Web economy in G20 set to double by 2016, Google says

Customer looks at smartphone in Bangkok, Thailand More and more people are accessing the internet via mobile devices

The value of the web economy in G20 countries will nearly double by 2016, according to Boston Consulting Group.

Driving the spurt from $2.3tn (£1.5tn) to $4.2tn (£2.7tn) will be the rapid rise of mobile internet access.

The study, supported by web giant Google, assumes that in four years 3bn people will be using the internet, or nearly 50% of the world's population.

The research suggests that the UK is one of the most advanced e-commerce economies.

Right now, every year about 200 million people are going online for the very first time.

However, traditional internet access via a copper wire and a desktop PC will fade into the background.

The rapid fall in the cost of smartphones - with cheap versions now costing about $100 - means that by 2016 about 80% of all internet users will access the web using a mobile phone.

The research does not even account for web access using so-called feature phones.

The 'new' internet

These numbers look impressive, but they are still just a fraction of the global economy.

Start Quote

We don't fill empty holes on websites any more, we engage customers”

End Quote Michael Lazerow Chief executive of Buddymedia

In 2010, the internet economy in the G20 group of leading nations was worth $2.3tn - larger than the economies of Italy or Brazil, but a mere 4.1% of the total size of all G20 economies.

The Boston Consulting Group researchers speak of the emergence of a "new internet" where:

  • web access will not be a luxury any more
  • the majority of web users will live in emerging markets (within four years, China is expected to be home to 800 million people using the internet; that is more than the United States, India, France, Germany and the UK taken together)
  • about 80% of all internet users will access the web from a mobile
  • the internet will go social, and allow customers and companies to engage with each other

This trend will be coupled with another huge technology shift that will fundamentally change the nature of how to run a business - the rise of the so-called "internet of things", where all kinds of devices from sensors to cars to radiators will be connected to the web.

Start Quote

Understanding the economic potential of the web should be an urgent priority for leaders”

End Quote Patrick Pichette Google chief financial officer

Technology giant IBM estimates that by 2015, one trillion devices will be internet-connected.

Online is also reaching into the offline world. The BCG researchers say that every household already researches about $3,000 worth of goods online before buying them in traditional stores.

Digital, the researchers say, cannot be an add-on. Businesses have to adapt their people, processes and structures for the digital economy.

Paul Zwillenberg of BCG says that entrepreneurs building a digital business are outperforming rivals who do not embrace the web economy.

However, what the research fails to capture is the balance of employment between new, more efficient digital companies and old-style businesses.

The winners

Google, who supported the research, is obviously one of the companies set to gain most from the rapid growth of the internet.

"Understanding the economic potential of the web should be an urgent priority for leaders... [with] a powerful case for countries and companies to get online and reap the rewards of an age of data," Patrick Pichette, Google's chief financial officer, says.

However, the report suggests that Google will not be the only winner.

The researchers identify several "internet ecosystems" that will try to tie users in to their customised part of the internet, among them Amazon, Apple, Facebook, Google, Baidu and Tencent in China and Yandex in Russia.

What is digital?

A problem with BCG's research is obviously that it is difficult to define what is actually part of the digital economy.

"During the research we discovered very quickly that there is no approved way of measuring the internet economy," says David Dean, a managing director at BCG.

Official statistics simply do not capture the sideways move of old technologies into the digital world, for example when a widget maker starts upgrading its devices so that they can be hooked up to the internet.

But if the report's predictions are correct, then speaking of a "web economy" will soon sound about as comical as speaking of an "electricity economy".

David Dean believes that the G20 countries could reach this moment as early as 2020.

More on This Story

The BBC is not responsible for the content of external Internet sites

More Business stories

RSS

Features & Analysis

Elsewhere on the BBC

  • FutureThe future is now

    Get the latest updates and biggest ideas from BBC Future’s World-Changing Ideas Summit

Programmes

  • Smart glassesClick Watch

    Smart spectacles go into battle – the prototypes looking to take on Google Glass

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.