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Intranet spending may double

A study by consulting firm CAP Ventures says spending on corporate intranets will double this year to $8.45 billion.

Spending on corporate intranets will double this year to $8.45 billion, and software and services revenue will grow faster than hardware sales, according to a study to be released next week.

"The market is surprisingly large and robust for such a relatively young market" according a draft of the report from CAP Ventures, a consulting firm that specializes in document management. "It appears that intranets are actually something of a consolidation of technologies and efforts that have been ongoing for a number of years," the report states.

Projecting 50-percent annual growth through the end of the decade, CAP dubbed 1997 as a "spurt year," when growth will hit 100 percent. But while hardware and system software topped spending in 1996, CAP expects application development, services, and training to grow faster this year.

"If 1996 was the year when people were setting up systems to see what they could do, 1997 is year for putting them to work," Bill Zoellick, author of the report, told CNET. "These systems are being put in as backbones for real business applications."

CAP's projections are somewhat lower than those from Zona Research, which puts the market at $6.03 billion in 1996 and $12.1 billion in 1998.

"We found more detail, rather than saying the marketing is going to Microsoft and Netscape" Zoellick said. "It's a much richer market with more space for vendors large and small."

For intranet software, Zoellick sees "truly astounding growth" for content management software--including databases, web management, and document management--and application software, and for "push" publishing tools like Marimba's Castanet, Pointcast, and Documagix.

CAP sees slower growth in hardware sales because many companies have already bought hardware for their intranets and because more are buying Intel/Windows NT hardware rather than pricier Unix-based systems.

CAP predicts spending by communications firms will grow 160 percent this year, the fastest among the industries it studied. Financial institutions, government agencies, and printing and publishing firms will more than double their intranet spending, the study predicts.

The CAP study combined two rounds of original research with reviews of other industry research. One round of original data was drawn from 550 organizations, the other from 150 larger companies in industries where intranets are catching on. The more focused, intranet-specific research was conducted in October.