Asia’s Internet Ecommerce Applications Markets to Top US$1.3 Billion by 2003, Says IDC

FRAMINGHAM, Mass., July 13, 1999 – The Asia/Pacific (excluding Japan) Internet ecommerce applications market topped US$20.8 million in revenue in 1998, up 104% from US$10.17 million in 1997, according to market research firm International Data Corporation (IDC). The region saw the start of strong growth for this market in 1998 as an increasing number of organizations and their IT professionals adopted Internet commerce software products rather than developing their own. According to IDC, Internet ecommerce software applications are applications that enable companies to conduct business online.

The IDC report listed the following trends shaping the Internet ecommerce application market in Asia:

— Booming sales growth. The market for Internet commerce applications has been enjoying robust growth over the past year, and it will likely remain that way through 2003. IDC estimates the market will grow 95% to US$40.45 million in 1999 and US$169.76 million in 2000. By 2003, the market is projected to top US$1.3 billion.

— Content is king, and relationship is the key. Within the Internet commerce applications market, two types of products should warrant special attention over the next two years. One application allows Web sites to better manage online content; the second includes applications that will help sites improve their interaction with customers. Both will be increasingly important to companies betting their future on the Internet.

— Fragmentation in the store-creation market. Vendors such as Open Market, InterWorld, and Netscape will seek to address the needs of expected big-name merchants in Asia/Pacific (excluding Japan) that are willing to spend more than US$100,000 on elaborate Web sites. On the other hand, Internet commerce shopping applications priced under US$100,000 will have to find their customers among Internet service providers, systems integrators, and commerce service providers.

— The portal squeeze. Although the portal sites are expected to wield a great deal of power over the traffic flow on the Internet, it is sensible for them to direct visitors to their own ecommerce hubs, which in many cases are built using their own products.

— Emergence of hosted marketplace. In 1999, the virtual marketplace concept is expected to play a major role in business-to-business ecommerce. A number of vendors have aggressive plans to help large businesses set up hosted marketplaces so their customers will be able to aggregate their purchasing power to obtain better prices from a set of common suppliers.

— Localizing is key. Vendors will find the key success factor to penetrating the Asian markets depends on how much effort is made to localize their technology. Examples include creating software that provides double-byte versions of their products and services or understanding cultural issues that preclude online buying.

Who Are the Key Players?

IDC identified the top eight vendors in the overall Internet commerce applications market who represented nearly 75% of the total license sales revenue for the entire region, indicating the market is vastly under-penetrated. These vendors (not in order of ranking) are Oracle, OpenMarket, InterShop, Sterling Commerce, Ariba, Netscape, BroadVision, and InterWorld.

Where Is the Opportunity?

IDC also examined the market from a country perspective, finding the countries within the Australia/New Zealand subregion were far and away the leading driver of sales for ecommerce software vendors in the region. This is mainly a result of the use of English as the main language medium, a relatively mature IT infrastructure, and high Internet user penetration.

Outside the Australia/New Zealand subregion, IDC found the hottest markets for ecommerce software adoption among innovative companies are Singapore, Malaysia, Taiwan, and South Korea. This is due to the active level of ecommerce activity among the business community in these countries and the increasing level of Internet maturity seen locally in these markets.

Conclusion

IDC expects to see tremendous growth in the number of ecommerce software vendors indigenous to Asia/Pacific, providing multilingual, multicurrency business-to-business and business-to-consumer software applications in the next three years, driving the size of the market upwards, servicing an increasing number of businesses in Asia/Pacific looking to enable themselves. These findings stem from a new IDC report called eCommerce Software Applications Market in Asia/Pacific. For more information regarding this report, please contact Cheryl Toffel at 508-872-8200 or ctoffel@idc.com. For general information on IDC Asia/Pacific services, please contact Lisa Bloom or Beth Freedman at 508-935-4236/4764

About IDC

Headquartered in Framingham, Mass., International Data Corporation is the information technology industry's most comprehensive resource on worldwide IT markets, trends, products, vendors, and geographies. IDC provides data, analysis, and advisory services to the world's leading IT suppliers as well as IS professions in finance, insurance, entertainment, advertising, consumer goods, and publishing. IDC's research and opinions are based on the results of more than 300,000 end-user surveys, in-depth competitive analysis, broad technology coverage, and strategic analysis. IDC is committed to providing global research with local content through its 500 analysts in more than 40 countries worldwide. Additional information on IDC can be found on its Web site at http://www.idc.com.

IDC is a division of International Data Group, the world's leading IT media, research and exposition company.

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