TEAM NIMBUS
REPORT 1: PRINCIPLES

This team report will compare the book principles to our selected companies: Amazon.com, eBay.com, and iVillage.com. However, some principles may not have been used or applied by the company.

LAW/THEORY

Moore's Law : Technological advances have allowed Amazon.com to conduct faster and more efficient transaction processing of customer orders than ever before. However, the company does not manufacture silicon chips, therefore Moore's Law does not apply.

Metcalfe's Law: Amazon is a proponent of this law through its speedy network connections and leadership for Internet online shopping.

Coase's Theory: The success the company's growth greatly depends on low transaction costs through technological change.

Law of Disruption: This law has affected Amazon through an increase in competition from the online commerce market. Amazon is not a killer app because consumers can shop elsewhere.

PRINCIPLES

1. Outsourcing the customer: Amazon's 1-Click ordering allows the customers to do most of the transaction work themselves.
2. Cannibalize you markets: Amazon continually expands its customer base by attracting customers away from other competitive sites.
3. Treat each customer as a market segment of one: The Web can be very personal after you setup an account. Each time you visit the site, you are welcomed and given a list of titles to browse. The software agent targets your needs based on your buying and browsing habits.
4. Create communities of value: This firm is very customer-focused. Amazon builds these communities of value simply by attracting as many users as possible.
5. Replace rude interfaces with learning interfaces: Each Web page has a consistent look and feel that a user can easily navigate to find what they want.
6. Ensure continuity for the customer, not yourself: The company must ensure continuity for the customer. Recently, the company announced online auctions. It will promote brand name products to its growing customer base.
7. Give away as much information as you can: Amazon gives a lot of information free online about book and music reviews that help consumers to compare and shop for the best deal.
8. Structure every transaction as a joint venture: The company has been very active in investing and acquiring companies that have strategic and complementary technologies and product offerings.
9. Treat your assets as liabilities: Amazon leased a new distribution center in Nevada to better service its customers in the western United States.
10. Destroy your value chain: The company created a new value chain, which includes authors, publishers, and Amazon.com. This new structure has radically changed online Internet commerce forever. Click here for a value chain diagram.
11. Manage innovation as a portfolio of options: The company launched Amazon.com Auctions in direct competition with eBay, an online Internet auction player.
12. Hire the children: We found no indication of this in our research thus far.

TEAM NIMBUS
REPORT 1: PRINCIPLES

LAW/THEORY

Moore's Law - eBay is services company and does not manufacture silicon chips, therefore Moore's law does not apply to them.

Metcalfe's Law - eBay achieved a critical mass quickly by being the first company to offer online auctions. The value of eBay is proportional to the number of users that participate in its community.

Coase's Theory - eBay exemplifies Coase's theory by bringing together buyers and seller from across the globe. This reduces transaction costs for individuals, many times creating transactions that would otherwise not be feasible.

Law of Disruption - Although eBay is an innovative concept, it is not a killer app that will fundamentally change things.

The Modern Model - eBay is facing tougher and tougher competition due to globalization and will have to continue to innovate in order to compete in the future.

PRINCIPLES

1. Outsourcing the customer - eBay uses this principle extensively. The customers themselves perform almost all services that they use on eBay.
2. Cannibalize your markets - eBay is still trying to build a bigger customer base by obtaining new customers from other markets.
3. Treat each customer as a market segment of one - eBay practices this principle by offering services such as the Personal Shopper and customized account configuration.
4. Create communities of value - This is the founding principle behind eBay. The fundamental concept behind eBay is to form a community of users that create value for themselves.
5. Replace rude interfaces with learning interfaces - eBay's interface changes constantly offering news, features, and customization.
6. Ensure continuity for the customer, not yourself - eBay tries to closely follow customer demands by maintaining constant communication with them through email and a suggestion box and adapting accordingly.
7. Give away as much information as you can - eBay facilitates the flow of information by connecting buyers and sellers through an online forum.
8. Structure every transaction as a joint venture - eBay accomplishes this by establishing a relationship with every customer that signs up. They maintain this relationship primarily through email communication.
9. Treat your assets as liabilities - Although I did not find any direct evidence of this, I believe eBay does a relatively low investment in assets mainly because they are an Internet service company.
10. Destroy your value chain - eBay is attempting to destroy it's own value chain by offering competing services such as local eBays.
11. Manage innovation as a portfolio of options - eBay is still expanding on the original concept of an online trading community. However, they are currently experimenting with new interfaces and features.
12. Hire the children - I could find no evidence indicating the age of any eBay employee.

TEAM NIMBUS
REPORT 1: PRINCIPLES

LAW/THEORY

Moore's Law This may have some application technologically for iVillage but not so much in the public's perception of the site.

Metcalfe's Law This principle applies to iVillage because achieving a critical mass of members is key to the success of a web site, especially one that doesn't not have a product and instead relies on advertising to generate its revenue.

Coase's Theory Once initial costs of getting the information to the customer are paid, the cost of servicing the next member are minute.

Law of Disruption Perhaps the universally-held belief that the law of disruption would apply to for iVillage is the traditional way that women would get information, i.e. newspapers, magazines, television. Here, they have another form of getting, receiving and responding to information.

PRINCIPLES

1. Outsourcing the customer. While there are many appealing topics to women on this site, you can't customize the service in the true customizing sense.
2. Cannibalize you markets. We found no indication of this in our research thus far.
3. Treat each customer as a market segment of one. Visitors are met with a vast array of information and can pick and choose what topics they are interested in. The topics are so wide, as they pertain to women, that women are, in a sense, treated as a market segment of one in that they can use the service as they wish and form their own relationships in chat rooms provided by the site.
4. Create communities of value. The value created is the community itself. There is no real "product" so the value to the customer is that which she creates for herself. If there is no value perceived, then the customer won't return.
5. Replace rude interfaces with learning interfaces. The site is very user friendly and welcoming.
6. Ensure continuity for the customer, not yourself. There are a variety of entry points for members to choose from and, thus, stay a while to visit.
7. Give away as much information as you can. All the information is free on iVillage. All visitors are required to do, if they wish to chat at least, are register as members. If you just wish to read, there's no registration requirement at all.
8. Structure every transaction as a joint venture. The visit is a joint venture between the customer and the site.
9. Treat your assets as liabilities. We found no indication of this research thus far.
10. Destroy your value chain. The company is continuing to grow and is always looking for ways to reinvent itself.
11. Manage innovation as a portfolio of options. This site is forward thinking and must innovate in order to keep customers around. IVillage recently partnered with Ziff-Davis Inc. with plans to develop a new Web channel focused on technology using content provided by ZDNet, the online unit of media and marketing company Ziff-Davis Inc.
12. Hire the children. We found no indication of this research thus far.