eNET Internetkutató és Tanácsadó Kft.

Report on the internet economy: In focus: Corporations II. 2002

2002. November 17.

I. Summary

In the second quarter of 2002, the GKI-Westel e-Economy Index, reflecting the role of the internet in the business world and the expectations of the corporate sector, rose to a level not seen in more than a year, signaling the return of confidence. In contrast to the trends of the previous periods, it was not the large corporations but rather the small and medium-sized companies that were more upbeat about the economic impact of the internet and the available business opportunities.

The rise in the index is primarily due to the fact that companies attributed more significance to the business potential of the world wide web. Compared with the previous quarter, companies in the areas of industry, services and tourism have become more optimistic, while the expectations of the retail and wholesale segments as well as the financial sector remained at the level of the previous quarter.

In addition to the assessment of the e-economy, the quarterly survey of GKI Economic Research Co. in association with Westel Mobile Telecommunication Co. and Sun Microsystems Hungary also solicited the opinions of companies on mobile phone commerce (m-commerce).

The majority of companies agree that with the advancement of mobile data transfer technologies, conducting commerce on handheld wireless devices could turn into a successful business model.  In fact, 18% of the respondents believe that the majority of products and services can be sold or purchased via mobile phones in the future. 39% of companies think that m-commerce solutions could be successful in the short term (1-3 years) in the case of certain products and services, while 30% believe that mobile commerce has greater feasibility in the medium term (3-5 years).  As low as 18% of the survey respondents see no potential in m-commerce; they anticipate that this business model will by no means become popular.

Companies primarily see advertising opportunities for their products and services in mobile commerce. 20% would take advantage of such services in the short term, and 28% in the medium-term. A smaller percentage of firms believe that company profiles should be presented over mobile phones, and as low as one-fourth of the companies predict that their products could possibly be sold via mobile phones in the medium term (3-5 years).

At the same time, 24% of companies are certain that they would use mobile applications to order products or services from their suppliers if they had the opportunity, particularly unfinished materials, miscellaneous supplies (e.g. office supplies), as well as repair and maintenance services. According to the majority of arguments against m-commerce, other existing ordering methods fully meet the demand (52% of respondents), but many companies also have concerns regarding the security of mobile applications (22% of respondents).

Somewhat more than one-fourth of the companies believe that mobile phone payments would work well for the sales of their products or services.  Companies think that m-payments are more appropriate for smaller orders,  and only if the issues of security and customer confidence are taken care of. Careful monitoring of the payment systems and transactions is essential.

II. Detailed report

1. Will businesses regain their confidence in the internet economy?

As in numerous other research projects of GKI Economic Research Co., the results of this survey are synthesized in one index, called the  GKI-Westel e-Economy Index.

This sentiment index,  representing  the expectations of certain segments of the economy regarding the market impact of internet use and internet  applications, is  comprised of responses to four questions. The questions relate to the following issues: expectations regarding internet sales and procurement,  the impact of the internet on the market of the company, as well as the utilization of the internet in the present and in the future.

In the second quarter of 2002, the GKI-Westel e-Economy Index, reflecting the expected  role of the internet in the business world, rose to a level not seen in more than a year (the revenue-weighted index value was 14.1 points on a scale ranging from -100 to +100), which signals the return of confidence. In contrast to the trends of the previous periods, it was not the large corporations but rather the small and medium-sized companies that were more optimistic about the economic impact of the internet and the available business opportunities. While more and more small and medium-sized companies expect their online transactions to increase every quarter, large corporations anticipate the percentage of online orders to remain flat or edge up marginally.

2002-ii-jelentes-vallalat-westel_eng
(Note: Values above zero indicate optimism and positive expectations.)

As the internet and web-applications gain momentum, more and more companies realize that their own markets are no exception; they will also see a shift in market structures and mechanisms. The rise in the index over the second quarter of 2002 was largely due to a more positive assessment of internet-based business opportunities.

Compared with the first quarter, companies in the industry, services and tourism have become more optimistic, while the expectations of the retail and wholesale segments as well as the financial sector remained at the level of the previous quarter. The expectations of travel agencies and hotels for early summer were boosted by the upcoming tourist season.

2. Mobile commerce: sales of products and services

In addition to the assessment of the e-economy, the quarterly survey of GKI Economic Research Co. in association with Westel Mobile Telecommunication Co. and Sun Microsystems Hungary also solicited the opinions of companies on mobile phone commerce (m-commerce). The survey covered companies with over employees.

As mobile data transfer technologies advance and the transfer speed improves, mobile phones are able to support a wider range of business processes beyond voice transmission; wireless handsets could become a new sales channel. The majority of companies agree that e-commerce via mobile phone, a more common device than computers, could become a successful business model. According to 18% of the respondents, the majority of products and services will be suitable to be sold or ordered via mobile phones.

39% of companies think that m-commerce solutions could be successful in the short term (1-3 years) in the case of certain products and services, while 30% believe that mobile commerce has greater feasibility in the medium term (3-5 years).  As low as 18% of the survey respondents see no potential in m-commerce; they anticipate that this business model will by no means become popular.

Companies primarily see advertising opportunities for their products and services in mobile commerce. 20% would take advantage of such services in the short term, and 28% in the medium-term. A smaller percentage of firms believe that company profiles should be presented over mobile phones, and as low as one-fourth of the companies predict that their products could possibly be sold via mobile phones in the medium term (3-5 years). Companies that are open to taking advantage of mobile phone solutions as a sales channel actually sell a wide range of products, from home appliances to cosmetics.

2002-ii-jelentes-vallalat-mobil_eng

At the same time, 24% of companies are certain that they would use mobile applications to order products or services from their suppliers if they had the opportunity, particularly unfinished materials, miscellaneous supplies (e.g. office supplies), as well as repair and maintenance services. According to the majority of arguments against m-commerce, other existing ordering methods fully meet the demand (52% of respondents), but many companies also have concerns regarding the security of mobile applications (22% of respondents), due to the potential for abuse.  As far as security is concerned , many companies rule out the option of m-commerce because of the lack of documentation and validation for transactions.

3. Mobile commerce: the success of mobile payment systems

Somewhat more than one-fourth of companies believe that mobile phone payments could become a common payment method for the sales of their products or services, but the majority of them are relatively uncertain about the issue. Companies think that m-payments are more appropriate for smaller orders,  and only if the issues of security and customer confidence are taken care of. Careful monitoring of the payment systems and transactions is essential.

2002-ii-jelentes-vallalat-mobilfizetes_eng

Accordingly, security is the key requirement when it comes to mobile phone payments. The responses reveal that the simplicity and transparency of the payment method is another major concern, while information storage capability and convenience factors are considered less important. The availability of a wide range of functions is the least significant requirement for mobile payment systems.

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RESEARCH THEMES
Bonus/Coupon, e-commerce, e-government, e-finance, e-tourism, Electronic Communications, Frequency, Information Society, Information Security, Internet Subscriptions, Internet Economy, Internet usage, Internet Access, Internet Penetration, Internetbank, Internet Commerce, R&D, Christmas, Social Site, Media, Mobile Payment, Mobile Purse, Mobile Shopping, Mobile Internet, Mobile Games, Mobile Phones, NGN, Smartphone , Online Games, Online Shopping, PC, Tablet, Telecommunication Spending, TV, Video Sharing, VoD