FINALLY, EUROPEANS ARE
STORMING THE NET
The region looks like the next great cyberspace growth market
It's 8:58 p.m., and from Berlin to Munich to tiny Black Forest hamlets, German
Internauts are booting up their PCs. Their chat rooms have been practically
deserted until now. But after the two minutes it takes to make modem
connections, they will be as lively as Bavarian beer halls. ''There's a
tremendous surge of online activity at nine o'clock in Germany,'' says Jack
Davies, president of AOL International. Why so? It's at 9 p.m. that German
phone rates drop by half.
Europeans, long cyberspace holdouts, are rushing onto the Net. It started
with companies, from German auto giants to banks in the City of London, that
are wiring together customers and suppliers in networks. With appetites
whetted, employees are subscribing in increasing numbers to online services,
which are hurrying to come up with offerings in European languages. Net
subscriptions in Europe are growing at 30% annually, even though high rates
push up the average outlay to $75 a month--triple a U.S. rate that allows
unlimited Internet access on free local lines.
Europe, in short, looks like the next growth market for cyberspace. If
deregulation cuts prices, as expected, cheaper phones--or cable or satellite
connections that circumvent phones--should draw consumers online. The
most dramatic growth is likely to be in company-to-company electronic
commerce. Forrester Research, a U.S. technology researcher with a unit in
Amsterdam, predicts that online business of $1.2 billion this year will be worth
$64.4 billion by 2001. ''There's incredible pent-up demand,'' says James
Richardson, president of Cisco Systems Inc.'s European operations.
Internet companies are rushing into the fray. Partnered with German media
giant Bertelsmann since 1995, AOL is taking on giants Deutsche Telekom
and France Telecom. When AOL purchased CompuServe Inc. in February, it
nearly doubled its European base, to 2 million. In the race to wire the
Continent for the Net, outfits such as Cisco and Lucent Technologies are
battling France's Alcatel and Germany's Siemens. What's more, as Europe's
businesses invest some $125 billion to prepare computers for the euro,
they're also putting the businesses online. For Casa Gancia, a 150-year-old
Italian winemaker, the Internet replaces annual communications traffic of
35,000 faxes and letters between its offices, warehouses, and agents. It is
now extending the network to 60 countries.
SKIP A STAGE. In both home and business applications, analysts estimate,
Europe is about four years behind the U.S. in cyberspace. In Germany,
France, and Britain, barely a fifth of homes have PCs, while in the U.S., the
figure is nearer half. Internet usage is still just 7% in Germany, 6% in Britain,
and 2% in France, compared with 25% in the U.S. But Europe could catch up
fast. It may not have to follow the U.S. through a step-by-step evolution of
chips and modems, for instance. Instead, Europeans can buy their way into
the state of the art. ''To some extent, Europeans will move faster because
they don't have to go through the pioneer stage,'' says William A. Etherington,
general manager of IBM's Europe division.
In fact, many Europeans may skip the PC stage and jump to the Web through
alternative devices. Alcatel wowed the crowd at Germany's Cebit computer
show last March with a telephone equipped with a screen and built for
Web-surfing. L.M. Ericsson and Nokia Corp. are promoting their latest cellular
phones as Web machines.
For many Europeans, though, the most likely path to the Net is the old telly.
British Telecommunications PLC, which has teamed up with Microsoft Corp.'s
WebTV, predicts that TV access to the Internet in Britain will grow from zero
now to 3.5 million subscribers in four years. That's twice the number of
current Net surfers using PCs. Cable & Wireless Communications PLC has
hooked up with U.S.-based Network Computer Inc., an Oracle and Netscape
Communications affiliate, for its autumn, 1998, digital TV launch. C&W intends
to offer TV-based Internet access within the next 12 months.
EASY TO WIRE. Even as consumers sort through these choices, businesses
are pressing ahead. Multinationals have been moving online for the past five
years. In April, Amazon.com, the online bookseller, announced that it would
purchase three European companies--two in Britain, one in Germany--to build
European book and video sales. And to compete in a united Europe, small
companies have to catch up. Further, many of them are adopting software
systems--including products by Oracle, Baan, and SAP--that virtually thrust
them into networks.
One added benefit for businesses: They're the first beneficiaries of telecom
reform. Throughout the Continent, new competitors are targeting business
customers with discount services. Businesses are easier to wire and provide
far greater traffic than the unwieldy consumer market. ''You get to business
customers with a much smaller investment,'' says Aldo Peterson, chief
executive at Telepartner, a Danish company that discounts phone services.
The trouble for consumers is that while many former monopolies, including
Spain's Telefonica, are lowering long-distance fares, they're compensating by
jacking up local rates. ''There has to be a balance,'' says Luis Lopez von
Damm, CEO of Telefonica Internacional, the company's European joint
venture with WorldCom Inc. In the meantime, prices limit the number of Net
surfers in some countries.
Europeans have long resisted the Internet as a phenomenon of limited value.
Now, as they warm to the Net, they're likely to imprint their culture--as well as
their languages--on cyberspace. And with time, maybe they won't have to wait
until 9 p.m. to switch on. |
