Convergence of Telecoms and IT: The Internet's Rapid Growth

Strategic Insights -

The internet, a ubiquitous technology just five years ago, has disrupted the vocabulary of the IT industry. This rapid growth has brought together several industries, transforming the way companies operate and do business. The infrastructure that carries internet signals comes from telecoms suppliers, making the convergence of telecoms and IT a reality. Companies like Cabletron, a $1.4bn telecoms equipment vendor, are poised to capitalize on the growth of the internet, with internet revenues expected to account for 25% of their revenue within the next 18 months.

Key Takeaways:

  • The internet has grown at an incredible rate, with estimates suggesting a 1,000% increase in internet messages per year.
  • The global market for internet backbone equipment is expected to reach $8bn in 2000 and $19bn by 2002, according to Datamonitor.
  • Cabletron, a telecoms equipment vendor, sees the internet as a major growth area, with internet revenues expected to account for 25% of their revenue within 18 months.
  • Cable & Wireless, a conventional telecoms operator, is also shifting its focus towards internet projects, with 25% of its staff expected to work on internet initiatives within the next two years.
  • Electronic commerce is seen as a major opportunity for companies, with a widespread perception that this is a new channel to market just waiting to be exploited.
  • Small companies are expected to flock to managed internet services, with Cable & Wireless planning to launch an internet services package for small and medium-sized enterprises later this year.
  • Nortel Networks, a telecoms equipment maker, provides switching technology to customers outside of large telecoms carriers and sees itself as providing the "picks and shovels" for internet companies.

Statistics:

  • The global market for internet backbone equipment is expected to reach $8bn in 2000 and $19bn by 2002. (Source: Datamonitor)
  • Cabletron expects internet revenues to account for 25% of their revenue within the next 18 months.
  • Cable & Wireless expects 25% of its staff to work on internet projects within the next two years.
  • The UK mobile phone market is expected to grow from 15m today to 30m by 2002. (Source: Ericsson)
  • Ericsson expects the replacement cycle for mobile phones to drop to nine months by 2002.