IDC traces leading US industry Internet spenders

Manufacturers of hard goods are ahead of other US industries in spending on World Wide Web applications for extranets, intranets and for e-commerce sites, shelling out an estimated $US23 billion this year, according to findings released by IDC. Companies making the likes of automobiles and major appliances are embracing a model which considers the Internet as a strategic part of doing business, including connecting with clients and channel partners.

Manufacturers of hard goods are ahead of other US industries in spending on World Wide Web applications for extranets, intranets and for e-commerce sites, shelling out an estimated $US23 billion this year, according to findings released by IDC.

"It's no longer just about Internet commerce, that is to say, how much goods and service revenues are passing over the Internet," said analyst Michael Sullivan-Trainor of the Framingham, Massachusetts-based market researcher. "And it's not just about deploying some technology in IS to do intranets or to make employees more efficient. Those were the two sets of expenditures to track in the early '90s."

The late '90s model encompasses more, leading industries to consider the Internet as a strategic part of doing business, including connecting with clients and channel partners. Using that new model is what puts manufacturers of hard goods -- automobiles and major appliances, for instance -- ahead in Internet spending.

The US Internet economy, which combines spending to create Web businesses and applications with revenue from products and services sold via the Internet, is predicted by IDC to grow from $124 billion this year to $518 billion in 2002.

Among US industries, communications/media is second in spending behind manufacturers with $15.2 billion, followed by banking at $15.1 billion; services, $10.9 billion; process manufacturing, $10 billion, and retail, $8.4 billion.

Government and education bring up the rear among 18 industry groups in the analysis with less than $2 billion[in Internet-related spending, IDC found. The relatively low level of spending by government and education is due, at least in part, to the fact that those public sectors do not engage in e-commerce.

Technology deployment makes up the bulk of Internet-related spending by industries, followed by expenditures for marketing and branding, professional services, content creation, and education and training.

The Internet economy research included an analysis of IT budgets by industry and non-IT technology spending, as well as a survey of 600 people involved in building the so-called Internet economy.

As that economy continues to take shape, it will alter traditional business models and relationships, Sullivan-Trainor said. In some cases, the changes will be radical, with new competitors springing up quickly, offering deep discounts in areas such as travel and financial services.

Issues regarding who controls distribution, manufacturing and access will have to be sorted out.

"The whole set of rules about how companies work within a value chain has to be re-examined, if not rewritten," Sullivan-Trainor said. "It's not so clear as it once was."

IDC will elaborate on the U.S. findings and release worldwide Internet economy data at its Internet Executive Forum Sept. 15 and 16 in San Jose, California.

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