A significant consolidation of Web portal giants, as well as a dramatic Internet stock correction loom for the online industry in 1999, predicts International Data Corp. (IDC), an information technology market research firm located in Framingham, Mass. These market developments are among IDC's annual predictions of key Internet trends, strategies, and events that will reshape business and society, prognosticated by Frank Gens, IDC's senior vice president, Internet research. Some of these predictions include:
- Yahoo! will partner with TimeWarner or CBS; Microsoft will purchase a major portal; a global financial services company such as Citicorp or Wells Fargo will buy E*trade.
- Web access will become available in many retail stores, while live salespeople can be reached through retail Web sites.
- PC prices will drop to the $400 price range, and finally penetrate more than half of U.S. homes.
- Internet usage will rocket to 147 million users, larger than the population of Japan.
- Online spending will total nearly $1 trillion by 2002.
- Disruptions from Y2K will be as low as 0.2% for business-critical applications.
IDC also predicts the stock market will begin to correct artificially high values for Internet stocks. 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. Possible additional deals include:
- NBC buying more of CNET and Snap.
- Compaq selling off AltaVista.
- Infoseek merging with Lycos.
Commerce across the Internet will more than double to $68 billion in 1999, with certain trends emerging according to IDC:
- 50% of U.S. households who are online will buy online.
- Virtual sites will become voice-enabled to give customers live sales assistance and customer support.
- Personalization will be the ante for successful commerce sites.
- Reaching international customers will become a critical success factor.
Changes on the technology front will continue in 1999, says IDC:
- More than 3 million Net TVs will be installed and activated.
- Home networking will roll out.
Shifts in demographic profile will mean men and the U.S. will no longer be in the majority in Cyberspace, predicts IDC, as women will break through the 50% mark in online populations, and for the first time, a majority of Internet users, 51%, will live outside the U.S.
