Web Site Development Said to Be a $10 Billion Industry

ActivMedia Research said its study of
electronic commerce shows that Web site development has grown into a $10
billion industry, while revenues generated online may reach $95 billion in
1999 and are expected to reach $226 billion in 2000.

The average budgeted investment for e-commerce Web site development in 1999
across all Web sites (excluding ISPs) is about $37,000, the “Real Numbers
Behind ‘Net Profits” study found.

Media portal houses committed to spending the most, averaging $78,000.
Business-to-consumer operations that sell exclusively through the Internet
budgeted an average of $68,000.

Online growth is exploding, particularly among mid-range and smaller online
operations, as companies gear up to meet anticipated demand, according to
ActivMedia vice president of Research Harry Wolhandler.

“Internet-generated revenues in 2000 will reach $226 billion, nearly six
times the $38 billion observed in 1998,” he said.

“Typical growth rates for many mid-range players are even higher, and some companies will experience
online revenue growth of over 2000. Naturally, e-commerce programs that see
growth rates three to four times higher than average are going to budget more
for Web site development in order to handle the expected future business.”

The study also found that European Web sites committed to spending better
than twice as much per site on development costs than what is to be spent in North America.

And Web sites anticipating profitability in two to five years had far higher
development budgets than sites that were already profitable or expecting
profitability in the near term.

The sixth wave update of the study is available for $2,995. ActivMedia
Research conducts custom and syndicated research; clients include Andersen
Consulting, Unisys, IBM, Intel, UPS and Visa.

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