Web becomes a business imperative

During the past year US businesses have significantly changed their Web spending patterns. Gone are the days of Web spending to build an Internet presence, and in their place is spending to integrate the Internet into internal and external business processes. In other words, purchases of Web-related technology are now a business imperative, according to IDC.

Corporate Internet spending today is an investment that directly impacts the strategic directions of organisations, IDC analysts explained. The strategic impact remains, but it has shifted from reducing costs to the transformation of business models. While the reason for Web spending is evolving, the amounts expended on IT hardware, software and services will remain high. IDC expects Web spending to more than double from $US119.1 billion in 2000 to $US282.5 billion in 2003.

This year, for the first time, US businesses will spend more on Web-related IT services than hardware, and the services category will represent the largest opportunity throughout IDC's forecast. Nevertheless, the importance of hardware should not be underestimated.

Resist imposing Web models on mobile accessThe number of browser-enabled cellular handsets is expected to reach a market of almost 95 million in 2004, but marketers must resist imposing their Web strategy to reach these users, according to research from Jupiter Communications. Success on the Web will not necessarily translate into success on wireless devices, and Jupiter advises cellular service carriers to work to create an open platform for services. The best bet for marketers will be to align with or support applications for the mobile medium that facilitate communications, provide instant gratification or offer an entertaining diversion, Jupiter analysts said.

Mobile access will yield an entirely new medium that is not analogous to the Web and with that space, browser-enabled cell phones will dominate, Jupiter forecasts. By the end of 2004, approximately 95 million cellular handsets are expected to be in the field and capable of accessing interactive services - that is seven times the projected number of personal digital assistants (PDAs) in the US.

With a strong user base, wireless access brings not only the benefit of mobility but also several constraints, including a limited user interface and expensive, narrowband network. Jupiter's analysts believe that the platform will continue to grow at a rapid rate as better handsets enter the market and carriers upgrade networks to support always-on packet data services.

IS expenditure stable in Australasia

After much speculation in the press of either a pre Y2K investment-freeze or a post Y2K investment lull, it may be comforting for suppliers and CIOs to realise that the 2000 IDC's Forecast for Management survey results show that there was nothing to worry about. As a percentage of turnover, IS expenditure within organisations in Australia and New Zealand has remained relatively stable over the last 12 months. In 1999's survey it stood at 2.51 per cent of turnover. In 2000, it was 2.5 per cent, and had suffered a very modest decline, given the amount of resources business invested in rectifying the Y2K issue.

What is most interesting in IDC's findings, though is that this figure reinforces a perception that IT expenditure is plateauing at a new high within business. For much of the 1980s and early 90s IS expenditure averaged around a median level of 1.35 per cent of turnover. Then, when client-server architectures started to integrate the desktop and the data centre, there was a jump to around two per cent in the mid 1990s. However, by the end of the century the e-commerce revolution had seen a new spurt to around 2.5 per cent.

CIOs cannot forget that in an era of ruthless cost cutting this additional investment is testimony to the faith business has in the potential of IT.

Free Internet access gets costly

The future may offer a mixed blessing; you'll have free Internet access, but you'll pay for it by viewing ads. And the ads are getting smarter.

Custom advertising, targeted at your interests, will populate the banners that you have to put up with to get free Internet access, according to a recent study released by Strategis Group Inc.

More than 12 million users already go online, using a free, advertising-supported service, according to Strategis researchers. They expect that number will grow to 37 million by 2005, climbing to about 23 per cent of all residential Internet users. Ever-cheaper bandwidth and increasingly sophisticated tools to personalise content delivery are pairing to make free Internet access more profitable, say the researchers.

Worldwide ASP Market to explode

The worldwide application service provider (ASP) industry is poised for explosive growth, as the market is forecast to rocket from a value of $US1 billion in 1999 to more than $US25.3 billion by 2004, according to Dataquest. The worldwide ASP market is on pace to reach $US3.6 billion this year, Dataquest believes.

The ASP market represents a major computing revolution with the power to dramatically redraw today's IT ecosystem based on the delivery of application services over a network. Software licensing models, application and networking architectures, and vendor strategies will all be impacted greatly. Eventually, business services wrapped around application functionality will be most useful to customers.

Within the ASP market, there is the emergence of a new architecture for "Web native software" - software that exists purely on the Internet and enables the delivery of business services.

For enterprises of all sizes, the opportunity to secure Tier 1 application functionality while foregoing significant infrastructure, software and personnel investment is alluring, as is the lower total cost of ownership, which is estimated between 30 per cent and 70 per cent, depending on the application and the services provided.

Thin Clients begin to replace PCs

Thin clients are becoming increasingly popular, according to research by IDC, which found that shipments of these devices increased a solid 90 per cent in 1999. In other surveys almost 75 per cent of respondents said thin clients are an acceptable alternative for some PC users. In fact, more than 50 per cent of respondents have replaced PCs with thin clients.

IDC's survey indicates that primary reason companies are purchasing thin clients is because of their reliability. The second most important factor in their decision is ease of use, followed by performance. End-users expect thin clients to be reliable, easy to use, and good performers. In addition, they should allow access to Windows applications, be cost effective, easy to install and secure. A strong message from the research data is that vendors of thin clients need to pay attention to reliability.

IDC's survey indicates the reasons companies purchase thin clients vary according to company size.

Small sites (fewer than 100 employees) employ thin clients to improve their IT management practices and reduce desktop complexity.

Midsize companies (100-499 employees) are turning to thin clients because of the centralised control and ease of management they provide.

Large companies (500 or more employees) purchase thin clients to lower their total cost of ownership.

What is really encouraging for thin client vendors is that approximately 25 per cent of respondents indicated there was no major inhibitor preventing them from purchasing thin clients.

Car sales increasingly influenced by WebThe impact of the Internet on the US automotive market will increase dramatically in the next five years, affecting sales of both new and used automobiles, according to new research from Jupiter Communications. Online-direct and online-influenced new vehicle sales are expected to exceed $US128 billion in the US by 2004. However, to achieve this market, car makers, dealers and service providers must focus on integrating the Internet into their business to create a seamless network of service and product offerings, which will drive benefits to consumers whether they browse online or buy online.

Jupiter analysts forecast that approximately eight per cent of US new car sales - more than 1.3 million units worth $US33 billion -- will be sold online in 2004, up from 17,000 vehicles in 1999. The research indicates that consumer conduct online will influence an additional 22 per cent of domestic new car sales in 2004, or 3.8 million vehicles worth $95 billion.

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