discussion questions week 3-2
Use the attached reading material to answer the following questions. (each answer 150 words)
1. Provide a specific example of how each of the five major m-commerce applications can benefit a business.
Identify advantages and disadvantages of each of the four main types of wireless transmission media.
2. Identify advantages and disadvantages of each of the four main types of wireless transmission media.
1. Identify advantages and disadvantages of each of the four main types of wireless transmission media.
2. Explain how businesses can use technology employed by short-range, medium-range, and long-range networks, respectively.
3. Provide a specific example of how each of the five major m-commerce applications can benefit a business.
4. Describe technologies that underlie pervasive computing, providing examples of how businesses can utilize each one.
5. Explain how the four major threats to wireless networks can damage a business.
• 8.1 Wireless Technologies
• 8.2 Wireless Computer Networks and Internet Access
• 8.3 Mobile Computing and Mobile Commerce
• 8.4 Pervasive Computing
• 8.5 Wireless Security
• Student PowerPoints for note taking
• Author video lecture for each chapter section
• Practice quizzes
• Flash Cards for vocabulary review
• Additional “IT’s About Business” cases
• Video interviews with managers
• Lab Manuals for Microsoft Office 2010 and 2013
What’s in it For Me?
This Chapter Will Help Prepare You To …
Customers today are in more of a hurry than ever before. To satisfy them and keep their business, retailers are looking for strategies to speed up the checkout process and improve the overall customer experience. One strategy is to use customers’ smartphones as a replacement for credit and debit cards. Instead of swiping a plastic card at the checkout counter, consumers merely wave their phones a few inches above a payment terminal. This process uses a contact-free technology called near-field communications (NFC).
The Battle for the Mobile Wallet
The technology described in the preceding paragraph, known as the mobile wallet, is already being installed on millions of phones in both the United States and overseas. However, wide adoption of this technology in the United States is being hindered by a major battle among large corporations that represent different components of the online commerce industry.
In one camp are the established credit card companies such as MasterCard, Visa, and American Express, in alliance with the banks that actually issue the cards to customers. The goal of these businesses is to maintain their traditional position at the center of any payment system and to continue to collect fees from merchants. However, they are facing intense competition from the other camp, which consists of technology companies such as Google and PayPal whose goal is to become major players in the new payment system. In addition, Apple and the mobile carriers such as Verizon, AT&T, and T-Mobile form a third camp that want to collect fees through their own control of the phones. Adding to the competitive mix are individual companies such as Starbucks that are developing proprietary mobile wallet technologies.
In the middle of this corporate battleground are the retailers, who may yet be the deciding factor in determining who wins the payment battle. To take advantage of mobile wallet technology, retailers have to install terminals that accept mobile payments. One final concerned party consists of consumer advocates, who are concerned that a mobile system would bring higher fees, which would ultimately be passed on to the customers.
The stakes in this competition are enormous because the small fees generated every time consumers swipe their cards add up to tens of billions of dollars of annual revenue in the United States alone. This revenue, of course, goes straight into the pocket of whoever controls the payment system. Before any individual company makes money, all of companies involved in electronic commerce need to sort out what role each one will play and who will collect the lucrative transaction fees from retailers.
A Variety of Solutions
Mobile Phone Carriers
In 2010, three of the four big mobile phone service providers— AT&T, T-Mobile, and Verizon, but not Sprint—along with Discover (www.discovercard.com) and Barclays Bank (www.barclays.co.uk) formed a joint venture named Isis. Their intention was to develop a new payment network that included both credit card companies and card-issuing banks. Isis creates a digital wallet into which customers of card-issuing banks can easily move their accounts. Consumers would interface with Isis through a mobile app, which would give them access to multiple credit and debit accounts. Retailers would participate by targeting offers to loyal members through Isis, while product companies and brands could also offer discounts to customers who opt in.
Credit Card Issuers
All three card issuers have mobile wallet applications: MasterCard has MasterCard PayPass (which is integrated into Google Wallet), Visa has the payWave mobile wallet, and American Express has American Express Serve (with Sprint).
The credit card companies claim that their mobile applications enable consumers to make online payments quickly, without having to enter card numbers and billing addresses over and over. For example, people who play smartphone games could buy add-ons, such as new weapons or extra ammunition, simply by clicking a Visa logo. Similarly, a caterer could e-mail a bill with a button that allows the client to pay with one click. Payers would authorize the transaction simply by entering a name and password.
In May 2011, Google released a free Android app called the Google Wallet. The wallet securely stores multiple credit cards or a Google prepaid card linked to the customer’s credit card. Google also introduced Google Offers, a location-based service that delivers daily, targeted, Groupon-like deals to the Google Wallet. The wallet also allows people to register their store loyalty cards and gift cards in the app.
Interestingly, if future models of the Apple iPhone incorporate NFC, the iPhone may route payments through Apple’s iTunes store, which already has some 400 million accounts tied to credit cards. Apple iTunes could therefore be transformed into mobile wallets. Both Google Wallet and Apple iTunes, however, would need access to smartphone chips and to merchants’ terminals. Apple could solve this problem by manufacturing its own smartphone chips, but Google could not because it makes only the software for Android smartphones, not the phones themselves.
In March 2012, eBay’s PayPal unit released a card reader and a digital wallet that do not use NFC. Instead, to use the wallet customers simply need to enter a phone number and a PIN at the register. PayPal is also integrating check-in capabilities with its mobile application and location-based services so that smartphone users can identify nearby stores or restaurants.
One startup company, Square (www.squareup.com), has entered the field with several products. The Square Card Reader is a small plastic device attached to an iPod Touch, an iPhone, an Android phone, or an iPad. Merchants pay a 2.75 percent fee per transaction with no monthly charge, compared to a standard credit card rate of 3.5 percent with a 15 cent transaction fee.
Square’s second product is an app called Pay With Square. Customers who install this app on their mobile devices can link to a credit or debit card and leave their wallets at home. At the checkout, the customer’s name and photo appear on the merchant’s point-of-sale system. The customer then digitally signs, and he or she receives a receipt via e-mail or text. This app also allows merchants to automatically identify Pay With Square users when they walk into a store or restaurant. Users can view all participating merchants via the app, and they can also receive coupons and incentives.
Square’s third product is Square Register. Square developed this product to compete with the point-of-sale terminals used by retailers, a business now dominated by hardware makers such as VeriFone (www.verifone.com) and NCR (www.ncr.com). Register allows retailers to keep track of customers and inventory and to offer loyalty deals and discounts. In addition, it delivers analytics that inform merchants what their customers buy and when they buy it.
In August 2012 Starbucks invested $25 million in Square. The coffee giant plans to use Square to process all debit and credit transactions at its stores.
To compete directly with Square, in 2012 VeriFone introduced a card reader and a point-of-sale system that can work with products from other companies, such as digital wallets from Google and Isis. Both PayPal and VeriFone set their processing fees at 2.7 percent, undercutting Square by .05 of a percentage point. NCR launched its own card reader in July 2012.
Apple seems to be easing into the competition with its PassBook product. PassBook is an electronic wallet that customers can use to purchase boarding passes, movie tickets, and store cards. Keep in mind that Apple has some 400 million accounts with payment credentials in its iTunes store.
In December 2011, Verizon blocked its customers from installing Google Wallet on their smartphones. Verizon maintained that Google Wallet is not sufficiently secure to use on its phones because of technical issues The company further claimed that it is collaborating with Google to resolve those issues.
Despite this public statement, industry analysts charge that Verizon’s move is likely related to its plan to team up with rival carriers AT&T and T-Mobile on the mobile payments venture, Isis. At the same time, Google is collaborating with MasterCard, Citigroup, and Sprint Nextel Corporation on its Google Wallet. Meanwhile, Visa is developing another digital wallet.
The battle for the transaction fees from mobile wallets is ongoing, and the results will not be evident for several years. However, the potential for large revenue streams is real, because mobile wallets have clear advantages. For example, which are you more likely to have with you at any given moment—your phone or your wallet? Also, keep in mind that if you lose your phone, it can be located on a map and remotely deactivated. Plus, your phone can be password protected. Your wallet cannot do these things.
When all of the digital wallet issues are sorted out, your smartphone or tablet may become your wallet, as well as a credit card reader and a register for merchants. You will use your mobile device as a coupon book, a comparison-shopping tool, and a repository for loyalty cards. In addition, when you walk into a store it will act as a beacon that can recommend products, provide reviews, and give directions to a product in a giant store.
Sources: Compiled from A. Johnson, “What’s in Your Digital Wallet? Lucrative Data,” The Wall Street Journal, March 22, 2013; S. Greengard, “Money Squared: The Digital Wallet,” Baseline Magazine, October 1, 2012; “Bye-Bye Wallets,” Time, August 27, 2012; L. Tucci, “What’s a Wallet-Less Future Got to Do with Enterprise Computing?” SearchCIO.com, August 16, 2012; D. Goldman, “Mobile Pay War: Wal-Mart and Others Vs. Google,” CNN, August 15, 2012; M. Helft, “The Death of Cash,” Fortune, July 23, 2012; D. Zax, “Geode, the iPhone E-Wallet,” MIT Technology Review, June 6, 2012; J. Leber, “A Banking Giant Makes a Mobile Payment Bet,” MIT Technology Review, July 11, 2012; K. Kelleher, “PayPal’s Bid for the Digital Wallet Looks Strong,” CNN, March 21, 2012; A. Efrati and A. Troianovski, “War Over the Digital Wallet,” The Wall Street Journal, December 7, 2011; B. Reed, “Verizon Cites Security Issue for Nixing Google Wallet,” Network World, December 6, 2011; D. Goldman, “Verizon Blocks Google Wallet,” CNN Money, December 6, 2011; C. Iozzio, “The Cash Killer,” Popular Science, November, 2011; F. Graham, “Will NFC Make the Mobile Wallet Work?” BBC News, October 27, 2011; K. Boehret, “Google Mobile App Aims to Turn Phones Into Wallets,”The Wall Street Journal, September 21, 2011; T. Duryee, “PayPal’s Response to Google’s Payment Plans,” AllThingsD.com, September 15, 2011; M. Hachman, “Is Google Wallet What Mobile Payments Need to Succeed?” PC Magazine, May 27, 2011; B. Reed, “Google Wallet: Five Things You Need to Know,” Network World, May 26, 2011; R. Kim, “Isis: Respect the Carriers; We’ll Be Key to NFC Success,” GigaOM, May 6, 2011; S. Marek, “AT&T, Verizon Wireless and T-Mobile Backpedal on Isis Joint Venture,”FierceWireless, May 4, 2011; R. Sidel and S. Raice, “Pay By Phone Dialed Back,” Wall Street Journal, May 4, 2011; T. Team, “American Express and Visa Squeeze PayPal’s Crown Jewels,” Forbes, April 4, 2011; A. Efrati and R. Sidel, “Google Sets Role in Mobile Payment,” Wall Street Journal, March 28, 2011; T. Bernard and C. Miller, “Swiping Is the Easy Part,” New York Times, March 23, 2011; D. Aamoth, “Pay Phone,” Time, February 21, 2011; D. MacMillan, “Turning Smartphones into Cash Registers,”Bloomberg BusinessWeek, February 14–20, 2011; K. Eaton, “The Race Is On to Make NFC Wireless Credit Card Dreams Come True (and Win Market Share),” Fast Company, February 2, 2011; M. Hamblen, “NFC: What You Need to Know,” Computerworld, January 28, 2011; K. Heussner, “Is Your Next Credit Card Your Cell Phone?” ABC News, January 26, 2011; S. Greengard, “Mobile Payment, Please,” Baseline Magazine, January 26, 2011; E. Zemen, “Will Apple, Google Lead Mobile Payment Revolution?”InformationWeek, January 25, 2011; B. Ellis, “The End of Credit Cards Is Coming,” CNNMoney, January 24, 2011; C. Miller, “Now at Starbucks: Buy a Latte by Waving Your Phone,” New York Times, January 18, 2011; O. Kharif, “In the Works: A Google Mobile Payment Service?” Bloomberg BusinessWeek, January 4, 2011; R. King, “Wells Fargo to Employees: Leave Wallets Home, Pay by Phone,” Bloomberg BusinessWeek, January 4, 2011; www.iconcessionstand.com, www.paypal.com, accessed April 28, 2013.
What We Learned from This Case
The old, traditional working environment that required users to come to a wired computer was ineffective and inefficient. The solution was to build computers that are small enough to carry or wear and can communicate via wireless networks. The ability to communicate anytime and anywhere provides organizations with a strategic advantage by increasing productivity and speed and improving customer service. Wireless is a term that is used to describe telecommunications in which electromagnetic waves, rather than some form of wire or cable, carry the signal between communicating devices such as computers, smartphones, and iPads.
Before you continue, it is important to distinguish between the terms wireless and mobile, because they can mean different things. The term wireless means exactly what it says: without wires. In contrast, mobile refers to something that changes its location over time. Some wireless networks, such as MiFi (discussed later in this chapter), are also mobile. Others, however, are fixed. For example, microwave towers form fixed wireless networks.
Wireless technologies enable individuals and organizations to conduct mobile computing, mobile commerce, and pervasive computing. We define these terms here, and then we discuss each one in detail later in the chapter.
