What's Ahead For The Net In '99
In 1999, merger mania will sweep the Internet industry, stock prices will fall back to earth, online sales will continue to boom, men will become a minority on the Net and the Year 2000 problem will "cause only modest disruptions," according to a prominent market research firm.
In its fourth annual prediction of key Internet trends, International Data Corp. of Framingham, Mass., says 1999 will be a year of major market shifts that will create new winners and losers. One driving force, IDC says, will be the reversal of artificially high Internet stock valuations.
"These deflated valuations, coupled with growing cash needs, intensifying competition, the need for critical mass and a possible recession, will drive a trend toward acquisitions of Internet companies by 'real world' companies and mergers among Internet companies," IDC says.
Some possibilities: A Yahoo! (YHOO) alliance with CBS (CBS) or TimeWarner (TWX); increased ownership by NBC of CNET and Snap; an Infoseek (SEEK) merger with Lycos (LCOS); a Microsoft (MSFT) purchase of a major portal; a Compaq (CPQ) sale of AltaVista; and the sale of E-Trade (EGRP) to a global financial services company such as Citigroup (C) or Wells Fargo (WFC).Commerce over the Internet, meanwhile, will double to $68 billion, IDC predicts. "For the first time ever, Internet commerce volume will exceed Bill Gates' wealth," chief IDC Internet researcher Frank Gens said.
IDC predicts half of all households online will make purchases over the Net in 1999, while "e-tailers" will find new ways to service customers, including live interaction.
"Not having an Internet presence and an Internet commerce strategy is a recipe for market share loss," Gens said. "In the U.S. market, starting in 1999, the virtual market is reality."
Reaching international customers will also become a major component of business strategy, as IDC expects more than half of online users to come from outside the U.S. for the first time in the Internet's history.
The research firm also believes online access will gow more rapidly as computer prices drop to the $400-$600 range from the current $800-$1100, making them affordable to families who don't own PCs.
For the first time, women will become the majority of online users, IDC projects.
"The feminization of the Internet is a very important shift, because women seek out different Web destinations than men, spend less time surfing online and are the primary decision-makers in the majority of household purchases," Gens said.
Finally, IDC predicts that the Year 2000 problem, "contrary to many current views," won't cause much trouble. "A mere two-tenths of one percent of Y2K bugs will cause business-critical problems," Gens said.
Written By Jeffry Bartash