The Great Recession that the world faced in 2008-09 had mixed effects on the E-Commerce and Internet Business. Online ad sales were soft, and in many cases ad prices were down considerably. Since consumers are more focused than ever on finding the best prices, firms like Amazon that are known for their high value at low prices strategy are well positioned to prosper. The global Internet audience continued to grow rapidly, with the worldwide base of Internet users in the 2 billion range as 2011 began, including a large base of mobile broadband users.

The online industry enjoyed a stellar year in 2010 as most of the world rebounded from the recession. Online sales of advertising, products and services were strong, and the most powerful trends surged forward, including Internet access via wireless devices, migration of entertainment to the web and cloud-based software as a service.

The standout winner in e-commerce continues to be Amazon, where sales have soared thanks to aggressive discount pricing and an ever-growing variety of merchandise categories.  Amazon's revenues rose by 27.8% in 2009, to $24.5 billion, and profits grew substantially as well.  For 2010, revenues soared to $34.2 billion, with profits rising to $1.15 billion.  Clearly, there is growing adoption of online consumer purchases throughout the world's major economies.

Online advertising leader Google's recent results are a good indicator of the strong rebound in online advertising during 2010.  The firm saw revenues increase 8.5% in fiscal 2009, to $23.65 billion, while profits soared 54.2% to $6.5 billion.  For 2010, with a much stronger global economy, Google's revenues rose 23.9% to $29.32 billion, while profits increased 30.4% to $8.5 billion.

Growth in broadband subscriptions worldwide continues at a strong pace. Analysts at In-Stat estimate that there were 578 million broadband subscribers worldwide by the end of 2009 (both fixed and wireless), growing to 763 million at the end of 2010, and expected to surpass 1 billion by 2013.

Logically enough, as the home of the world’s largest population, China holds the world’s highest number of Internet users, at an estimated 420 million as of June 30, 2010, according to the China Internet Network Information Center (www.cnnic.net.cn), including 364 million broadband users.

The number of American homes and businesses with broadband access capabilities topped 100 million by the end of 2010, thanks in part to modest monthly fees at Internet service providers. This number does not include mobile broadband users, estimated at another 83.2 million. As a result of this mass market, a plethora of new services, entertainment options and timesaving solutions have become widely available online.

Online advertising continues to grow as a percent of total advertising. Online advertising in 2010 accounted for about 15% of all ad expenditures in the U.S., according to Plunkett Research estimates. Online ad expenditures increased by 13% for 2010 over 2009 in the U.S., according to Magna Global.

Total online sales were essentially flat in the U.S. during 2009, at about $131.4 billion (not including sales of travel), according to analysts at eMarketer, but enjoyed excellent growth in 2010, to $152.1 billion.

U.S. travel sales online for 2010 were estimated at $92.5 billion by eMarketer. Plunkett Research estimates global travel expenditures online at more than $300 billion for 2010.

A significant evolution is taking place in the world of business, as more and more telecommunications move to the Internet. VOIP continues to grow in popularity, both at home and at the office. Meanwhile, the concept of “unified communications” threatens to completely revolutionize business communications by combining all communications into one screen on the desktop, including phone, fax, e-mail, IM, voice mail and teleconferencing. Voice communications will be digitized and archived, just as e-mail is today. A user’s communications tools will move seamlessly from the desktop to the mobile device.

Convergence: The Internet is about saving time (and therefore saving money), and the potential of the Internet has barely been tapped. New methods of taking advantage of efficiencies are becoming widely accepted, as access to high-speed broadband Internet connections becomes commonplace. Users of the Internet (both business and consumer) are multiplying around the globe, and many companies are earning terrific profits in the process of serving those users. The long-awaited phenomenon of “convergence” of entertainment, computing and communications arrived around 2004 and has been moving forward ever since. Now, the latest televisions come equipped with built-in Internet connections. This is going to create radical changes in the way TV viewers obtain their movies and TV programming over the near term.

Top selling product and services categories online include travel, clothing and accessories, books, music, videos, electronics and specialty foods including wines. In these markets, online shopping amounts to a significant share of sales. Meanwhile, many of the world’s largest storefront retailers now operate some of the most-visited Internet sites. For example, online traffic is extremely strong at the sites of Wal-Mart, Target, Best Buy, J.C. Penney, Sears, Home Depot, Lowes, Macy’s, Kohl’s, Cabela’s and Barnes & Noble.

A Brief History of the Online Sector: The e-commerce and Internet sector has evolved rapidly, going through several distinct stages since its beginnings in the 1970s. Before we delve into an analysis of the trends that are shaping the Internet sector today, a quick look at history is in order.
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