Mobile computing refers to a real-time, wireless connection between a mobile device and other computing environments, such as the Internet or an intranet. Mobile commerce—also known as m-commerce—refers to e-commerce (EC) transactions conducted with a mobile device. Pervasive computing, also called ubiquitous computing, means that virtually every object has processing power with either wireless or wired connections to a global network.
Wireless technologies and mobile commerce are spreading rapidly, replacing or supplementing wired computing. In fact, Cisco (www.cisco.com) predicts that the volume of mobile Web traffic will continue to rapidly increase over the next decade. As illustrated in this chapter’s opening case, there is a huge battle underway to provide you with a mobile, digital wallet and to enable you to get rid of your physical wallet altogether, including all of the credit and debit cards you have in it. Billions of dollars are at stake, further highlighting the importance of wireless to you and your organization.
Almost all (if not all) organizations utilize wireless computing. Therefore, when you begin your career, you likely will be assigned a company smartphone and a wirelessly enabled computer. Clearly, then, it is important for you to learn about wireless computing not only because you will be using wireless applications but also because wireless computing will be so important to your organization. In your job, you will be involved with customers who conduct wireless transactions, with analyzing and developing mobile commerce applications, and with wireless security. And the list goes on.
Simply put, an understanding of wireless technology and mobile commerce applications will make you more valuable to your organization. When you look at “What’s In IT For Me?” at the end of this chapter, envision yourself performing the activities discussed in your functional area. An understanding of wireless technology can also help you start and grow your own business, as illustrated in IT’s About Business 8.1.
IT’s [about business]
8.1 Big Wheel Mobile Truck & Square
Have you ever gone into a restaurant, had a great time, and enjoyed a wonderful meal, only to find out that the restaurant does not accept credit cards? Naturally, you do not have enough cash on you, so you have to locate the nearest ATM that accepts your card. Why, you ask yourself, would a business not accept credit cards? The reason is that some businesses do not want to pay fees to the credit card companies. (These fees start from at least 2.75 percent of the transaction price.) Other businesses do not accept credit cards for technological and logistical reasons. Such was the case for Tony Adams.
Chef and owner Tony Adams runs a mobile restaurant in Orlando, Florida (see http://bigwheeltruckmenu.com andhttp://bigwheelprovisions.com). Tony prides himself on his original recipes, which are made from fresh, locally sourced foods that Tony frequently purchases from the local farmers market. His Web site proudly advertises that “Local Is Lovely.”
Tony sells his food from a food truck, and his location changes daily. He needed a mobile connection to accept credit card payments. Tony first tried a mobile app that allowed him to type in credit card numbers, but the app was cumbersome, and it did not allow him to customize his menus every day in the way that he needed to. In addition, he still had to total each order either on paper or with a calculator and then use the app only for accepting a credit card. Tony needed a much quicker method to calculate total amounts and accept credit card payments.
Then he heard about Square (http://squareup.com). Square offers an iPad point-of-sale (POS) system that allows Tony to customize his menus daily. As he logs in his menu items, Tony creates his POS for the day. Each item gets its own button, so he has to tap the menu items only to total each order. Square also offers a small device (it looks like a square) that plugs into the headphone jack of the iPad (and will also work on an iPhone). About the size of a postage stamp, this little gadget allows users to swipe the magnetic stripe of a credit card to enter the numbers into the POS. In sum, Square has provided a POS system that speeds up transactions for both Tony and his customers.
Do not confuse what Tony is doing with mobile payments. Tony is using technology to accept credit cards in a mobile environment. In fact, he is not alone in this endeavor. Mobile payment technologies have made it possible for many mobile vendors to accept credit cards with their iPads and iPhones. Mobile payments—that is, payments made with a mobile phone rather than with a debit/credit card—are an option for Tony’s consumers who use Square’s app called “Square Card Case.” This app allows two Square users to connect app-to-app and complete a transaction without having to swipe a credit card.
Sources: Compiled from T. Bajarin, “Bringing the Checkout Counter to You,” PC Magazine, June 24, 2013; D. Kucera, “Square Unveils All-in-One Point-of-Sale System for Stores,” Bloomberg.com, February 20, 2013;http://squareup.com, http://squareup.com/register, http://bigwheelprovisions.com, http://bigwheeltruckmenu.com, accessed June 30, 2013.
1. Other than efficiency, what are additional benefits that Square provides for Tony?
2. Describe possible disadvantages of the Square app for Tony.
The wireless infrastructure upon which mobile computing is built may reshape the entire IT field. The technologies, applications, and limitations of mobile computing and mobile commerce are the focus of this chapter. You begin the chapter by learning about wireless devices and wireless transmission media. You continue by examining wireless computer networks and wireless Internet access. You then look at mobile computing and mobile commerce, which are made possible by wireless technologies. Next, you turn your attention to pervasive computing. You conclude by familiarizing yourself with a critical component of the wireless environment—namely, wireless security.
8.1. Wireless Technologies
Wireless technologies include both wireless devices, such as smartphones, and wireless transmission media, such as microwave, satellite, and radio. These technologies are fundamentally changing the ways organizations operate.
Individuals are finding wireless devices convenient and productive to use, for several reasons. First, people can make productive use of time that was formerly wasted—for example, while commuting to work on public transportation. Second, because people can take these devices with them, their work locations are becoming much more flexible. Third, wireless technology enables them to schedule their working time around personal and professional obligations.
Wireless devices provide three major advantages to users:
• They are small enough to easily carry or wear.
• They have sufficient computing power to perform productive tasks.
• They can communicate wirelessly with the Internet and other devices.
Modern smartphones provide capabilities that include cellular telephony, Bluetooth, Wi-Fi, a digital camera for images and video, global positioning system (GPS), an organizer, a scheduler, an address book, a calculator, access to e-mail and Short Message Service (SMS, sending and receiving short text messages up to 160 characters in length), instant messaging, text messaging, an MP3 music player, a video player, Internet access with a full-function browser, and a QWERTY keyboard.
One downside of smartphones is that people can use them to copy and pass on confidential information. For example, if you were an executive at Intel, would you want workers snapping pictures of their colleagues with your secret new technology in the background? Unfortunately, managers think of these devices as phones, not as digital cameras that can transmit wirelessly. New jamming devices are being developed to counter the threat. Some companies, such as Samsung (www.samsung.com), have recognized the danger and have banned these devices from their premises altogether. Regardless of any disadvantages, however, cell phones, and particularly smartphones, have had a far greater impact on human society than most of us realize, as you see inIT’s About Business 8.2.
IT’s [about business]
8.2 Cell Phones Revolutionize Healthcare in Uganda
Uganda’s healthcare system needed an overhaul. The country has only 131 hospitals, and they need to serve 136 million people. This is a major reason why Ugandan children are dying of treatable diseases, particularly malaria, which accounts for up to 40 percent of medical visits and almost 25 percent of deaths among children under the age of 5. The Ugandan Ministry of Health and various other international organizations have tried to address the health-care issue by building smaller clinics and utilizing volunteer village health team workers, some of whom dispense drugs. However, the results of these efforts have not been encouraging.
On the positive side, Uganda is well served by cellular carriers. One-third of Ugandans have mobile phones, which they share widely. These phones are not smartphones. The only app most of these $7 handsets offer is a flashlight. However, they can send text messages.
In an initiative called mTrac, principally sponsored by UNICEF, health workers are using these phones to text details of drug supplies and disease outbreaks that they had previously put on paper. This information is collected and entered into an online dashboard so that public-health officials can observe in real time what is happening. These officials can track which clinics have medicine and which ones do not. They then use this information to move medical supplies to locations where they are critically needed.
Local health clinics are not eager to report that they have extra medical supplies to avoid having these supplies sent to other clinics. Therefore, mTrac has developed an alternate data source: crowdsourcing. Specifically, mTrac has instituted a toll-free hotline where people can text complaints. Anyone who wants to report a problem about healthcare delivery can anonymously send information to a call center. At the center these complaints are gathered, checked out, and added to the online dashboard.
To support these activities, UNICEF has recruited about 140,000 members to a type of short-message-service social-networking group called U-report. Communicating entirely by text, U-reporters, who join the group much as people join Facebook, send and receive information about health issues. These texts can be targeted; for example, mothers can be alerted to free vaccinations in their area.
The ongoing cost of mTrac to the Ugandan Ministry of Health is negligible. Experts estimate that the ministry’s outlay for mTrac is about $14 per district per month. UNICEF, the World Health Organization (WHO), and the United Kingdom’s Department for International Development provided the initial capital, including money for developing the software and training workers, but the workers use their own phones.
The value of mTrac is incalculable. In January 2012, the health team in the Kotido district noticed an increase in reported cases of pneumonia. Upon investigation, it found that a village health team worker was misdiagnosing the disease and that patients were being treated with unnecessary and expensive antibiotics. The mistake was noted and fixed within weeks, and the worker was given additional training.
The mTrac program is now operating in all of Uganda’s 113 districts. However, the system is not a cure-all. Being aware of the details of a health problem is not the same as developing a solution for that problem. The Ministry of Health receives 1,000 reports every week, and it sometimes struggles to respond. Despite these limitations, however, mTrac has changed expectations among people who formerly felt they had no voice. The Ugandan government contends that mTrac is helping to remake the social contract between the government and its citizens, no small matter indeed.
Sources: Compiled from J. de Vroeg, “Using Mobile Technology in TB Control in Uganda,” Text to Change, January 8, 2013; B. Luscombe, “Disease Can’t Hide,” Time, August 27, 2012; C. Schultz, “Mobile Phones Helping to Control AIDS in Uganda,” iMedicalApps, August 10, 2012; “mTrac Is Changing the Face of Health Operations in Uganda,”News Vision, July 26, 2012; “Uganda’s Free Health Care Systems ‘in Crisis,’ Daily Monitor Reports,” The Guardian, October 4, 2011; B. Among, “Who Will Heal Uganda’s Sick Health Sector,” The Daily Monitor, October 1, 2011;www.mtrac.ug, accessed March 23, 2013.
1. Describe the problems with implementing mTrac in Uganda.
2. Describe how the use of smartphones (rather than simple cell phones) could change healthcare in Uganda. (Hint: Take a look at the thousands of healthcare apps available on smart-phones today.)
Despite all of their advantages, however, the latest version of cell phones—smartphones— can cause problems as well. The following example demonstrates how smartphones can disrupt the court system.
Smartphones in Court
Smartphones are now present in U.S. jury boxes, raising serious questions about juror impartiality and the ability of judges to control courtrooms. A Reuter’s legal analysis revealed that jurors’ forays onto the Internet via smartphones have resulted in dozens of mistrials, appeals, and overturned verdicts.
For decades, courts have instructed jurors not to seek information about cases outside the evidence introduced at trial. They also routinely warn jurors not to communicate about a case with anyone before they reach a verdict. Today, however, jurors can, with a few clicks on their smartphones, look up definitions of legal terms on Wikipedia, view crime scenes via Google Earth, and communicate with other people via their Facebook pages.
The consequences of these behaviors can be significant. In September 2010, for example, a Florida court overturned the manslaughter conviction of a man charged with killing his neighbor, citing the jury foreman’s use of an iPhone to look up the definition of prudent in an online dictionary. That same month, the Nevada Supreme Court granted a new trial to a defendant convicted of sexually assaulting a minor, because the foreman had used his smartphone to search online for information about the types of physical injuries suffered by young victims of sexual assaults.
Courts are exploring ways to keep jurors “unplugged.” Some judges now confiscate all smartphones from jurors when they enter a courtroom. In 2009, California updated its civil jury instructions to bar jurors from “all forms of electronic communication.” From a different perspective, some legal experts argue that rather than try to stifle jurors from pursuing information on the Internet, courts need to figure out how to help them do so in a responsible way.
Sources: Compiled from H. Patel, “The Internet and Juries: The Role of the Factfinder?” Rutgers Computer and Technology Law Journal, March 3, 2013; D. Hefley, “New Jury Video Tackles Smartphones,” Herald Net, December 18, 2012; “Juror Social Media Misconduct Can Lead to Mistrials,” Slater & Zurz LLP Law Firm Blog, September 20, 2012; S. Eder, “Jury Files: The Temptation of Twitter,” The Wall Street Journal, March 12, 2012; “Juries and the Internet: Justice Online,” The Guardian, January 3, 2011; “As Jurors Go Online, U.S. Trials Go Off Track,” Reuters, December 8, 2010.
Wireless Transmission Media
Wireless media, or broadcast media, transmit signals without wires. The major types of wireless media are microwave, satellite, radio, and infrared. Table 8.1 lists the advantages and disadvantages of each type.
Table 8.1 Advantages and Disadvantages of Wireless Media
Channel Advantages Disadvantages
Microwave High bandwidth.
Relatively inexpensive. Must have unobstructed line of sight.
Susceptible to environmental interference.
Satellite High bandwidth.
Large coverage area. Expensive.
Must have unobstructed line of sight.
Signals experience propagation delay.
Must use encryption for security.
Radio High bandwidth.
Signals pass through walls.
Inexpensive and easy to install. Creates electrical interference problems.
Susceptible to snooping unless encrypted.
Infrared Low to medium bandwidth.
Used only for short distances. Must have unobstructed line of sight.
