end iPod increased song capacity by forty times in six years while dropping in cost by fifty dollars. The result has been sales of over 150 million iPods. Faster, cheaper bandwidth has abetted the sale of over four billion songs. The faster, cheaper phenomenon has totally realigned the retail music industry, pushing Apple ahead of Wal-Mart, Best Buy, and Target. Amazon has also leveraged cheap storage. Amazon launched its "Search Inside the Book" feature as a 20 TB (terabyte) database. By 2009, digital books weren't just for search; they were for sale. Amazon's Kindle reader (a Moore's Law marvel sporting a microprocessor and flash storage) became the firm's top-selling product in terms of both unit sales and dollar volume

Random-access memory (RAM)

Chip-based memory

What is the Netflix churn rate and what are the reasons behind this rate?

Churn is a marketing term referring to the rate at which customers leave a product or service. A low churn is usually the key to profitability because it costs more to acquire a customer than to keep one. However, the year after Blockbuster and Wal-Mart launched with copycat efforts, the rate at which customers left Netflix actually fell below 4 percent, an all-time low. Churn rates have remained stable over time, an indication that customer loyalty remained strong despite a challenging recession. The number of choices offered by Netflix, prompt delivery, and good service has created satisfied customers. This in turn provides a low churn rate

What is a semiconductor? What is the substance from which most semiconductors are made?

Computer chips are sometimes referred to as semiconductors. They are made of silicon dioxide, and both enable and inhibit the flow of electricity.

massively parallel processing

Computers designed with many microprocessors that work together, simultaneously, to solve problems.

What kinds of problems might be solved if the promise of quantum computing is achieved? How might individuals and organizations leverage quantum computing? What sorts of challenges could arise from the widespread availability of such powerful computing technology?

Currently quantum computing physicists are developing processes that they think will be necessary to build a large-scale quantum computer out of quantum bits. Potential applications for quantum computing include drug development, modeling the human body, very long range weather forecasting, computer security, and facial recognition. Individuals and organizations (including governments) might leverage quantum computing in a number of ways including: development of new products that benefit society (e.g., new drugs), creation of new industries, personal gain, more sophisticated and deadly ways of waging war, etc. As a result, it is likely that legal, ethical, and moral challenges will also arise.

How does flash memory differ from the memory in a PC? Are both solid state?

Flash memory is not volatile; when power is shut off the stored information is preserved. RAM is volatile; when power is shut off the information stored in RAM vanishes. Solid state components often suffer fewer failures and require less energy than mechanical counterparts because they have no moving parts. RAM, flash memory and microprocessors are solid state devices. Hard drives are not.

How Does the Netflix Business Model Work?

Helps us examine how tech helps firms craft and reinforce a competitive advantage

What appointments did Reed Hastings accept in addition to his job as Netflix CEO? Why is this appointment potentially important for Netflix?

Reed Hastings accepted an appointment to the Board of Directors of Microsoft. A possible outcome of this appointment is a good relationship whereby Netflix might distribute its streaming DVDs via Microsoft's Xbox technology.

semiconductors

a substance such as silicon dioxide used inside most computer chips that is capable of enabling as well as inhibiting the flow of electricity So if someone refers to the semiconductor industry, they're talking about the chip business

microprocessor

brain of a computing device

Server farms are used when ________.

the website has large numbers of users

What are the five waves of computing? Give examples of firms and industries impacted by the fifth wave.

1) In the first wave in the 1960s, computing was limited to large, room-sized mainframe computers that only governments and big corporations could afford. 2) Moore's Law kicked in during the 1970s for the second wave, and minicomputers were a hit. 3) The 1980s brought wave three in the form of PCs, and by the end of the decade nearly every white-collar worker in America had a fast and cheap computer on their desk. 4) In the 1990s wave four came in the form of Internet computing—cheap servers and networks made it possible to scatter data around the world at the same time that fast, cheap PCs became mouse-click easy and PC ownership became common in the industrialized world. 5) The prior decade saw mobile phones drive what can be considered computing wave five. (6) Today many say the sixth wave of computing can be considered the era of pervasive computing, where technology is fast and so inexpensive that it is becoming ubiquitously woven into products in ways few imagined years before.

