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Monday - September 18, 2000
Purchases of Web-Related Technology Are
Now a Business Imperative
During the past year, U.S. 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.
"Today, corporate Internet spending is
an investment that directly impacts the strategic direction
of organizations," said Anna Giraldo Kerr, research
manager for IDC's Internet and eCommerce Strategies program. "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 for IT hardware, software, and services
will remain high. IDC expects Web spending on IT products
and services to more than double from $119.1 billion in 2000
to $282.5 billion in 2003.
This year, for the first time, U.S. 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.
"Hardware vendors play a critical role
in the ebusiness supply chain. Their products enable the
interface and access of Web technologies," Kerr said. "Although
it may appear that Internet-related hardware is at the bottom
of the food chain, without it there would be no Internet
activity."
Internet access and Web hosting will contribute
to growth in the services space.
Spending on software will grow faster than
any other type of Web IT spending. Web software-related spending
will increase at a compound annual growth rate of 43% from
1999 to 2003, compared with a CAGR of 35% for the overall
market. Despite the high growth, software will remain the
smallest part of the market.
Internet Strategies for a Competive Advantage
According to Wharton:
"At a conference in the fall of 1998,
a consultant from a Big Five firm told the audience a memorable
anecdote. Two students approached a venture capitalist with
a concept for a dot-com business. Intrigued by what he heard
in the first few minutes of the students' pitch, the VC asked
if they had a business plan. Did they? The students flourished
a document—all of three handwritten pages—and the VC was
sold. A handshake later, he promised cash. Soon the capital
was delivered, and a dot-com was born. It was a deal typical
of those times.
Today, the fate of that company is unknown,
but if its track record is anything like that of many other
Internet startups, it is probably dismal..."
Click here for the full story.
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