1. 1 © 1999, Cisco Systems, Inc. Course Number 1084_06F9_c3

2. 2 © 1999, Cisco Systems, Inc. Course Number 1084_06F9_c3 Internet Economy Indicators John Chambers Cisco Systems

3. 3 1084_06F9_c3 © 1999, Cisco Systems, Inc. Major Economic Changes

4. 4 1084_06F9_c3 © 1999, Cisco Systems, Inc. The Internet Economy The confluence of two forces has created the Internet Economythe globalization of business and the networking of information technology.

5. 5 1084_06F9_c3 © 1999, Cisco Systems, Inc. Role of IS

6. 6 1084_06F9_c3 © 1999, Cisco Systems, Inc. 6 1084_06F9_c3 © 1999, Cisco Systems, Inc. What every CEO should know about e-business

7. 7 1084_06F9_c3 © 1999, Cisco Systems, Inc. Government Partnering with Business for Common Goals

8. 8 1084_06F9_c3 © 1999, Cisco Systems, Inc. Measuring the Internet Economy How is it defined? How large is it? How fast is it growing? What methodologies are appropriate for measuring activities in this economy? How is it defined? How large is it? How fast is it growing? What methodologies are appropriate for measuring activities in this economy?

9. 9 1084_06F9_c3 © 1999, Cisco Systems, Inc. World E-Commerce Sales Source: Forrester Current Projection Six Months Ago

10. 10 1084_06F9_c3 © 1999, Cisco Systems, Inc. 10 1084_06F9_c3 © 1999, Cisco Systems, Inc. The Internet Economy Indicators

11. 11 1084_06F9_c3 © 1999, Cisco Systems, Inc. Who Was Involved in the Internet Economy Indicators Study? University of Texas Anitesh Barua Andrew B. Whinston Internet research experts 3000 U.S.-based Internet companies University of Texas Anitesh Barua Andrew B. Whinston Internet research experts 3000 U.S.-based Internet companies

12. 12 1084_06F9_c3 © 1999, Cisco Systems, Inc. Four Internet Economy Layers Internet Infrastructure LAYER 1 Application Infrastructure LAYER 2 Intermediary/Market Maker LAYER 3 Internet Commerce LAYER 4

13. 13 1084_06F9_c3 © 1999, Cisco Systems, Inc. Layer 1: Internet Infrastructure Companies that manufacture or provide products and services that make up the Internet network infrastructure includes: Internet backbone providers Internet service providers Networking hardware and software companies PC and Server manufacturers Security vendors Fiber optics makers Line acceleration hardware manufacturers

14. 14 1084_06F9_c3 © 1999, Cisco Systems, Inc. Layer 1: Internet Infrastructure Companies that manufacture or provide products and services that make up the Internet network infrastructure includes: IndicatorRevenuesJobs Internet Infrastructure $115 B 372,000

15. 15 1084_06F9_c3 © 1999, Cisco Systems, Inc. Layer 2: Internet and Network Applications Infrastructure Companies that manufacture or provide products and services necessary to carry out all activities in the digital market includes: Internet consultants Web server software and other Internet applications Multimedia applications Web development software Search engine software Online training Web-enabled databases

16. 16 1084_06F9_c3 © 1999, Cisco Systems, Inc. Layer 2: Internet and Network Applications Infrastructure Companies that manufacture or provide products and services necessary to carry out all activities in the digital market includes: IndicatorRevenuesJobs Application Infrastructure $56 B 231,000

17. 17 1084_06F9_c3 © 1999, Cisco Systems, Inc. Layer 3: Internet Intermediary Companies that increase the efficiency of electronic markets by facilitating the meeting and interaction of buyers and sellers via the World Wide Web and Internet includes: Market makers in vertical industries Online travel agents Online brokerages Content aggregators Portals/Content providers Internet ad brokers

18. 18 1084_06F9_c3 © 1999, Cisco Systems, Inc. Layer 3: Internet Intermediary Companies that increase the efficiency of electronic markets by facilitating the meeting and interaction of buyers and sellers via the World Wide Web and Internet includes: IndicatorRevenuesJobs Intermediary Infrastructure $58 B 252,000

