Intel Says Trillion Dollar E-Commerce Forecast Too Low

Intel Corp.’s CEO Craig Barrett told reporters in Amsterdam last week that current forecasts projecting the growth of e-commerce were too low.

Barrett took issue with industry experts’ predictions of a trillion dollars in U.S. e-commerce being generated over the next two years, as well as, the forecast of several billion for Western Europe during the same period.

“I frankly think that all of these forecasts are underestimates. The forecast for this year in the U.S. is $100 billion,” Barrett told Bloomberg. “Our company will do about $15 billion of our business over the Internet — about half of our revenue with top customers. I don’t think we’ll be 15 percent of the U.S. e-commerce total — I think we’ll be a smaller percentage.”

Barrett also talked about Intel’s European investments, which includes an undisclosed sum pumped into Dutch-based Internet service provider World Online International. The ISP operates in 12 European counties with about 800,000 individual subscribers and 15,000 business subscribers.

“We’ve made very substantial investments, in the tens of millions of dollars range,” Barrett said.

He went on to elaborate on Intel’s strategy to invest in European startups that are working on exciting, new technologies. Then, once they’ve developed such promising technologies, Intel would help market them, he said. Nevertheless, Intel’s focus on e-commerce won’t waver.

“We will also make investments into mature companies like World Online and those strategic investments in areas we think are key to Internet and e-commerce growth and will be larger than 10 million dollars (US$),” Barrett added.

Some analysts say Intel is using the same guerrilla tactics in Europe that have always worked well for the giant chipmaker stateside: It’s creating the market for e-commerce by first providing the investment and infrastructure to make it possible. The potential size of the European e-commerce is also causing other high-tech giants to ante up substantial up front money.

Free service to establish a foothold

For instance, the world’s No. 1 online service, American Online, announced last week that it would soon join Microsoft Corp. and start giving away service in the U.K and Germany. It’s part of a joint venture between AOL and the third-largest media company Bertelsmann AG. The new service will be called Netscape Online and should be up and running by as early as August. AOL also said it would provide customer service free of charge in an attempt to lure users away from such rivals as Yahoo! — the most popular Internet search engine in Europe.

As the battle for the colonization of Europe by U.S. high-tech companies heats up, analysts wonder how many billions will have to be plowed into the old country before they can begin to cash in on its “new economy?”