Despite Continued Investment in eBusiness, Internet Stocks Won’t Recover, IDC Says

FRAMINGHAM, MA – JANUARY 4, 2001 – In what has become an annual tradition, IDC today issued to clients its predictions for the information technology and communications industry for the upcoming year. Last year at this time when Internet stock prices were still skyrocketing, IDC predicted they would soon come crashing down. In the spring, IDC's gloomy prediction became reality. This year, the global market intelligence and advisory firm says those expecting Internet stocks to stage a comeback will be vastly disappointed.

 

"The genie is out of the bottle," said John Gantz, IDC’s chief research officer. "The Internet crash of 2000 has sobered up a new generation of investors and stock market analysts. The criteria for investing and for taking companies public will revert to old criteria – operating histories, consecutive quarters of profit, and long-term fundamentals – and it will be years before market euphoria sends Internet stocks soaring again."

This does not mean, however, that companies wont continue to invest in ebusiness. IDC believes brick-and-mortar businesses will fuel significant technology investments as they build a Web presence. Additionally, mobile commerce will create quite a buzz in the industry. Talk about wireless mcommerce will reach hysteria levels, but despite all the talk, IDC believes roll out of mobile-specific commerce applications will be slow and steady rather than rapid. IDC estimates that mcommerce will generate only $1 billion of the worldwide business-to-consumer Internet commerce market of $95 billion in 2001.

While enthusiasm for mcommerce mounts, mentions of the application service provider acronym, ASP, will decrease. "On the public relations side, this is the result of the dot-com crash, which was closely associated with the ASP market. Vendors no longer want to be associated with this decimated sector. On the revenue-generation side, companies who classified themselves as ASPs will expand their services beyond pure application rental services," Gantz said. "The ASP market will experience a shakeout, but companies with well-defined service offerings, clear market targets, and solid integration skills will survive – for them, there will be plenty of demand."

In all, IDC made 10 predictions about the IT industry. All 10 predictions are published in the bulletin IDC Predictions 2001 (IDC #B23642). To purchase this bulletin, please contact Cheryl Toffel at 1-800-343-4952 extension 4389 or ctoffel@idc.com.

About IDC

IDC is the foremost global market intelligence and advisory firm helping clients gain insight into technology and ebusiness trends to develop sound business strategies. Using a combination of rigorous primary research, in-depth analysis, and client interaction, IDC forecasts worldwide markets and trends to deliver dependable service and client advice. More than 700 analysts in 43 countries provide global research with local content. IDC's customers comprise the world's leading IT suppliers, IT organizations, ebusiness companies, and the financial community. Additional information can be found at www.idc.com.

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

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