Users by country - What is the Internet? :

2.2 What is the Internet? :

2.2.6 Users by country

In August 1 999, International Data Corp. issued a research report predicting that by the end of that year, almost 60 percent of the world's online population would reside outside the US, and non-US Internet commerce would explode from 26 percent of worldwide e-commerce spending in 1 998 to 46 percent by 2003 (Krochmal, 1 999). The number of people connected to the Internet was predicted to mushroom from 1 50 million in 1 999 to 500 million in 2003, but information technology vendors would nonetheless have to work hard to secure a share of the exploding Internet market, market research company International Data Corp. (ID e) said at its 1 999 annual Directions conference. "Just showing up [with an Internet presence] has been a key part of the success of the first four years of the Internet economy," said Frank Gens, senior vice president of Internet research at IDC. "But the rules for success are

changing." In particular, there would be a dramatic change in the profile of the Internet user, according to Gens. In 1 999, for the first time in the U.S., the majority of Internet users would be women, he said. Another first would be a shift in nationality - in 1 999, more than half of Internet users would be outside the U.S. and the new users would no longer balk at buying online, according to Gens. In 1 999, more than half of U. S. households that were online would buy something online, and that figure was 25% worldwide, he said (cited by Sykes, 1 999).

According to the Computer Industry Almanac (July, 200 1 ) there were predictions of over 625 million computers in use by the end of 200 1 , up from 55 1 . 1 million

computers in use at the end of 2000. The U.S. was projected to have over 1 82 million computers in use, or 30.64% of the total in the year 2000. The following table shows the top 1 5 countries and accounts for over 70% of the worldwide computers in use at the end of 2000 with projections for the end of 200 1 . The numbers include all

computers, from PCs to supercomputers, used in business, educational institutions and homes. The numbers include adult Internet users with weekly usage in businesses and

homes. The Almanac defines Internet users to be over 1 6 years of age and using the Internet on a regular or occasional basis (www.c-i-a.com!200 1 07cu.htm).

Rank Country Year End 2000 Year 2000 % Year End 200 1 (millions) share of total millions

1 United States 1 69 3 1 1 82 2 48 9 55 ,., ₃₂ ₆ ₃₆ .) 4 United 26 5 29 5 France 22 4 25 6 China 2 1 4 26 7 Canada 1 7 3 1 9 8 Italy 1 7 3 20 9 South Korea 1 5 ,., _{1 8} .) 1 0 Brazil 1 1 2 1 3 1 1 Australia 1 0 2 1 1 1 2 Russia 9 2 1 1 1 3 8 1 9 14 Taiwan 7 1 9 1 5 Netherlands 7 1 8 Total Top 1 5 420 76 473 Countries Total Worldwide 55 1 1 00 626

Table 2.2.6 Top 15 countries in computers in use Year End 2000 and 2001 2.2.6.1 New Zealand

In 1 995, New Zealand was in fifth place behind Iceland, Finland, the United States and Norway, going by the number of computers connected directly to the Internet per

1 000 capita (Dias, 1 995) and at that time New Zealand companies were joining the Internet at a compounding rate of 1 8 per cent a month. The then Communications Minister Maurice Williamson said "New Zealand's Internet growth is high even by the Internet's own amazing standards. In 1 994, New Zealand's Internet grew three times as fast as the global Internet" (Dias, 1 995).

According to the January 1 998 survey by United States-based Network Wizards, New Zealand boasted 4702 Internet-connected computers per 1 00,000 people - more than any other country (http://www.kiosks.org/newsbitsI1 998/nb09 1 1 98b.html). This made

Wellington the world's most networked city, according to Prof. Howard Frederick. By comparison, Silicon Valley, the headquarters of highly valued Internet stocks,

numbered only 3555 hosts per 1 00,000 people. After New Zealand came Sweden, Australia, Denmark, Canada, Netherlands, Britain, Switzerland, Germany, Japan, Italy and the United States.

