Role of Internet Exchanges to Expand

A $575 million market last year, Internet exchanges will explode to set prices in $129 billion in sales in 2002-a full 29 percent of all Internet transactions-according to a report published by Keenan Vision Inc.

The report, titled “Exchanges in the Internet Economy,” explores the role that auction technology is currently playing in building Internet commerce sites. The report also analyzes the technology choices available to entrepreneurs who want to implement their own auction and exchange offerings. It is available on the Keenan Vision web site and may be accessed for no charge

“Exchanges have been a part of human history for over four millennia, so the fact the auction pit has been built online is natural,” said Vernon Keenan, CEO of Keenan Vision Inc. “What is remarkable is how quickly the Internet Exchange is being adopted by businesses. People instantly linking anyone from anywhere combined with the personal freedom to create corporations that build exchanges will dramatically change the way mankind does business.”

The report estimates the size of the Internet economy in 1997 was approximately $13 billion; growth estimates are $40 billion in 1998 and $446 billion in 2002. To examine the role of Internet exchanges, Keenan Vision estimated the proportion of all Internet transactions that would be performed using dynamic market prices. Approximately $575 million in transactions, or 4% of all Internet Economy transactions, were performed on Internet exchanges in 1997. For 1998 it is estimated that $3.8 billion in transactions, or 10% of all Internet commerce, will be conducted on Internet exchanges. The report estimates that by 2002, 29 percent of all Internet economy transactions ($129 billion) will be performed on Internet exchanges.

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