Study: U.S. Internet Economy Booming

The economy spawned by the explosive growth in use of the Internet by businesses and consumers in the U.S. will generate $124 billion this year and more than half a trillion dollars in 2002, according to a new report released by International Data Corp. (IDC).

The study, “Architects of the Internet Economy: Redesigning the Rules of Business,” found that in just four years approximately 100 million people are logging onto the Web regularly. Because of this heavy usage, companies across all industries are trying to leverage the Net’s popularity and connect with consumers and suppliers quickly and efficiently, resulting in the burgeoning Net economy.

Other key findings from the report include:

  • U.S. businesses will spend over $200 billion on Internet technology
    deployment by 2002, comprising 20% of technology spending
  • By the end of this year, tech spending will hit the $62 billion mark
  • Non-tech Internet spending, including content, marketing and sales, is
    expected to grow to $300 billion in 2002
  • In case study comparisons of certain application investments, first year
    return on investment (ROI) for Web applications equaled 245%, compared to
    leading-edge client/server applications at 95%
  • Venture capital availabilty for investment in Internet companies will
    double this year, reaching $8 billion
  • Total Internet commerce in the U.S. will soar to $250 billion in 2002.

The report also focused on Internet mavericks or “architects of the Internet economy,” those visionaries that have had a profound effect on Internet business. Architects play several roles, the
study said, such as establishing standards, redesigning business procedures, financing growth, and evangelizing the Internet. They also play pivotal positions in determining the decision making process, interacting among themselves and responding to
a constantly shifting sector.

“Our research shows that these ‘architects’ are an aggressive, risk
taking, optimistic bunch,” said John Gantz, IDC senior vice president. “They
have a common need to think strategically about the opportunity the Internet
offers them, develop tactics for chasing that opportunity, and demand the
attention of others who will help them in their pursuit.”

IDC’s Internet architects findings:

  • 75% of the architects have direct control or major influence in their
    company’s Net strategy
  • Over 80% of these trailblazers buy products and services via the
    Internet on a monthly basis
  • Surveyed Internet security and market research analysts project that
    more than
    5,000 clients in the trade, business and press read their reports during the year
  • Polled venture capitalists will spend an average of $20 million
    each on Net companies this year.

“If you didn’t buy that Vail condo in the 1960s or hedged on the chance to
purchase Microsoft stock when it first went public in 1986, you can come in
off the ledge,” said Gantz. “A new opportunity has emerged and it promises to
be really big. But don’t hesitate. Any delay in joining the Internet economy
is lost opportunity–and the barriers to entry will go up every year.”

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