Electronic Design

Consumer Spending For Internet Services Will Soon Outpace Purchases of PCs

Telecommunications and computers are becoming inseparable. Their growth rates are staggering, and the Internet's ascendancy as a market force is already massive. This convergence—and its economic implications—was a featured topic at the Intel Computer Continuum Conference in San Francisco.

David C. Nagel, president and chief technical officer of AT&T Laboratories in Basking Ridge, N.J., said that the Internet serves 275 million customers today, with access to over 1 billion web pages. Between now and 2003, the Internet will enjoy a compound annual growth rate (CAGR) of 100%, carrying it to a $1.3 trillion revenue total. Small businesses will see their web-related spending reach $13 billion this year and then increase by a 36% CAGR over the next three years.

By 2001, Nagel said, consumer spending on the Internet will surpass consumer spending on PCs themselves. Internet suppliers will be glad to note that in terms of dollars per connection for voice, the cost trajectories for circuits and IP will cross this year. As a result, the cost per connection via IP will fall below the cost of traditional circuits.

Households without PCs are now use set-top boxes for broadband access. Several million set-top boxes have been sold so far. By the end of the year, the number of U.S. households with set-top boxes will exceed 5 million. This number should reach 14 million by 2004.

Transmission rates, which now peak at 200 Gbits/s, will soon cross over into the terabit range. According to Nagel, photonic technology will provide a simpler and more elegant solution for handling data. Broadband is beginning to take a bite out of dial-up circuits as well. Fiber optics now covers a third of the AT&T footprint, and OC192 is able to handle just under 10 Gbits/s.

Looking to the future, Nagel envisioned a "universal communications" system that will always be on and available. There will be an end to the burden of separate numbers for the phone, fax, cell phone, and Internet connection. The day is coming when we all will have one phone number and one mailbox.

Nagel also said that there soon will be a significant shift "from 'I go on the Internet and search for information' to 'I let the Internet tell me when something is happening.'"

The future of the Internet and telecommunications isn't completely bright, though. Unresolved issues include plug and play, applications, administration and management, security, privacy, and the user interface. Internet growth will be hindered until the privacy and security issues—and the public's fears about them—are successfully resolved. Nagel closed by warning the audience that even though "the opportunities are enormous, so are the risks." In other words, exercise some caution in the upcoming spending frenzy.

TAGS: Intel
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