Two-thirds of US homes to be online by 2003-report
NEW YORK, March 26 (Reuters) - Around a third of U.S.
households are expected to be online by the end of 1999 and
nearly two-thirds by December 2003 with the availability of
cheaper computers enabling more people to gain access to the
Web, a study released this week said.
With sub-$600 personal computers representing nearly a
fifth of all U.S. PC retail sales, and sub-$300 machines now a
reality, more households can afford the devices they need to
get online.
Around 25 percent of U.S. households currently have access
to the Internet, according to the report by Boston-based
research firm the Yankee Group, a unit of Primark Corp.
<PMK.N>.
That compares to 5 percent of households in all Western
European countries. Internet access by European consumers is
expected to rise to around 17 percent by the end of 2002,
Yankee Group studies show.
U.S. consumers will spend $56 billion on Internet access
services over the next five years, and the market will grow 21
percent a year during the same period, the report said.
The Internet is now the No. 1 use for home computers. The
Yankee Group survey found 46 percent of U.S. households with
PCs cite the Internet as the primary use for their computers,
followed by home office use with 23 percent, and games and
entertainment at 18 percent.
Around 45 percent of U.S. households have PCs.
Leading the low-priced PC revolution have been a number of
upstart PC makers, including eMachines Inc., a joint venture of
two South Korean companies - Trigem Computer Inc. and Korean
Data Systems, and Microworkz Computer Corp.
Mainstream computer makers such as Packard Bell NEC
<6701.T> are also entering the sub-$600 market.
In February, retail sales of sub-$600 PCs were up sixfold
from a year earlier, according to a report by Reston, Va.
research firm PC Data. Retail sales made up only 23 percent of
the 29 million desktop PCs sold in the United States in 1998
but pricing in the consumer market affects the whole industry.
Web access providers wishing to profit from increasing
computer ownership should sign up PC neophytes, the Yankee
Group said.
The Boston firm's survey found America Online Inc. <AOL.N>
had a 57 percent share of the U.S. consumer market but showed
plenty of room for Internet service firms to carve out the
number two spot.
"Any company serious about obtaining double-digit market
share must focus on the 'newbie' market -- the 75 percent of
households who have yet to get online," Yankee Group analyst
Emily Meehan said in the report.
"The only other growth strategies are to steal current AOL
customers and/or acquire locally dominant Internet service
providers to generate a greater presence in a particular
geographic location," Meehan said.
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