Microwave transmission systems transmit data via electromagnetic waves. These systems are used for high-volume, long-distance, line-of-sight communication. Line-of-sight means that the transmitter and receiver are in view of each other. This requirement creates problems because the Earth’s surface is curved rather than flat. For this reason, microwave towers usually cannot be spaced more than 30 miles apart.
Clearly, then, microwave transmissions offer only a limited solution to data communications needs, especially over very long distances. In addition, microwave transmissions are susceptible to environmental interference during severe weather such as heavy rain and snowstorms. Although long-distance microwave data communications systems are still widely used, they are being replaced by satellite communications systems.
Satellite transmission systems make use of communication satellites. Currently, there are three types of satellites circling Earth: geostationary (GEO), medium-earth-orbit (MEO), and low-earth-orbit (LEO). Each type has a different orbit, with the GEO being farthest from Earth and the LEO the closest. In this section, you examine the three types of satellites and then discuss two major satellite applications: Global positioning systems and Internet transmission via satellites. Table 8.2 compares and contrasts the three types of satellites.
Table 8.2 Three Basic Types of Telecommunications Satellites
Type Characteristics Orbit Number Use
GEO • Satellites stationary relative to point on Earth
• Few satellites needed for global coverage
• Transmission delay (approximately .25 second)
• Most expensive to build and launch
• Longest orbital life (many years) 22,300 miles 8 TV signal
MEO • Satellites move relative to point on Earth
• Moderate number needed for global coverage
• Requires medium-powered transmitters
• Negligible transmission delay
• Less expensive to build and launch
• Moderate orbital life (6–12 years) 6,434 miles 10–12 GPS
LEO • Satellites move rapidly relative to point on Earth
• Large number needed for global coverage
• Requires only low-power transmitters
• Negligible transmission delay
• Least expensive to build and launch
• Shortest orbital life (as low as 5 years) 400–700 miles Many Telephone
As with microwave transmission, satellites must receive and transmit data via line-of-sight. However, the enormous footprint—the area of Earth’s surface reached by a satellite’s transmission— overcomes the limitations of microwave data relay stations. The most basic rule governing footprint size is simple: The higher a satellite orbits, the larger its footprint. Thus, medium-earth-orbit satellites have a smaller footprint than geostationary satellites, and low-earth-orbit satellites have the smallest footprint of all.Figure 8.1 compares the footprints of the three types of satellites.
Figure 8.1 Comparison of satellite footprints. (Source: Drawn by Kelly Rainer.)
In contrast to line-of-sight transmission with microwave, satellites use broadcast transmission, which sends signals to many receivers at one time. So, even though satellites are line-of-sight like microwave, they are high enough for broadcast transmission, thus overcoming the limitations of microwave.
Types of Orbits
Geostationary earth orbit (GEO) satellites orbit 22,300 miles directly above the equator. These satellites maintain a fixed position above Earth’s surface because, at their altitude, their orbital period matches the 24-hour rotational period of Earth. For this reason, receivers on Earth do not have to track GEO satellites. GEO satellites are excellent for sending television programs to cable operators and for broadcasting directly to homes.
One major limitation of GEO satellites is that their transmissions take a quarter of a second to send and return. This brief pause, one kind of propagation delay, makes two-way telephone conversations difficult. Also, GEO satellites are large and expensive, and they require substantial amounts of power to launch.
Medium-earth-orbit (MEO) satellites are located about 6,000 miles above Earth’s surface. MEO orbits require more satellites to cover Earth than GEO orbits because MEO footprints are smaller. MEO satellites have two advantages over GEO satellites: They are less expensive, and they do not have an appreciable propagation delay. However, because MEO satellites move with respect to a point on Earth’s surface, receivers must track these satellites. (Think of a satellite dish slowly turning to remain oriented to a MEO satellite).
Low-earth-orbit (LEO) satellites are located 400 to 700 miles above Earth’s surface. Because LEO satellites are much closer to Earth, they have little, if any, propagation delay. Like MEO satellites, however, LEO satellites move with respect to a point on Earth’s surface and therefore must be tracked by receivers. Tracking LEO satellites is more difficult than tracking MEO satellites because LEO satellites move much more quickly relative to a point on Earth.
Unlike GEO and MEO satellites, LEO satellites can pick up signals from weak transmitters. This feature makes it possible for satellite telephones to operate via LEO satellites, because they can operate with less power using smaller batteries. Another advantage of LEO satellites is that they consume less power and cost less to launch.
At the same time, however, the footprints of LEO satellites are small, which means that many satellites are needed to cover the planet. For this reason, a single organization often produces multiple LEO satellites, known as LEO constellations. Two examples are Iridium and Globalstar.
Iridium (www.iridium.com) has placed a LEO constellation in orbit that consists of 66 satellites and 12 in-orbit spare satellites. The company maintains that it provides complete satellite communications coverage of Earth’s surface, including the polar regions. Globalstar (www.globalstar.com) also has a LEO constellation in orbit.
Global Positioning Systems
The global positioning system (GPS) is a wireless system that utilizes satellites to enable users to determine their position anywhere on Earth. GPS is supported by 24 MEO satellites that are shared worldwide. The exact position of each satellite is always known because the satellite continuously broadcasts its position along with a time signal. By using the known speed of the signals and the distance from three satellites (for two-dimensional location) or four satellites (for three-dimensional location), it is possible to find the location of any receiving station or user within a range of 10 feet. GPS software can also convert the user’s latitude and longitude to an electronic map.
Most of you are probably familiar with GPS in automobiles, which “talks” to drivers when giving directions. Figure 8.2 illustrates two ways for drivers to obtain GPS information in a car: a dashboard navigation system and a GPS app (in this case, TomTom;www.tomtom.com) on an iPhone.
Figure 8.2 Obtaining GPS information in an automobile. (left: Source: Image Source.)
Commercial use of GPS for activities such as navigating, mapping, and surveying has become widespread, particularly in remote areas. Cell phones in the United States now must have a GPS embedded in them so that the location of a person making an emergency call—for example, 911, known as wireless 911—can be detected immediately.
Three other global positioning systems are either planned or operational. The Russian GPS, GLONASS, was completed in 1995. However, the system fell into disrepair with the collapse of the Russian economy. In 2010, however, GLONASS achieved 100 percent coverage of Russian territory. The European Union GPS, Galileo, has an anticipated completion date of 2015. China expects to complete its GPS, Beidou, by 2020.
Internet over Satellite (IoS)
In many regions of the world, Internet over Satellite (IoS) is the only option available for Internet connections because installing cables is either too expensive or physically impossible. IoS enables users to access the Internet via GEO satellites from a dish mounted on the side of their homes. Although IoS makes the Internet available to many people who otherwise could not access it, it has its drawbacks. Not only do GEO satellite transmissions involve a propagation delay, but they also can be disrupted by environmental influences such as thunderstorms.
Radio transmission uses radio-wave frequencies to send data directly between transmitters and receivers. Radio transmission has several advantages. First, radio waves travel easily through normal office walls. Second, radio devices are fairly inexpensive and easy to install. Third, radio waves can transmit data at high speeds. For these reasons, radio increasingly is being used to connect computers to both peripheral equipment and local area networks (LANs; discussed in Chapter 6).
As with other technologies, however, radio transmission has its drawbacks. First, radio media can create electrical interference problems. Also, radio transmissions are susceptible to snooping by anyone who has similar equipment that operates on the same frequency.
Another problem with radio transmission is that when you travel too far away from the source station, the signal breaks up and fades into static. Most radio signals can travel only 30 to 40 miles from their source. However, satellite radio overcomes this problem. Satellite radio (or digital radio) offers uninterrupted, near CD-quality transmission that is beamed to your radio, either at home or in your car, from space. In addition, satellite radio offers a broad spectrum of stations, including many types of music, news, and talk.
XM Satellite Radio and Sirius Satellite Radio were competitors that launched satellite radio services. XM broadcast its signals from GEO satellites, while Sirius used MEO satellites. In July 2008, the two companies merged to form Sirius XM(www.siriusxm.com). Listeners subscribe to the service for a monthly fee.
The final type of wireless transmission is infrared transmission. Infrared light is red light that is not commonly visible to human eyes. Common applications of infrared light are found in remote control units for televisions, VCRs, and DVD and CD players. In addition, like radio transmission, infrared transceivers are used for short-distance connections between computers and peripheral equipment and local area networks. A transceiver is a device that can both transmit and receive signals.
before you go on..
1. Describe the most common types of wireless devices.
2. Describe the various types of transmission media.
8.2. Wireless Computer Networks and Internet Access
You have learned about various wireless devices and how these devices transmit wireless signals. These devices typically form wireless computer networks, and they provide wireless Internet access. In this section you will study wireless networks, which we organize by their effective distance: short range, medium range, and wide area.
Short-Range Wireless Networks
Short-range wireless networks simplify the task of connecting one device to another. In addition, they eliminate wires and enable users to move around while they use the devices. In general, short-range wireless networks have a range of 100 feet or less. In this section, you consider three basic short-range networks: Bluetooth, ultra-wideband (UWB), and near-field communications (NFC).
Bluetooth (www.bluetooth.com) is an industry specification used to create small personal area networks. A personal area network is a computer network used for communication among computer devices—for example, telephones, personal digital assistants, and smartphones—located close to one person. Bluetooth 1.0 can link up to eight devices within a 10-meter area (about 30 feet) with a bandwidth of 700 kilobits per second (Kbps) using low-power, radio-based communication. Bluetooth 2.0 can transmit up to 2.1 megabits per second (Mbps) and, at greater power, up to 100 meters (roughly 300 feet). Ericsson, the Scandinavian mobile handset company that developed this standard, called it Bluetooth after the tenth-century Danish King Harald Blatan (Blatan means “Bluetooth”). Ericsson selected this named because Blatan unified previously separate islands into the nation of Denmark.
Common applications for Bluetooth are wireless handsets for cell phones and portable music players. Advantages of Bluetooth include low power consumption and the fact that it uses omnidirectional radio waves—that is, waves that are emitted in all directions from a transmitter. For this reason, you do not have to point one Bluetooth device at another to create a connection.
Ultra-wideband (UWB) is a high-bandwidth wireless technology with transmission speeds in excess of 100 Mbps. This very high speed makes UWB a good choice for applications such as streaming multimedia from, say, a personal computer to a television.
Time Domain (www.timedomain.com), a pioneer in UWB technology, has developed many UWB applications. One interesting application is the PLUS Real-Time Location System (RTLS). An organization can utilize PLUS to locate multiple people and assets simultaneously. Employees, customers, and/or visitors wear the PLUS Badge Tag. PLUS Asset Tags are placed on equipment and products. PLUS is extremely valuable for healthcare environments, where knowing the real-time location of caregivers (e.g., doctors, nurses, technicians) and mobile equipment (e.g., laptops, monitors) is critical.
Near-field communications (NFC) has the smallest range of any short-range wireless networks. It is designed to be embedded in mobile devices such as cell phones and credit cards. For example, using NFC, you can swipe your device or card within a few centimeters of POS terminals to pay for items (see this chapter’s opening case). NFC also has many other interesting uses. For example, IT’s About Business 8.3 illustrates how NFC technology helps travelers in Japan.
Medium-Range Wireless Networks
Medium-range wireless networks are the familiar wireless local area networks (WLANs). The most common type of medium-range wireless network is Wireless Fidelity, or Wi-Fi. WLANs are useful in a variety of settings, some of which may be challenging.
IT’s [about business]
8.3 Near-Field Communications Helps Travelers in Japan
Japan’s smartphones are called keitai. These phones contain a high-resolution camera, a projector, and near-field communication capability. Consider the case of a Japanese woman who uses her keitai to scan a QR code (discussed later in this chapter) at a Tokyo bus stop. A timetable appears instantly on her screen, along with the estimated arrival time of the next bus. When her bus arrives, she uses her keitai to pay by simply waving it close to the payment terminal in the front of the bus.
Because the keitai are NFC equipped, they can function as boarding passes and tickets for trains, airplanes, and events. They also allow users to check into hotels, and they even serve as electronic room keys. Keitai also act as electronic wallets (e-wallets). Customers can input a credit of up to 50,000 yen over the Internet and then use their keitai to buy groceries at convenience stores, pay taxi drivers, and purchase goods from Japan’s ubiquitous vending machines.
Japan’s leading airline, All Nippon Airways (ANA), has been using e-wallets to compete with the country’s fast trains for several years. As one ANA spokesperson explained, “The major drawback of flying compared to train travel is, of course, the time spent at the airport.”
With ANA’s all-in-one keitai ticket and boarding pass, passengers can arrive and board their planes in 15 minutes or less, even going through security checkpoints. This service, called SKiP, uses an e-wallet technology developed by communications company NTT.
Keitai are also equipped with GPS technology, which makes them very useful navigation tools. The Total Navigation site on a keitai displays three-dimensional maps and directions on the screen. If a user is holding the phone while navigating, it will vibrate to alert the driver to upcoming turns.
Keitai also help visitors cope with the Japanese language. For example, menus in Japanese restaurants are invariably written only in Japanese. Using a keitai, a visitor can take a picture of a meal, and the phone describes in English what the meal actually is. This is a valuable tool for many restaurants, because Japan relies on tourists for needed revenue. Other applications allow users to bring up menus, reviews, and translations by other users simply by focusing the phone’s mobile camera at the restaurant itself.
