BuddeBlog

JULY 1999

A smorgasbord of data has recently become available from three new studies which analyse and predict current and future Internet use worldwide – eMarketer’s eGlobal Report, the US Commerce Department Study Falling Through the Net: Defining the Digital Divide and Greenfield’s Pulsefinder On-Campus Market Study.

eMarketer’s eGlobal Report

- Worldwide Internet use will grow by 35.2 million this year to 130.6 million.

- Worldwide Internet users now exceed those in North America.

- 350 million people will use the Internet by 2003.

- 75%+ of the world’s Internet sites are in English.

- By 2003 Internet users will reach 350 million – a 267% increase from the end of 1998.

- revenues will climb from US$98.4 billion in 1999 to US$1.2 trillion by 2003.

- The United States will earn the majority share of every e-commerce dollar, followed by Germany, then the United Kingdom.

- South America is the biggest growth area for Internet access – rising by 550%.

- Despite these figures, the worldwide online population is still only equal to 2.2% of the total 5.9 billion world population.

US Commerce Department Study

- Over 40% of US household have computers; 25% have Internet connections.

- Internet users are still divided by race and income – the Net is mainly accessed by Caucasians with incomes of US$75,000 and above.

- The demographic gap is widening between white, black and Hispanic users, despite efforts to achieve equality of access.

- Users with incomes of US$75,000 and above are more than 20 times likely to have Internet access than low income families.

- Use by black and Hispanic people doubled when outside access was made available – in schools, libraries etc.

Greenfield Pulsefinder Study

- More college students are going online – 84% will have soon access on campus.

- Most popular sites for students are entertainment and travel.

The compilers of the eMarketer report acknowledged that their figures were not absolutely exact, owing to the use of different sources of data.

One reason for the variance in data was due to conflicting interpretations of the term ‘web user’ – what online frequency is necessary for a person to qualify as a user, and whether a person who only uses e-mail fits into this category.

This resulted in differences in forecasts, such as the Morgan Stanley prediction of 157 million Internet users in 2000 compared with the 327 million anticipated by Internet Industry Almanac.

AUGUST 1999

According to Gary Arlen’s ISSR, online census, growth in the first half year of 1999 stands at around 20%, mainly fuelled by first-time computer users, who seem to buy home computers primarily to use the Internet. And it is the big players who are gaining most new customers.

The table below indicates the various segments of the market. The numbers can’t be added up together as users have multiple accounts. This is, of course, particularly true in the case of ad-supported e-mail.

The fastest growing segment, despite being from a small installed base, is cable modems.

Internet and online market – 1997-1999

Online medium 1997 1998 July 1999

Internet dial-up 21 million 26.9 million 32.5 million

Internet TV 30,000 713,000 864,000

Cable Modem services 20,000 530,000 893,000

Ad supported email 18.5 million 71.1 million 123 million

(Source: Gary Arlen’s online census)

AUGUST 1999

Nineteen of the world’s leading technology, service and telecom companies are combining forces to define a standard that could revolutionise the Internet, altering its finances and stimulating new services.

If they succeed, the critical issue of how to track, identify and bill traffic appropriately will be resolved and around the world service providers will be able to work to a standard that allows a proper return on investment.

Industry leaders say they can no longer tolerate a system of flat-rate pricing that fails to distinguish between simple, low-cost e-mail and more complex services, such as high-speed video streams, and to levy them accordingly. This is holding back the delivery of more advanced services and skewing the market.

AT&T, Oracle, Andersen Consulting, Hewlett-Packard, Sun Microsystems and others have pledged to develop the new open Internet billing standard. The inaugural meeting has led to the establishment of a working group coordinated by TeleStrategies, a US company specialising in IP (Internet protocol) billing.

The standard, to be called the Internet Protocol Detail Record, will establish an open format that stores data about any Internet activity. This can be referenced by any network service provider.

The working group’s objective is to reach agreement on the standard by the end of 1999 and present the result to the appropriate standard-setting bodies.

The companies involved say that, compared with traditional circuit switching, which uses a common set of standards to define such activities as local and long-distance calls and the duration and routing data of calls, the IP world enables hundreds of unique applications.

Experts say that without common billing operating between IP service providers will become very difficult and will render the cost of support systems prohibitive.

AUGUST 1999

Launched in 1995/1996 freemail has quickly conquered the world.

The boom in the ad-supported e-mail services market seems unstoppable. By providing the operators of these services with a personal profile, targeted advertising is e-mailed based on customers’ preferences.

In 1996 there were just over 2 million users; by mid-1999 close to 125 million free mailboxes had been issued (55 million in 1998). While the various players are squabbling about who is offering the most successful service the market leaders are continuing to show spectacular growth in subscriber numbers.

Table 2 – Ad-supported e-mail services – subscribers 1997 – 1999

Service 1997 1998 July 1999

Hotmail (Microsoft) 9.5 million 34.0 million 40.0 million

Yahoo! Mai 2.5 million 25.0 million 65.0 million

NET@dress (USA Net) 2.6 million 5.8 million 11.0 million

Juno 3.9 million 6.3 million 6.8 million

(Source: Paul Budde Communication, Gary Arlen)

The number of free e-mail addresses now exceeds the number of US households.

Warning! We question the real numbers of the ad-supported e-mail market for a couple of reasons:

- First of all, there are many users that only use the service ad hoc when travelling or to bypass the office system.

- Secondly, many people sign up but then lose their passwords and sign up again, leaving the system with a large number of dormant e-mail accounts.

AUGUST 1999

Fast Search and Transfer ASA, a Norwegian company, is preparing to launch a search engine – alltheweb.com – purported to be capable of indexing every address on the Internet within the next year. They claim they have already indexed 25% of the 800 URLs – 9 points ahead of their nearest rival. (It is said that there will soon be one billion URLs.)

Fast Search intend to sell the service to Internet portals, other search engines and ISPs.