IDC: E-commerce evolution will weed out startups

The e-commerce bubble is about to burst for dot-coms.

So warned analysts from International Data Corp. (IDC) last week, who said e-commerce is entering a new era in which alliances between big companies are forcing startups to turn a profit faster, form alliances or be driven out of the market.

The IDC analysts, speaking at the company's Directions 2000 conference in Boston, said Internet commerce sales hit $130 billion last year but will rocket to $2.4 trillion by 2004. The growth will be driven primarily by large corporations - often traditional competitors - which can move quickly to form partnerships for common business-to-business exchanges that promise a more immediate return, they said.

That rapid growth in the size and scope of e-commerce activities will put pressure on smaller-scale e-commerce ventures.

"The change is not only in business behavior, but in the speed at which these changes are happening," said John Gantz, senior vice president at IDC.

The lure of the Internet will spur 65 percent of businesses to have an Internet presence by the end of this year, 30 percent of which will be doing e-commerce, he said. US businesses will spend $2.2 trillion by 2004 on developing their Web presence.

By 2004, 60 percent percent of e-commerce activity will take place beyond US borders, presenting a host of opportunities to adapt US technology and software for foreign markets, according to IDC.

"There's opportunity there (big enough) to drive a fleet of trucks through," said IDC analyst Frank Gens.

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