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Chapter 4. Chapter Understanding the Onl... > Starting with the Fundamentals

Starting with the Fundamentals

Anyone wanting to order something from your Web store must fulfill a number of prerequisites: They must own a computer, connect it to the Internet, and begin using the Web. These are the critical building blocks for understanding the online shopping market. Therefore, before looking closely at the specifics of online shopping, it's important to examine the nature of computer owners, Internet connections, and usage of the World Wide Web.

From Computers to Devices

When people think of surfing the Web, they almost always envision the use of a standard personal computer, an image that has been etched into our minds since the first IBM PCs and Apple Macs shipped more than 15 years ago. However, in today's technological world there are a number of new computer-like devices that also offer connections to the Web. At the gut level, they are very capable computers. But on the outside, they look like very different devices—machines such as screen phones, Web TVs, and even video game consoles.

The notion of what is or isn't a computer will change over time. Even today there are cellular phones and handheld PCs (such as Palm devices) that are capable of providing Web access. This is why most market researchers count not only the number of personal computers in use, but also consider an array of Web-capable devices. We will try to do the same.

Despite the rise of alternative devices, common personal computers will remain the dominant form of Web access for some time. PC sales are booming on a worldwide level—not just in the United States, Japan, and major European countries, but also in places such as China, Brazil, Singapore, India, and Korea. Overall in 1998 and expected in 1999, worldwide PC shipments increased 15 to 20 percent according to research firm Dataquest. The sub-$1,000 PC market is growing particularly fast.

PC Market

During 1997 and especially 1998, dozens of vendors began rolling out speedy and Web-capable PCs that cost less than $1,000. This spurred aggressive home consumer demand for PCs and led to strong growth in the PC market. That segment is now growing faster than almost any other segment of the PC industry as vendors push prices down even further and pack more power into newer generation machines. Last year it was estimated that close to 12 million sub-$1,000 PCs were sold in the U.S. alone.

For a summary of key computer hardware figures, see Table 4.1

Table 4.1. Key Computer Hardware Figures
210 million computers and other devices will be linked to the Internet by the end of 2000 —Jupiter Communications
92 million PCs were sold worldwide in 1998. Growth is averaging more than 15 percent yearly and is even higher in some markets such as the U.S., where aggressive pricing of sub-$1,000 PCs and the Internet are driving demand for computers. —Dataquest
The consumer PC industry will continue to skyrocket in 1999 as homes snap up more than 13 million new machines, 4.5 million of which will be first time computer purchases. —Forrester Research
More than one million WebTV consoles have been sold since it debuted in 1997. Estimates are that some 15 million Web console devices (either WebTVs or video game consoles that can also surf the Web) will be in homes by the end of 2002–2003. —Various reports
Estimates are that more than 6 million handheld PCs, like the Palm PC or Windows CE, sold in 1998 and as many or more will sell in 1999. —Various reports

Game Consoles and Web Appliances

WebTV is not being as rapidly adopted in the early going as some might have predicted, but they are a growing force. The device appears destined to become an interesting platform that should grow as it matures and, most likely, combines with its video–game console cousins. As more TVs and set-top cable boxes ship with built-in capabilities, the market may even piggyback on the overall television sales and cable installation market. This is already beginning to happen.


According to WebSideStory's Statmarket, which tracks and reports traffic statistics for more than 100,000 small- to medium-sized Web sites, WebTV already accounts for more than 1 percent of all Web traffic. This is a small number but a significant one because it is growing, and because most are being used by home consumers.

Handheld PCs

Another potent group of devices that will surf the Web are handheld, such as those from Palm Computing or using the Windows CE system. These devices, especially the Palms, are booming right now, selling at a clip of 4 to 5 million units per year. The latest Palm model, the Palm VII, offers wireless access to special online services, and that is only a hint of what to expect from the next generation of Personal Digital Assistants (PDAs). Equipped with better, color screens, higher resolution, and wireless access, these devices will enable people to surf the Web and access email while outside the home and office. While most shopping will be done via office- and home-based systems, as PDAs become a dominant form of portable computing, no doubt they will be a key to people interacting with merchants on the Web and especially through email.

A new category in the handheld market is the so-called smartphone. These devices, such as the Nokia 9000, combine voice phones with small screens and keyboards, enabling them to offer some common handheld functionality to access Web-based information. Research firm IDC distributed a press release predicting shipments to reach 8.8 million units by 2001.

So between just PCs, Web TVs, and handheld devices, there will be plenty of new computer-capable hardware sold over the next few years. Almost all of it will be attached to the Web.

Research firm Jupiter Communications predicts that overall the number of devices accessing the Web will grow to more than 210 million by the end of 2000, with more than 160 million users. This includes many different devices, not just computer workstations or servers, and not just items people use at home or at work. Eventually, all sorts of devices—copiers, fax machines, ATMs, pagers, and even vending machines—could be connected in some form to the Internet, enabling a rich, worldwide e-commerce system.

The range of devices that will allow people to access the Web, or which are connected directly themselves, is an important issue. These numbers and trends indicate that many Web surfers, and therefore shoppers, will access the Internet through more than just common home computers. Stores that can appeal to buyers, whether they are on a Web-enabled TV, home computer, or portable phone, will have an advantage.

These devices will affect Web design and e-commerce because they will require Web stores (and other types of Web sites) to prepare content and technology that works with many different types of displays and devices. WebTV, for example, doesn't support Java, and many handhelds feature screens that are grayscale with resolutions well below the lowest computer resolution of 640 by 480 pixels (the Palm's screen is 160 by 160). In addition, displaying graphics on a TV set device (like a video game console or WebTV) alters their appearance, as opposed to displaying them on a crisp, high-resolution computer monitor. As shoppers begin to use more non-computer devices to interact with merchants on the Web, online stores will have to adapt. Those that do so will find even more consumers in the online universe than will their competitors.


A critical aspect of Web-connected devices is the underlying access software. As many Web developers know, the software that is used to get access to the Internet dictates the capabilities of its users. Although Microsoft Internet Explorer and Netscape Communicator (or Navigator) try to be relatively compatible, both browsers implement things the other doesn't. Thus, all eyes are on browser platforms from Netscape and Microsoft so that developers (and store owners) can better discern what their sites should support.

The browser battle was initially won by Netscape, which crushed a room full of hopefuls to gain close to an 80 percent market share. However, Internet Explorer has responded and now has 75 pecent of the market.


Watch the browser upgrades carefully, as features added to newer versions of the browser platforms have the potential to greatly transform the Web and Web-based commerce. Upcoming browser technologies like XML (eXtensible Markup Language) and electronic wallets will usher in an even more mature technology framework upon which to build Web stores.

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