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Chapter 6
Data Communications
- Case & Exercise
Jason C. H. Chen, Ph.D.
Professor of MIS
School of Business
Gonzaga University
Spokane, WA 99258 USA
[email protected]
Dr. Chen, Management Information Systems
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USING YOUR KNOWLEDGE
(p. 209)
• #1 Suppose you manage a group of seven employees
in a small business. Each of your employees wants
to be connected to the Internet. Consider two
alternatives:
•
• Alternative A: Each employee has his or her own
modem and connects individually to the Internet.
• Alternative B: The employees’ computers are
connected using a LAN and the network uses a
single modem to connect.
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a. Sketch the equipment and lines required for each alternative
Alternative A:
Computer 1
Computer 2
Computer 3
Computer 4
Computer 5
Computer 6
Computer 7
Modem 1
Modem 2
Modem 3
Modem 4
Modem 5
Modem 6
Modem 7
ISP
Internet
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Alternative B:
Computer 3
Computer 4
Computer 2
Computer 5
Computer 6
Computer 7
Computer 1
Switch
Router
Modem
ISP
Internet
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Compare two issues: 1) initial set-up cost, 2) speed and flexibility for the future
Computer 1
Computer 2
Computer 3
Computer 4
Computer 5
Computer 6
Computer 7
Modem 1
Modem 2
Modem 3
Modem 4
Modem 5
Modem 6
Modem 7
ISP
Internet
Computer 3
Computer 4
Computer 2
Computer 5
Computer 6
Computer 7
Computer 1
Switch
Router
Modem
ISP
Internet
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Compare two issues: 1) initial set-up cost, 2) speed and flexibility for the future
Computer 1
Computer 2
Computer 3
Computer 4
Computer 5
Computer 6
Computer 7
Modem 1
Modem 2
Modem 3
Modem 4
Modem 5
Modem 6
Modem 7
ISP
Internet
Computer 3
Computer 2
Computer 1
NIC
NIC
NIC
Computer 4
NIC
UTP wire
DSL ( use existing UTP
telephone lines)
Computer 5
NIC
Computer 6
Computer 7
NIC
NIC
Switch
Router
Modem
ISP
DSL or Cable
Internet
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c. Compare the alternatives using the criteria in
Figure 6-16 (cont.)
Initial Setup
Cost
Ongoing
Cost
Option:
A
Less expensive
More
Option:
B
More expensive
Less
Dr. Chen, Management Information Systems
Speed
Good
may be slow
if each users
is consistently
uploading/do
wnloading
huge files
Flexibility
Not very
flexible
Yes (easy to
add more
users to the
network)
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• b. Explain the actions you need to take to create each
alternative.
• To create alternative A, you would arrange for and obtain
seven modems from your Internet Service Provider. As this is
a business setting, you are likely to want DSL modems so that
regular voice communication will not be interrupted on the
phone lines to each of your employees. Connect each
computer to its DSL modem and connect the modem to the
phone line. Pay your ISP for seven Internet connections.
• To create alternative B, install network interface cards on each
computer. Connect each NIC to a switch using unshielded
twisted pair wire. Connect the switch to a router, enabling the
computers to share a single Internet connection. Connect the
router to the correct modem (DSL or cable), and pay your ISP
for one Internet connection.
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• c. Compare the alternatives using the criteria in Figure 6-16.
• Alternative A would require the initial cost of seven DSL modems.
Each modem would have to be attached to each computer using
existing phone lines. Ongoing costs include the seven Internet
connections provided by the ISP. This configuration would provide
excellent Internet access speed to each computer, but would not be
very flexible.
• Alternative B would require more extensive initial set up costs. The
NICs would have to be installed on each computer. Cables would
have to be run to connect each NIC with the switch. The switch
would have to be installed and configured and connected to the
router. The router would have to be installed, configured, and
connected to the modem. Ongoing costs would include one Internet
connection provided by the ISP and costs associated with maintaining
and repairing the switch and router. Performance in this configuration
could decline if each user accesses the Internet extensively. This
configuration is more flexible than the other since it is relatively easy
to add more users to the network.
