Internet stock corrections, the death of pure-play "dot.coms" and an explosion of free 'Net access services are the main predictions for 2000 that International Data Corp. (IDC) Senior Vice President Frank Gens makes.
In the market research company's Fifth Annual Predictions report published last week, Gens' predictions for key trends, strategies and events likely to occur in the coming year are as follows:
Financial reality will meet the Internet this year. There will be a broad correction in 'Net stock prices and consolidation in key e-commerce segments, and dot.com companies will see a trend towards profitability, according to the IDC analyst.
Free Internet access, devices and software will be commonplace by the end of the first quarter. Gens pointed to Kmart's deal with Yahoo, offering free 'Net access to those who register at Bluelight.com, as an example of this growing trend.
Gens also predicted the demise of companies that exist solely on the Web. Customers live in the real world as much as in the virtual one, which will force pure-play Internet firms to step up their bricks-and-mortar presence, he says.
The smart companies will put network effects to work in their business models, radically expanding their electronic channels, and becoming channels for others, according to Gens. Indirect channels will make a huge comeback, with growth in online shopping engines, virtual malls, digital marketplaces and affiliate marketing, he said. Even the head of Dell, Michael Dell, the poster child for direct marketing on the 'Net, will embrace the new breed of e-channels, according to Gens.
In the area of technology developments, Gens' predictions included the following:
-- Broadband will account for more than one in 10 online households in the U.S. by year-end - about 2.5 times the number in 1999.
-- Thirty eight percent of U.S. households with two or more PCs will also have a home LAN.
-- EWallets for wired consumers will reach critical mass just in time for the 2000 holiday season.
Gens also offered a grab-bag of miscellaneous predictions:
-- Microsoft will be broken up - either by itself or by the Department of Justice in the wake of the current antitrust trial against the software giant.
-- Still more U.S. presidential candidates will seek credit for the Internet and e-commerce boom, despite the flak that U.S. Vice President Al Gore received over his 'Net claims last year. Unfortunately, according to Gens, the candidates will do so by proposing new legislation and regulation.
-- Celebrity CEOs will jump to dot.com companies. Wealthy middle-aged CEOs will look for new challenges in running Internet start-ups, with Scott McNealy of Sun and Larry Ellison of Oracle being likely candidates for a move.
-- Many Fortune 1,000 businesses will still bungle their path to becoming dot.com operations. Despite the many very visible examples about how not to run an Internet business, many Fortune 1,000 companies will still struggle to get their online initiatives to work. Expect a lot of vice presidents and presidents of Internet divisions to be fired, Gens says.
IDC, in Framingham, Mass., can be reached at 508-872-8200 or at www.idc.com/.
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