Boston Consulting Group – In the G-20 nations, the Internet economy will grow more than 10 percent a year through 2016, according to a new report published by The Boston Consulting Group (BCG) as part of its Connected World series.
In the developed markets of the G-20, the Internet economy will grow approximately 8 percent annually; in the developing markets, it will grow more than twice as fast—at an average annual rate of 18 percent. Argentina and India will grow the fastest, at 24 percent and 23 percent a year, respectively. The leading developed markets—Italy and the U.K.—will grow about 12 percent and 11 percent a year, respectively.
BCG projects that the Internet economy will contribute a total of $4.2 trillion to the G-20’s total GDP in 2016. “If it were a national economy, it would rank in the world’s top five, behind only the U.S., China, India, and Japan, and ahead of Germany,” said David Dean, BCG senior partner and a coauthor of the report.
The new report, titled The $4.2 Trillion Opportunity: The Internet Economy in the G-20, includes profiles of Internet usage and economic impact for each of the G-20 economies, which together account for more than 80 percent of the global economy
Across the G-20, it already amounted to 4.1 percent of GDP, or $2.3 trillion, in 2010—surpassing the economies of Italy and Brazil. The Internet is contributing up to 8 percent of GDP in some economies, powering growth, and creating jobs.
The scale and pace of change is still accelerating, and the nature of the Internet—who uses it, how, and for what—is changing rapidly too. Developing G-20 countries already have 800 million Internet users, more than all the developed G-20 countries combined. Social networks reach about 80 percent of users in developed and developing economies alike. Mobile devices—smartphones and tablets—will account for four out of five broadband connections by 2016.
The New Internet
The new internet is different in many ways from the old Internet.
* Its center of gravity is shifting. The Internet has become interactive and participatory. It is moving from fixed access to ubiquitous access. No longer limited to developed markets, it is growing by leaps and bounds in emerging markets, as well. And these countries are increasingly driving innovation.
* It is now an “Internet of everything.” IBM predicts that 1 trillion devices will be connected to the Internet by 2015. The Internet of everything can radically change the ways companies interact with customers and run their supply chains. It also allows new entrants to attack the foundations of traditional industries.
* It is about ecosystems. The Internet is increasingly being shaped by ecosystems orchestrated by companies such as Amazon, Apple, Facebook, and Google, but also by companies such as Baidu and Tencent in China and Yandex in Russia.
* It is generating tremendous economic value. Across the G-20 nations, the Internet economy amounted to 4.1 percent of GDP, or $2.3 trillion, in 2010, larger than the economies of Italy or Brazil. In some leading economies, it is contributing up to 8 percent of GDP, powering economic growth and creating jobs.
* It has gone local. The Internet experience has become an ingrained feature of everyday life, reflecting national characteristics as well as economic, political, and social influences specific to individual countries.
* A new generation has grown up on the Internet. The “Millennials” have vastly different expectations as employees, consumers, and citizens. The Arab Spring protests and grass-roots “occupy” movements in the West are only the most visible manifestations of the power of the Millennials to shape society and commerce.