The eEurope ReportTM

April 2001

www.emarketer.com

The eEurope Report

Table of Contents 3 Methodology: The eMarketer Difference 9 I Economy, Infrastructure and Users 11

A. Population and Economy 12

B. Technology Infrastructure 18

C. Internet Users 40 II eCommerce 45

A. Overview 46

B. B2C eCommerce 54

C. B2B eCommerce 72

D. eCommerce Barriers and Drivers 75 III eAdvertising 93

A. Overview 94

B. Advertising Spending by Country 96 IV eFinance 97

A. eBanking 98

B. eInvesting 103

C. IT Spending 104

D. Expectations: Supply-Side Vs. Buy-Side 108 V eWireless 111

A. Overview 112

B. Technology Infrastructure 113

C. Mobile Internet Users and Usage 135

D. mCommerce 141

E. mFinance 144

F.mAdvertising 147 VI Denmark 151

A. Overview 152

B. