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KN72029

KEY NOTE INTERNET USAGE IN BUSINESS AUGUST 1999

Overview

ISBN 1-85765-882-5

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Executive Summary

Table of Contents

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EXECUTIVE SUMMARY

This report considers business usage of and spending on the Internet. It also briefly covers related areas, such as intranets. The focus of the report is on three areas: business spending on Internet connectivity, business spending on Internet services and software, and business revenues from the commercialisation of the Internet (i.e. revenues from Internet advertising and electronic commerce -- e-commerce).
The Internet market (covering software, connectivity and non-connectivity services) was worth around £1.1bn in 1998, and is predicted to grow to around £1.64bn in 1999. The market has grown rapidly from a low initial base. Growth has been driven by the need for cheap electronic communications between businesses, the rise of collaborative working practices in companies, the growing realisation that the World Wide Web (WWW) can be a commercial medium and not just a source of information, and the introduction of new Internet infrastructure and technologies, which is giving the Internet the functionality of proprietary computer networking systems.
In 1999, the main sector of the Internet market was non-connectivity services and software (mainly services), representing 77.2 percent of the market, with connectivity services representing 22.8 percent of the market. Revenues from e-commerce and advertising are growing rapidly and are estimated to have reached over £3.5bn in 1999.
The key issues now shaping Internet usage are:

* the need for new technologies and infrastructure to develop new business-orientated applications (e.g. Internet 2, DHTML, IPv6, VoIP)
* the introduction of lower-cost Internet access, such as free dial-up Internet service providers (ISPs) and fast, wireless internet connections
* the growing strategic importance of Internet advertising and the role in this taken by the portal sites
* proposed new arrangements and legislation to govern the Internet (i.e. new e-commerce regulations and new arrangements to control domain name registration)
* the growth of Internet clans, i.e. groups of companies strategically controlled or influenced by large investment funds.

In the future, the commercial exploitation of the Internet will be the main driver of the market. The Internet market (software, connectivity and non-connectivity services) is forecast to grow by 297.6 percent between 1999 and 2003, to reach a value of £6.5bn in 2003. The main growth area will be in non-connectivity services.
E-commerce sales on the Internet will grow over the same period by 638.3 percent, to reach £25.81bn in 2003. Advertising revenues on the Internet will rise by 900 percent between 1999 and 2003, to end the period at £550m.

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TABLE OF CONTENTS

Executive Summary

Market Definition

INTRODUCTION

DEFINITIONS

MARKET SECTORS

MARKET POSITION

MARKET TRENDS

Table 1: The Internet and the UK Computer Market (£m), 1995-1999

Market Size

THE TOTAL MARKET

CONNECTIVITY

SOFTWARE AND SERVICES

ELECTRONIC COMMERCE

A GLOBAL PERSPECTIVE

Table 2: The UK Internet Market (£m), 1995-1999

Table 3: The UK Internet Connectivity Market by Value (000 connections, £m and £), 1995-1999

Table 4: Methods of Internet Access ( percent of UK businesses), 1997-1999

Table 5: The UK Connectivity Market by Type of Connection (£m and percent), 1995-1999

Table 6: Number of Internet Connections by Type (000 connections mid-year), 1995-1999

Table 7: International Comparison of the Cost of 20 Hours On-Line per Month ($)Å, 1998

Table 8: ISDN Penetration and Connection Costs ($), 1998

Table 9: The UK Fixed Link Market - Shares of the Leading Providers ( percent of connections), Mid-1999

Table 10: The UK's Major Internet Service Providers by Subscriber Numbers (000), Mid-1999

Table 11: Leading UK Largest Dial-Up Business Service Providers ( percent of connections), Mid-1999

Table 12: The Internet Software and Services Market by Value (£m), 1995-1999

Table 13: Number of UK Commercial Domain Name Registrations, 1996-1999

Table 14: Server Software Packages Used by Global Websites (number of websites and percent), April 1999

