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19 August 2005

Hey! - Guess What?

The Internet is Over. Yeah, you heard it here first, sort of. Paul Kedrosky over at the Financial Post says it's done. He has some good points on the use of the Internet peaking at 75% of users in Canada, and rehashes some old stories about folks being afraid of buying on the internet, but all in all, a good article. Full text reproduced here since the article is behind the National Post subscriber firewall.

Web surfers settle down to everyday pace of life

Paul Kedrosky
Financial Post

August 19, 2005

The Internet is over. A new study says Internet use has plateaued in Canada. Oh-oh, it must be time for some government program to encourage more Canadians to use it.

Granted, the study (from TNS Canadian Facts) does show Internet usage has held more or less steady over the past year in Canada, with 73% of respondents reporting that they use the Internet, versus 72% a year ago.

Cynics out there will say it's long past time things slowed down in the go-go world of the Internet. After all, there was a period when Internet boosters promoted the nonsensical (but widely believed) notion that Internet traffic was doubling every six months. By that way of thinking, having Internet adoption peak at three out of four Canadians is hardly a bad thing.

More seriously, this was predictable. Like all technologies, from colour television to the fax machine and the VCR, Internet adoption was eventually going to plateau. It had to. You can't have more than 100% of the people adopt any technology, and you never get to 100% in the first place. There are always some people who don't want to use the latest thing, regardless of how useful it is (we think) to the rest of us. Yes, in other words, there are still people out there who don't have colour televisions, and even some who don't use electricity. And the world trundles on, nevertheless.

Now, some will argue that Internet adoption plateauing at 73% is too low. These are people who believe the Internet is such a precious thing that any adoption level more than a stone's throw away from 100% is a problem.

They use the Internet, they like the Internet, and they want everyone in Canada using the Internet.

That's nice, but it's impractical and silly. You never get to 100% adoption for any technology, from indoor plumbing to electricity, so the Internet will never get there either. But this is just Sturm und Drang. There are deeper Internet-related adoption trends that matter more, and some of them appear in the same "plateau" study.

For example, last year 29% of Canadians reported they had purchased something on the Internet. This year that number has climbed to 34%. That is a remarkable change, an increase of 5% in 12 months in something that many people, until very recently, viewed as highly risky: giving out their credit card number over the Internet.

What does it mean? It means buying and selling over the Internet is becoming as comfortable for most people as buying and selling in the real world. Perhaps even more comfortable. Why? Because when you're buying and selling on the Internet you don't have to go out anywhere -- hey, you don't even to have to shower if you don't want to.

More importantly, buying on the Internet means there are a host of tools to assist you. I recently purchased an absurdly large Samsung television, a behemoth almost two metres across. Local stores had it at $3,000, plus tax, which would have put it up to $3,200 or so. But by using a comparison shopping site called Pricegrabber.com (and there are many others of its comparison ilk) I could, in effect, pit many suppliers against one another, and then buy from the one who offered the best combination of delivered price and ratings from buyers. The result? Rather than spending $3,200, I spent more like $2,300, including shipping. It is a remarkable difference, and one that more and more buyers will discover as they do more buying on the Internet.

This is a much bigger and more important change than whether Internet adoption has plateaued at 72, 73 or 74% of the Canadian population.

Changing buying behaviour is transforming business, meanwhile democratizing markets and giving buyers many more options than they ever had before. It is, for example, making it possible to buy and sell many things without having to hop in a car and burn increasingly expensive gasoline while wandering around from mall to mall looking for the "best" price, one that can almost certainly be beat online in seconds.

So, should anyone be despondent that Internet adoption is plateauing? Absolutely not. Instead, we should applaud it. Because having reached a point in its evolution when it is no longer the new-new thing, a whizzy technology rapidly being adopted by people who like to have the latest gee-gaws, it can now settle down into a comfortable middle age, one where average people can use it for normal stuff, like transforming the Canadian economy one online transaction at a time.
© National Post 2005
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