Understanding Technology
Internet Growth in the Home
Today most people believe that the Internet is only 3 or 4 years old. In reality the Internet has taken more than 25 years
to become an overnight success.
With that success, more and more businesses recognize the need, and the opportunity, to use the Internet (today) to
support the achievement of their organizational objectives. Business Internet use is growing, but what about home
use of the Internet? Let’s take a look.
Growth of Internet usage in the home is throttled by 2 things: affordability of Internet capable home computers and
price stability of monthly Internet access fees. The affordability of Internet capable computers is rapidly improving
and the monthly price for Internet access accounts have stabilized.
First, home computer prices, for Internet capable systems, have broken the $1,000 barrier. The big Atlanta computer
superstores have been providing sub-$1,000 home computers for at least 6 months. Locally, Carrollton’s oldest computer
store, Century Computers, has been selling sub-$1,000 Internet capable home computer systems for several months.
If home computer price trends continue as they have for the past 2 years, then Internet capable computer system prices
will break through the $500 price by the end of 1998. Within the past month one of our Internet access customers purchased
a new (Internet capable) computer system, without a monitor, for only $500. By the end of the year the total computer
and monitor price will easily drop below $500.
The significance of the $500 barrier is affordability, affordability for most families. When computers are readily
available at the sub-$500 price point, sales will soar. You may recall that color television sales skyrocketed
when the $500 price point was broken. Expect the same results for home computers.
Second, monthly Internet access fees have stabilized at (plus or minus) $20 per month.
American On Line (AOL), the world’s biggest network access provider, recently announced that they are raising their
monthly unlimited access account prices to about $22. IBM, a traditional computer company (that is growing their network
access business) recently announced that they have put a cap on the total hours that their $19.95 monthly account holders
may use (they are no longer unlimited accounts). IBM justified their rule change on the fact that 10 percent of their
Internet access users have been consuming over 40 percent of their total network resources. It turns out that these
few users stay logged onto IBM’s network much longer than IBM’s average users. Even though IBM has moved away from
unlimited Internet access accounts, they are still offering reasonable services at the $19.95 monthly price point.
Most Internet service providers (ISPs) appear to be keeping their monthly access fees at just under $20 per month.
Following the AOL price-increase announcement, Atlanta based Mindspring Enterprises indicated that they will not be
increasing their Internet access fees. Locally, The Information Age, the leading West Georgia based Internet services
provider, is leaving monthly unlimited Internet access account fees at $19.50 per month (no price change).
Most families can afford to pay $20 for unlimited monthly Internet access. As long as there are no surprises
(i.e., hidden costs) and as long as Internet service is good (fast, with no busy signals), families have no problem
paying $20 for monthly Internet access.
In conclusion, Internet home use will take off this year. This will occur because most families will be able to afford
Internet capable computers and because Internet access fees will remain affordable. Buckle up. It’s going to be a great
year for home computing and for Internet Access.
Until next time, we’ll see you in The Village!
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