Forget about the dot-com bust, experts say, growth continues unabated.
When network pioneer Leonard Kleinrock leads a celebration of the Internet’s 35th birthday at UCLA this Friday, it will mark the ‘Net’s first big milestone since it turned 30 at the height of the dot-com bubble.
There are other ways to date the dawn of the Internet, but Kleinrock’s seems apt in the era of text messaging. On the night of Oct. 29, 1969, he sent the first message over the Internet’s predecessor, the U.S. government-funded ARPAnet. It went from the network’s first node, at UCLA, to a node at Stanford Research Institute (SRI), in Menlo Park, Calif., and consisted of two letters, “lo.” (Kleinrock was attempting to “login” to the SRI computer, but that system crashed before he could send the “g.”) He and his SRI counterpart maintained “presence” through the experiment via an old-fashioned telephone call.
Whereas its 30th birthday found the Internet undergoing an historic boom in investment and public interest, since that then it has exploded in real terms.
“We haven’t seen the Golden Age,” says Kleinrock, a professor of computer studies at UCLA. “We’re still in the Stone Age.”
To start with, a lot more people are online. There are now 787.5 million Internet users worldwide, up from 266.8 million in 1999, according to IDC. A lot more of those users have fat pipes to the ‘Net: By the end of June, there were 123 million home broadband connections of all kinds, according to the DSL Forum. Even in December 2000, there were only 7.6 million connections.
Speed has changed how people use the Internet, too.
“Music downloading five years ago was something a handful of people did mainly because they could do it,” says Michael Gartenberg, an analyst at Jupiter Research. Today, 20% of online households in North America download music, according to Forrester Research.
The idea that was supposed to drive all those phenomenal business models in 1999, business-to-consumer e-commerce, is now an everyday reality. In the U.S., 111 million people will buy things online this year, up from 33 million in 1999, according to Jupiter. Meanwhile, online retail spending has ballooned from $12.3 billion to $65.1 billion.
Apart from convenience, online shopping means people now can buy goods they previously just couldn’t buy, such as advanced gadgets from Japan, Jupiter’s Gartenberg says.
More importantly, in the developed world, the Internet has become something that people take for granted, he adds. About 24 million people now transact business online at big U.S. banks each month, according to comScore Networks.
While the ‘Net has gone from novelty to necessity in wealthy countries, it also is transforming up-and-coming players in the world economy.
“The Internet is not just a U.S.-European thing. It’s a worldwide thing now,” says Alan Mauldin, an analyst at Telegeography Research Group. In 1999, there was only 49G bit/sec of cross-border bandwidth dedicated to Internet use, with a big chunk of that going across the Atlantic and only about 5G bit/sec across the Pacific. This summer there was about 2.4T bit/sec of international Internet bandwidth and more than 181G bit/sec of that goes across the Pacific, he says.
Growth rates are steep, and transformations are underway in the world’s two biggest developing economies.
India had almost 5 million Internet users as of June, up 30% in the past year, according to the Telecom Regulatory Authority of India. By comparison, there were only about 700,000 subscribers there in November 1998, according to the National Association of Software and Service Companies, in Delhi.
The Internet has not had a profound impact on most of Indian industry, as local industry doesn’t use computers extensively, says Vijay Mukhi, an Internet analyst and author of technical books. However, it has helped to power the boom in India’s software outsourcing and business process outsourcing (BPO) industries.
“The software exports and BPO businesses have benefited the most from the Internet,” Mukhi says. “These businesses would not have existed if it had not been for the Internet.” Although these outsourcing companies also use point-to-point telecom circuits to their clients abroad, they prefer to use the Internet because of its lower cost.
In China, between July 1999 and July 2004 the number of Internet users increased from 4 million to 87 million, according to the China Internet Network Information Center (CNNIC). The fastest growth during this period has been among female Internet users, who represented just 15% of Chinese Internet users in 1999. Today, more than 40% of Chinese Internet users are female.
“Since then, the industry has matured a lot, and the Internet has become an essential part of people’s lives,” says Pete Fang, a longtime Internet user in Beijing.
The percentage of Internet users shopping online also has risen since the heyday of the dot-com era. In 1999, only 3.2% of Internet users – or roughly 128,000 people – shopped online. Today, that percentage has more than doubled, according to CNNIC.
Jupiter’s Gartenberg cautions that the world’s embrace of the Internet has made people vulnerable to new problems.
“Five years ago, if the average consumer’s PC stopped working for a couple of days, it wasn’t really going to disrupt them in any way, shape or form,” he says. “Today, it’s a major issue.”
Likewise, for some it’s hard to remember a time before e-mail was a daily minefield of security concerns. UCLA’s Kleinrock does, thinking back only to 1999.
“The Internet was a somewhat cleaner system then, if you think of the dark side as being dirty,” he says. “We had spam and we had some viruses and worms, but nothing like what we’re seeing today.”
Still, he doesn’t regret that the cozy network shared among UCLA and other research institutions evolved into a sometimes chaotic public place.
“Had we not been able to bring in the tens and hundreds of millions of people, it would not be what it has become,” Kleinrock says. “The magic of the Internet has to do with the fact that it is and was an open network.”
Lawson is a correspondent with the IDG News Service. John Ribeiro in Bangalore, India, and Sumner Lemon in Taipei, China, contributed to this report.
