Internet Users in Asia-Pacific to Surpass U.S. Users in 2005

The number of Internet users in the Asia-Pacific region is increasing at an unprecedented rate and is expected to surpass those in the United States by 2005, according to International Data Corp. (IDC).

The Asia-Pacific region (excluding Japan) is forecast to exceed 240 million Internet users within four years, and, although this represents more than a 30 percent compound annual growth rate from the 64 million users in 2000, there remains plenty of room for continued growth. Internet use as a percentage of the population in the region will be only 9 percent by 2005. By comparison, the U.S. figure will be 76 percent.

“Rapid growth coupled with a huge pool of potential users will work to ensure Asia’s place at the forefront of the Internet revolution,” said Douglas Jaffe, analyst with IDC Asia/Pacific’s Internet Market research. “Internet users and e-commerce revenues are increasing rapidly, and the wireless Internet is poised to transform Asia into a key global growth center for m-commerce.”

China, Korea and India will account for more than 72 percent of total Internet users in the Asia-Pacific region by 2005. Greater China, which includes China, Hong Kong and Taiwan, will eventually comprise nearly half of all users in the region, increasing from 39 percent in 2000.

“China is still an extremely poor country, but these trends herald a fundamental shift in the regional balance of power, especially considering the economic and cultural clout behind Greater China,” Jaffe said. “Even so, the Internet is pushing populations together faster than governments.”

IDC’s research also found that the PC will remain the key Web access device throughout the region. IDC expects solid PC sales growth in 2001, reflecting the continued strength of markets such as India and China. While PCs are currently dominant, smart handheld devices are also taking off in the Asia-Pacific region. The region accounts for more than 25 percent of the world’s total installed base of mobile phones. Mobile subscribers will exceed 366 million in 2004, leading to a penetration rate that will far exceed that of the PC. But at present, only 2.6 percent of mobile phones are used for wireless Internet use, but IDC expects this proportion to increase to nearly 40 percent by 2005. IDC predicts Asia will become a vibrant center for the development of the wireless economy, with m-commerce revenues forecast to exceed $36 billion by 2004.

E-commerce is expected to serve as an important engine of growth for development across the region, with revenues reaching nearly $600 billion in 2005, a compound annual growth rate of more than 101 percent from 2000, and includes growth figures for both the B2B and B2C segments.

According to IDC, manufacturing and export-driven economies will be better suited to implement B2B solutions, and much will depend on the relative maturity of a country’s IT infrastructure. Australia, Korea, Taiwan and China are expected to derive the highest absolute revenue from e- and m-commerce, while rich economies like Hong Kong and Singapore, although small, will play an important role in stimulating regional IT development.

In a separate report on B2B commerce in the region, IDC found that companies in the Asia-Pacific region will purchase more than $516 billion of direct and indirect materials through the Internet by 2005. This represents greater than a 3,900 percent increase over the $12.8 billion spent in 2000.

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