Table 15: The Leading Server Developers Worldwide (number of websites and percent), April 1999

Table 16: Leading Server Developers in the UK (number of websites)Å, April 1999

Table 17: The Internet Advertising Market by Value (£m), 1995-1999

Table 18: The Top Ten Advertisers on the UK Web by Expenditure (£000), 1998

Table 19: The Most Popular Sites in the UK by Page Impressions per Month (million impressions), May 1999

Table 20: Share of Sales Coming from the Internet (£bn), 1996-2000

Table 21: The UK Internet Electronic Commerce Market (£m)Å, 1997-1999

Table 22: The Number of Internet Hosts in the UK and in the World (000), July 1993-1999

Table 23: Number of Internet Hosts in the UK and the Rest of Europe, June 1999

Industry Background

DEVELOPMENT OF THE INTERNET

INDUSTRY CONCENTRATION

TRADE ASSOCIATIONS

Table 24: The History of the Internet, 1960-Present

Table 25: Internet Companies in the UK (estimated number of companies), 1999

Table 26: Estimated Number of Companies in the Internet Software Market by Type of Product, 1999

Competitor Analysis

THE MARKETPLACE

LEADING INTERNET SERVICES PROVIDERS

SOFTWARE/SERVICE COMPANIES

ADVERTISING AND PROMOTION

Table 27: Internet Service Providers Offering Business Connectivity, 1999

Table 28: The Major Internet Software Companies and Areas of Activity, 1998

Table 29: Main Media Advertising Expenditure by Internet Service Providers (£000), Year to March 1999

Table 30: Main Media Advertising Expenditure by Online Services and Websites (£000), Year to March 1999

Strengths, Weaknesses, Opportunities and Threats (SWOT)

STRENGTHS

WEAKNESSES

OPPORTUNITIES

THREATS

Buying Behaviour

THE TARGET MARKET

IMPACT OF THE INTERNET

INTERNET UPTAKE

USAGE OF THE INTERNET

Table 31: Information Technology Infrastructure and Hardware Use in the UK ( percent of companies), 1997-1999

Table 32: Uptake of the Internet in Major Industrialised Countries ( percent of companies), 1997-1999

Table 33: Business Usage of Internet Technologies by Type ( percent of UK companies), 1997-1999

Table 34: Internet Access by Type of Company ( percent), 1999

Table 35: Companies Using the Internet for Information Gathering ( percent), 1997-1999

Table 36: Trends in Companies Selling Online ( percent), 1997-1999

Table 37: Companies Using Their Websites To Sell Online by Type of Company and Region, 1999

Current Issues

NEW INTERNET ARCHITECTURE

CHEAPER CONNECTIVITY

ELECTRONIC COMMERCE LEGISLATION

NEW SOFTWARE TECHNOLOGIES

THE GROWTH OF INTERNET CLANS

Table 38: Examples of UK Free Internet Service Providers, 1999

Forecasts

FORECASTS FOR 1999 TO 2003

KEY TRENDS

Table 39: Forecast UK Internet Market by Value (£m), 1999-2003

Table 40: Forecast Internet Connectivity Market by Type of Connection and Value (£m), 1999-2003

Table 41: Forecast Number of Internet Connections (000 connections mid-year), 1999-2003

Table 42: Forecast Software and Services Market by Value (£m), 1999-2003

Table 43: Forecast UK Internet Electronic Commerce Transactions (£m), 1999-2003

Table 44: Forecast UK Internet Advertising Revenues (£m), 1999-2003

Company Profiles

INTRODUCTION

DEFINITIONS

FURTHER INFORMATION

Further Sources

ASSOCIATIONS

PERIODICALS

DIRECTORIES

GENERAL SOURCES

HOPPENDSTEDT BONNIER INFORMATION SOURCES

GOVERNMENT PUBLICATIONS

OTHER SOURCES

Text © 1999 Key Note

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Last updated by Jacob van Eldik 24th January 2000