Thursday, February 15, 2001

Online Youth Spent $2.4 Billion Over Holidays

Online US kids, teenagers, and young adults aged 8 to 21 spent $2.4 billion on gifts for others during the 2000 holiday period. Girls were more generous in their gift giving than boys, and although Generation Y expresses a keen interest in buying online, online shopping has yet to take a firm hold among the nation’s youth.

These are among the findings of the most recent wave of Harris Interactive YouthPulseSM. The study, conducted online twice yearly by Harris Interactive (Nasdaq: HPOL), the global leader in Internet-based market research, measured responses of 3,139 young participants in January 2001.

The study found that holiday spending grows significantly with age: Eight to nine year olds spent about $15 on average, while 18-21 year olds spent about $130 during the same period. And, girls spent more than boys did – across all age ranges.

"It is clear that young girls are more generous than young boys when it comes to gift giving," stated John Geraci, Harris Interactive’s Vice President for Youth Research. "The gap between girls’ and boys’ holiday spending actually widens with age. This is surprising in that we have also shown that boys have larger discretionary incomes than girls."

Boys were more likely to buy holiday gifts online than girls were. "Boys seem more comfortable with the concept of ecommerce," added Geraci, "and YouthPulseSM has consistently finds that Generation Y wants to spend more online but doesn’t feel enabled to do so. On the whole, before age 19, kids and teens buy online by using their parent’s credit cards, and this probably suppressed online holiday spending by young people as it is awkward to borrow parents’ cards to buy gifts for them. We expect online shopping among youth to grow significantly as enabling strategies such as eWallets, online purchase cards and online bank accounts, debit cards targeted to teens, are adopted.

Solid Growth for Western European Server Market
IDC expects Western European server market revenue growth to slow slightly in 2001 to 7.2%. IDC anticipates a compound annual growth rate of 9.3% over the 2000-2005 period.

Market data released today indicates Western European server market revenues were flat 2000 over 1999, looked at in current dollars, but grew 9.6% when adjusted for exchange rate fluctuations.

Explaining the results, Martin Hingley, vice president of IDC's European Systems Group, said: "The server market has been subjected to a number of disruptive influences over the past two years. The rapid build out of Internet and associated infrastructures, server consolidation and server management issues, and, of course, the problems associated with year 2000 have caused significant distortion in market patterns."

Looking forward to 2001-2005, Hingley added, "The Western European market has not grown as quickly as in the United States and has, at present, the capacity to take up slack from the U.S. market. However, there are two immediate dangers - continued exchange rate imbalances and vendors reducing focus on Europe in response to reduced U.S. demand. We expect vendors to look at the fundamentals in Europe - PC penetration is lower than in the United States; Internet build out still has a way to go; and Europe has not yet achieved U.S. levels of efficiencies from technology use. All these indicate there is room for expansion in Europe, even ignoring new technologies that require ever greater compute capacity."

Highlights
- Entry level systems, defined by IDC as systems costing under $100,000, again led market growth with rackable systems - especially rack-mounted Intel architecture systems - growing at phenomenal rates. "In one of the more difficult years for the Intel server market, rack-mounted systems have been a high point. The explosion in market demand for these systems, primarily due to reduced space usage and lower administration costs, will ensure their continued growth. Vendors need to work on simplifying systems management and improving power management," said Thomas Meyer, research manager in the European Enterprise Server Group. "Intel faces considerable challenges going into 2001. There is increased competition from low-end RISC systems and from other chip vendors moving into Intel's core market. Intel needs to make a big success of IA64 and must concentrate on the roadmaps for IA32."

- Unix showed very strong growth in 2000 in Western Europe with new midrange and entry level Unix systems being introduced by all the major vendors operating in this market. IDC expects growth to slow in 2001 as the market stabilizes, but it will continue to be one of the most interesting -and competitive - arenas.

- After a relatively slow start, Microsoft's new server operating systems products, Advanced Server and Datacentre Edition, showed good performance in 2000, and IDC expect them to grow at a healthy rate over the forecast period.
Linux continued to grow strongly in Western Europe, emphasizing the need for a reliable and cost-effective platform for both Internet infrastructures and other core workloads. The number of vendors launching significant Linux initiatives ensures

- Linux will continue to grow rapidly throughout 2005. IDC expects a move to more complex applications and hence higher value systems.

- 2000 saw major efforts in the appliance server market with both new entrants and established server vendors launching new products and honing their appliance server strategies.

News Tidbits (appears every day on the front page)
- Amazon.com's "One Click" checkout technology may soon appear on other sites after a Federal Appeals Court, in overturning a lower court ruling, said that Barnes and Noble had mounted a strong challenge to Amazon.com's "One Click" patent. It is widely believed that this patent infringement case could set up other legal challenges to patent claims made by online companies.