In Kyoto, the Hyatt Regency offers an iPhone rental service that pinpoints guests’ locations and beams target text, video, and graphics to inform, help, and guide them around the area. The hotel augments this service with advice and suggestions from the concierge.
The keitai are also equipped with augmented reality (AR). AR apps know where users are, and they beam location-relevant information to their phones. This information is superimposed on the camera viewfinder on the phone’s screen. AR apps in Japan also add tagging and social networking. Like other AR apps, the keitai calculates the user’s position and then, using the camera, displays location-specific information graphically on top of the user’s real-world view.
Interestingly, individuals and businesses can add their own information to these AR apps. They point the phone’s camera at the landscape, adding “tags” that can include text, images, and sound that can be picked up later by other users in the area. Tags can translate into coupons from businesses or travel trips from friends and colleagues.
Sources: Compiled from D. Balaban, “Japan Airlines Set to Launch First NFC Boarding Passes,” NFC Times, September 27, 2012; “NFC in the USA: Learning From Japan,” Travers Collins, July 2, 2012; M. Keferl, “Near-Field Communication Is Shifting Marketing in Japan,” Advertising Age, June 12, 2012; M. Fitzpatrick, “Near Field Communication Transforms Travel in Japan,” BBC News, April 28, 2011; S. Clark, “NTT Adds New Mobile Marketing Capabilities to Japan’s Osaifu-Keitai Mobile Wallet Service,” Near Field Communications World, June 16, 2010; S. Toto, “Separate Keitai: Meet Japan’s Sexiest New Handset,” TechCrunch, February 5, 2010; “Japanese Cell Phone Culture,” www.japaneselifestyle.com.au, accessed February 13, 2013.
1. As the Japanese travel industry creates more applications of technology for travel, what assumptions is it making about tourists?
2. Which of the keitai apps would you find most useful? Provide specific examples of the app(s) and the way(s) in which you would use them.
3. Do you see any problem with the social networking aspect of AR apps? Support your answer.
Wireless Fidelity (Wi-Fi)
Wireless fidelity (Wi-Fi) is a medium-range WLAN, which is a wired LAN but without the cables. In a typical configuration, a transmitter with an antenna, called a wireless access point (see Figure 8.3), connects to a wired LAN or to satellite dishes that provide an Internet connection. A wireless access point provides service to a number of users within a small geographical perimeter (up to a couple of hundred feet), known as a hotspot. Multiple wireless access points are needed to support a larger number of users across a larger geographical area. To communicate wirelessly, mobile devices, such as laptop PCs, typically have a built-in wireless network interface capability.
Figure 8.3 Wireless access point.
Courtesy of Brad Prince
Wi-Fi provides fast and easy Internet or intranet broadband access from public hotspots located at airports, hotels, Internet cafés, universities, conference centers, offices, and homes (see Figure 8.4). Users can access the Internet while walking across a campus, to their office, or through their homes. In addition, users can access Wi-Fi with their laptops, desktops, or PDAs by adding a wireless network card. Most PC and laptop manufacturers incorporate these cards in their PCs.
Figure 8.4 Starbucks’ patrons using Wi-Fi.
©Maranna Day Massey/Zuma Press
The Institute of Electrical and Electronics Engineers (IEEE) has established a set of standards for wireless computer networks. The IEEE standard for Wi-Fi is the 802.11 family. As of mid-2013, there were five standards in this family:
802.11a: supports wireless bandwidth up to 54 Mbps; high cost; short range; difficulty penetrating walls.
802.11b: supports wireless bandwidth up to 11 Mbps; low cost; longer range.
802.11g: supports wireless bandwidth up to 54 Mbps; high cost; longer range.
802.11n: supports wireless bandwidth exceeding 600 Mbps; higher cost than 802.11g; longer range than 802.11g.
802.11ac: a standard finalized in late 2012 that will support wireless bandwidth of 1 Gbps (1 billion bits per second); expected to reach the general market by early 2014.
The major benefits of Wi-Fi are its low cost and its ability to provide simple Internet access. It is the greatest facilitator of the wireless Internet—that is, the ability to connect to the Internet wirelessly.
Corporations are integrating Wi-Fi into their strategies. For example, Starbucks, McDonald’s, Panera, and Barnes & Noble offer customers Wi-Fi in many of their stores, primarily for Internet access. The airlines are also getting in on the Wi-Fi act, as you see inIT’s About Business 8.4.
Although Wi-Fi has become extremely popular, it is not without problems. Three factors are preventing the commercial Wi-Fi market from expanding even further: roaming, security, and cost.
• At this time, users cannot roam from hotspot to hotspot if the hotspots use different Wi-Fi network services. Unless the service is free, users have to log on to separate accounts and, where required, pay a separate fee for each service. (Some Wi-Fi hotspots offer free service, while others charge a fee.)
• Security is the second barrier to greater acceptance of Wi-Fi. Because Wi-Fi uses radio waves, it is difficult to shield from intruders.
• The final limitation to greater Wi-Fi expansion is cost. Even though Wi-Fi services are relatively inexpensive, many experts question whether commercial Wi-Fi services can survive when so many free hotspots are available to users.
IT’s [about business]
8.4 Airlines Provide Wi-Fi to Passengers
After years of using drop-down televisions and expensive seat-back monitors, airlines now hope to entertain passengers on the screens that the travelers bring with them. The airlines are providing Wi-Fi, movies, and TV shows that travelers can view on their smartphones, tablets, and laptops. Although the airlines are experiencing economic difficulties, they are investing heavily in Wi-Fi capabilities. The airlines hope that this upfront investment will help them tap into a new source of revenue as they attract customers who need to be online while they are traveling.
By the time of this writing in mid-2013, some 2,000 commercial aircraft offer Internet access to passengers. Travelers can access their Internet connection at any point above 10,000 feet, the federal minimum altitude for using portable electronics. At least four companies are competing to provide Wi-Fi service to aircraft.
Five major U.S. carriers—Delta, American, AirTran, Alaska Airlines, and Virgin America—got into the wireless-providing business early. They signed contracts with Gogo (www.gogoair.com), the early option for in-flight Wi-Fi, and are now locked into contracts for a service that is quickly being bested by a number of rivals. Gogo beams its connection from cellular towers on the ground to antennas on the plane. This service has two major limitations. First, it is limited to the continental United States and Alaska. Second, it does not include live television.
Gogo’s competitors offer expanded services and more features, but they have not yet proved themselves. Their promised services rely on satellites, which require heavier receivers that take longer to install than Gogo’s receivers. Row 44 (http://row44.com), the Wi-Fi provider to Southwest Airlines, and Panasonic Avionics (www.mascorp.com), another in-flight Wi-Fi provider, offer global Wi-Fi via satellite. They stream live news and sports channels to flyers’ devices.
ViaSat (www.viasat.com) provides more powerful in-flight Wi-Fi with the newest satellite technology, called Ka band. Ka band’s competitive advantage is its higher bandwidth, which can service at least 10 times as many users as other in-flight Wi-Fi providers without affecting download speed. Gogo has announced plans to switch to Ka band by 2014 in the United States and to become a global Wi-Fi provider by 2015.
In the fall of 2012, Delta launched its on-demand service on 16 aircraft, offering $4 movies and $1 TV shows for flyers’ laptops. American offers the same functions on 15 aircraft. Both airlines are running national ad campaigns that focus on their in-flight connectivity. Southwest charges $5 a flight for Row 44 Wi-Fi. Gogo charges $5 to $13 for Wi-Fi based on flight time, and it offers 15 minutes of Wi-Fi for $2. Virgin Atlantic plans to replace its seat-back touch screens with high-definition screens and to offer an enhanced Gogo Wi-Fi service that is four times as fast as its existing service.
Not surprisingly, passengers are unhappy with the cost of in-flight Wi-Fi access. Only about 7 percent of passengers currently avail themselves of the service. Although competition among in-flight Wi-Fi providers will drive down prices over time, in-flight Wi-Fi will not be an effective revenue-producing technology for airlines until this occurs.
Sources: Compiled from E. Perkins, “Perkins on Travel Wi-Fi Update, Airline by Airline,” Tribune Media Services, March 13, 2013; H. Martin, “United Airlines Adds Wi-Fi for Overseas Flights,” Los Angeles Times, February 10, 2013; R. Tomkins, “Airlines Cash In As In-Flight Wi-Fi Takes Off,” CNN, November 22, 2012; N. Trajos, “More Airlines Add Wi-Fi, But Travelers Balk at Paying,” USA Today, January 16, 2012; J. Nicas, “Playing the Wireless Card: Airlines Rush to Add Wi-Fi,” The Wall Street Journal, October 11, 2011; www.gogoair.com, http://row44.com,www.mascorp.com, www.viasat.com, accessed March 20, 2013.
1. Would you use in-flight Wi-Fi if you had to pay the prices listed in this case? Why or why not?
2. How much would you pay to use in-flight Wi-Fi? (Your answer can be $0.)
3. What are the potential dangers of using in-flight Wi-Fi services?
Until late 2010, Wi-Fi could operate only if the hotspot contained a wireless antenna. Because of this limitation, organizations have typically used Wi-Fi for communications of up to about 800 feet. For shorter, peer-to-peer connections they have used Bluetooth.
This situation changed following the introduction of a new iteration of Wi-Fi known as Wi-Fi Direct. Wi-Fi Direct enables peer-to-peer communications, so devices can connect directly. It allows users to transfer content among devices without having to rely on a wireless antenna. It can connect pairs or groups of devices at Wi-Fi speeds of up to 250 Mbps and at distances of up to 800 feet. Further, devices with Wi-Fi Direct can broadcast their availability to other devices just as Bluetooth devices can. Finally, Wi-Fi Direct is compatible with the more than 1 billion Wi-Fi devices currently in use.
Wi-Fi Direct will probably challenge the dominance of Bluetooth in the area of device-to-device networking. It offers a similar type of connectivity but with greater range and much faster data transfer.
MiFi is a small, portable wireless device that provides users with a permanent Wi-Fi hotspot wherever they go. Thus, users are always connected to the Internet. The range of the MiFi device is about 10 meters (roughly 30 feet). Developed by Novatel, the MiFi device is also called an intelligent mobile hotspot. Accessing Wi-Fi through the MiFi device allows up to five persons to be connected at the same time, sharing the same connection. MiFi also allows users to use voice-over-IP technology to make free (or cheap) calls, both locally and internationally.
MiFi provides broadband Internet connectivity at any location that offers 3G cellular network coverage. One drawback with MiFi is that it is expensive both to acquire and to use.
Super Wi-Fi is a term coined by the U.S. Federal Communications Commission (FCC) to describe a wireless network proposal that creates long-distance wireless Internet connections. (The use of the trademark “Wi-Fi” in the name has been criticized because Super Wi-Fi is not based on Wi-Fi technology.) Super Wi-Fi uses the lower-frequency white spaces between television channel frequencies. These lower frequencies enable the signal to travel further and penetrate walls better than normal Wi-Fi frequencies.
Super Wi-Fi is already in use in Houston, Texas, and Wilmington, North Carolina. The technology threatens cell phone carriers’ 3G technology, and it could eventually bring broadband wireless Internet access to rural areas.
Wireless Mesh Networks
Mesh networks use multiple Wi-Fi access points to create a wide area network that can be quite large. Mesh networks could have been included in the long-range wireless section, but you see them here because they are essentially a series of interconnected local area networks.
Around the United States, public wireless mesh programs have stalled and failed (e.g., in Philadelphia, in Boston, and on Long Island, New York). Service providers that partnered with cities to maintain the systems are dropping out, largely because the projects’ costs are escalating and the revenue models are unclear. However, San José, California, is building a new “municipal Wi-Fi” network that shows promise, as the following example illustrates.
Municipal Wi-Fi in San Jose, California
Municipal wireless networks (also called municipal Wi-Fi) are designed to turn an entire city into a wireless access zone in order to provide universal wireless access to the Internet. Cities provide municipal Wi-Fi via wireless mesh networks, using hundreds of wireless access points that are often located on utility poles. Unfortunately, some municipal wireless networks did not work as planned. They proved to be expensive to install and maintain. Further, they often did not provide adequate bandwidth for users to access the Internet.
A new downtown Wi-Fi network in San Jose, California, indicates a new beginning for the ill-fated and brief “muni Wi-Fi” attempts over the last decade. San Jose’s municipal Wi-Fi network is now operating in the city’s downtown area.
The city’s goal is not to provide wireless Internet for all residents throughout the city. Rather, the city wants to make Wi-Fi available to all residents within the context of certain key municipal infrastructure applications. For instance, the new Wi-Fi network supports mobile Wi-Fi users in the city’s parking guidance system, which can feed near real-time information about the location of empty spaces in the network of city-owned parking garages. The system also supports an expanding population of wireless parking meters. Both processes will generate city revenues, creating a sustainable foundation for the network’s operations. This revenue generation is the basis for offering free, pervasive, high-bandwidth Wi-Fi connectivity as an end-user amenity in the 1.5-square-mile downtown area.
