According to information technology and telecommunications market intelligence and consulting company BMI-TechKnowledge`s South African Internet Services Market Report, the total value of Internet and e-Commerce Services grew 55% from 1998 to 1999 to reach R1,204-billion. Access-services generated roughly double the revenue of non-access services in 1998 at R672-million and R326-million respectively, but by 2001 revenues generated by these two industries should both reach about R1,5-billion. By 2003, non-access services revenue is expected to double that of access services reaching R3,555-billion.
According to the report`s authors Brian Neilson, Neil Lightfoot and Anton Heydreich, clients in the non-access services market have a rapidly increasing choice of providers, even though the market is still far from mature. "A pattern similar to that of Web site design - where increased competition, improved design products and more knowledgeable clients rapidly drove down excessive prices to realistic levels - could be expected for Internet and e-Commerce services. The challenge for service providers is to select the right service type and market segment and establish themselves before the market matures," Neilson says.
BMI-T forecasts growth rates for non-access services will be high. Internet and e-Commerce services will grow at a compounded annual growth rate (CAGR) of 61% for the period 1998 to 2003. Consulting services will see the most rapid growth at a CAGR of 71%.
"Application development and systems integration (including Web site design and Web application development) was non-access service providers` largest source of revenue in 1998 and 1999. However, as companies start trading, operational services and outsourcing (including payment facilitation and vortex or mall services) will become a larger contributor to service provider revenue," Neilson predicts.
Rapid growth and far-reaching rationalisations were the hallmarks of the access services industry, which is still the larger component of the total Internet Services market, in 1999. The total number of leased lines grew 35% from 1998 to 1999, while grow in 1999 shot up to 61%. "Whereas in the past most of the leased-line installations were to new users, BMI-T believes the market will in future increasingly be supplying lines to users, currently with dial-up access, or no access at all, looking for more reliable means of connectivity," Neilson says.
Revenues derived by Internet service providers through supplying leased-lines equalled R314-million in 1999 (1998: R215-million). Leased-line access revenues have experienced more than 100% growth over two years running - 105% for both 1997 and 1998. In 1999, growth slowed down considerably to 46%. BMI-T anticipates positive revenue growth for leased-line provision, to reach R749-million by 2003. Growth margins are expected to deteriorate beyond 2001 as a function of increased competitiveness, lower pricing tariffs and increasing market saturation.
The dial-up access market has experienced significant year-on-year growth, for as long as BMI-T has been tracking the market. Before 1999, dial-up adoption had assumed exponential proportions, the curve becoming steeper over time. In contrast, 1999 saw this growth curve levelling out, suggesting a slowing down of the market.
Share