IDC Expects a Surge in Live Voice Communications over the Internet

FRAMINGHAM, MA – APRIL 24, 2000 – The whole world is already talking about the Internet, but more and more Internet users are talking over it. Communications and messaging services bringing live voice communications to the Internet (Web talk) are expanding at astronomic growth rates. IDC forecasts Web talk service provider revenues will increase at a compound annual growth rate of 200% from $208 million in 2000 to $16.5 billion by yearend 2004.

"Demand for Web talk capabilities is increasing from both Web sites and end users," said Mark Winther, group vice president of IDC's Worldwide Telecommunications research. "Individuals want to use Web talk to communicate with their friends and families, and companies with ecommerce sites want to apply Web talk to improve poor customer service that is often caused by lack of human interaction."

According to IDC, Web talk applications leverage the browsers, portals, and network structures already in place on the Internet. They became a reality because of improved Internet performance and the declining cost of bandwidth. Service providers are eager to take advantage of the opportunities generated by Web talk. Last year, more than 25 Web talk service providers launched commercial offerings.

Web talk service providers, which use a free business model, make their money from four revenue sources: advertising, up-selling to premium services, hosted services, and ecommerce fees. This year, the bulk of revenues will be generated from premium services, accounting for $96.3 million, or 46% of the market. Through 2004, revenues from hosted services and advertising will increase the fastest, however.

IDC believes Web talk service providers' current objective is to increase their user base quickly. Word of mouth, which in this case can be literally applied, will help these providers grow quickly in the beginning, but later more aggressive marketing techniques will have to be used.

Overall, IDC believes Web talk will be a huge success. "By 2004, the amount of time users spend talking on the Web will exceed 3 trillion minutes a year," Winther said.

IDC's new report, Web Talk 2000: Market Forecast and Analysis (IDC #B22019), analyzes the worldwide market for Web-based live voice communications services. The report forecasts Web talk revenue by four categories: advertising, ecommerce, premium services, and hosted services. Forecasts are also provided for Web talk users, spending, and talk time. Web talk capital investment and marketing and channel strategies are discussed. The report also includes profiles of the leading Web talk service providers. To order a copy of the report, contact Bruce Atlas at 1-800-343-4952, ext. 4053 or at batlas@idc.com.

About IDC

IDC delivers dependable, relevant, and high-impact data and insight on information technology to help organizations make sound business and technology decisions. IDC forecasts worldwide IT markets and technology trends and analyzes IT products and vendors, using a combination of rigorous primary research and in-depth competitive analysis. IDC is committed to providing global research with local content through more than 500 analysts in 43 countries worldwide. IDC's customers comprise the world's leading IT suppliers, IT organizations, and the financial community. Additional information can be found at http://www.idc.com.

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

All product and company names may be trademarks or registered trademarks of their respective holders.