Search online to identify the five fastest supercomputers currently in operation. Who sponsors these machines? What are they used for? How many processors do they have?

1) Tianhe-2 (China) China's Tianhe-2 is used mainly for government security applications at China's National University of Defense Technology. ... 2) Sunway TaihuLight (China) Also a former number one, Sunway TaihuLight dominated the list for two years after its debut in June 2016. ... 3) Sierra (US) ... 4) Summit (US) ... 5) Fugaku (Japan)

optical fiber line

A high-speed glass or plastic-lined networking cable used in telecommunications.

What is a microprocessor? What devices do you or your family own that contain microprocessors (and hence are impacted by Moore's Law)?

A microprocessor is the part (brain) of the computer that allows it to execute the instructions of a computer program. Microprocessors can be found in computers, cars, cell phones, dishwashers, DVD players, and a host of other products.

As Moore's Law advances, technology becomes increasingly accessible to the poor. Give examples of how tech has benefited those who likely would not have been able to afford the technology of a prior generation.

A tech product containing a microprocessor that is transforming the lives of some of the world's most desperate poor is the cell phone. Mobiles change lives for the better. According to economist Jeffrey Sachs, "The cell phone is the single most transformative technology for world economic development" Three-quarters of the world's poorest people get their food and income by farming. But isolated rural farmers often suffer from an information asymmetry problem. Coming to the aid of farmers, the Ghanaian firm Esoko delivers market prices, farming tips, and other key information via text message on even the lowest-end smartphones. In one study, farmers using Esoko reported a 10 percent increase in revenue

Name two companies that have incurred the wrath of environmental advocates. What might these firms have done to avoid such criticism?

Apple and Dell have incurred the wrath of environmentalists. Dell could have avoided criticism by making sure prison labor wasn't used as part of its recycling effort. Apple could have done more to take back their products for responsible recycling, and to eliminate or reduce toxins from their products. Proper attention to the elimination or reduction of toxic materials during the design and production phases facilitates the recycling process could be a long term solution for the companies.

Why does the longtail work?

Because the cost of production and distribution drop to a point where it becomes economically viable to offer a huge selection. Ex. For Netflix, the cost to stock and ship an obscure foreign film is the same as sending out the latest Will Smith blockbuster. The long tail gives the firm a selection advantage (or one based on scale) that traditional stores simply cannot match.

How does Moore's Law impact production and inventory decisions?

Because the value of chips falls rapidly, excess inventory can cost company money. Dell claims its inventory depreciates as much as one percent per week. As a result, it becomes imperative to reduce inventory by just-in-time ordering and manufacturing processes.

Which businesses are using supercomputing and grid computing? Describe these uses and the advantages they offer their adopting firms. Are they a source of competitive advantage? Why or why not?

Businesses that use supercomputers include United Airlines (flight scheduling), and CIBC (portfolio simulation). The advantages offered by supercomputers and grid computing include cost savings (United Airlines, CIBC, Proctor & Gamble, GM, and Ford), reduced time to market (Monsanto, GM, Ford, and Pratt and Whitney), and the ability to do something that would be impossible without mega computing power (special effects created by movie studios). Supercomputers and grid computing can yield operational efficiencies; because they can be (easily) imitated, they do not provide a sustainable competitive advantage.

What part does corruption play in the recycling and disposal of e-waste?

Developing nations such as China have banned the importing of e-waste. But corruption ensures that e-waste continues to enter developing nations. The trade is often brokered by middlemen who mask the origin, destination, and nature of the e-waste.

What is e-waste? What is so dangerous about e-waste?

Discarded, often obsolete technology is referred to as electronic waste or ewaste. Consumer electronics and computing equipment can be a toxic cocktail that includes cadmium, mercury, lead, and other hazardous materials.

What are the possible consequences should a U.S. firm be deemed "environmentally irresponsible"?

