ISM 211

Winter 2009
eBusiness: Technology and Strategy





It’s not too late to join the class! You can make up the first lecture by watching it online here.


Post to the course discussion forum each week for full credit. This is based on the SOE online forum system---contact Geoff if you need help setting up a login name and password.


The 2/12 class has been moved to Tuesday, 2/10, E2 room 586, 6-9:30 PM.  The following week (2/19) we will resume the usual Thursday night schedule.


Feb. 26 update:  final projects due on March 12.  Project 1 results are posted below.




          Thursdays 6-9:30, E2 194, UCSC Campus (first class: Thursday Jan 8th)

          Telecast to UCSC Silicon Valley Center

(Located at NASA Ames Research Park, Moffett Field, Mountain View, CA)         

          Course Number: 45188 (Campus) 45189 (SVC)

          Required Course of Knowledge Services & Enterprise Management (KSEM) Certificate

          Enrollment is open to non-full time students from industry via the UCSC Extension [link]


Course Description:

TIM 211 is a first graduate course in technology and business strategy for information technology products and services. Firms trying to succeed in the information technology products and services sectors need to understand the structure of modern information technology, the relation of that structure to the structure of the industry that creates it, and the economic forces that drive the players in the industry.



          John Musacchio (

Office:                         E2 Room 557

Office hours:              TBA



Teaching Assistant: Geoff Ryder




Materials Requiring Purchase:

*    C. Shapiro, H. Varian, Information Rules: A Strategic Guide to the Network Economy, Harvard Business School Press; 1st edition (November 1998)

*    Buy from: [Amazon] [Barnes and Noble][Harvard Business School Press]


*    Online Reader of Cases and Articles from Harvard Business School Press

*    [Purchase Here]

*    Reader Includes

*      T. Eisenmann, K. Hermann, “Google Inc,” Harvard Business School Case Study, 2006.

*      F. W. McFarlan, V. Belokhvostova, “RosettaNet and ebXML: Betting on the Right eBusiness Standard,” Harvard Business School Case Study, 2006.

*      M. J. Piskorski, “LinkedIn (A),” Harvard Business School Case Study, 2007.

*      M. Porter, “Strategy and the Internet,” Harvard Business Review, March 2001.

*      M. Porter, “The Five Competitive Forces That Shape Strategy,” Harvard Business Review, March 2008.

*      D. Yoffe, M. Kwak, “With Friends Like These: The Art of Managing Complementors,” Harvard Business Review, September 2006.


Other Reading:

*      B. Edelman, M. Ostrovsky, M. Schwarz, ”Internet Advertising and the Generalized Second Price Auction: Selling Billions of Dollars Worth of Keywords,” Working paper, 2005.

*      J. Musacchio, J. Walrand, G. Schwartz, “A Two-Sided Market Analysis of Provider Investment Incentives With an Application to the Net-Neutrality Issue.” To appear in Review of Network Economics (2008)

*      D. Messerschmitt, “Rethinking components: from hardware and software to systems.” Proceedings of the IEEE, vol.95, no.7, July 2007, pp. 1473-96.


Suggested Reference Books [Purchase NOT Required]:

*      D. Fudenberg, J. Tirole, Game Theory, MIT Press, 1991.

*    D. Messerschmitt, C. Szyperski, Software Ecosystem: Understanding an Indispensable Technology and Industry, The MIT Press; New Ed edition (September 1, 2005)

*    H. Varian, J. Farrell, C. Shapiro, The Economics of Information Technology: An Introduction, Cambridge University Press (January 31, 2005)



*    Homework assignments 15%

*    Participation 10%

*    Discussion Forum 10% à ISM 211 forum

*    Project 1 25%

*    Final Project 40%


Tentative Lecture Plan

(We will likely make adjustments to the topics as we assess the needs and interests of the students. More assignments will be added to the lecture plan as the quarter progresses!)




Lecture Topic


(Reading to be done before each class)




·      Course Introduction

·      Introduction to Strategy

·     Varian and Shapiro (VS), Chapter 1, The Information Economy

·     HBR Five Competitive Forces

Final project assigned



·      Economics of Information

- Pricing and versioning

- Bundling


·     HBR Five Competitive Forces (cont)

·     VS Chapter 2, Pricing

·     VS Chapter 3, Versioning

·     HBR, Strategy and the Internet

Problem Set 1 out: (pricing and versioning)




·      Industry and Technology Structure

-      technology layering, component suppliers and system integrators

·      Web Programming Tutorial


·     HBR, Strategy and the Internet (cont)

·     Messerschmitt: Rethinking Components

·     HBS ebXML case study

·     Web Services Reference:  ebxml-ws.pdf

Project 1 out:

(web programming)



·      Network Effects;

·      Game Theory and Auctions Introduction

·     VS Chapter 7, Networks and Positive Feedback

·     HBS Winner-Take-All in Networked Markets

·     Game Theory Tutorial Reading—see the tutorial included in

·     Amazon Web Services

Problem Set 1 due



·      Game Theory Applications: Modeling of two-sided markets and Net Neutrality; Advertising Auctions

·     Musacchio, Schwartz, Walrand, "A Two Sided Market Analysis...Net-Neutrality"

·     Other readings TBD




·      Game Theory Applications

·      ***NOTE:  Lecture changed to Tuesday night, E2 room 586, this week only***

·     Edelman, Ostrovsky, Schwartz, "Internet Advertising..."

·     Feldman et al.:  P2P Incentives







·      Discussion of Search Engine Business Model

·      Lock-In

·     HBS Google

·     VS Chapter 5, Recognizing Lock-In

·     VS Chapter 6, Managing Lock-In

Project 1 due



·      Managing Complementors

·      Standards

·     HBR With Friends Like These

·     VS Chapter 8, Cooperation and Compatibility

·     VS Chapter 9, Waging a Standards War




·      eCommerce; social networks

·      Open Social Initiative

·      Rights Management

·     HBS Linked In

·     VS Chapter 4, Rights Management

·     VS Chapter 10, Information Policy




·      Final Project Presentations

·      Wrap-Up


Final projects due