What we can expect in 1999
cbs.marketwatch.com
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What's in store for the Internet in 1999
Research firm sees lots of mergers, falling stock prices
By Jeffry Bartash, CBS MarketWatch
Last Update: 11:56 AM ET Dec 30, 1998
Internet Daily
FRAMINGHAM, Mass. (CBS.MW) -- In 1999, the Internet may be in
for another batch of developments that alter the cyberscape.
Merger mania will sweep the Net business. 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 a major media company such as CBS (CBS)
or TimeWarner (TWX); increased ownership by
NBC of CNET (CNWK) 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).
Soaring online sales
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.
"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."
PCs, women and Y2K
The research firm also believes online access will grow 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.
Jeffry Bartash is a reporter for CBS MarketWatch. |
