Future of Web Business

Arpad Horvath

Department of Civil and Environmental Engineering

University of California, Berkeley

October 19, 2004

“No Net? We’d Rather Go Without Food”

• Newsweek, October 11, 2004: http://msnbc.msn.com/id/6161343/site/newsweek/

• “Participation is no longer optional.”• The Internet is “the most important technological

development of our generation.”• 75% of all Americans have access, spending on average 12.5

hrs a week online.• “Netheads” in all age groups, but for 12-18 year olds, usage is

~100%• #1 activity: email• “Internet Deprivation Study”

New vs. Old Economy

• The New Economy is about becoming “electronic,” use the Internet, speed up the flow of information

• The winners of the New Economy are the companies of the old economy that make the right steps

Business-to-Business (B2B) Formats

• Multi-vendor catalogue• Auction• Reverse auction• Exchange

Source: Jan Elfving, “Overview of the Current State and Future Trends in Construction E-Commerce.” Student Summer Report, UC Berkeley, July 2000.

E-Services and Selected Providers

ONE BUYER

Reverse Auction

• Contractorsesource (now defunct)

Catalogue

• Buildpoint

• Buzzsaw (now Autodesk Buzzsaw)

MANY BUYERS

Exchange

• Buildpoint

• Contractorsesource

• Buzzsaw

 

Auction

• Contractorsesource

MANY SELLERS

ONE SELLER

Source: Jan Elfving, “Overview of the Current State and Future Trends in Construction E-Commerce.” Student Summer Report, UC Berkeley, July 2000.

Construction E-Commerce• The total construction market reached $652 billion in 1998 in the US.• 50% of companies are providing customer service via internet (construction).• 42% of companies are selling products on the Internet (construction).• 42% of companies are selling services on the Internet (construction).• On average, 11% of companies’ IT budgets goes to e-business and Internet.• The revenue share construction and engineering companies get from e-business is 8%.• Over $28 billion in construction trade will be conducted online by 2003.• In the U.S., inter-company trade of hard goods over the Internet will hit $109 billion in

1999 and surge to $1.3 trillion by 2003 – with annual growth rate of 99%.• Business e-commerce will make up more than 9% of all sales by 2003, up from 0.2% in

1997.• Business to business transactions in U.S. accounted for 80% of the $26 billion in Internet

e-commerce in 1997, or just over $20 billion.Source: Jan Elfving, “Overview of the Current State and Future Trends in Construction E-

Commerce.” Construction Engineering & Management Program, UC Berkeley, July 2000.

Internet Usage: Where Are We?

• Communication• (Limited) collaboration• (Limited) e-commerce

– Sales

– Procurement

• (Limited) entertainment

Where Next? • Ubiquitous computing

• Wireless – for free

• New functions, new users

• Decrease in local content, increase in centralized, real-time access

• Telework

• Wired home

• Security

• Spam, spam, spam…

• Privacy

• Entertainment

A Wireless Future

• A new report released by research group Ovum predicts that global revenues from wireless portals will skyrocket from $747 million in 2000 to $42 billion in 2005. (July 2000)

• Cable modem U.S. home penetration is expected to rise to 22% in 2006 from 4.6% in 1999. Almost a five fold increase. (MSDW Research July 2000)

• In 1999, wireless broadband realized a mere 60,000 subscribers. This figure will grow to 3.86 million users by 2003. (Emarketer, June 2000)

• Wireless phone sales will shoot through the roof over the next several years according to Cahners In-Stat Group. The high-tech market research firm predicts that more than 1 billion wireless handsets will be sold worldwide in 2003. (June 2000)

Source: http://www.vankampen.com/products/uit/WIRE/WIREovr.htm; 8/30/00, 11:40 am

Growth Prospects

• By some accounts, Internet data traffic is growing by over 500% annually. (S&P Industry Surveys, Communications Equipment, June, 2000)

• Online infrastructure spending is expected to grow to $600 billion by 2003. (S&P Industry Surveys, Computers: Hardware, June, 2000)

• Robertson Stephens estimates that sales for three optical networking sectors - long-haul equipment, boxes that direct traffic in metropolitan markets, and optical switches - will accelerate from about $4.1 billion in 1999 to as much as $25 billion in 2003. (June, 2000)

• Computer Economics projects that in the home, cable modem use will grow from 5.7 million installed systems in 2000 to 27.6 million systems in 2005.

• DSL lines in the home will grow even more quickly in the next five years. Between 2000 and 2005, DSL lines installed in homes will increase from 2.4 million to 15.9 million. (March, 2000)

Source: http://www.vankampen.com/products/uit/TELE/TELEovr.htm; Accessed 8/30/00, 11:30 am

Growth Prospects (cont.)

• Web appliances are expected to rise from 5.9 million in 1998 to 55.7 million by 2002. (S&P Industry Surveys Computers: Software, March, 2000)

• IDC expects Internet commerce to exceed $1.6 trillion worldwide by 2003. (International Data Corporation (IDC), June 2000)

• U.S. Internet business-to-business commerce is expected to soar to $6 trillion in 2005. (Jupiter Communications, June 2000)

Source: http://www.vankampen.com/products/uit/INET/INETovr.htm; Accessed 8/30/00, 11:50 am

New Economy: Environmentally Better?

• See Toffel-Horvath’s paper in Environmental Science & Technology

• http://pubs.acs.org/cgi-bin/asap.cgi/esthag/asap/pdf/es035035o.pdf