In NZ although the Internet penetration (ie the number of people with Internet access) was good, the uptake of online shopping was slow (Morrison, 1 999). Stuart Christie,

an e-commerce principal of Ernst and Young believed one of the reasons for the slow uptake " . . . was because in-store shopping was more enjoyable in New Zealand than in many other countries" (Morrison, 1 999, p I 8) . According to a survey by Ernst and Young of online shoppers, the main reason for customers to choose online shopping in countries like the United States was because "it saved time and the stores and malls were too crowded" which were problems not experienced as much in New Zealand (Morrison, 1 999). In 1 998, " . . . hardly any Christmas shopping was done online in New Zealand" (Morrison, 1 999, p I 8). However, the number of on line shoppers increased during the Christmas season of 2000 (Talbot, 2000). So some growth was seen although " . . . . the business-to-consumer online shopping industry still had not experienced the take-off that had been anticipated" (Tal bot, 2000, p23). 2.2.6.2 United States

1 996 figures showed that by the year 2000, the number of adults online was expected to reach sixty million. Users of the Internet paralleled the rough demographics of the US as a whole. Whites comprised 86 percent of the total number of users versus 85 percent of the general public. Nonwhites represented 1 4 percent of the Internet users, the same percentage in the general population, although Asians tended to use the Internet at a higher rate and Hispanics at a lower rate.

The US had almost 52% of the world's Internet users in 1 998, according to Computer Industry Almanac Inc., and the number of users was expected to grow from 76.5 million to more than 207 million in 2005.

By September 200 1 , more than fifty percent of Americans were using the Internet. Use grew rapidly during the year, with Commerce Dept data showing that 1 43 million Americans, or 54% of the country, were using the Internet as of September. The number was up 26% from a year earlier, a huge rise. The report found that while a digital divide continued, it was beginning to narrow. Between December 1 998 and September 200 1 , Internet use by the nation's poorest citizens, those earning less than $ 1 5,000 per household, increased at an annual rate of 25% (Dreazen, 200 1 ).

More than half of the households in the United States had at least one computer in 200 1 , up from 42 percent in 1 998 and more than 40 percent of these were connected to the Internet. According to a Census Bureau report (September 200 1 ), 65 percent of children aged 3 to 1 7 had access to a computer at home in 2000, up from about 55 percent in 1 998. The survey found significant discrepancies in computer ownership and Internet use along age, racial and economic lines. Among households with incomes of $75,000 or more, 88 percent had a computer, while in households with incomes below $25,000, only 28 percent had a computer. Sixty one percent of white adults said they owned a computer, while 3 7 percent of black adults and 35 percent of Hispanic adults reported they did (New York Times Staff, 200 1 ).

2.2.6.3 Europe

The average number of households accessing the Internet almost doubled in the European Union's (EO) 1 5 countries, but dropped to a mere 8 .3%, between 1 997 and

1 998, according to a Eurobarometer survey from the European Commission. Northern residents, however, were far more plugged in than their southern counterparts,

according to the study called "Measuring Information Society 1 998." Swedes came out on top, with 39.6% of the population accessing the Internet at home. Sweden was followed by Denmark (24.6%) and the Netherlands ( 1 9.6%). Scandinavian countries were widely reported to have more Internet users per capita than any other country,

including the United States.

At the low end of the scale, only 2.9% of all Greeks accessed the Internet at home, the Eurobarometer found, followed by 3 .4% of households in Portugal, 3 .9% in France and 5% in Spain. UK Internet use in the home stood at 1 0.7%.

While 27 million people in the EU used the Internet from their home, approximately 22.4 million used it at work, representing 1 3 .3% of the working population. In countries where home Internet use was high, so was business use of the Net, the survey indicated.

A lack of need was the main reason reported for the low interest in Internet services: 55% of respondents said they had no need for such services; 24.2% said the services were too expensive; 2 1 .5% said they didn't have the necessary equipment; and 1 8.2% found the whole issue too complicated.

Regarding basic computer use, an average of 30.8% of EU citizens used PCs at home, again with the majority of use in the northern countries: 59.8% of all Swedes used computers at home, followed by the Dutch (58.8%) and the Danes (56.7%). At the other end of the scale, only 1 2 .2% of Greek citizens used computers in their home, while 1 8.4% of all Portuguese, 22.8% of all French and 26.6% of all Italians used computers at home.

Although only 1 1 % of European Internet users made online purchases in the last three months of 1 998, that figure was predicted to grow to 25% by 2002. In that same year, IDC predicted Internet usage would swell to 35% of Western European customers, which was about the same level it had been in the United States in 1 998. It was anticipated such changes would however be slow to filter through to the European corporate sector, frequently perceived by Americans as overly conservative.

