Business Strategy in the Online Industry

"The Internet is like a 201'00t tidal wave coming thousands of miles across the Pacific and we are in kayaks. " Andi Grove In the course of the commercial distribution of Internet technology since the year 1995 new business models emerged and ultimately established the on-line industry as a distinct eco­ nomic environment. The author defines this new marketspace as " . . . . a multi-layered industry consisting of five main layers: network, hosting, software, content and devices. Each layer consists of sub-layers. Players from the converging industries telecommunications, computer hardware/software, media and consumer electronics conduct on-line business units offering a set of on-line services. " (S. 17). Significance and growth of the on-line industry are enormous. The market for multimedia products and services represents approximately 10% of the US GOP already today. The industry volume is expected to double every 12 to 18 months. The increasing relevance of the on-line industry is driving the interest of academia in a theoretical foundation of the observed economic phenomena. The term network economics establishes a new scientific area. Due to the specific structure and logic of the industry traditional business concepts and strategy approaches can be translated only in a limited way. At this point the work of Christian Gottsch comes in play, which - by utilizing the theoretical concepts of net­ work economics and game theory - models the structure of the on-line industry and delivers a methodic set of instruments to develop marketing strategies.