FRAMINGHAM (11/04/2003) - The promise of convergence, lower prices and convenience are driving more consumers to adopt broadband Internet services, according to a recent report. GartnerG2 (a division of Stamford, Conn.-based Gartner Inc.) expects 46 million households to make the broadband jump by 2007, up from 18 million households in 2003.
Laura Behrens, Gartner analyst, says broadband is experiencing healthy growth. "More people have been exposed to the advantages of broadband, mostly through the workplace," Behrens says. "It's not unlike how the PC got into a lot of homes."
According to Gartner, 24 percent of traditional dial-up users access digital media content (games, music, videos). That number jumps to 40 percent for broadband users. Broadband users are also more likely to conduct transactions (shopping, banking, trading) than dial-up users. Just 21 percent of dial-up users participate in e-commerce, compared to 36 percent of broadband users. Behrens says the broadband consumer is definitely more attractive for retailers and rich media content providers. "Broadband users are more affluent and they spend more time online than dial-up users," Behrens says. "It's a lot easier to shop on a broadband connection. Anything that requires the exchange of information happens in almost real time."
In spite of broadband's success, Behrens says dial-up won't be going away for at least five or 10 years, if that. "There's some segment of the market that will never spend the money for broadband because they are adequately served by dialup," says the analyst.
Behrens says content providers have rolled out tiered services, one for their broadband users and another for dial-up users. This strategy has two objectives: Give broadband subscribers what they want and entice dial-up users to make the switch. Behrens says content providers should always be mindful of the limitations placed on their dial-up users. "You don't want to make your dial-up users so frustrated by pushing all of that broadband content to them," Behrens says.
Behrens says that broadband Internet connections are bringing consumers closer to the digital home, where devices like computers, televisions, stereos and even kitchen appliances will be wired to the Internet. Squabbles between computer manufacturers and consumer electronics makers will need to take a backseat to consumer demand, Behrens warns. "They have to figure out how to converge, Behrens says, "because consumers will demand it."