Page 340 - E-Bussiness and E-Commerce Management Strategy, Implementation, and Practice

M05_CHAF9601_04_SE_C05.QXD:D01_CHAF7409_04_SE_C01.QXD 16/4/09 11:12 Page 307

Chapter 5 E-business strategy 307

(www.orkut.com) in 2004 (based on a concept developed during the staff’s research time) and
Google Earth (via Keyhole Inc). Yahoo! has purchased eGroups, later to become Yahoo!
Groups and more recently photo-sharing and tagging service Flickr (www.flickr.com) and
shared bookmark tagging service (www.del.cio.us). Microsoft will also acquire companies
where appropriate, but in the areas mentioned above has tended to pursue a ‘fast-follower’
strategy based on internally developed technology. For example, many of these services are
available through MSN Spaces (http://spaces.msn.com), a rival service to social network site
MySpace (www.myspace.com) which was purchased by News Corporation in 2005.
These companies also invest in internal research and development (witness Google Labs
(http://labs.google.com), Microsoft Research (http://research.microsoft.com) and Yahoo!
Research (http://research.yahoo.com)) and continuously develop and trial new services.
Early (first) mover
The case study on Tesco.com in Chapter 6 also highlights how innovation in the Tesco
An early entrant into the
marketplace. business model has been facilitated through online channels.

Mini Case Study 5.3 Innovation in the Dell business model

One example of how companies can review and revise their business model is provided by Dell Computer.
Dell gained early-mover advantage in the mid-1990s when it became one of the first companies to offer
PCs for sale online. Its sales of PCs and peripherals grew from the mid-1990s with online sales of $1 million
per day to 2000 sales of $50 million per day. Based on this success it has looked at new business models
it can use in combination with its powerful brand to provide new services to its existing customer base and
also to generate revenue through new customers. In September 2000, Dell announced plans to become a
supplier of IT consulting services through linking with enterprise resource planning specialists such as soft-
ware suppliers, systems integrators and business consulting firms. This venture enabled Dell’s Premier B2B
customer extranet to be integrated into the procurement component of ERP systems such as SAP and
Baan, thus avoiding the need for rekeying and reducing costs. Dell Business Solutions is now an important
contributor to its business.
In a separate initiative, Dell launched a B2B marketplace (formerly www.dellmarketplace.com) in mid-
2000 aimed at discounted office goods and services procurements including PCs, peripherals, software,
stationery and travel. This strategic option did not prove sustainable, but it was able to test a model and
then move on – it closed the marketplace after just 4 months! This was Dell’s dot.com disaster. However, it
does offer Dell Outlet, a relatively low-cost purchase method for returned, refurbished PCs.
More recently, in 2007, Dell launched Ideastorm (www.ideastorm.com), a site encouraging user partici-
pation site where anyone can suggest new products and features which can be voted on, rather like the way

stories are rated in Digg (www.digg.com). Importantly, Dell ‘close the loop’ through a separate ‘Ideas in
Action’ section where they update consumers on actions taken by the company. As well as improvements
to customer service, they have explained how they have introduced systems with a non-Windows Linux
operating system in response to suggestions on Ideastorm. In 2008 Dell also has a raft of online options to
engage with customers and other partners including:
A corporate blog, Direct2Dell (www.direct2dell.com), which is ‘a blog about Dell products, services and
customers’
Studio Dell (www.studiodell.com) ‘designed to help you get the most from your Dell experience’
A brand channel on YouTube (www.youtube.com/DellVlog)
Dell Community / Dell Conversations (www.dell.com/conversations) ‘interactive ways for you to share and
learn with others and with us’.