Disregard of ethical recycling imperatives can seriously tarnish the brand of a firm, and can expose it to criminal action. The firm can also be forced to take back its products for responsible recycling and to eliminate the worst toxins from its products

What has been the impact of "faster, cheaper" on Apple's business lines?

Due to faster, cheaper, storage and bandwidth, Apple has moved far beyond the traditional PC industry. New business lines include the iPod, iTunes, Apple TV, movies, and games.

What sorts of materials might be harvested from e-waste recycling?

E-waste contains mainstream materials like aluminum and plastics as well as more valuable materials like gold, silver, platinum, and copper.

Why is it difficult to recycle e-waste?

E-waste recycling is extremely labor intensive. Sending e-waste abroad, where cheap labor is available, and environmental laws are lax, is ten times cheaper than dealing with it in the U.S. However, many developing nations have dreadful conditions for recycling e-waste. The reality of e-waste management is that it's extremely difficult to monitor, track, and police.

Stacked or Three-Dimensional Semiconductors

Engineers slice a flat chip into pieces, then reconnect the pieces vertically, making a sort of "silicon sandwich." The chips are both faster and cooler since electrons travel shorter distances.

How has Netflix improved its customer service operation? Describe the results and impact of this improvement.

Every warehouse employee gets a free DVD player and Netflix subscription so that they better understand the operation from the customer's perspective and can make suggestions for improvement. By paying attention to technology design and process improvements, Netflix has been able to reduce the number of customer representatives even as subscriptions have increased. This has resulted in increased customer satisfaction and a very low churn rate.

How does grid computing change the economics of supercomputing?

Grid computing utilizes special software placed on numerous PCs and servers that enables these computers to work together to solve a common problem. Large organizations may have thousands of PCs, but they're not necessarily being used all the time, or at full capacity. With grid software installed on them, these idle devices can be marshaled to attack portions of a complex task as if they collectively were one massively parallel supercomputer. The cost of grid computing software and services can be as little as twenty-five thousand dollars, assuming the organization already has the PCs and servers in place.

Could a new competitor match Netflix's recommendation software? If it did, would this create a threat to Netflix? Why or why not?

It is possible for a competitor to write software that is as good as, or is even better than, Cinematch. However, without Netflix's mountain of data (over five billion ratings), the software would pose little or no threat.

What lessons do the challenges of e-waste offer the manager? What issues will your firm need to consider as it consumes or offers products that contain computing components?

It is vital for managers to understand that disregard of ethical recycling imperatives can seriously tarnish the brand of a firm, and can expose it to criminal action. Managers must be cognizant that environmentalists have leaned on the best known tech firms to take back their products for responsible recycling, and to eliminate toxins from their processes and products. Managers must understand the impact of their own actions, as well as those of its suppliers and partners as they apply to: how the products are manufactured; the conditions under which the products are manufactured; what materials are used; what happens to the items when they are discarded; and, who provides the collection and disposal.

As chips grow smaller they generate increasing amounts of heat that needs to be dissipated. Why is keeping systems cool such a challenge? What are the implications for a firm like Yahoo! or Google? For a firm like Apple or Dell?

Keeping systems cool is a challenge. As the chips grow smaller, the more tightly packed electrons will heat the chips to the melting point. Most corporate data centers require elaborate and expensive air conditioning and venting systems to dissipate the heat in order to prevent a meltdown. The need to cool modern data centers requires a lot of expensive power. Microsoft, Yahoo!, and Google have all built massive data centers in the Pacific Northwest in order to benefit from cheap hydroelectric power for running and cooling their servers. Computer manufacturers like Dell and Apple must build in more robust cooling systems (fans) in order to utilize the smaller, high-heat generating chips.

Why would a manufacturer of DVD players be motivated to offer the Netflix "Watch Now" feature in its products?

Manufacturers of DVD players might be motivated to offer Netflix's "Watch Now" feature in order to benefit from Netflix's large and growing user base and the varieties of titles that Netflix offers. If a large number of buyers want access to Netflix offerings, a manufacturer of DVD players who offers the desired feature is likely to benefit through increased sales.