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• d. Which of these two alternatives do you
recommend?
•
• Unless each user is constantly uploading
and downloading huge files, alternative B
would provide the most effective and
flexible plan for Internet access for the
business.
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Case Study 6:
Turbulent Air in Those Azure Clouds
(pp. 210 – 212)
• Microsoft has to find a profitable way to put a
big part of its business out of business
• If Azure is successful, Office 365 will replace
Windows Server and SQL Server, which is
24% of current revenue
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11
Azure
Standard
Rates
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1. In your own words, summarize Microsoft’s
problem.
•
• In a nutshell, Microsoft is facing trends in the
marketplace (cloud computing) that make one of
its core business product lines obsolete.
• As it moves to attain a competitive position in the
cloud computing market, it makes its own products
and services unnecessary, essentially cannibalizing
its server line of business.
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2. Explain the meaning of the following sentence: “…you can purchase
an hour of a mid-range server for 24 cents. Let’s assume the cost of
running that server is a little less than half, say, 10 cents. Because
Rackspace can sell an hour on a bare server for a penny and half, it’s
likely that a big part of that 24 cents is a license for Windows Server,
and the true marginal cost to Microsoft is probably much less than 10
cents.”
•
• The point of this sentence is that the cost of an hour of a
mid-range server factors in a fee for the Windows server
license that Microsoft wants to recover from its customers.
However, since Microsoft owns its own server software, it
does not actually have to pay this server fee to anyone, but
keeps it for itself (in essence, offsetting the lost software
license fees it can no longer attain through the sale of
servers owned in-house by its customers).
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3. How does the example Office 365 marginal revenue
analysis change if the cost of running that server is 1 cent,
not 10?
•
• If the cost of running the server is one cent per
hour, Microsoft’s margin will increase:
• Office 365 costs $6 per month, per employee,
which is $120 for 20 people, or $1,440 per year.
• $1,440 – (8760 * $.01) = 1,440 – 87.60 =
$1,352.40
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4. How does the example Office 365 marginal revenue
analysis change if that single server supports 2,000 users, not
20?
•
• If 2,000 users were supported, the revenue side of the
equation increases substantially:
•
• 2,000 * $6 = $12,000
•
• Assuming the original assumption of the cost of running the
server at ten cents per hour, the new margin is:
•
• $12,000 - $876 = $11,124
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5. As of this writing Microsoft just purchased Skype; their reasons
for doing so are unclear at present (November 2011), but most
likely involve the problems addressed in this case. By the time you
read this, Microsoft’s Skype strategy should be clear. Describe
what it is and how it changes this analysis.
•
• Microsoft’s strategy is not clear at this point (December 2011),
but the reaction to this purchase is fairly positive. Many believe
that Microsoft made a smart move buying advanced
communications technology it can put into its products along
with a ready base of users.
•
• The most likely first step will be to bring Skype to the nearly 35
million active members of Xbox Live, Microsoft’s online
gaming setup, allowing players to video-chat while they play
games or watch movies.
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Dr. Chen, Management Information Systems
5 (cont.)
• Microsoft will then look to introduce Skype as an app on its
Windows Phones and make it complementary to its PC software,
analysts said, helping it battle rival services Google Talk and
Apple Inc’s FaceTime.
•
• The strategy will be to draw more people into Skype, especially
business users, pushing them towards paid services. “It’s a huge
installed base and Microsoft can target them with services from
Bing, ads and so on,” said Jack Gold, head of J Gold Associates,
a telecoms research firm. “Skype can also plug into the Lync
environment and give Microsoft scalability way beyond what
they can do now, as many companies already use Skype.”
• Source: Microsoft’s likely strategy for Skype October 29, 2011
http://timesofindia.indiatimes.com/tech/news/software-services/Microsoftslikely-strategy-for-Skype/articleshow/10529444.cms
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