US Internet Dominance Slipping

US dominance of the Internet is slipping, as the growth of Web users is significantly slower than just two years ago, according to a report by eMarketer that pegs Europe, Latin America, and China as the Internet markets of the future.

According to the eGlobal Report, the number of active Internet users worldwide will climb to 361.9 million by the year 2003, a 178 percent from the 130.6 million people who were actively using the Net at year-end 1999. By year-end 2000, eMarketer predicts that only 42 percent of the world’s active Internet users will come from the US. This percentage will continue to decline as Internet use rapidly accelerates worldwide. By 2003, the US share will drop to 36.9 percent of total active users.

Western Europe will be home to just under 30 percent of the world’s users in 2003, eMarketer predicts, followed closely by the Asia-Pacific region with nearly 27 percent, while Latin America will capture 5.3 percent. By 2005, the lion’s share of Internet expansion will come from the Asia-Pacific region and Western Europe. Because of its considerably lower starting point, Latin America will show the highest growth rate.

“The increasing numbers of non-US Internet users will have two important effects on the Internet,” said Geoffrey Ramsey, eMarketer Statsmaster. “The Web’s content and language will become more diverse as Internet companies catering to languages and tastes in other countries provide unique local content. At the same time, a truly global Internet, like TV and other mass media, is likely to accelerate the convergence of styles, tastes, and products and create a more homogenous global marketplace.”

The growth rate of Internet access in the US is slowing because the number of Americans that already have access. The majority of US households, approximately 60 percent, will have personal Internet access in the year 2000, according to a report by Cahners In-Stat Group. The main obstacles to Internet access — price and technology — have fallen, and most consumers that want Internet access have it.

“The nagging question is, when will the Internet become a must-have technology?” said Kate von Goeler, industry analyst for In-Stat’s Internet Strategies Group. “For most educated consumers, that time has come. Others will need to be convinced.”

The In-Stat report also found that US Internet users are becoming more balanced by gender. By the end of 2000, 49.1 percent of online consumers will be women. Online consumers will remain slightly more highly educated than the population at large, however. Almost 72 percent of consumers with a graduate school education are currently online, compared to only 26.7 percent with a high school education or less.

Despite the increase in households getting connected, 40 percent of the population remains hesitant to the lures of the Web. “Internet Apathy” (the belief that they neither want, nor need Internet access) is the primary reason that these consumers choose to remain offline. Consumers also told In-Stat that price matters most when choosing an ISP and that value-added services do not seem to be a priority.

Other findings from eMarketer’s eGlobal Report include:

  • B2B e-commerce will continue to outpace business-to-consumer (B2C) e-commerce in all countries worldwide At year-end 2000, B2B will capture $184.85 billion (79 percent) of e-commerce revenues and will grow to $1.26 trillion, (87 percent) in 2003.
  • Total e-commerce revenues will increase from $233 billion at year-end 2000 to $1.4 trillion in 2003.
  • The US will continue its e-commerce dominance, capturing 69 percent of total e-commerce dollars by year-end 2000. By 2003, the US share will have slipped to 59 percent. Europe and the Asia-Pacific will easily pick up the slack, garnering 35 percent of total e-commerce between them.
  • Scandinavian countries far outpace Southern Europe in Internet access and per capita e-commerce transactions.
  • Russia and Eastern Europe are mostly unwired, but Hungary and Estonia are moving forward rapidly.
  • Brazil, Mexico, and Argentina are far ahead of the rest of Latin America in Web users and e-commerce.
  • The world’s poorest regions, including most of Africa, India, Southeast Asia, and Russia, lack the infrastructure and access devices to have large Internet users populations.
  • Cell phones will soon link millions of new users to the Internet, thanks largely to their popularity in Europe. Cell phones will also help e-commerce boom in Asia, and in Japan, where cellular telephone and personal digital assistant (PDA) penetration is very high.

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