Are other aspects of computing advancing as well? At what approximate rates?

Other computer components have seen their price versus performance curves increase exponentially. Data storage capacity doubles every twelve months, and optical fiber speeds can double every nine months.

multicore microprocessors

Microprocessors with two or more (typically lower power) calculating processor cores on the same piece of silicon. Today, most PCs and laptops sold have at least a two-core (dual-core) processor. The Microsoft Xbox 360 has three cores.

What is "Moore's Wall"?

Moore's Wall is the set of physical limitations imposed upon Moore's Law by the interrelated constraints of size, heat, and power.

Will multicore chips run software designed for single-core processors?

Multicore processors can run older software written for single core processors; however, they use one core at a time. Versions of Windows or the Mac OS are aware of multicore processors and can assign one program to run on one core. A second application is assigned to the next core. In order to take full advantage of multicore chips, applications must be written to split up tasks so that smaller portions of a problem are executed simultaneously inside each core.

What are the characteristics of problems that are most easily solved using the types of parallel computing found in grids, clusters and modern day supercomputers? What are the characteristics of the sorts of problems not well suited for this type of computing?

Multicore, massively parallel, grid, and cluster computing are all related in that each attempts to lash together multiple computing devices so that they can work together to solve problems. Software must be written to divide problems into discrete pieces that can be attacked by each core, processor, or computer. Problems that can be divided or split into chunks, like simulations, are best solved by the multi-brain approach. Linear problems, where, say, step two can't be completed until the results from step one are known, are not amenable to the multi-brain approach.

Scale advantages are advantages related to size. In what key ways is Netflix "bigger" than the two major competitors who tried to enter the DVD-by-mail market?

Netflix enjoyed scale advantages over both Blockbuster and Wal-Mart due to a larger selection (the "long tail"), customer base, and data (customer film ratings).

Does Netflix have a strong brand? Offer evidence demonstrating why the firm's brand is or isn't strong. How is a strong brand built?

Netflix has a very strong brand. Netflix customers are rabidly loyal and the firm repeatedly ranks at the top of customer satisfaction surveys. The year after Blockbuster and Wal-Mart launched with copycat efforts, the rate at which customers left Netflix actually fell below 4 percent. Churn rates have remained stable over time, an indication that customer loyalty remained strong despite a challenging recession. Building a great brand, especially one online, starts with offering exceptional customer value.

What "class" of software does Netflix use to make movie recommendations? Think about: Which key competitive resource does this software "create"? What kinds of benefits does this provide to the firm? What benefits does it provide to Netflix's suppliers?

Netflix uses collaborative filtering software to make movie recommendations called Cinematch. Collaborative filtering creates a data and switching cost resource that is valuable, rare, imperfectly imitable, and non-substitutable. The data provided by Cinematch develops a map of user ratings, and steers the user toward titles preferred by people with similar tastes. In turn, this personalizes the individual customer's experience, builds brand, and creates switching costs. Collaborative filtering allows Netflix to "discover" and recommend less popular (and even obscure) films owned by studios, thereby earning revenues for the studios that they would have not received otherwise.

Which firms are or have been Netflix's most significant competitors? How do their financial results or performance of their efforts compare to Netflix's efforts?

Netflix's most significant competitors have been Wal-Mart and Blockbuster. Wal-Mart left the DVD-by-mail business, and Blockbuster is in deep financial distress after losing billions of dollars. Not only did Netflix hold on to its customers, it grew bigger, recording record profits.

What do you believe are the most significant long-term threats to Netflix? How is Netflix trying to address these threats? What obstacles does the firm face in dealing with these threats?

Netflix's most significant long term threat is the ever changing technology and how to harness its full potential for sustainability. Another threat is its competitors such as Hulu who are feverishly trying to create something that will rival Netflix. Netflix is address these threats in many ways, one way is that they are publishing their own movies and TV shows that are only available on Netflix, such as the critically claimed show, House of Cards.

