How The Internet Drove the Digitalization of Products and Services

Introduction

The product or service of a business is the very essence of the company because it is what makes it what it is, thus on which rest the success of a business.  With the advent of the Internet, a whole new world was created, which is the cyber world.  And much like any other worlds, it has a market place through which commerce is channelled in an electronic way.  In the same manner, it consists of buying, selling, marketing and distribution of products or services over the global network of computers or in closed networks (like AOL or Minitel) that have a gateway onto an open network. And congruently to a traditional offline business, a competent management, great after-sales services, and a well-organized structure are equally important to an e commercial business.

For companies to gain entry to this new competitive marketplace, it must embark on the computerization and integration of information technology in its products, services and systems which led to the evolution of products and services in digital format. Apparently, electronic commerce entails its components to be digitized so that they can be facilitated electronically.

The central argument of the paper proposes that the Internet compelled the digitalization of products and services in modern society.  To support the thesis, this paper will explore the different products and services that evolved with the introduction of the Internet and prevalence of ecommerce in our modern society.  It will include a brief history of the Internet focusing on its development from a research oriented network to a commercial network.  It will explain the difference between the meanings of digitalization in comparison to the analogue process for clarification and setting the parameters of the paper.  It will provide an extensive discussion of the digitized products and services that developed in response to the electronic commerce along with the different issues that arose with its introduction.  And finally, it will provide marketing strategies that many e commercial companies adopt in order to successfully implement an online business and compete in the cyber world.

Review of Related Literature

The Internet and the World Wide Web

The Internet evolved from the need to transfer information between distant sites by connecting far apart computers and its users.  The connections of these computer terminals thru long distance lines (often phone lines) that facilitated the sending of information back and forth established the network.  The first wide-area network facility developed was the ARPANET (Advanced Research Projects Agency) which connected governmental and academic computer systems in the US. (Reed, 2007, p41)  Computers needed a standard language to facilitate communication between each other.   This led to the development of the TCP/IP (transmission control protocol/ Internet protocol) network protocol, the language that computers connected to the network used to talk to each other.  When all the interconnected research networks in the US were finally converted to the TCP/IP protocol, the Internet was born.  The Internet evolved from a command-line interface to a graphical user interface (GUI) with the introduction of the World Wide Web. Initially conceived by Tim Berners-Lee, the World Wide Web is an application in which all information in the Internet can be accessed in a uniform and simple manner through a standard set of naming and access conventions.

Among the standard guidelines are as follows:  All web sites are written in the same script called HTML (Hypertext Mark-up Language); All web sites use the same language or extensible transport mechanism called HTTP (hypertext transfer protocol) to communicate within the Web; and All web sites use URL (Universal Resource Locator) as its network-wide addressing scheme. (Poole, et al, 2005, p20) There are 2 basic qualities of the web which ultimately led to its popular adoption of the masses that initiated its potential to become a new channel for conducting business.  The first most conspicuous quality is its providence of the graphical interface. With the web, the Internet can now support multimedia formats (sounds, videos, images), which made the presentation of information more interesting, pleasing and effective. Secondly, the web made the Internet as easy as ABC. Unlike before when commands were typed much like in DOS, all commands now are practically just a click of a mouse. From then on, the Internet expanded around the globe beyond the expectations of its pioneers. Furthermore, it has become a global resource of information covering diverse topics on just about anything anyone can think of.

History shows that no one can exactly pinpoint which company really conducted the first online business or electronic commerce.  Although in the late 1960’s, ecommerce originally pertains to the facilitation of commercial transactions electronically or over a network such as electronic funds transfer (EFT) and electronic data interchange (EDI) because business companies and organizations were allowed to interact and to exchange business documentation electronically. (Reilly , 2004, p295)  However, the pioneer to the modern concept of e commerce in which we purchase products and services online is usually attributed to Amazon.com, an online bookstore established by Jeffrey Bezos on July 1995.   This was followed by Ebay, Dell, and Hewlett Packard until such time when every company had been prompted to join the bandwagon. Incidentally, the introduction of the Napster peer-to-peer sharing system in 1999 through which online users can exchange music files also played a significant role for the masses to embrace the new technological channel for commercial transaction.

