IDC: Internet economy just beginning

In just a few years, observers will look back at today's e-commerce as nothing but the "primordial ooze" necessary to develop the full-blown economy that is bound to emerge over the Internet, an analyst at an IDC conference on the Internet economy said in the keynote presentation.

There will be many losers along with winners in the Internet economy of the near future, as accelerating growth erases present-day conventions, said Frank Gens, IDC senior vice president for Internet research, citing a new IDC survey of 650 business and IT executives.

"It's pretty clear that the battle for Internet economy has just begun," said Gens. "The guys who caught the wave of the first paradigm (of the Internet economy) may wind up being buried by the guys who come behind."

A number of present-day trends reflect the hyper growth of e-commerce, he said. Among them are the following:

- Internet users will become Internet buyers. Users will increase from 160 million in 1998 to 500 million in 2003, the survey showed. More dramatic growth was seen in commercial activity on the Internet, with purchases growing from $US50 billion in 1998 to $US1.3 trillion in 2003.

- Worldwide, just 4 per cent of the population used the Internet in 1998, but by 2003, 11 per cent will have signed on.

Rapid growth will create other challenges for Internet businesses, Gens said. "We've seen skunkworks and spinoffs, but few (Web sites) have been fully integrated within the business organisation," he said. "E-business not integrated at the core business will be in trouble."

And the myth that Internet sites can stand to lose money as they gain market share will end, as companies demand and receive profits, Gens said. Two-thirds of businesses polled said they expect to make a profit by 2001.

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