Growth seen in number of US wireless subscribers

FRAMINGHAM, Mass. -- Despite the economic downturn following the terrorist attacks and the resulting drop in travel and consumer spending, the wireless Internet is expected to have great growth. According to IDC, the number of wireless Internet subscribers in the United States will increase at a whopping compound annual growth rate (CAGR) of 73%, from approximately 5 million in 2000 to more than 84 million in 2005. 

While consumer and business users both make up roughly equal pieces of the wireless Internet user base, business usage is expected to be higher in the near future. "Business users will lead the way in wireless adoption as they are usually the early adopters and are willing to pay for services and applications they see valuable," said Charul Vyas, senior research analyst with IDC's Wireless and Mobile Communications program. "Businesses tend to introduce new services and devices to their employees first, and mobile employees have a need for highly functional devices with higher speed wireless Internet capabilities." 

According to primary IDC research, the number of business wireless Internet users will grow from 2.6 million in 2000 to more than 49 million in 2005. IDC research also finds that consumers are interested in accessing Internet information from their phones or PDAs, which, in turn, should cause consumer adoption to take off.

IDC forecasts that beginning in 2003, the U.S. market will see significant uptake in wireless Internet services resulting in the following:

▪ Wireless data rates will be faster than landline dial-up rates as carriers roll out their 2.5G and 3G networks.

▪ More functional end-user equipment designed for wireless Internet usage will become available in mass-market quantities in 2003-2004.

▪ The always-on capabilities and stickier applications will drive usage in the coming years.

Three weeks ago, IDC released its measurement of the IT industry in the wake of the tragedies on September 11. These findings were presented via a telebriefing with IDC clients, hosted by Chief Research Officer John Gantz.

Economic impact of 9/11

Using an economic impact model to examine IT growth trends during national crises such as Desert Storm, Y2K, and the Internet stock crash, IDC measured the impact of business disruptions from the events of September 11. "While lost business revenues totaled in the hundreds of billions of dollars, lower consumer and business confidence will influence the downturn of the IT industry," said John Gantz, IDC Chief Research Officer. "These factors will delay the economic turnaround that was anticipated to begin in Q4 of 2001 into mid-2002."

While this will impact the industry's last quarter of revenue, IDC believes over the next five quarters IT users worldwide will spend more than $1.3 trillion. In fact, IDC predicts IT users worldwide will spend $100 billion more in 2002 than they did in 2001.

According to IDC, by the third quarter of 2002, IT spending will increase 4-6% in the United States, 6-7% in Western Europe, and 10-12% in Asia/Pacific. IDC believes IT budgets will be at higher levels next year, but spending against these budgets will be on a project-to-project basis.

Slow recovery

"Prior to September 11, things were starting to look up for the U.S. economy, with consumer spending above 2%, tax rebates at almost 0.5% of GDP, and interest rate cuts of 3%," Gantz said. "Now we're anticipating our economic recovery to stretch out one or two additional quarters."

Last February, seven months before the terrorist attack but well into the global economic decline, IDC issued a report saying that the travel industry and the Internet make a prosperous pair. According to IDC, online sales of airline tickets, car rentals, and hotel reservations make the travel industry one of the strongest e-commerce markets in existence today.

"The ease of substituting one remote channel for another and the lack of need for physical fulfillment make the travel industry ideal for e-commerce," said Joshua Friedman, senior research analyst for IDC's eTravel program.

Airline industry

The airline industry represents the largest segment of the e-travel industry. IDC estimated U.S. online airline ticket sales alone soared past $7 billion last year and will climb to much higher altitudes in the next few years. U.S. online hotel and motel sales were well above $2 billion in 2000, and U.S. online car rentals will pass the billion-dollar mark this year.

The biggest factor in stimulating online travel sales will be Web sites designed to meet consumer needs. "The travel industry must improve its understanding of the consumers' booking habits and change their sites to address consumer sales," Friedman said.