Study: 100 million online in 1998
Similar to a baby boom, a Web boom is on its way next year with the advent of less expensive means for getting online, a new study says.
The study predicts that the Web population will reach close to 100 million, fueling a boom in e-commerce to more than $20 billion. More than two-thirds of that sum will be generated from business-to-business sales, however, said Frank Gens, IDC's senior vice president of Internet research. The study points to technologies such as digital certificates and Web-based language translation as conduits for fast growth.
"These are the beginnings of what we see as a 1 billion number by 2005," Gens said. "We're about one-tenth of the way there. We have a long way to go."
The cause for all this explosive growth will stem from the introduction of more types of less expensive and less technologically complicated appliances for getting on the Internet, according to Gens, including TV set-top boxes, Web-enabled TVs, Web-enabled screen phones, Web-enabled video game consoles, Web-enabled Personal Digital Assistants, and others. The availability of these devices will lead to one in four U.S. households being online in 1998, he said.
"If you think $999 PCs turned the market on end, see what happens at $199, with the arrival of a wide range of information appliances," Gens said in a statement.
Speed is also a factor in future Net growth. IDC predicts that high-speed Internet access via copper wires, known as DSL (digital subscriber line), will have more widespread U.S. trials in 1998 and begin rapid adoption in 1999. By 2002, almost 15 percent of the 45-50 million U.S. households online will have Internet access at megabit speeds--with DSL and cable dominating the market and wiping out ISDN (integrated services digital network).
The study also says the much-touted sub-$1,000 PCs are not inexpensive enough to gain mass market penetration. It says to get household penetration to the 60 percent to 80 percent level, suppliers will have to lower PC prices to the $500 to $700 price point. The first-tier PC suppliers will hit those price points within the next 18 months, IDC predicts.
Finally, IDC predicts the Justice Department's temporary injunction against Microsoft will be made irrelevant, because users want browser capability included as a base function within their systems. It says Microsoft will have to focus more on being competitive in the information appliance arena and less on bundling more functionality into the operating system.
"Our 'out-on-a-limb' prediction for 1998 is that Microsoft will rethink its appliance strategy and launch a new non-Windows platform focused on this new class of devices," Gens said.
Many analysts predict explosive growth for the Internet and its related technologies in the coming few years, given the relatively short period since the Net has gone from relative obscurity to becoming a medium bordering on mass penetration. What remains to be seen is exactly how much growth will take place as technologies evolve and the Net becomes commercialized.