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eCommerce Bustles As The PC Era Finally Yields To The Internet-Savvy Population, Predicts Forrester Research

Cambridge, Mass., May 31, 2000 . . . Online consumers of yesteryear have shed their thick skins, revealing a confident, knowledgeable, and demanding population ready to embrace Internet advancement as the PC becomes mainstream. According to the new Technographics® Benchmark Data Overview from Forrester Research, Inc. (Nasdaq: FORR), by 2001, more than one-half of US households will be online, more than one-third will have purchased online, and one in 10 will have banked or invested online.

"2000 will be remembered as the year that important psychological thresholds were crossed and technologies once considered cutting-edge entered the mainstream -- making the PC as common as the stereo system," said Patrick Callinan, analyst at Forrester Research. "Today's Internet consumers are doing and spending more online -- faster. In 1999, only 13% of those online for less than six months had purchased online. Twenty-four percent of this year's inductees have bought something in the past three months."

Due to the increasingly difficult task of penetrating new households, PC adoption growth will continue to slow. Sixteen percent of offline households that have not yet purchased personal computers report that computers are too expensive, and 55% say they don't need one. The digital divide persists, with almost 20% of households, typically having lower incomes and less education, saying they will never go online. As penetration slows, the growth of online households will emerge from two sources -- outside the home and online devices. Initially, much of the growth will be driven by online access from places beyond the home, including work and school, before consumers turn to online devices, like Web TV and game consoles to get online.

Despite the rapid growth of eCommerce, activities like email and search queries remain two to four times more common than shopping online. With two years of Internet experience, more consumers read newspapers and product reviews online than in the past, while software and music downloads become more likely among those who have three or more years of Net experience. More experienced users are less likely to play games or chat online.

Beyond just browsing, buying, and booking travel online, one in 10 online US households trades stock online, and slightly more pay bills online. Only 9% of consumers cite security as the reason they don't trade online, down from 18% last year. Online consumers are also turning to the Net to research financial products they purchase less frequently, from mortgages to auto insurance.

As PCs become mainstream, PC ownership becomes a less effective predictor of technology adoption. Technology optimism, on the other hand, remains a strong predictor of technology adoption. Optimists still buy more technology earlier and buy online in far greater numbers than pessimists with the same income. Technology optimism is a transcultural construct, so European and US numbers are remarkably similar -- high-income optimists represent about 30% of households in both markets. Broadband, digital TV, Web TV, digital video cameras, and PDAs today serve as more accurate indicators to predict consumer adoption patterns.

"Prophets of doom have found their 15 minutes of fame proclaiming that the Internet destroys community, literacy, self-esteem, and families," added Callinan. "An objective analysis of age, media consumption, personality, and lifestyle revealed that on average, online Americans are more extroverted and have a stronger self-perception than do their offline counterparts."

For the "Benchmark Data Overview," Forrester surveyed 90,000 American and Canadian households. Forrester also surveyed nearly 17,000 Europeans consumers. The Technographics Benchmark Data Overview is part of Forrester's Technographics Data & Analysis -- the industry's most comprehensive quantitative research program analyzing how today's technology impacts consumer attitudes and behavior.

Forrester Research is the leading independent Internet research firm, analyzing technology change and its impact on business, consumers, and society. Forrester's "Whole View" of the Internet economy enables clients to weave together Internet commerce initiatives with eBusiness technology to satisfy customers' changing needs. Clients receive continuous research and analysis through Forrester's unique eResearch™ Reports, an array of advisory services, bit products, and topical events. Established in 1983, Forrester is headquartered in Cambridge, Mass. Forrester's European Research Center is located in Amsterdam, Netherlands, and its UK Research Centre is located in London. Additional information about Forrester Research can be found at www.forrester.com.

Contact:

Mariko Zapf
Manager, Public Relations
Forrester Research, Inc.
+1 617/613-6255
press@forrester.com