Sources: Compiled from E. Voss, “San Jose Free WiFi Network Launches in Downtown,” MuniWireless, March 15, 2013; P. Shuler, “San Jose Launches ‘Wickedly Fast’ WiFi,” KQED News, March 13, 2013; B. Reed, “South Carolina Clamps Down,” BGR.com, June 29, 2012; M. Silbey, “Seattle Ends Free Wi-Fi,” Smart Planet, May 8, 2012; J. Cox, “San Jose Wi-Fi Net Could Mark Rethinking of ‘Muni Wi-Fi’,” Network World, March 13, 2012; “Let Them Browse While They Eat Cake,” The Economist, January 5, 2012; http://www.sanjoseca.gov/, accessed March 21, 2013.
Despite these problems, there are many examples of successful mesh-network applications. Consider the following:
• U.S. military forces are using wireless mesh networks to connect their laptops in field operations.
• Electric meters are now being placed on residences to transfer their readings to the central office for billing, without the need to employ human readers or to connect the meters with cables.
• The LEO Iridium constellation operates as a mesh network, with wireless links among adjacent satellites. Calls between two satellite phones are routed through the mesh, from one satellite to another across the constellation, without having to pass through an Earth-based station. As a result, the signal travels a shorter distance, reducing any transmission lag. In addition, the constellation can operate with fewer Earth stations.
Wide-Area Wireless Networks
Wide-area wireless networks connect users to the Internet over a geographically dispersed territory. These networks typically operate over the licensed spectrum—that is, they use portions of the wireless spectrum that are regulated by the government. In contrast, Bluetooth and Wi-Fi operate over the unlicensed spectrum and are therefore more prone to interference and security problems. In general, wide-area wireless network technologies fall into two categories: cellular radio and wireless broadband.
Cellular telephones (cell phones) provide two-way radio communications over a cellular network of base stations with seamless handoffs. Cellular telephones differ from cordless telephones, which offer telephone service only within a limited range through a single base station attached to a fixed landline—for example, within a home or an office.
The cell phone communicates with radio antennas, or towers, placed within adjacent geographic areas called cells (see Figure 8.5). A telephone message is transmitted to the local cell—that is, the antenna—by the cell phone and then is passed from cell to cell until it reaches the cell of its destination. At this final cell, the message either is transmitted to the receiving cell phone or it is transferred to the public switched telephone system to be transmitted to a wireline telephone. This is why you can use a cell phone to call other cell phones as well as standard wireline phones.
Figure 8.5 Cellular Radio Network. (Sources: Anthony Lee/OJO Images/Getty Images and Image Source Limited)
Until early 2011, large cell towers have been a “given” for cellular technology. The following example introduces an exciting new technology from Alcatel-Lucent (www.alcatel-lucent.com) that aims to replace these towers.
Cellular technology is quickly evolving, moving toward higher transmission speeds and richer features. The technology has progressed through several stages:
• First generation (1G) cellular used analog signals and had low bandwidth (capacity).
• Second generation (2G) uses digital signals primarily for voice communication; it provides data communication up to 10 Kbps.
• 2.5G uses digital signals and provides voice and data communication up to 144 Kbps.
• Third generation (3G) uses digital signals and can transmit voice and data up to 384 Kbps when the device is moving at a walking pace, 128 Kbps when it is moving in a car, and up to 2 Mbps when it is in a fixed location. 3G supports video, Web browsing, and instant messaging.
3G does have disadvantages. Perhaps the most fundamental problem is that cellular companies in North America use two separate technologies: Verizon and Sprint use Code Division Multiple Access (CDMA), while Cingular and others use Global System for Mobile Communications (GSM). CDMA companies are currently using Evolution-Data Optimized (EV-DO) technology, which is a wireless broadband cellular radio standard.
In addition, 3G is relatively expensive. In fact, most carriers limit how much information you can download and what you can use the service for. For instance, some carriers prohibit downloading or streaming audio or video. If you exceed the carriers’ limits, they reserve the right to cut off your service.
• Fourth generation (4G) is still under development, and it is not one defined technology or standard. The International Telecommunications Union has specified speed requirements for 4G: 100 Mbps (million bits per second) for high-mobility communications such as cars and trains, and 1 Gbps (billion bits per second) for low-mobility communications such as pedestrians. A 4G system is expected to provide a secure all-IP (Internet Protocol)-based mobile broadband system to all types of mobile devices. Many of the current “4G” offerings do not meet the ITU specified speeds, but they call their service 4G nonetheless. See “IT’s Personal” for more information.
Wireless Broadband or WiMAX
Worldwide Interoperability for Microwave Access, popularly known as WiMAX, is the name for IEEE Standard 802.16. WiMAX has a wireless access range of up to 31 miles, compared to 300 feet for Wi-Fi. WiMAX also has a data-transfer rate of up to 75 Mbps. It is a secure system, and it offers features such as voice and video. WiMAX antennas can transmit broadband Internet connections to antennas on homes and businesses located miles away. For this reason WiMAX can provide long-distance broadband wireless access to rural areas and other locations that are not currently being served.
IT’s Personal: Wireless and Mobile
What the GSM3GHSDPA+4GLTE???
This chapter explains the many mobile platforms that are available to you as a consumer. Specifically, it discusses cellular, Bluetooth, Wi-Fi, satellite, and other wireless options. Within the cellular area, however, things get confusing because the telecommunications companies use so many acronyms these days. Have you ever wondered if Verizon 3G was equivalent to AT&T 3G? What about 4G and 4G LTE? Of course, most people assume that 4G is faster than 3G, but by how much?
For instance, when Apple released an update to its mobile operating system (iOS), AT&T suddenly began to display 4G on the iPhone rather than 3G! That was with no phone upgrade! Pretty nice, right? Wrong. In this instance, the “upgrade” was simply a change in terminology rather than a change in technology. The speed of the 3G/4G network had not changed. (Note: AT&T “4G LTE” is a different technology that does offer significantly higher speeds than AT&T 3G or 4G.)
Actual connection speeds are described in bit rates, meaning how many bits (1s or 0s) can be transmitted in one second. For example, a speed listed as 1.5 Mbps translates to 1.5 million bits per second. That sounds like a tremendous rate. Knowing the bits per second, however, is only part of understanding the actual speed. In reality, connection speed is not the same as throughput. Actual throughput will always be less than the connection speed.
To understand this point, consider how your car operates. Your car is probably capable of driving more than 100 mph. However, you are “throttled down” by various speed limits, so you never reach your potential speed. Your actual speed varies depending on the route you take, the speed limits imposed along that route, the weather, and many other factors. In the same way, even though AT&T, Verizon, Sprint, and other companies boast incredible wireless speeds (“Up to 20 Mbps!”), they will always say “up to” because they know that you will never actually download a file at that rate.
The best method for determining the actual speeds of the various networks is to go to your local wireless store and run a speed test using the demo model they have on display. This will give you first-hand experience of the actual throughput speed you can expect from their network. This number is much more realistic than understanding terms such as 3G, 4G, and 4G LTE.
Here is how to perform the test: First, make sure the unit is connected only to a cellular network (not Wi-Fi). Then go to http://speedtest.net, and click “Begin Test.” I just ran this test from my iPhone 4S on AT&T’s 4G (not 4G LTE) network. My download speed was 3.80 Mbps, and my upload speed was 1.71 Mbps. These numbers are more informative than any name they are given (3G, 4G, etc.) because they indicate exactly what you can expect from your wireless connection. Run this test at competing stores (AT&T, Verizon, Sprint, T-Mobile, etc.), and you will have real data to compare. As names change, you can always run a test to find the facts.
before you go on..
1. What is Bluetooth? What is a WLAN?
2. Describe Wi-Fi, cellular service, and WiMAZ.
8.3. Mobile Computing and Mobile Commerce
In the traditional computing environment, users come to a computer, which is connected with wires to other computers and to networks. Because these networks need to be linked by wires, it is difficult or even impossible for people on the move to use them. In particular, salespeople, repair people, service employees, law enforcement agents, and utility workers can be more effective if they can use IT while in the field or in transit. Mobile computing was designed for workers who travel outside the boundaries of their organizations as well as for anyone traveling outside his or her home.
Mobile computing refers to a real-time connection between a mobile device and other computing environments, such as the Internet or an intranet. This innovation is revolutionizing how people use computers. It is spreading at work and at home; in education, healthcare, and entertainment; and in many other areas.
Mobile computing has two major characteristics that differentiate it from other forms of computing: mobility and broad reach.Mobility means that users carry a device with them and can initiate a real-time contact with other systems from wherever they happen to be. Broad reach refers to the fact that when users carry an open mobile device, they can be reached instantly, even across great distances.
These two characteristics, mobility and broad reach, create five value-added attributes that break the barriers of geography and time: ubiquity, convenience, instant connectivity, personalization, and localization of products and services. A mobile device can provide information and communication regardless of the user’s location (ubiquity). With an Internet-enabled mobile device, users can access the Web, intranets, and other mobile devices quickly and easily, without booting up a PC or placing a call via a modem (convenience and instant connectivity). A company can customize information and send it to individual consumers as a short message service (SMS) (customization). And, knowing a user’s physical location helps a company advertise its products and services (localization). Mobile computing provides the foundation for mobile commerce (m-commerce).
In addition to affecting our everyday lives, mobile computing is also transforming the way organizations conduct business by allowing businesses and individuals to engage in mobile commerce. As you saw at the beginning of this chapter, mobile commerce (or m-commerce) refers to electronic commerce (EC) transactions that are conducted in a wireless environment, especially via the Internet. Like regular EC applications, m-commerce can be transacted via the Internet, private communication lines, smart cards, and other infrastructures. M-commerce creates opportunities for businesses to deliver new services to existing customers and to attract new customers. To see how m-commerce applications are classified by industry, seewww.wirelessresearch.eu.
The development of m-commerce is driven by the following factors:
• Widespread availability of mobile devices. By mid-2013, some 6 billion cell phones were in use throughout the world. Cell phones are spreading more quickly in the developing world than the developed world. Experts estimate that within a few years about 70 percent of cell phones in developed countries will have Internet access. Mobile Internet access in developing countries will increase rapidly as well. Thus, a mass market has developed for mobile computing and m-commerce.
• Declining prices. The price of wireless devices is declining and will continue to decline.
• Bandwidth improvement. To properly conduct m-commerce, you need sufficient bandwidth for transmitting text, voice, video, and multimedia. Wi-Fi, 4G cellular technology, and WiMAX all provide the necessary bandwidth.
Mobile computing and m-commerce include many applications, which result from the capabilities of various technologies. You will examine these applications and their impact on business activities in the next section.
Mobile Commerce Applications
Mobile commerce applications are many and varied. The most popular applications include location-based applications, financial services, intrabusiness applications, accessing information, and telemetry. The rest of this section examines these various applications and their effects on the ways people live and do business.
Location-Based Applications and Services
M-commerce B2C applications include location-based services and location-based applications. Location-based mobile commerce is called location-based commerce (or L-commerce).
Location-based services provide information that is specific to a given location. For example, a mobile user can (1) request the nearest business or service, such as an ATM or a restaurant; (2) receive alerts, such as a warning of a traffic jam or an accident; and (3) find a friend. Wireless carriers can provide location-based services such as locating taxis, service personnel, doctors, and rental equipment; scheduling fleets; tracking objects such as packages and train boxcars; finding information such as navigation, weather, traffic, and room schedules; targeting advertising; and automating airport check-ins.
Consider, for example, how location-based advertising can make the marketing process more productive. Marketers can use this technology to integrate the current locations and preferences of mobile users. They can then send user-specific advertising messages concerning nearby shops, malls, and restaurants to consumers’ wireless devices. Despite these developments, however, mobile advertising is still in its early stages, as you see in IT’s About Business 8.5.
Mobile financial applications include banking, wireless payments and micropayments, money transfers, wireless wallets, and bill-payment services. The bottom line for mobile financial applications is to make it more convenient for customers to transact business regardless of where they are or what time it is. Harried customers are demanding such convenience.
IT’s [about business]
8.5 Mobile Ads Still Aren’t Very Good
Experts classify mobile ads as the holy grail for companies that conduct business online. In fact, Pandora Media, Twitter, and many other companies often derive the majority of their revenue from mobile advertising. For example, in October 2012, Facebook’s stock increased in value by more than 10 percent following news that the social network had earned 14 percent of its 2012 third-quarter revenue from mobile ads, up from almost nothing in the first quarter of that year.
Our smartphones are always with us, know where we are, and collect far more data about us than a desktop or laptop computer. So, if mobile computing has so much potential, why are mobile ads so mediocre?
Working with a tiny smartphone display, most mobile ads take one of two forms, each of which has serious limitations. The first form is the banner ad, which has little room to say anything other than “Click here for something!” The second form is the interstitial, which is the screen that pops up and interrupts you while you are trying to read something else. These two simple forms were borrowed from other media where they make more sense. For example, a print advertisement or a Web ad on a computer’s large display is based on the concept of adjacency. We tolerate it because it is next to content that we want. Television ads function this way, but with the added dimension of time. Your TV show will be interrupted of course, but the show’s story structure is designed with these interruptions in mind, and you will sit through commercials because you want to see what is going to happen next. Regardless of which of the two forms a mobile ad takes, it is disruptive to the viewer, and viewers simply do not like that.
