Every business needs to “Go Digital” as nearly half the world's population become web users by 2016, says report by the Boston Consulting Group
The Internet economy of the world is projected to increase dramatically by 2016 providing companies and countries with a vital source of growth, according to The Boston Consulting Group (BCG).
The biggest driver is the unprecedented increase in the number of users around the globe—from 1.9 billion users in 2010 to a projected 3 billion users in 2016, about 45 percent of the world’s population. The rise of the emerging markets, the popularity of mobile devices, especially smart phones, and the growth of social media are also compounding the economic impact of the Internet.
In The Digital Manifesto: How Companies and Countries Can Win in the Digital Economy, the latest in a series of BCG reports on the rise of the Internet, BCG makes the case that businesses will be fundamentally transformed over the next five years. It also urges action by companies and countries, recommending the creation of a “digital balance sheet” and offering an agenda for chief executives and policymakers to build their digital advantage.
“No company or country can afford to ignore this development. Every business needs to go digital,” said David Dean, a coauthor of the report and a senior partner at BCG.
Joerg Hildebrandt, Partner and Managing Director at BCG Middle East added: “The findings of this report are particularly relevant for the Middle East as this is one of the fastest growing regions in terms of internet and smart phone penetration."
The Rise of the New Internet
The BCG report charts several major shifts that are not well understood by many corporate executives and policymakers. These include the following changes in the use and nature of the Internet:
From a Luxury to an Ordinary Good. Twenty years ago, at the Internet’s commercial birth, its use was restricted to the relatively wealthy. Today it is almost everywhere, with half the world’s population expected to use the Internet by 2016.
From Developed to Emerging Markets. By 2016, nearly 70 percent of the Internet users in the G-20 will be from emerging markets, up from 56 percent in 2010. China will have nearly 800 million Internet users—about the same number as France, Germany, India, Japan, the U.K., and the U.S. combined. The contribution of emerging markets to the G-20’s Internet economy will grow from less than one-quarter in 2010 to more than one-third in 2016.
From PC to Mobile. By 2016, mobile devices—increasingly, smart phones—will account for about 80 percent of all broadband connections in the G-20 nations.
From Passive to Participatory. Social media are changing global communication patterns. Countries such as Argentina, Brazil, Indonesia, and Mexico are going straight to social, with more than 90 percent of Internet users engaged in social media. In these countries, social media are used more extensively than in developed markets in the creation and sharing of content.
Why Every Business Needs to Go Digital
Consumers are starting to derive extraordinary value from the Internet, according to the BCG report. Across the G-20, $1.3 trillion of goods was researched online before being purchased offline—representing 2.7 percent of GDP, or more than $3,000 per connected household. In the largest G-20 economies, the perceived value that consumers place on the Internet, above what they already pay, is $1.9 trillion, or $5,000 per connected household.
Likewise, companies that make extensive use of the Internet—including social media—to sell, market, and interact with their customers and suppliers grow faster than those that do not. Over the past 18 months, BCG surveyed more than 15,000 small and medium-size enterprises around the world.
In the U.S., businesses with a medium or high Internet presence expect to grow by 17 percent over the next three years, compared with 12 percent for other companies. In the U.K., the overall sales of businesses with a medium or high Internet presence rose by 4.1 percent each year from 2007 to 2010—about seven times faster than so-called low-Web and no-Web businesses. This trend is consistent across all the countries surveyed, underscoring the Internet’s contribution to economic growth and jobs creation.
The Boston Consulting Group
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