Thursday - September 7, 2000

Mobile And iDTV Commerce Won't Meet Expectations

European retailers' hopes to sell through mobile phones, interactive TVs, and PDAs will fall short. The inherent constraints of these devices will limit their share of online retail to 33 billion in 2005 -- only 19% of total online retail. In a recent report, Forrester Research B.V. (Nasdaq: FORR) outlines how retailers must instead use devices to drive sales indirectly -- influencing purchases, not conducting them.

"Pioneering European retailers move beyond the PC to reach their customers, offering WAP sites and iDTV shops. But more than half of projects fail to meet expectations," explained Carsten Schmidt, associate analyst for Forrester Research. "Just because a retail sale is possible on a device doesn't make it probable -- device opportunities lie beyond transactions."

Forrester projects that mobile phones will account for only a meager 3% of total online retail by 2005, totaling 5.2 billion. Mobile phones only favor transactions that are timely, simple, and location-based -- low-cost items like flowers and cinema tickets. iDTV will account for 16% of online retail by 2005, totaling 28 billion. Limited input, poor resolution, and an entertainment bias lead iDTV viewers toward "lazy interactivity," not considered shopping trips. As a result, iDTV is better for purchases that are audiovisual, contextual, and entertainment-related. Finally, PDAs struggle to connect -- the first wireless PDAs will not hit the European market until 2001. Even in 2005, wireless PDAs will be outnumbered more than 150-to-1 by Net-enabled mobile phones and will capture less than one-tenth of 1% of online retail sales.

"With household penetration approaching 50% in 2005, accessing the Internet from a PC at home will become as ubiquitous as toting a mobile phone is today. PCs will capture more than 80% of online retail sales," added Schmidt. "The PC's rich input and display, wealth of competing sellers, and seasoned population of shoppers will not only capture the majority of retail sales in each category, but claim the biggest share in the biggest categories: For example, more than 97% of online grocery sales, the single biggest online category in 2005, will move through PCs. In total, PC-based online retail will form a 141 billion market that year."

Forrester projects that the value of retail sales influenced, but not captured, by non-PC devices will outpace device transactions by 10-to-1. iDTV will influence 28 billion in retail spending both on- and offline by 2005, representing 1.1% of total retail sales. Mobile devices alone will drive loyalty and influence 229 billion, more than eight times iDTV alone. Finally, the combined impact of both devices in use by 7.6% of Europeans will influence another 59 billion.

"Retailers must look beyond transactions. For example, mobile phones reach consumers anywhere. They can cultivate loyalty through personalized alerts, create opportunities for location-based services that advance consumers toward purchases, and build brand awareness through opt-in ads," added Schmidt.

In the report "Driving Retail With Devices," Forrester interviewed 40 executives from European retailers who support at least one of these new interactive devices in addition to the PC. Forrester also used results from the Technographics® Europe May 2000 survey of 23,000 consumers. Forrester's Technographics Europe research program provides continuous quantitative information about consumers' attitudes toward and adoption of technology.

A Look at the Latest Internet Statistics
NetValue, the first panel-based service that measures all Internet activity -- including Web, e-mail, chat, audio, video, games, ICQ, and FTP -- today released the July 2000 Internet key findings results in the US, the UK, France, and Germany, revealing the most comprehensive insight about the Internet.

The US remains way ahead in terms of Internet penetration with over 51 million households connected (49.8 percent of the US population). The UK is leading the way in Europe with 30.8 percent of its population connected to the Internet, representing 7.3 million households. Germany comes next with 24.7 percent (8.5 million households), followed by France with 16.6 percent, accounting for almost 4 million households online.

Users across measured countries are connected an average of 10.2 days to the Internet (all activities: Web, e-mail, audio, video...) per month, somewhat less than the average U.S. user, who is connected an average of 11.9 days.

Women currently represent only 46 percent of the US online population but are more active on the Internet than their male counterparts. Over the past three months, women have consistently spent 32 percent more time surfing the Web and have viewed 30 percent more unique pages than men. And since they are being exposed to more advertising by being on the Web more, women also click on more banners. In July, women clicked on an average of 4.3 banners, compared to just 2.2 for men.

The number of home Internet users is still increasing in Europe. The UK now stands at 10.20 million, Germany at 10.47 million and France at 5.81 million. However, the most dramatic change is the split by gender: in July, a staggering 40.5 percent of Internet users in the UK were women with 34.8 percent in Germany and 37.4 percent in France (compared with May statistics indicating a female population of 38 percent in the UK, 33.0 percent in Germany, 33.6 percent in France.).

The number of women currently logging on to the Internet at home now stands at over 4 million in the UK. In France, the number of female Internet users has grown to 2.17 million, and in Germany females account for 3.64 million users.

This trend in the growth of women online is borne out by an increase in hours connected per user, number of sessions online, and total number of pages displayed.

E-mail and audio/video usage are two areas where men definitely still rule.

In the US, only 45 percent of e-mail users in July were women, and only 44 percent made use of audio/video. But that 44 percent represents a six point increase in audio/video usage among women since May, an indication that usage of audio/video is rapidly increasing among women.

In Europe, e-mail and audio/video usage is even more dominated by men, but the increase among women is very strong in every European country.

Dot-Com Shakeout Fears Continue for Rest of the Year
According to USA Today:

"Until very recently it looked as if ailing health Web site drkoop.com would join the list of the dot-com deceased, which includes online retailer boo.com. Then, at the last minute, a group of investors stepped in with a $20 million package to bring the company back to life.

As the near death experience shows, these are uncertain times for aspiring Internet companies. A handful of Web companies failed this year, and many more are waiting on the sidelines. Even more are watching as their cash reserves diminish, having endured two quarters of stock market highs and lows and dampened investor enthusiasm for anything with a dot-com suffix.

Understandably then, many dot-coms view the rest of 2000 with concern. And indeed, the third and fourth quarters will be vital for Web companies hoping to beat a path to profitability..."

Click here for the full story. [Link no longer active]

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