Amazon, Orbitz, and Others: The Business Case for Linux Group 5 – Case 2
Team Members • Nina Wolf • Jesse Janis • Elizabeth Cates • Eric Young • Yvonne Hildebrand
Jeffrey P. Bezos - President, Chief Executive Officer and Chairman of the Board • Jeff Bezos has always been interested in anything that can be revolutionized by computers. Intrigued by the amazing growth in use of the Internet, Jeff created a business model that leveraged the Internet's unique ability to deliver huge amounts of information rapidly and efficiently. In 1994 he founded Amazon.com, Inc., now the leading online retailer that offers services which traditional retailers cannot: lower prices, authoritative selection, and a wealth of product information. Before heading West to start Amazon.com, Jeff worked at the intersection of computer science and finance, helping build one of the most technically sophisticated quantitative hedge funds on Wall Street for D. E. Shaw & Co. He also led the development of computer systems that helped manage more than $250 Billion in assets for Bankers Trust Company. • He graduated summa cum laude, Phi Beta Kappa in electrical engineering and computer science from Princeton University in 1986.
History • 1995-Founder and CEO Jeff Bezos opened the virtual doors of Amazon.com's online store in July 1995. • 1994-1996-The company was incorporated in 1994 in the state of Washington and reincorporated in 1996 in Delaware. • 1997-The Company's principal corporate offices are located in Seattle, Washington. Amazon.com completed its initial public offering in May 1997, and its common stock is listed on the Nasdaq National Market under the symbol AMZN. • 1997-Amazon.com went public on May 15, 1997, and the IPO price was $18.00, or $1.50 adjusted for the stocks splits that occurred on June 2, 1998 (2-for-1 split), January 5, 1999 (3-for-1 split), and September 1, 1999 (2-for-1 split).
Amazon’s Competitors Barnes and Noble Books a Million Yahoo Wal-Mart e-Bay Library
Orbitz’s Competitors Priceline Hotwire Travelocity Cheaptickets.com Expedia Enterprise Avis Rent-a-Car Budget Thrifty Hertz
Orbitz - A Departure from the Ordinary Travel Site • Orbitz is a leading online travel company offering leisure and business travelers a wide selection of low airfares, as well as deals on lodging, car rentals, cruises, vacation packages and other travel. The site was created to address consumers' need for an unbiased, comprehensive display of fares and rates in a single location
Orbitz - The Travel Site • Award-winning flight search engine makes it easy to find the lowest fares on more than 455 airlines. • Comprehensive selection of hotel rates, including discounted OrbitzSaverSM rates. • Preferred rates from the most comprehensive selection of car rental companies in one place on the Internet. • Special deals on cruises available only to online customers.
Orbitz • Orbitz' inventory includes more than 455 airlines, 45,000 lodging properties and 23 rental car companies. Orbitz search results are presented in an easy-to-use matrix that displays a vast array of travel options. We won't favor or promote a specific travel provider, allowing you to easily identify and select the price and supplier that best meets your needs.
Orbitz Cares • Orbitz is the first and only travel site with a seasoned Customer Care Team that monitors nationwide travel conditions for our travelers around the clock, every day. At our command center, the Care Team gathers and interprets FAA, National Weather Service and other data to provide you with travel intelligence - real-time information that travelers won't find elsewhere. • At Orbitz, the customer relationship doesn't end when you hit the "purchase" button. The Orbitz Care Team is on the case 24/7 while you're on the road, providing automated Travel Alerts and Flight Updates via your device of choice: mobile phone, pager, PDA or e-mail. If you want, you also can receive your updates by calling the Orbitz toll-free number and using your personalized PIN. Orbitz is there to make your journey as easy as possible, providing the latest information on flight delays, weather conditions, gate changes, airport congestion or any other event that might impact your travel.
How it All Started • Five airlines - American, Continental, Delta, Northwest and United - came together to fulfill a mission: Develop a travel website that would serve people better.
Case Summary • The competitive advantage that Linux on Intel–based servers creates is far superior than that of Proprietary systems of many organizations. • The expense is far lower and benefits from speed and reliability are by far greater. • It helps to create a lower labor and hardware cost for the company creating a greater desire for the growing company.
Question 1: What are the business and technical benefits of switching from proprietary systems to Linux on Intel-based servers?
Business benefits • Cost savings, because Linux and Intel offer cheaper hard- and software tools • Savings in labor costs, because Linux programmers are more plentiful and cheaper to hire than ever • More negotiation power of buyers • Linux-software is free and the Intel-based hardware costs a fraction of what proprietary system do
Technical benefits • In former times the only way to get fast, reliable and secure systems was with expensive and specially tuned systems consisting of proprietary hardware and software. • Today Intel machines are often faster than proprietary systems from other companies such as HP, IBM and Sun and with Linux they are just as reliable
Question 2 Why can Linux make a strategic difference in the profitability of some companies? Use examples from the case.
Burlington Coat Factory • For Burlington it is more efficient • “Now I can play all the vendors off against each other to get the price I want. I never had that negotiating power when all my machines came from Sun.”, Mike Prince, CIO • Prince says that he has saved money by switching to Linux because the software is free and the hardware costs a fraction of what the proprietary system did
Orbitz • Enhanced processing power • Cost effective • Orbitz was able to switch from Unix to Linux for about one-tenth of the cost • “We also increased the speed in moving into a more efficient hardware and software environment” Roger Liew, VP of Technology Development
Question 3 • What are the limitations of Linux for business use? Visit the Linux website (www.linux.com) for background information to help you answer.
Limitations • Linux has a lack of mature development tools • “not a lot of depth” • Users run into problems, if they try to do something that Linux is not designed to do • To many Linux variants • Acquisition costs for more sophisticated versions of the software • Mainframe version of Linux isn’t free • Support fees
Limitations (cont) • Lack of applications for small and medium sized companies • Linux lags Windows in terms of integration with hardware and software other companies take their time to make sure that everything work well togehter • No single standard for Linux • Some companies like Red Hat and SuSe produce their own versions • Problems, if you choose one, which not succeeds at the marketplace