According to research firm EMarketer (www.emarketer.com), worldwide mobile-ad spending will exceed $23 billion by 2016. Google is the largest beneficiary of that growth. Google realizes, however, that banner ads and interstitials do not work well on smart-phones. Therefore, the company has been developing enhanced ad services like click-to-call buttons, which allow people to contact an advertiser directly about an offer using the phone in their hand. Another possible source of advertising is Google Now, a virtual personal assistant incorporated into Google’s Android devices that keeps track of your frequently visited locations and repeating calendar entries and then tries to provide relevant information, such as a traffic report minutes before you head to work. As of mid-2013, Google had not sent any advertising through Google Now. However, industry analysts expect that it will at some point.
Google’s mobile-payment system, Google Wallet (see the chapter-opening case), is another strategy the company is utilizing to move beyond the existing mobile-advertising model. Storing a user’s credit-card information does two things: It makes mobile purchases easier, and it provides a mechanism to track expenditures. Without a payment platform, Google and other companies have no way to determine whether an ad persuades a user to make an offline purchase. However, if you use Google Wallet to pay a florist after Google sent you an ad from that florist, Google can draw some conclusions about that ad’s effectiveness, and it can then adjust prices accordingly.
Like Google, Facebook has expanded its mobile advertising. This expansion has been possible because more than 60 percent of Facebook users access the site via a mobile device. Facebook attributes its growth in mobile ads to the fact that its ads appear in the user’s news feed, which the company calls a “sponsored story.” (See the opening case in Chapter 9.) On Facebook, sponsored stories are first distributed to users who have chosen to be fans of an advertiser’s Facebook page. If a fan likes the ad—which often consists of a coupon or another discount—in a sponsored story, then the ad is distributed to that fan’s network of friends, regardless of whether they liked the advertiser’s page. Facebook research has found that people recall an ad referred by a friend 10 times more often than they do a typical display ad.
The bottom line? Traditional advertising does not translate well to mobile devices, and companies are still having difficulty coming up with effective strategies for mobile advertising.
Sources: Compiled from T. Foran, “Native Advertising Strategies for Mobile Devices,” Forbes, March 14, 2013; R. Hof, “Has Facebook Finally Mastered Mobile Marketing?” Forbes, March 6, 2013; A. Lashinsky, “Meet the Man Behind Facebook’s Ad Revenue,” Fortune, February 22, 2013; E. Spence, “Mobile Advertising in a Nutshell, Android for Show, Apple for Dough,” Forbes, February 7, 2013; V. Kopytoff, “Cracking the Mobile Ad Market,” Fortune, January 24, 2013; S. Olenski, “Is Location Based Advertising the Future of Mobile Marketing and Mobile Advertising?”Forbes, January 17, 2013; T. Worstall, “eBay Drops Mobile Advertising: Does This Hurt Face-book?” Forbes, December 20, 2012; S. Grobart, “Mobile Ads Are the Future. They’re Also Lousy,” Bloomberg BusinessWeek, November 5–11, 2012; J. Perez, “Zuckerberg Dazzles Wall Street with Q3 Mobile Progress,” CIO, October 24, 2012.
1. Describe the advantages of mobile advertising to the advertiser. To the consumer.
2. Describe the disadvantages of mobile advertising to the advertiser. To the consumer.
In many countries, banks increasingly offer mobile access to financial and account information. For example, Citibank (www.citibank.com) alerts customers on their digital cell phones about changes to their account information.
If you took a taxi ride in Frankfurt, Germany, you could use your cell phone to pay the taxi driver. Such very small purchase amounts (generally less than $10) are called micropayments.
Web shoppers historically have preferred to pay with credit cards. Because credit card companies sometimes charge fees on transactions, however, credit cards are an inefficient way to make very small purchases. The growth of relatively inexpensive digital content, such as music (e.g., iTunes), ring tones, and downloadable games, is driving the growth of micropayments, as merchants seek to avoid paying credit card fees on small transactions.
Ultimately, however, the success of micropayment applications will depend on the costs of the transactions. Transaction costs will be small only when the volume of transactions is large. One technology that can increase the volume of transactions is wireless mobile wallets. Various companies offer mobile wallet (m-wallet) technologies that enable cardholders to make purchases with a single click from their mobile devices. This chapter’s opening case discusses mobile wallets in detail.
In China, SmartPay allows people to use their mobile phones to pay their phone bills and utility bills, buy lottery tickets and airline tickets, and make other purchases. SmartPay launched 172.com (see www.172.com), a portal that centralizes the company’s mobile, telephone, and Internet-based payment services for consumers. It designed the portal to provide a convenient, centralized source of information for all of these transactions.
Although business-to-consumer (B2C) m-commerce gets considerable publicity, most of today’s m-commerce applications actually are used within organizations. In this section, you will see how companies use mobile computing to support their employees.
Mobile devices increasingly are becoming an integral part of workflow applications. For example, companies can use nonvoice mobile services to assist in dispatch functions—that is, to assign jobs to mobile employees, along with detailed information about the job. Target areas for mobile delivery and dispatch services include transportation (delivery of food, oil, newspapers, cargo; courier services; tow trucks; taxis), utilities (gas, electricity, phone, water); field service (computers, office equipment, home repair); healthcare (visiting nurses, doctors, social services); and security (patrols, alarm installation).
Another vital function of mobile technology is to help users obtain and utilize information. Two types of technologies—mobile portals and voice portals—are designed to aggregate and deliver content in a form that will work within the limited space available on mobile devices. These portals provide information to users anywhere and at any time.
A mobile portal aggregates and provides content and services for mobile users. These services include news, sports, and e-mail; entertainment, travel, and restaurant information; community services; and stock trading. The world’s best-known mobile portal—i-mode from NTT DoCoMo (www.nttdocomo.com)—has more than 40 million subscribers, primarily in Japan. Major players in Europe are Vodafone, O2, and T-Mobile. Some traditional portals—for example, Yahoo!, AOL, and MSN—have mobile portals as well.
A voice portal is a Web site with an audio interface. Voice portals are not Web sites in the normal sense because they can also be accessed through a standard phone or a cell phone. A certain phone number connects you to a Web site, where you can request information verbally. The system finds the information, translates it into a computer-generated voice reply, and tells you what you want to know. Most airlines utilize voice portals to provide real-time information on flight status.
Another example of a voice portal is the voice-activated 511 travel-information line developed by Tellme.com. This technology enables callers to inquire about weather, local restaurants, current traffic, and other valuable information. In addition to retrieving information, some sites provide true interaction. For example, iPing (www.iping.com) is a reminder and notification service that allows users to enter information via the Web and receive reminder calls. This service can even call a group of people to notify them of a meeting or conference call.
Telemetry is the wireless transmission and receipt of data gathered from remote sensors. Telemetry has numerous mobile computing applications. For example, technicians can use telemetry to identify maintenance problems in equipment. As another example, doctors can monitor patients and control medical equipment from a distance.
Car manufacturers use telemetry applications for remote vehicle diagnosis and preventive maintenance. For instance, drivers of many General Motors cars use its OnStar system (www.onstar.com) in numerous ways.
An interesting telemetry application for individuals is an iPhone app called Find My iPhone. Find My iPhone is a part of the Apple iCloud (www.apple.com/icloud). This app provides several very helpful telemetry functions. If you lose your iPhone, for example, it offers two ways to see its approximate location on a map. First, you can sign into the Apple iCloud from any computer. Second, you can use the Find My iPhone app on another iPhone, iPad, or iPod touch.
If you remember where you left your iPhone, you can write a message and display it on your iPhone’s screen. The message might say, “Left my iPhone. Please call me at 301-555-1211.” Your message appears on your iPhone, even if the screen is locked. And, if the map indicates that your iPhone is nearby—perhaps in your office under a pile of papers—you can tell Find My iPhone to play a sound that overrides the volume or silent setting.
If you left your iPhone in a public place, you may want to protect its contents. You can remotely set a four-digit passcode lock to prevent people from using your iPhone, accessing your personal information, or tampering with your settings. Going further, you can initiate a remote wipe (erase all contents) to restore your iPhone to its factory settings. If you eventually find your phone, then you can connect it to your computer and use iTunes to restore the data from your most recent backup.
If you have lost your iPhone and you do not have access to a computer, you can download the Find My iPhone app to a friend’s iPhone, iPad, or iPod touch and then sign in to access all the Find My iPhone features.
before you go on..
1. What are the major drivers of mobile computing?
2. Describe mobile portals and voice portals.
3. Describe wireless financial services.
4. Descuss some of the major intrabusiness wireless applications.
8.4. Pervasive Computing
A world in which virtually every object has processing power and is connected to a global network either via a wireline or wirelessly is the world of pervasive computing (or ubiquitous computing). Pervasive computing is invisible “everywhere computing” that is embedded in the objects around us—the floor, the lights, our cars, the washing machine, our cell phones, our clothes, and so on.
For example, in a smart home, your home computer, television, lighting and heating controls, home security system, and many appliances can communicate with one another via a home network. You can control these linked systems through various devices, including your pager, cell phone, television, home computer, and even your automobile. One of the key elements of a smart home is the smart appliance, an Internet-ready appliance that can be controlled by a small handheld device or a desktop computer via a home network, either wireline or wireless. Two technologies provide the infrastructure for pervasive computing: radio-frequency identification and wireless sensor networks.
Radio-frequency identification (RFID) technology allows manufacturers to attach tags with antennas and computer chips on goods and then track their movement through radio signals. There are many uses for RFID tags, as you see in IT’s About Business 8.6.
IT’s [about business]
8.6 BP Uses Wireless Technologies
In 2009 the giant oil company BP (www.bp.com) launched a wide-ranging information technology initiative. The initiative, which BP calls “Track and Trace,” involves deploying a web of networked RFID tags, cellular phones, and GPS devices to monitor key assets around the world. Its goals were to improve safety and compliance. Another goal was to save money by reducing BP’s asset loss and theft, employee downtime, and material waste.
Track and Trace relies on a wide range of sensing technologies that had to be customized for the project. The technologies had to be safe enough to use around oil and gas and yet resilient enough to survive harsh conditions—from Arctic cold to desert heat to Gulf of Mexico humidity. For example, BP collaborated with a vendor to develop a GPS tracking device for pipeline inspectors, who often work alone in hazardous, remote conditions. To develop this technology, the vendor had to shrink its standard device and ensure that it would not emit sparks, so that it would be safe to use around combustible materials. Track and Trace technologies also had to be practical on a massive scale to influence the operations of a company with roughly 80,000 employees, thousands of facilities spread throughout the world, and millions of pieces of field equipment.
When the Deepwater Horizon oil rig exploded in 2010, killing 11 people and spewing oil into the Gulf of Mexico for 87 days, BP faced one of the industry’s biggest and costliest oil cleanups. Track and Trace enabled BP to respond quickly in managing the cleanup, primarily through alerting spill responders about what equipment they had to work with and what condition the rig was in. BP deployed RFID-tagged Wave Gliders (self-powered robots that float around collecting data on air and water quality) in the Gulf of Mexico, and it tagged skimmers and other key assets across four U.S. Gulf states.
Another example of Track and Trace’s usefulness is the role it played when BP had to perform routine refinery maintenance at the firm’s Gelsenkirchen (GSK) refinery in Germany. To accomplish this process, GSK technicians worked section by section, sealing off one area before proceeding to the next. To do that, they used what is called ablind to close off pipe ends at the flange. Blinds were inserted and removed in a precise sequence. Engineers had to place RFID tags on 100,000 blinds at the refinery. They used Track and Trace to track the blinds with handheld readers. SAP software analyzed the data from Track and Trace to automatically determine which flanges should be blinded, and when.
In another Track and Trace project, BP outfitted oil trucks in Alaska with cellular equipment that transmits data to BP through the AT&T cellular network or, as a backup, through Iridium’s satellites. The system monitors driver activity and sends alerts through e-mail and text about a suspected accident or unsafe activity by their truck drivers such as speeding and hard braking. The system monitors about 900 trucks, and it generates roughly 500,000 messages per week.
Sources: Compiled from T. Team, “BP Goes for Public Relations Makeover to Get Beyond Gulf Spill,” Forbes, February 7, 2012; P. McDougall, “Asset Tracking Aids Huge BP Cleanup,” InformationWeek, September 19, 2011; C. Swedberg, “BP Uses RFID Sensors to Track Pipe Corrosion,” RFID Journal, January 31, 2011; www.bp.com, accessed March 11, 2013.
1. How did Track and Trace technologies help BP at least try to manage its catastrophic oil spill in the Gulf of Mexico?
2. What other uses might BP have for wireless sensor technologies?
RFID was developed to replace bar codes. A typical bar code, known as the Universal Product Code (UPC), is made up of 12 digits that are batched in various groups. The first digit identifies the item type, the next 5 digits identify the manufacturer, and the next 5 identify the product. The last digit is a check digit for error detection. Bar codes have worked well, but they have limitations. First, they require a line of sight to the scanning device. This system works well in a store, but it can pose substantial problems in a manufacturing plant or a warehouse or on a shipping/receiving dock. Second, because bar codes are printed on paper, they can be ripped, soiled, or lost. Third, the bar code identifies the manufacturer and product but not the actual item. Two systems are being developed to replace bar codes: QR (for quick response) codes and RFID systems. Figure 8.6 shows bar codes, QR codes, and an RFID tag.