19. 19 1084_06F9_c3 © 1999, Cisco Systems, Inc. Layer 4: Internet Commerce Companies that generate product and service sales to consumers or businesses over the Internet and World Wide Web Online product sales Fee/subscription-based companies Online advertising Online travel providers

20. 20 1084_06F9_c3 © 1999, Cisco Systems, Inc. Layer 4: Internet Commerce Companies that generate product and service sales to consumers or businesses over the Internet and World Wide Web IndicatorRevenuesJobs Internet Commerce $102 B 482,000

21. 21 1084_06F9_c3 © 1999, Cisco Systems, Inc. Internet Economy Indicators IndicatorRevenuesJobs Unified* $301B 1,203,000 Internet Commerce $102 B 482,000 Intermediary Infrastructure $58 B 252,000 Application Infrastructure $ 56 B 231,000 Internet Infrastructure $115 B 372,000 *Takes into account double counting among layers

22. 22 1084_06F9_c3 © 1999, Cisco Systems, Inc. Industry Comparisons IndustryRevenuesJobs Energy/Utility $223 B 671 K Telecommunications $270 B 975 K Banking $7,890 B 3,600 K Automotive $350 B 1,500 K Source: U.S. Department of Commerce, Fortune Magazine

23. 23 1084_06F9_c3 © 1999, Cisco Systems, Inc. Internet Revolution 19951998 CAGR Growth $6,762 B $7,552 B 2.8% $5 B $301 B 174.5% GDP Internet Economy

24. 24 1084_06F9_c3 © 1999, Cisco Systems, Inc. Future of the Indicators Quarterly Updates Creation of Comprehensive Index Quarterly Updates Creation of Comprehensive Index

25. 25 1084_06F9_c3 © 1999, Cisco Systems, Inc. New Internet Evolution Academia Business Consumer

26. 26 1084_06F9_c3 © 1999, Cisco Systems, Inc. ($B) Source: Bloomberg Market Capitalization June 4, 1995 Ascend 3Com Cabletron Fore Newbridge Cisco Competitors $24B $14B Bay

27. 27 1084_06F9_c3 © 1999, Cisco Systems, Inc. Market Capitalization June 4, 1999 3Com Ascend Cabletron Fore Newbridge $43B $180B ($B) Source: Bloomberg Cisco Competitors

28. 28 1084_06F9_c3 © 1999, Cisco Systems, Inc. Lucent Cisco Ericsson Alcatel Nokia Siemens Motorola Nortel Fujitsu NEC Market CapitalizationJune 4, 1998 Source: Bloomberg ($B)

29. 29 1084_06F9_c3 © 1999, Cisco Systems, Inc. Market CapitalizationJune 4, 1999 Lucent Cisco Ericsson Nortel Motorola Nokia Siemens Fujitsu Alcatel NEC Source: Bloomberg ($B)

30. 30 1084_06F9_c3 © 1999, Cisco Systems, Inc. Source: NASDAQ, Bloomberg Barnes & Noble Amazon.com CBS Yahoo Merrill Lynch eTrade ($B) Internet Impact on Market Capitalization June 4, 1996

31. 31 1084_06F9_c3 © 1999, Cisco Systems, Inc. Source: NASDAQ, Bloomberg Barnes & Noble Amazon.com CBS Yahoo Merrill Lynch eTrade ($B) Internet Impact on Market Capitalization June 4, 1999

32. 32 1084_06F9_c3 © 1999, Cisco Systems, Inc. Internet Economy Business Principles for Success

33. 33 1084_06F9_c3 © 1999, Cisco Systems, Inc. Internet Economy Attitudes

34. 34 1084_06F9_c3 © 1999, Cisco Systems, Inc. Challenges to Growth Government Regulation Education R&D Spending Security/ Privacy

35. 35 1084_06F9_c3 © 1999, Cisco Systems, Inc.

36. 36 1084_06F9_c3 © 1999, Cisco Systems, Inc. 36 1084_06F9_c3 © 1999, Cisco Systems, Inc.

37. 37 1084_06F9_c3 © 1999, Cisco Systems, Inc. 37 1084_06F9_c3 © 1999, Cisco Systems, Inc.