According to the Pew Internet & American Life Project , 29 million people spent an average of $392 each purchasing gifts online during the 2001 holiday season, up from 20 million people who spent an average of $330 each on holiday gifts in 2000. That represents a growth in online holiday gift sales from $6.6 billion to $11.4 billion, or a year-to-year increase of approximately 72%.
This increase in Internet shopping came in the midst of an otherwise lackluster holiday retail season, counteracting predictions by some that the days of the Web were numbered in the wake of the dotcom shakeout. "This is only one example of evidence that the Internet is alive and well, and on its way to becoming the preeminent medium for commerce, information and entertainment," says Intel Chairman Andy Grove. "The Internet is in its infancy, and we have just begun to envision its multitude of uses. Consumers and businesses are only beginning to embrace the power of the Internet and fully integrate its benefits into their day-to-day lives."
Grove notes that telecommunications and computing, in a combined fashion, now represent an essential infrastructure that keeps our society connected and running efficiently. He acknowledges that economics and other factors have slowed the growth of this infrastructure dramatically over the past two years, but he says that the pace of technology innovation has not slowed. "Almost every week the media describes a new technology-related breakthrough," he comments. "Today's industry is not plagued by lack of innovation, but instead by factors that have slowed the deployment of technology."
Grove attributes part of the current slowdown to earlier over-investment in Internet technologies. "Fueled by an abundance of available capital and excessive optimism, previous Internet growth forecasts were inflated to unrealistic levels," he notes. "In short, investment got ahead of demand. Today, our markets and our industry are adjusting to healthier expectations."
Grove attributes the slowdown in building the Internet infrastructure to another major factor: lack of ubiquitous broadband access. Effective transmission of video and other forms of digital communications over the Internet requires high-speed broadband access. Currently, that access is non-existent or limited in most geographies by what Grove calls the "first mile"the connection a consumer must make before accessing all the benefits of the Internet.
"The cost of providing high-speed broadband to the 100 million households and 20-30 million small businesses in the United States is estimated at between $100 billion and $400 billion," Grove notes, adding that the industry needs to consistently look for technologies capable of reducing that cost by several orders of magnitude. He points out that the telecommunications industry has traditionally relied on customized technology solutions, which are generally not as cost-effective as mass-produced solutions. "Part of the answer," Grove says, "will be the adoption of more standards within the industry. This would, in turn, lead to more cost-effective mass production of telecommunications products."
Through all of this industry turbulence, the growth of traffic on the Internet continues to accelerate at a dizzying pace. "Most important for Intel," says Grove, "the Internet is a physical entity. It is made up of ubiquitous networks connecting countless clients to countless servers. All of these are based on silicon, much of it from Intel. We have confidence in this industry and believe that while the deployment has slowed temporarily, we are, in fact, moving into a sustained build-out phase that will continue for decades to come."
A nonprofit initiative of the Pew Research Center for People and the Press. The project aims to provide impartial research and information on the Internet's growth and societal impact.