Figure 8.6 Barcodes, RFID tags, and QR codes.
© Patrick Duinkerke/iStockphoto; © raphotography/iStockphoto; Media Bakery)
A QR code is a two-dimensional code, readable by dedicated QR readers and camera phones. QR codes have several advantages over bar codes:
• QR codes can store much more information than bar codes.
• Data types stored in QR codes include numbers, text, URLs, and even Japanese characters.
• The size of QR codes is small because these codes store information horizontally and vertically.
• QR codes are more resistant to damage than bar codes.
• QR codes can be read from any direction or angle, so they are less likely to be misread.
RFID systems use tags with embedded microchips, which contain data, and antennas to transmit radio signals over a short distance to RFID readers. The readers pass the data over a network to a computer for processing. The chip in the RFID tag is programmed with information that uniquely identifies an item. It also contains information about the item such as its location and where and when it was made. Figure 8.7 shows an RFID reader and an RFID tag on a pallet.
Figure 8.7 Small RFID reader and RFID tag.
©Ecken, Dominique/KeystonePressendienst/Zuma Press
There are two basic types of RFID tags: active and passive. Active RFID tags use internal batteries for power, and they broadcast radio waves to a reader. Because active tags contain batteries, they are more expensive than passive RFID tags, and they can be read over greater distances. Therefore, they are used primarily for more expensive items. In contrast, passive RFID tags rely entirely on readers for their power. They are less expensive than active tags, but they can be read only up to 20 feet. For these reasons they are generally applied to less-expensive merchandise. Problems with RFID include expense and the comparatively large size of the tags.
Wireless Sensor Networks
Wireless sensor networks (WSNs) are networks of interconnected, battery-powered, wireless sensors called motes that are placed into the physical environment. The motes collect data from many points over an extended space. Each mote contains processing, storage, and radio-frequency sensors and antennas. Each mote “wakes up” or activates for a fraction of a second when it has data to transmit. It then relays those data to its nearest neighbor. So, instead of every mote transmitting its data to a remote computer at a base station, the data are moved mote by mote until they reach a central computer where they can be stored and analyzed. An advantage of a wireless sensor network is that if one mote fails, then another one can pick up the data. This process makes WSNs very efficient and reliable. Also, if the network requires more bandwidth, it is easy to boost performance by placing new motes when and where they are required.
The motes provide information that enables a central computer to integrate reports of the same activity from different angles within the network. Therefore, the network can determine with much greater accuracy information such as the direction in which a person is moving, the weight of a vehicle, and the amount of rainfall over a field of crops.
There are many applications of wireless sensors. Nest Labs (www.nest.com) produces a “digital thermostat” that combines sensors and Web technology. The thermostat senses not only air temperature, but also the movements of people in a house. It then adjusts room temperatures accordingly to save energy.
Placing sensors in all kind of products makes the products “smart.” Smart equipment includes sensors in bridges and oil rigs that alert their human minders when they need repairs, before equipment failure occurs. Sensors in jet engines produce data in real time on the operating performance of the engines. Sensors in fruit and vegetable cartons can track location and “sniff” the produce, warning in advance of spoilage, so shipments can be rerouted or rescheduled.
In Dubuque, Iowa, IBM has initiated a long-term project with the local government to use sensors, software, and the Internet to improve the city’s use of water, electricity, and transportation. In a pilot project introduced in 2011, digital water meters were installed in 151 homes. These meters contain software that monitors water use and patterns. It then informs residents about ways to consume less, and it alerts them to likely leaks. The pilot program decreased water use by 65 million gallons per year in the city.
A valuable application of sensors is to use them in smart electrical meters, thereby forming a smart grid. Smart meters monitor the usage of electricity, and they transmit that data to the utility company. IT’s About Business 8.7 illustrates the advantages of utilizing smart meters in Brazil.
IT’s [about business]
8.7 Brazil Uses Smart Meters
Reading electricity meters can be a dangerous job in Brazil, as AES Electropaulo (www.aeselectropaulo.com.br) meter readers well know. Robson Dourado, a São Paulo meter reader, claims that residents of São Paulo’s Morro do Indio slum watch him carefully as he makes his rounds, worried that he will detect rogue wires that residents use to siphon away power illegally.
Electricity theft is rampant across much of Latin America, so much so that statisticians have devised a formula that uses the stolen wattage to measure the size of a country’s informal economy. (The informal economy is that part of an economy that is not taxed or monitored by any form of government; for example bartering.) In some parts of Brazil, as much as 20 percent of electricity is stolen. To combat this problem and to avoid violent encounters with street gangs, utilities are using smart meters. These devices, which cost $150 to $400 each, allow power companies to monitor power usage remotely and in real time. The meters can detect unusually heavy demand, which may signal an illegal hookup. They can also shut off service to households and businesses that do not pay their bills.
The devices remove the human factor from meter reading, so customers can no longer collude with dishonest meter readers to cheat the power company. Smart meters are the perfect solution, says the chief technology officer of a Rio de Janeiro-based utility that has installed more than 150,000 of the devices. In his words, “They save us money, they are easy to install, and they require little maintenance.” One Brazilian government official contends that the meters may save utility companies as much as $4.7 billion per year.
Sales of smart meters in Latin America are expected to generate $24 billion in revenue through 2020, with Brazil accounting for two-thirds of that total. Experts estimate that Brazilian utility companies may install as many as 63 million smart meters by 2020, while Mexico may install 22.4 million, Argentina 5 million, and Chile 3 million during the same time period.
In Rio de Janeiro, utility companies are taking advantage of preparations for the 2014 World Cup soccer championship and the 2016 Olympic Games to deploy the meters. Before August 2011, about 80 percent of the electricity in Tabajara and Morro dos Cabritos, two particularly violent slums, was stolen through illegal connections. After police established a constant presence in the slums, a utility company installed 50,000 smart meters. Electricity theft has dropped to zero since that time, proving the efficacy of the new technology.
Sources: Compiled from T. Woody, “How Europe Is Cashing in on Smart Meters as the U.S. Lags,” Forbes, November 6, 2012; S. Nielsen, “Smart Meters Help Brazil Zap Electricity Theft,” Bloomberg BusinessWeek, March 8, 2012; “Latin America’s First Smart Grid Project Now Complete,” SmartGrid-News, December 22, 2011; “Brazil Will Adopt Smart Meters,” Gulfnews.com, October 30, 2011; J. St. John, “Echelon Partners Up to Break into Brazil’s Smart Meter Market,” Greentechmedia, October 13, 2011; J. St. John, “Brazil: The Next Hot Smart Meter Market,”GigaOM.com, November 24, 2010; www.aeselectropaulo.com.br, accessed March 20, 2013.
1. If smart meters are installed in large numbers, then what happens to the workers who are employed as meter readers? Do you see problems with this scenario?
2. Besides deterring theft, what other advantages might a smart meter provide to a utility company? To a homeowner? To a business?
before you go on..
1. Define lpervasive computing, RFID, and wireless sensor networks.
2. Provide two specific business uses of RFID technology.
8.5. Wireless Security
Clearly, wireless networks provide numerous benefits for businesses. However, they also present a huge challenge to management—namely, their inherent lack of security. Wireless is a broadcast medium, and transmissions can be intercepted by anyone who is close enough and has access to the appropriate equipment. There are four major threats to wireless networks: rogue access points, war driving, eavesdropping, and radio-frequency jamming.
A rogue access point is an unauthorized access point to a wireless network. The rogue could be someone in your organization who sets up an access point meaning no harm but fails to inform the IT department. In more serious cases, the rogue is an “evil twin”—someone who wishes to access a wireless network for malicious purposes.
In an evil twin attack, the attacker is in the vicinity with a Wi-Fi-enabled computer and a separate connection to the Internet. Using a hotspotter—a device that detects wireless networks and provides information on them (see www.canarywireless.com)—the attacker simulates a wireless access point with the same wireless network name, or SSID, as the one that authorized users expect. If the signal is strong enough, users will connect to the attacker’s system instead of the real access point. The attacker can then serve them a Web page asking for them to provide confidential information such as user names, passwords, and account numbers. In other cases, the attacker simply captures wireless transmissions. These attacks are more effective with public hotspots (e.g., McDonald’s and Starbucks) than with corporate networks.
War driving is the act of locating WLANs while driving (or walking) around a city or elsewhere. To war drive or walk, you simply need a Wi-Fi detector and a wirelessly enabled computer. If a WLAN has a range that extends beyond the building in which it is located, then an unauthorized user might be able to intrude into the network. The intruder can then obtain a free Internet connection and possibly gain access to important data and other resources.
Eavesdropping refers to efforts by unauthorized users to access data that are traveling over wireless networks.
In radio-frequency (RF) jamming, a person or a device intentionally or unintentionally interferes with your wireless network transmissions.
As you see, wireless systems can be difficult to secure. Technology Guide 5 discusses a variety of techniques and technologies that you should implement to help you avoid these threats.
before you go on..
1. Describe the four major threasts to the security of wireless networks.
2. Which of these threats is the most dangerous for a business? Which is the most dangerous for an individual? Support your answers.
What’s In IT For Me?
For the Accounting Major
Wireless applications help accountants to count and audit inventory. They also expedite the flow of information for cost control. Price management, inventory control, and other accounting-related activities can be improved with the use of wireless technologies.
For the Finance Major
Wireless services can provide banks and other financial institutions with a competitive advantage. For example, wireless electronic payments, including micropayments, are more convenient (anywhere, anytime) than traditional means of payment, and they are less expensive. Electronic bill payment from mobile devices is becoming more popular, increasing security and accuracy, expediting cycle time, and reducing processing costs.
For the Marketing Major
Imagine a whole new world of marketing, advertising, and selling, with the potential to increase sales dramatically. Such is the promise of mobile computing. Of special interest for marketing are location-based advertising as well as the new opportunities resulting from pervasive computing and RFIDs. Finally, wireless technology also provides new opportunities in sales force automation (SFA), enabling faster and better communications with both customers (CRM) and corporate services.
For the Production/Operations Management Major
Wireless technologies offer many opportunities to support mobile employees of all kinds. Wearable computers enable off-site employees and repair personnel working in the field to service customers faster, better, and less expensively. Wireless devices can also increase productivity within factories by enhancing communication and collaboration as well as managerial planning and control. In addition, mobile computing technologies can improve safety by providing quicker warning signs and instant messaging to isolated employees.
For the Human Resources Management Major
Mobile computing can improve HR training and extend it to any place at anytime. Payroll notices can be delivered as SMSs. In addition, wireless devices can make it even more convenient for employees to select their own benefits and update their personal data.
For the MIS Major
MIS personnel provide the wireless infrastructure that enables all organizational employees to compute and communicate anytime, anywhere. This convenience provides exciting, creative, new applications for organizations to cut costs and improve the efficiency and effectiveness of operations (e.g., to achieve transparency in supply chains). Unfortunately, as you saw earlier, wireless applications are inherently insecure. This lack of security is a serious problem with which MIS personnel must contend.
1. Identify advantages and disadvantages of each of the four main types of wireless transmission media.
Microwave transmission systems are used for high-volume, long-distance, line-of-sight communication. One advantage is the high volume. A disadvantage is that microwave transmissions are susceptible to environmental interference during severe weather such as heavy rain and snowstorms.
Satellite transmission systems make use of communication satellites, and they receive and transmit data via line-of-sight. One advantage is that the enormous footprint—the area of Earth’s surface reached by a satellite’s transmission—overcomes the limitations of microwave data-relay stations. Like microwaves, satellite transmissions are susceptible to environmental interference during severe weather.
Radio transmission systems use radio-wave frequencies to send data directly between transmitters and receivers. An advantage is that radio waves travel easily through normal office walls. A disadvantage is that radio transmissions are susceptible to snooping by anyone who has similar equipment that operates on the same frequency.
Infrared light is red light that is not commonly visible to human eyes. Common applications of infrared light are in remote-control units for televisions, VCRs, and DVD and CD players. An advantage of infrared is that it does not penetrate walls and so does not interfere with other devices in adjoining rooms. A disadvantage is that infrared signals can be easily blocked by furniture.
2. Explain how businesses can use technology employed by short-range, medium-range, and long-range networks, respectively.
Short-range wireless networks simplify the task of connecting one device to another, eliminating wires and enabling users to move around while they use the devices. In general, short-range wireless networks have a range of 100 feet or less. Short-range wireless networks include Bluetooth, ultra-wideband, and near-field communications. A business application of ultra-wideband is the PLUS Real-Time Location System from Time Domain. Using PLUS, an organization can locate multiple people and assets simultaneously.
Medium-range wireless networks include Wireless Fidelity (Wi-Fi) and mesh networks. Wi-Fi provides fast and easy Internet or intranet broadband access from public hotspots located at airports, hotels, Internet cafés, universities, conference centers, offices, and homes. Mesh networks use multiple Wi-Fi access points to create a wide area network that can be quite large.
Wide-area wireless networks connect users to the Internet over geographically dispersed territory. They include cellular telephones and wireless broadband. Cellular telephones provide two-way radio communications over a cellular network of base stations with seamless handoffs. Wireless broadband (WiMAX) has a wireless access range of up to 31 miles and a data-transfer rate of up to 75 Mbps. WiMAX can provide long-distance broadband wireless access to rural areas and remote business locations.
