Web economy in G20 set to double by 2016, Google says

January 27th, 2012

By Tim Weber Business editor, BBC News website, Davos

The value of the web economy in G20 countries will nearly double by 2016, according to Boston Consulting Group. Driving the spurt from $2.3tn (£1.5tn) to $4.2tn (£2.7tn) will be the rapid rise of mobile internet access.

The study, commissioned by web giant Google, assumes that in four years 3bn people will be using the internet, or nearly 50% of the world’s population.

The research suggests that the UK is one of the most advanced e-commerce economies.

Right now, every year about 200 million people are going online for the very first time.

However, traditional internet access via a copper wire and a desktop PC will fade into the background.

The rapid fall in the cost of smartphones – with cheap versions now costing about $100 – means that by 2016 about 80% of all internet users will access the web using a mobile phone. The research does not even account for web access using so-called feature phones.

The ‘new’ internet

These numbers look impressive, but they are still just a fraction of the global economy. In 2010, the internet economy in the G20 group of leading nations was worth $2.3tn – larger than the economies of Italy or Brazil, but a mere 4.1% of the total size of all G20 economies.

The Boston Consulting Group (BCG) researchers speak of the emergence of a “new internet” where: • web access will not be a luxury any more • the majority of web users will live in emerging markets (within four years, China is expected to be home to 800 million people using the internet; that is more than the United States, India, France, Germany and the UK taken together) • about 80% of all internet users will access the web from a mobile • the internet will go social, and allow customers and companies to engage with each other

This trend will be coupled with another huge technology shift that will fundamentally change the nature of how to run a business – the rise of the so-called “internet of things”, where all kinds of devices from sensors to cars to radiators will be connected to the web.

Technology giant IBM estimates that by 2015, one trillion devices will be internet-connected.

Online is also reaching into the offline world. The BCG researchers say that every household already researches about $3,000 worth of goods online before buying them in traditional stores.

Digital, the researchers say, cannot be an add-on. Businesses have to adapt their people, processes and structures for the digital economy.

Paul Zwillenberg of BCG says that entrepreneurs building a digital business are outperforming rivals who do not embrace the web economy.