Certainly, European consumers have erred on the side of caution when it comes to Internet commerce, but Stefan Elmer, a European research analyst at IDC, dismissed the idea that Europeans were against buying online. "Europeans are definitely not against doing business on the Web- they just need to see a clear reason for doing so", he said (McGrath, 1 999).

Booth (cited in McGrath, 1 999) suggested UK and German customers were more comfortable shopping and purchasing goods via online media services, whereas southern Europeans seem to be more tied to personal relationships with local shop owners. Firms have needed to act quickly to capitalise on the opportunities presented by new markets. Companies have needed to think globally but act locally to maximise their opportunities in e-commerce, and local marketing needs to be backed up by local infrastructure. The US-centric Web site, where customers buy in US dollars and ship by F edEx, was simply not going to cut it in Europe, according to Levy (cited in McGrath, 1 999).

2.2.6.4 Australian and NZ e-commerce figures

Results of research on business use of the Internet vary greatly but it is generally agreed that the fastest growing group of Internet services users are commercial enterprises. A comprehensive survey conducted by the Royal Melbourne Institute of Technology of Australian Internet users in 1 995, found that most businesses had been using the Internet for less than a year and the main uses were electronic mail and research. More than half the businesses connected had more than 200 staff. Almost half the companies had their own home page, in effect, an electronic storefront, making the Internet a popular advertising platform (Banaghan, 1 995).

Wellington the world's most networked city, according to Prof. Howard Frederick. By comparison, Silicon Valley, the headquarters of highly valued Internet stocks,

numbered only 3555 hosts per 1 00,000 people. After New Zealand came Sweden, Australia, Denmark, Canada, Netherlands, Britain, Switzerland, Germany, Japan, Italy and the United States.

Emst and Young sent questionnaires to 500 CEOs of the largest companies and organisations in New Zealand in November 1 998. The 1 03 who replied were

distributed fairly evenly across industry and revenue classes. The study found that in New Zealand, e-commerce wasn't enjoying the same welcome and uptake that it had received elsewhere. Less than half the respondents had invested NZ$50,000 in e commerce initiatives, while 40 percent said that they had no e-commerce Web presence at all. Less than seven percent of respondents saw themselves as innovators a fact that seems at odds with Wellington being the most networked city in the world and Wellington as the capital city, as the most net-connected in January 1 998. In its survey of 220 companies in Australia and New Zealand conducted by Delta Outlooks for IBM (cited in Bell, 1 999), 76 percent of businesses in Australia and New Zealand rated e-commerce as an important business strategy. However, only 35 percent of these businesses had a strategy in place. KPMG, in its more recent survey, found significantly better planning; although only 33 percent of the respondents indicated that they had allocated sufficient skilled resources.

Research indicates that New Zealand's smaller businesses have not been as quick as larger firms to take advantage of the Internet and e-commerce (Ministry of Economic Development, 2000, p4). The survey from the Information Technology Policy Group of the Ministry of Economic Development (2000, p I ) indicated that although New Zealand businesses were well prepared, they had yet to come to grips with the

implications of e-commerce. While two thirds of businesses claimed to be engaged in some type of e-commerce with other organisations already, only about one in ten had integrated this activity with their internal business systems.

The Business Practices Survey undertaken by Statistics NZ in June 200 1 with a sample size of2,756 enterprises found that 3 6% of New Zealand businesses had a Web site and the level of sales generated through the Internet was estimated to be 0.3 percent of total operating income of New Zealand businesses. Seventy nine percent of these businesses regularly used email, with the most common use being to

communicate with customers and suppliers. Eighty percent of businesses used information technology for accounting systems

(http://www.stts.govt.nzldomino/external/pasfull/pasfull.nsfl7cf46ae2dcb6800cc256a).

Large organisations change slowly: heavily ingrained structures and processes are often apparently immovable and change takes time to percolate through. Meanwhile, small organisations don't take up new technologies quickly unless they perceive immediate advantage in doing so, or immediate disadvantage in not making the move. New Zealand businesses do have some e-commerce success stories to tell but, as KPMG's Aaron Kumove pointed out, overall, conservatism still reigns. "There's a lot of thinking and planning going on and companies are now spending money on e commerce technologies, but there haven't yet been a lot of major initiatives rolled out," he says. "But I think this strategic planning and technology spend will soon translate into some serious e-commerce initiatives" (Bell, 1 999).

In document The impact of internet on business : a thesis presented in partial fulfilment of the requirements for the degree of Doctor of Philosophy at Massey University (Page 46-51)