3. Provide a specific example of how each of the five major m-commerce applications can benefit a business.
Location-based services provide information specific to a location. For example, a mobile user can (1) request the nearest business or service, such as an ATM or restaurant; (2) receive alerts, such as a warning of a traffic jam or an accident; and (3) find a friend. With location-based advertising, marketers can integrate the current locations and preferences of mobile users. They can then send user-specific advertising messages about nearby shops, malls, and restaurants to wireless devices.
Mobile financial applications include banking, wireless payments and micropayments, money transfers, wireless wallets, and bill-payment services. The bottom line for mobile financial applications is to make it more convenient for customers to transact business regardless of where they are or what time it is.
Intrabusiness applications consist of m-commerce applications that are used within organizations. Companies can use nonvoice mobile services to assist in dispatch functions— that is, to assign jobs to mobile employees, along with detailed information about the job.
When it comes to accessing information, mobile portals and voice portals are designed to aggregate and deliver content in a form that will work within the limited space available on mobile devices. These portals provide information anywhere and anytime to users.
Telemetry is the wireless transmission and receipt of data gathered from remote sensors. Company technicians can use telemetry to identify maintenance problems in equipment. Car manufacturers use telemetry applications for remote vehicle diagnosis and preventive maintenance.
4. Describe technologies that underlie pervasive computing, providing examples of how businesses can utilize each one.
Pervasive computing is invisible and everywhere computing that is embedded in the objects around us. Two technologies provide the infrastructure for pervasive computing: radio-frequency identification (RFID) and wireless sensor networks(WSNs).
RFID is the term for technologies that use radio waves to automatically identify the location of individual items equipped with tags that contain embedded microchips. WSNs are networks of interconnected, battery-powered, wireless devices placed in the physical environment to collect data from many points over an extended space.
5. Explain how the four major threats to wireless networks can damage a business.
The four major threats to wireless networks are rogue access points, war driving, eavesdropping, and radio-frequency jamming. A rogue access point is an unauthorized access point to a wireless network. War driving is the act of locating WLANs while driving around a city or elsewhere. Eavesdropping refers to efforts by unauthorized users to access data that are traveling over wireless networks. Radio-frequency jamming occurs when a person or a device intentionally or unintentionally interferes with wireless network transmissions.
Chip technology that enables short-range connection (data and voice) between wireless devices.
cellular telephones (cell phones)
Phones that provide twoway radio communications over a cellular network of base stations with seamless handoffs.
Global Positioning System (GPS)
A wireless system that uses satellites to enable users to determine their position anywhere on earth.
A small geographical perimeter within which a wireless access point provides service to a number of users.
A type of wireless transmission that uses red light not commonly visible to human eyes.
location-based commerce (l-commerce)
Mobile commerce transactions targeted to individuals in specific locations, at specific times.
Networks composed of multiple Wi-Fi access points that create a wide area network that can be quite large.
A wireless system that uses microwaves for high-volume, long-distance, point-to-point communication.
mobile commerce (or m-commerce)
Electronic commerce transactions that are conducted with a mobile device.
A real-time connection between a mobile device and other computing environments, such as the Internet or an intranet.
A portal that aggregates and provides content and services for mobile users.
mobile wallet (m-wallet)
A technology that allows users to make purchases with a single click from their mobile devices.
near-field communications (NFC)
The smallest of the short-range wireless networks that is designed to be embedded in mobile devices such as cell phones and credit cards.
personal area network
A computer network used for communication among computer devices close to one person.
pervasive computing (or ubiquitous computing)
A computer environment where virtually every object has processing power with wireless or wired connections to a global network.
Any delay in communications from signal transmission time through a physical medium.
radio-frequency identification (RFID) technology
A wireless technology that allows manufacturers to attach tags with antennas and computer chips on goods and then track their movement through radio signals.
Uses radio-wave frequencies to send data directly between transmitters and receivers.
satellite radio (or digital radio)
A wireless system that offers uninterrupted, near CD-quality music that is beamed to your radio from satellites.
A wireless transmission system that uses satellites for broadcast communications.
The wireless transmission and receipt of data gathered from remote sensors.
(see pervasive computing)
A high-bandwidth wireless technology with transmission speeds in excess of 100 Mbps that can be used for applications such as streaming multimedia from, say, a personal computer to a television.
A Web site with an audio interface.
Telecommunications in which electromagnetic waves carry the signal between communicating devices.
911 emergency calls made with wireless devices.
wireless access point
An antenna connecting a mobile device to a wired local area network.
Wireless Fidelity (Wi-Fi)
A set of standards for wireless local area networks based on the IEEE 802.11 standard.
wireless local area network (WLAN)
A computer network in a limited geographical area that uses wireless transmission for communication.
wireless sensor networks (WSNs)
Networks of inter- connected, battery-powered, wireless sensors placed in the physical environment.
1. Given that you can lose a cell phone as easily as a wallet, which do you feel is a more secure way of carrying your personal data? Support your answer.
2. If mobile computing is the next wave of technology, would you ever feel comfortable with handing a waiter or waitress your cell phone to make a payment at a restaurant the way you currently hand over your credit or debit card? Why or why not?
3. What happens if you lose your NFC-enabled smartphone or it is stolen? How do you protect your personal information?
4. In your opinion, is the mobile (or digital) wallet a good idea? Why or why not?
5. Discuss how m-commerce can expand the reach of e-business.
6. Discuss how mobile computing can solve some of the problems of the digital divide.
7. List three to four major advantages of wireless commerce to consumers and explain what benefits they provide to consumers.
8. Discuss the ways in which Wi-Fi is being used to support mobile computing and m-commerce. Describe the ways in which Wi-Fi is affecting the use of cellular phones for m-commerce.
9. You can use location-based tools to help you find your car or the closest gas station. However, some people see location-based tools as an invasion of privacy. Discuss the pros and cons of location-based tools.
10. Discuss the benefits of telemetry in healthcare for the elderly.
11. Discuss how wireless devices can help people with disabilities.
12. Some experts say that Wi-Fi is winning the battle with 3G cellular service. Others disagree. Discuss both sides of the argument and support each one.
13. Which of the applications of pervasive computing do you think are likely to gain the greatest market acceptance over the next few years? Why?
1. Investigate commercial applications of voice portals. Visit several vendors, e.g., Microsoft and Nuance (links to both websites are available via http://www.wiley.com/go/rainer/ problemsolving). What capabilities and applications do these vendors offer?
2. Using a search engine, try to determine whether there are any commercial Wi-Fi hotspots in your area. (Hint: Accesshttp://www.wiley.com/rainer/go/problemsolving.)
3. Examine how new data-capture devices such as RFID tags help organizations accurately identify and segment their customers for activities such as targeted marketing. Browse the Web, and develop five potential new applications not listed in this chapter for RFID technology. What issues would arise if a country’s laws mandated that such devices be embedded in everyone’s body as a national identification system?
4. Investigate commercial uses of GPS. Start with www.neigps.com. Can some of the consumer-oriented products be used in industry? Prepare a report on your findings.
5. Access www.bluetooth.com. Examine the types of products being enhanced with Bluetooth technology. Present two of these products to the class and explain how they are enhanced by Bluetooth technology.
6. Explore www.nokia.com. Prepare a summary of the types of mobile services and applications Nokia currently supports and plans to support in the future.
7. Enter www.ibm.com. Search for “wireless e-business.” Research the resulting stories to determine the types of wireless capabilities and applications IBM’s software and hardware support. Describe some of the ways these applications have helped specific businesses and industries.
8. Research the status of 3G and 4G cellular service by visiting the links available viahttp://www.wiley.com/go/rainer/problemsolving. Prepare a report on the status of 3G and 4G based on your findings.
9. Enter Pitney-Bowes Business Insight (www.pbinsight.com). Click on “MapInfo Professional,” then click on the “Resources” tab, then on the “Demos” tab. Look for the location-based services demos. Try all the demos. Summarize your findings.
10. Enter www.packetvideo.com. Examine the demos and products and list their capabilities.
11. Enter www.onstar.com. What types of fleet services does OnStar provide? Are these any different from the services OnStar provides to individual car owners? (Play the movie.)
12. Access various search engines to find articles about “The Internet of Things.” What is “the Internet of Things”? What types of technologies are necessary to support it? Why is it important?
Closing Case Retailer Gains Many Benefits with RFID Item-Level Tagging
American Apparel (AA; www.americanapparel.net) is a vertically integrated clothing manufacturer, wholesaler, and retailer that also conducts its own design advertising, and marketing. The firm is best known for making basic, solid-color cotton knitwear such as T-shirts and underwear. However, in recent years it has expanded to include leggings, leotards, tank tops, vintage clothing, dresses, pants, denim, nail polish, and other products. In mid-2013, the company operated over 285 retail stores in 20 countries.
American Apparel retail stores operate boutique-style, stocking only one item of each style, color, and size on the floor at any time. Inventory turns over quickly in the apparel business, and with more than 26,000 stock-keeping units (SKUs) to manage, store staff constantly battled to keep inventory counts 100 percent accurate and the sales floor 100 percent stocked. These efforts were time- and labor-intensive and expensive. However, the cost of inventory errors and stocking delays were even higher—lost sales and disappointed customers.
The IT Solution
AA searched for a more efficient and effective means to meet their goals and item-level radio frequency identification (RFID) that fit the company’s needs. Before implementing RFID across the entire company, AA tested the system in one store.
The company gave careful consideration to its choice of store for the pilot test. They looked for a store that had average sales and a dedicated staff that would embrace the technology as well as a new process for inventory management. In addition, AA wanted a location with good traffic flow that was centrally located to other area AA stores, in order to facilitate a regional roll-out if the single store pilot test proved successful. The company chose the Columbia University area store in New York City.
AA partnered with Motorola (www.motorola.com) and used that company’s handheld readers for the sales floor and the shipping dock. The store placed RFID tags on each item of clothing and merchandise. As the tags were affixed to each product, they were associated with the particular SKU in the system’s software. From that point on, store associates used mobile (handheld) and fixed RFID readers to stock, inventory, and replenish the store’s 40,000-piece store inventory.
American Apparel noted that its pilot RFID system contributed to a well-stocked store, increased sales, and allowed immediate and accurate responses to customers’ requested design, size, and color of in-store merchandise. The RFID technology also allowed the retailer to better determine real-time buying behaviors of its customers and adjust inventory accordingly. This process made items easier for customers to find and for employees to replenish. In fact, the new system reduced the number of “missing” items (i.e, an item color or size that is not on the floor) from an average of 80 missing items on the floor at any one time to fewer than 8, and these 8 were subsequently found misplaced on the floor.
Item-level RFID tagging also allowed inventory to be taken more accurately, in less time, enabling staff to spend more time on the sales floor assisting customers and making sales rather than restocking merchandise. Specifically, prior to implementing the RFID system, inventory took 6–8 people 6–8 hours. After the implementation, inventory takes two people 2.5 hours, and with improved accuracy.
The retailer is now able to fulfill its vision of consistently offering merchandise in every size and color on store floors at all times, creating a more rewarding customer experience and simplifying the inventory process. AA has also seen unexpected benefits from the RFID pilot test, namely a significant decline in employee theft.
American Apparel is now rolling out its RFID system across its stores around the world. By deploying the technology in all of its stores, the retailer expects to increase sales and improve customer service by having real-time visibility into product at nearby stores, enhancing the inter-store transfer process to balance stock. That is, if a store is out of a particular product, then the system will alert the staff to the nearest store with that product and how long it will take to transfer it where it is needed.
Sources: Compiled from “RFID News: JC Penney CEO Says Retailer Going All in on RFID, Perhaps With Significant Impact on Industry,” Supply Chain Digest, August 15, 2012; M. Roberti, “Word Is Getting Out About RFID in Retail,” RFID Journal, July 23, 2012; W. Loeb, “Macy’s Wins With Technology,” Forbes, July 10, 2012; “American Apparel Finds the Right Fit with Motorola RFID,” American Apparel Case Study, 2012; www.americanapparel.net, www.motorola.com, accessed April 25, 2013.
1. What are the possible disadvantages of American Apparel’s RFID system?
2. How could American Apparel measure the value of the RFID system? Provide specific examples of metrics that the retailer could use to justify the cost of the system. Also, provide non-quantifiable measures that the retailer could use to justify its system.
Mobile Communications have changed our lives dramatically in the past 15 years. We have progressed from a being connected to households by landline telephones to being connected to individuals by wireless devices. It is much more than just a phone… often referred to as a “smart” phone, these wireless devices allow us to stay connected via social media, text messages, video calls, photo sharing, email, and yes, even phone calls. It is no surprise, then, that businesses have used these powerful devices for their benefit in reaching out to customers.
For this Internship Activity, you will work for Jeremy Farr, Associate Vice President and IT Officer of Noble Bank & Trust in Anniston, AL. In particular, Jeremy is interested in learning about some of the new mobile developments his bank could use to allow their customers to access account information on the mobile web or through mobile apps. Your job will be to research potential providers and give feedback on the good and bad of different partners.
Please visit the Book Companion Site to receive the full set of instructions