What are Netflix's sources of competitive advantage?

Netflix's sources of competitive advantage include brand, large selection of movies (the "long tail"), their data asset (Cinematch), and scale of operation (customer base and distribution network size).

What part might product design and production engineering play in the reduction of the impact of technology waste on the environment?

Proper attention to the elimination or reduction of toxic materials during the design and production phases facilitates the recycling process. If toxic materials are not part of the product or process, they don't have to be dealt with later.

Why is Moore's Law important for managers? How does it influence managerial thinking?

Rapid obsolescence of computing equipment forces management to consider accounting and budgeting factors such as the useful life of the equipment, capital budget expenditures, and training budgets. In addition, because the value of chips falls rapidly, excess chip-containing inventory can cost company money.

What are some of the materials that may replace the silicon that current chips are made of?

Replacements made of are gallium arsenide, indium aluminum arsenide, germanium, and bismuth telluride. Intel adds hafnium to silicon chips to improve power use. In addition, a material derived from chicken feathers, and carbon nano-tubes, may also one day replace silicon.

Who are the rivals to Netflix's "Watch Now" effort? Do any of these firms have advantages that Netflix lacks? What are these advantages?

Rivals to Netflix's "Watch Now" effort include: (1) Apple with a model based on rentals that can be played on Apple TV or iPods (2) Microsoft offers online rentals and purchase services to get content to the TV via Xbox (3) Amazon provides free streaming for thousands of titles as a perk to customers who pay for its Amazon Prime shipping service (4) Hulu offers a both various ad-supported and subscription-based PC streaming services. Presently, all of these firms seem to have a clearer and better established path to the living room TV than does Netflix. In addition, many of these firms are deep-pocketed rivals that can subsidize experimentation through profits from their primary businesses, so even if efforts are slow to gain traction, a shake-out may take time.

Visit the SETI@Home Web site (http://seti.ssl.berkeley.edu). What is the purpose of the SETI@Home project? How do you participate? Is there any possible danger to your computer if you choose to participate?

SETI@Home is a program and project that involves millions of at home users from around the world in the Search for Extraterrestrial Intelligence (SETI). Since 1999, volunteers have been able to recycle their unused computing cycles in helping to analyze data collected from radio telescopes in search of signals from other worlds. You could participate from computers that you own or for which you have obtained the owner's permission. It will use part of the computer's CPU power, disk space, and network bandwidth. You can control how much of your resources are used by SETI@home, and when it uses them. The work done by your computer contributes to the goals of SETI@home. The application programs may change from time to time. Any time you download a program through the Internet you are taking a chance: the program might have dangerous errors, or the download server might have been hacked. However, SETI@home has made efforts to minimize these risks. This question is designed to encourage students to conduct research on the Internet and find information on the topics mentioned.

solid state electronics

Semiconductor-based devices. Solid state components often suffer fewer failures and require less energy than mechanical counterparts because they have no moving parts. RAM, flash memory, and microprocessors are solid state devices. Hard drives are not.

Which of the following are solid state devices: an iPod shuffle, a TiVo DVR, a typical laptop PC?

Solid state components often suffer fewer failures and require less energy than mechanical counterparts because they have no moving parts. The iPod shuffle is solid state; it uses flash memory rather than a hard drive.

volatile memory

Storage that is wiped clean when power is cut off from a device

Netflix uses technology to coordinate the process of sorting and dropping off DVDs for the U.S. Postal Service. This application of technology speeds delivery. What other advantage does it give the firm?

The application of technology to coordinate the process of sorting and delivering DVDs to the USPS processing and distribution facilities helps speed delivery to the customer and also insures that Netflix gets the lowest possible first class postage rates.

Describe various revenue models available as video content shifts from atoms to bits.

