Report: High-Speed Net Set To Transform E-Commerce

According to a report released Monday by research firm Gartner, high-speed Internet and network connections will spur the average American family to spend 20 times as much money online within six years as they do presently.

Gartner said that by 2006, one in four American households will spend $10,000 (US$) per year online and that nearly three-fourths of all U.S. households will be wired for Internet access, most via some form of broadband connection.

According to Gartner vice president Neil McDonald, broadband is “fundamentally changing the way we buy stuff.”

Changes Ahead

Gartner’s report, released at the beginning of the group’s annual symposium on technology issues, paints a sweeping portrait of an economy fundamentally altered by the spread of high-speed Internet connections and other networks.

The Stamford, Connecticut research firm says that for many corporations, the rise and fall of pure dot-coms will be seen as a “phase” passed over in favor of long-term spending on improving connectivity and capturing revenue streams on the Web.

“There has never been a better environment to make bold moves toward the networked economy,” said Gartner research fellow Kenneth McGee. “We have perfect conditions for technology breakthroughs, the only variable is the guts and conviction of business leaders in the wake of dot-com hysteria.”

Changing Online Landscape

While broadband will clear the way for more money to be spent online, Gartner warns that Internet providers will likely seek a larger piece of the pie, exacting commissions from e-commerce companies for directing high-speed enabled customers their way.

Those commissions will help pay for the expansion of high-speed Net access while preventing the cost of DSL (digital subscriber line) or cable access for consumers from rising above current rates of about $35 to $45 per month in the United States.

New Economy Corporations

Gartner predicts massive changes will also strike the corporate world as high-speed networks enable businesses to enhance their mastery over the flow of data. With sales and spending information tracked in real time, earnings could be reported on a daily basis and quarterly earnings reports produced the moment the fiscal quarter ends, rather than several weeks later.

Corporations will shift their IT spending away from back-end enterprise systems to the Web in order to capture more business-to-business (B2B) revenue, the report suggests. One outcropping of that shift will be the explosion of the application service provider (ASP) industry, which Gartner says will grow 2,400 percent over five years, from $1 billion in 1999 to $25.3 billion by 2004.

Opportunities Seized

“Our clients are not crying about the demise of the dot-coms or the resetting of public valuations,” said Gartner CEO Michael D. Fleisher. “They are gearing up for a sustained business-to-business networked economy that will make the dot-com phase look like a fad.”

Gartner’s week-long symposium will include keynote speeches by Microsoft and Hewlett-Packard executives, as well as panel discussions on the future of the Internet and networked economy.