Digital vs. Analogue

One the principal issues that need clarification in this paper are the term digital.  While there are many technical differences and consequences of digital in comparison to analogue files, this paper focuses on the idea that digital files refer to files that can be modified and stored in a computer in as much as it can be transmitted electronically over a computer network or the Internet.  Analogue on the other hand, pertains to the conventional and tangible substances that people traditionally use and exchange before especially before the advent of information technology.

In the technical sense, digital files are stored by means of binary digits (0 and 1 bits), which is ultimately the kind of language that computer machines can read, understand and absorb. (Doyle, 1985, p245) Digital files are computer files that can further be reduced to waves and frequencies for electronic transmission. Analogue files are stored using an infinite range that are not reduced to the language of machine and thus cannot be stored in computers. Thus, the delineation between digital and analogue can easily be discerned using computers. (Miller,  2007, p368) Traditional books and pictures can be considered as analogue files.  On the other hand, a PDF file and a jpeg, the corresponding equivalents of the book and the picture are digital files.  Central to this paper is the digitalization of analogue files which was influenced by the Internet.

Digitalization of Products

The Internet created a channel for distributing products and services electronically and conducting business online thus pushing companies to integrate information technology in their products and services by way of digitalization.   Many companies conducted product and service development and innovation in the auspices of digitalization in order to compete in the Internet.  The integration of information technology is not a matter of choice but has become a matter of necessity in order to enter the modern market where the battle must be fought.

The digitalization of products and services occurred across industries.  In the publishing industry, Amazon being one of the pioneers in electronic commerce, electronic book publishing has become essential.  Digitalization of books through electronic publishing will propel publishing companies to a high-tech industry and initiate for further expansion and diversification of products and services by responding the changing needs and trends of the market.  With E-book publishing, companies can further transform its website into an online resource of information or online library. This online library can be offered to academic and research institutions, other similar information research providers i.e. congress library and national library or even to the general public through a subscription fee.  It can also be integrated to the library systems of said institution clients for convenience their students and researchers.  The e-book format generated other educational instruction materials delivered through some form of information technology such as computers, CD-ROMs, internet or even cellular phones.  With the advancement of information technology, E-learning innovated CD ROM based materials that can accommodate auditory, visual, and kinaesthetic learning styles, or multimedia.  Special innovations may be expertly crafted and incorporated in the CD-ROM based information materials to make it distinct from simply reading a book.  Lessons identified as difficult to teach or hard to understand are reinforced through simulations, animations, games, and others.

The proliferation of books (PDF), picture (jpeg), music (mp3) and video (mp4) in digital format prompted the invention of gadgets or multimedia players in the market for the operation of the same.  One of the major gadgets that made waves in the commercial market is the digital audio player particularly the flash-based and digital jukeboxes.  Generally integrated into USB key drives of a computer, these devices behave like external data storages with the facility to play digital files (e.g. mp3 and .wma – Windows Media Audio). The handy flash players use memory cards while digital jukeboxes have hard drives with up to 100GB capacity.  Later, the Apple iPod specifically, the fifth-generation model can play videos. Another modern device which found its avid market among professionals is the personal digital assistant (PDA) or palmtop.  This electronic personal organizer usually includes an address book, schedule list, note pad, time keeper and calculator. Amidst these developments, a new technology promises to integrate the functions of a multi-media player, personal organizer, internet access, game console, photo, audio and video recorder aside from the fact that you can talk to people from anywhere on the world with them.  This is the 4th generation of wireless digital access device or the 4G cellular phones, which poses as an all-in-one gizmo a person will ever need in the future.

Digitalization of Services

With the digitalization of products, service industries where also afforded to digitalize their provision of services to their clients.  Educational institutions developed distance education programs to address the growing need for education and continuing education in the globalizing economy marked by a rapid exchange of people and culture between nations and economies and by rampant technological changes.  Education is necessary for the successful integration and operation between economies with cross cultural backgrounds, language barriers and different economic systems.  On the other hand, continuing education allows professionals to equip themselves with new skills demanded by modern society as well as to keep them abreast with trends.  Distance education refers to any teaching and learning process where the teacher and student(s) are separated by physical distance or circumstance that forbids face to face interaction.  (Moore and Anderson , p2003, p520) Information technology made it possible to bridge this gap by facilitating remote instruction and sustainable communication beyond space and time. With this, it afforded educational institutions to implement the Open University system, where students learn at the time, place and pace convenient and suitable to them considering their circumstances or limitations (time, distance or physical disability) to go to school to study.