Streaming content is available to a given distribution channel (theaters, hospitality channels, DVD, pay-per-view, pay cable, and commercial TV) for a specified time window, and under a variety of revenue models (ticket sales, DVD sales, license fees, etc.). Delivery business models vary significantly: - Apple's model is based on rentals that can be played on Apple TV or iPods. - Microsoft offers online rentals and purchase services to get content to the TV via Xbox. - Hulu is a joint venture backed by NBC, Fox, and other networks which offers a basic ad-supported PC streaming service. It also offers a subscription service with more content as well as streaming to certain consumer electronics devices. - YouTube offers thousands of television shows and movies via both ad-supported and rental models. - Netflix offers an unlimited monthly subscription streaming plan for $7.99

What is the difference between supercomputing and grid computing? How is each phenomenon empowered by Moore's Law?

Supercomputers are computers that are among the fastest of any in the world at the time of their introduction. Modern supercomputing is typically done via a technique called massively parallel processing (computers designed with many microprocessors that work together, simultaneously, to solve problems). Grid computing utilizes special software placed on numerous PCs and servers that enables these computers to work together to solve a common problem. Both are driven by the advent of cheaper, faster microprocessors. Massively parallel supercomputers chips can be compared to having several chips in one computer. Grid computing is like using existing computers to work together on a single task. Computing clusters are built with commodity servers, but they usually take advantage of special software and networking hardware to more tightly link them together to function as one.

price elasticity

Tech products are highly price elastic, meaning consumers buy more products as they become cheaper

What is the advantage of using grid computing to simulate an automobile crash test as opposed to actually staging a crash?

The advantages of using grid computing to simulate an automobile crash test as opposed to actually staging a crash are the savings resulting from not having to scrap cars, and less time taken to market due to the rapidity in conducting tests.

What three interrelated forces threaten to slow the advancement of Moore's Law?

The three interrelated forces that threaten to slow the advancement of Moore's Law are size, heat, and power.

Which commercial solutions, described in the section above, are currently being used to counteract the forces mentioned above? How do these solutions work? What are the limitations of each?

The multicore and stacked microprocessors are current solutions used by chip manufacturers to the triple threat forces of size, heat, and power. A multicore microprocessor is made by using two or more lower power processor cores on a single chip. For many applications the multicore chips will outperform a single speedy chip, while running cooler and drawing less power. Multicore processors can run older software written for single core processors; however, they use but one core at a time. Versions of Windows or the Mac OS that are aware of multicore processors, can assign one program to run on one core, while a second application is assigned to the next core. In order to take full advantage of multicore chips, applications must be written to split up tasks so that smaller portions of a problem are executed simultaneously inside each core. Writing code for execution in a multicore environment is challenging

What is Moore's Law? What does it apply to?

The phenomenon of "faster, cheaper" computing is often referred to as Moore's Law. It refers to silicon chips and holds that chip performance per dollar doubles every eighteen months.

What is the long tail? How "long" is the Netflix tail compared to traditional video stores?

The phenomenon whereby firms can make money by selling a near-limitless selection of less-popular products is known as "the long tail". A traditional video store like Blockbuster stocks roughly 3000 popular videos while Netflix is able to offer its customers a selection of over 125,000 titles and a large chunk of its revenue comes from selling the less popular titles.

Why is e-waste exported abroad for recycling rather than processed domestically?

The process of separating out the densely packed materials inside tech products so that the value in e-waste can be effectively harvested is extremely labor intensive, more akin to reverse manufacturing than any sort of curbside recycling efforts. Sending e-waste abroad can be ten times cheaper than dealing with it at home.

What is price elasticity? How does Moore's Law relate to this concept? What's special about falling chip prices compared to price drops for products like clothing or food?

The rate at which the demand for a product or service fluctuates with price change is referred to as price elasticity. Goods and services that are highly price elastic see demand spike as prices drop, whereas goods and services that are less price elastic are less responsive to price change. When technology gets cheap, price elasticity kicks in. As they become cheaper, consumers buy more tech products. As chips and other components become cheaper, entire new markets open up. Falling chip prices encourage additional purchases of tech products; whereas, falling food prices, while they might encourage substitution of more costly items, rarely encourage the purchase of additional items.

Many well-meaning individuals thought that recycling was the answer to the e-waste problem. But why hasn't e-waste recycling yielded the results hoped for?

There is often a disconnect between companies and consumers who want to do the right thing, and those efforts that are actually doing well. The process of recycling e-waste is extremely labor intensive. Sending e-waste abroad is ten times cheaper than dealing with it in the U.S. About 80 percent of the waste dropped off for recycling is exported, often ending up in China, South Asia, or Nigeria. Offshore processing is often done under terrible conditions that put both workers and the environment at serious risk

What are the advantages and disadvantages to each—for consumers, for studios, for middlemen like television networks and Netflix?

There's a clear upside to the model when it shifts to streaming; it will eliminate a huge chunk of costs associated with shipping and handling. In addition to this, the bandwidth and handling costs to send bits to a TV set are around a nickel. At some point, if postage goes away, Netflix may be in a position to offer even greater profits to its studio suppliers, and to make more money itself, too. However, wrangling licensing costs presents a challenge. Streaming licensing deals are tricky because rates vary. Some vendors have been asking as much as four dollars per stream for more valuable content —a fee that would quickly erase subscriber profits, making any such titles too costly to add to the firm's library. Though Netflix replaced its $9.99 unlimited streaming plus one-at-a-time DVD subscription service with two separate plans at $7.99 each which led to customer protests, it still represents a far greater value than any of the available alternatives. But more customers ready to watch content streamed by Netflix may prime the pump for studios to become more aggressive in licensing more of their content. Many TV networks and movie studios are leery of losing bargaining power to a dominant firm.

Wal-Mart backed out of the DVD-by-mail industry. Why does the firm continue to have so much influence with the major film studios? What strategic asset is Wal-Mart leveraging?

They're the king of DVD sales. The firm accounts for about 40 percent of DVD sales—a scale that delivers a lot of the bargaining power it has used to "encourage" studios to hold content from competing windows or to limit offering digital titles at competitive pricing during the peak new release period.

Define Longtail

This phenomenon whereby firms can make money by selling a near-limitless selection of less-popular products The 'tail' refers to the demand for less popular items that aren't offered by traditional brick-and-mortar shops

How have cheaper, faster chips impacted the camera industry? Give an example of the leadership shifts that have occurred in this industry.

Today the firm that sells more cameras than any other is Nokia, a firm that offers increasingly sophisticated chip-based digital cameras as a giveaway as part of its primary product, mobile phones. The factors explained in Moore's law are the reason for this shift. Nokia has overtaken former photography giants such as Kodak, and the now merged Konica-Minolta

Why did Wal-Mart and Blockbuster managers, as well as Wall Street analysts, underestimate Netflix? What issues might you advise analysts and managers to consider so that they avoid making these sorts of mistakes in the future?

Wal-Mart, Blockbuster, and Wall Street underestimated Netflix because it was a dot.com without a brick-and-mortar presence, and had a comparatively small customer base. Their estimates probably did not give enough weight to Netflix's superior business model, the quality of Netflix's staff, and the leadership provided by Reed Hastings.

Define Collaborative Filtering

a classification of software that monitors trends among customers and uses this data to personalize an individual customer's experience *used to customize the display of a Web page for each user so that an individual is greeted only with those items 69 Information Systems the software predicts they'll most likely be interested in.*

Supercomputers

computers that are among the fastest of any in the world at the time of their introduction

grid computing

firms place special software on its existing PCs or servers that enables these computers to work together on a common problem. Grids are now everywhere. Movie studios use them to create special effects and animated films. Proctor & Gamble has used grids to redesign the manufacturing process for Pringles potato chips. GM and Ford use grids to simulate crash tests, saving millions in junked cars and speeding time to market

flash memory

sometimes called "flash ram"; is solid-state memory that can be erased and reprogrammed; gets its name because the microchip is organized so that a section of memory cells are erased in a single action or "flash" ex. Cameras, MP3 players, USB drives, and mobile phones

Moore's Law

the principle that the speed and capability of computers can be expected to double every two years, as a result of increases in the number of transistors a microchip can contain