The financial industry is one of the pioneers in digitalizing their services in response to the demands of the Internet, which at the moment serves as one of the pillars in expediting e commerce. Business technology allowed the facilitation of commercial transactions electronically through electronic funds transfer (EFT) and electronic data interchange (EDI).  Today, digitalization of financial services extended to automated inventory management systems, and automated data collection systems, credit cards and automated teller machines (ATM) and lately enterprise resource planning systems (ERP), data mining and data warehousing. (Targowski, 2003, p355)

Research Methodology & Research Questions

The principal research methodology used in this research study is library and internet research. Library research will form the bulk of the review of related literature and the meat of the paper.  Internet research will help in identifying the different and common products and services that had been digitized.  Library research will be used mainly to validate, to support results and to provide the theoretical authority of the findings.  Informal interviews will also be conducted to web developers, companies, employees and consumers who are involved in ecommerce business.  This will provide a more comprehensive and practical insight on how the internet has affected or influence marketing in terms of digitizing products.

The library research encompasses the scientific positivism approach in the paper as it will help provide the paper scientific authoritative support in its claims.  On the other hand, the interview method will be conducted to cover Interpretivism as the insights that can be gathered from consumers and ordinary people can further provide depth and complexity of the ideas in this paper.  Finally, the conclusion of this paper will constitute the critical approach of research as it will try to connect how society interacts with technology thereby empowering ordinary people i.e. as consumers in dictating trends in technology for it to better serve us.

This research paper will not only provide an outright discussion of the different digital products and services that had evolved with the proliferation of the internet. It will involve discussions on other pertinent issues that arise about the different digital products and services.   For instance consider in undertaking an IT development project for companies to conduct ecommerce, outsourcing is one a business strategy or option that many companies can consider in which company takes some of its existing processes and lets some an outside party do them. Outsourcing an IT consulting firm for the project is necessary because many companies do not can the manpower capacity to undertake the project on its own. (Epstein , 2004, p67)  In which case, the marketing aspect of the e-commercial business including the digitalization of its products and services will be highly dependent on IT consulting firm to be outsourced.  It will try to obliquely answer what factors makes outsourcing a viable option in undertaking a project, what are the advantages and disadvantages of such strategy, and what are some evaluation criteria can be used by the company who wishes to outsource.

The copyright piracy is one major problem in the e-commerce industry that remains unresolved.  This included the illegal copying of music, movies and books in digital format which deprives or reduces composers, artists and writers of their rightful royalties. (Matsuura , 2001, p143) The paper will also touch on some innovative schemes that companies adopt in order to prevent or at least minimize the ill effects of piracy.

The paper will also try to investigate some of the limitations or hindrances that any company must address in digitizing the product and services.  While technology maybe available, there are still certain obstacles to the digitalization of services and products. For instance, not all educational institutions can establish an Open University that offers degree courses via distance education due to requirements of local government regulatory agencies, inadequate infrastructure, insufficient IT acculturation, market saturation and incapacities of their target markets.  (Moore , 2007, p584)

Contracting online or transacting via the Internet is principally automated through the use of credit cards.  Security is therefore a major concern in the development of ecommerce.  The main security issues in the context of e commerce arise from three factors namely: (1) unauthorized access to information; processing unauthorized or incorrect transaction and (3) changing transaction whiles in electronic transit. (Ferris and Whipple, 2002, p18).  Thus, it will propose common ways on how to secure the handling of online financial transactions.

Finally, the paper will also tackle the different standards in constructing a well-designed e commerce website as it will reflect how the internet have affected marketing to wit; how to make the website attractive to draw customers or to how it will be made to aim for to its target audience, among others.

Ontology or framework of the paper will be set by its focus on digitalization of products and services as identified and defined in the review of related literature.  The epistemology would pertain to the arising questions and issues that relate to build up a more comprehensive research project.  Methodology refers to an evaluation of effectiveness of the way the research was conducted.

Research Methods & Techniques

Internet research will be conducted first to identify which areas, products and services have been commonly digitized. Initial research conducted through informal browsing over the internet immediately allowed author to identify the following products: Books, music and video; and services: education and financial services. Focusing on these products and services, further information and data will be research using the Internet for any issues, questions that can be further identified.

Library research on the other hand, will serve to gather the needed theories and previous studies that have been conducted that will be used to support the issues raised in the internet research.  For instance, in exploring the digitalization of education service through distance education, such idea can be supported in the discussion of the concept of Virtual Learning Environment System (VLES) that will provide the framework through which e-learning will be implemented. (Ryan, 2000, p140) VLES generally refers to all online interactions between learners and teachers or students and faculty.  It can be incorporated to the idea of a Learning Management System (LMS), which extends the educational services to include web-based registration or enrolment and auto evaluation of student progress/ standings by computerized grading and certification process.

The conduct of the interviews will involve the research technique called dramaturgy.  Also known as dramaturgical interviewing, the researcher will make some role playing or acted ones biases in some social performance or interaction. (Miller and Dingwall, 1997. p106)  This is critical in establishing rapport and trust between the interviewer and interviewee to obtain natural and honest to goodness responses and replies.  In which case, the author will act like a client who is shopping online and make instigate situations in which feedbacks from the e-commercial business will be generated.  Moreover, informal interviews will be conducted to typical online purchasers that will be randomly selected from acquaintances and friends to gather insights on how they perceive the ecommerce website responds to their needs.  This supports the idea that even customer service support had been digitized by the provision of electronic documents that contain instructions as well as provision of downloadable software that is used to address the needs of the customer.

Ethical and Data Protection Issues

In any research endeavour, the need to respect and protect the confidentiality of information is a vital component because the guarantee of privacy endows clients a sort of an asylum or refuge that allows clients to open up to disclose their concealed experiences.  The prospect to cultivate faith and establish confidentiality is an important component in this research project.

However, because the topic of the research paper is highly impersonal meaning it does not involve highly confidential information or ethical issues, it will instead provide due protection to data presented in the paper through proper citation and bibliography.  No proper names will be specifically mentioned in order to protect the privacy of its source especially data gathered from specific websites or data gathered from interviews.  Subjects will be referred in general. In case, the brand names will be mentioned, the author will make sure that statements pertaining to the specified brand will not be pejorative nor will it provide undue criticism on it in the context of the paragraph.

Research Plan

The library and the Internet are the most accessible and available sources of data and information for the author.  A research history of the Internet will reveal the different components that led to its evolution from a mere network for information exchange into a new market network and conduit for conducting business.  After establishing this, research will be focused on common products and services that are available in the web specifically those products and services that have undergone digital formatting for electronic transmission namely music, pictures and videos and educational and financial service.  Issues involved with the digitalization including other problems of companies who are and who wish to establish an ecommerce business will be researched including outsourcing, copyright, security and others.  Library research will also be conducted to obtain authoritative theoretical principles that will address the issues.

Interviews to be conducted will only serve to provide supplemental insights on the findings of the research. The type of people to be interviewed will depend on availability and the circumstances arising from the library and internet research.  For instance, interviews will be conducted to ordinary people can be conducted with regards to their preference over audio CD and mp3s. Because the internet allowed sharing of the digital format of music, pictures and music, the new demands of consumers further prompted companies to digitized music.  In the case of distance education, the researcher also plans to act as a prospective client to get a hold of the information about the digital program elements of the distance education such as lecture materials  in the form of E-books or PowerPoint  presentations; animations, video and audio clips as well as applets.

Conclusion

After learning the intimate connection between the evolution of products and services with the development of the internet, this paper can provide companies initial knowledge that can serve as their entry point to enhance their capacity to participate in the digital economy or e-readiness.  Information technology is not simply a commodity but a driver towards economic progress and sustainability.  Moreover, the principles or lessons that we can learn and develop from this paper can help users, consumers and all concerned to understand the important roles of the information technology as well as their individual roles in dynamically influencing each other for the advancement of technology and progress of society.  

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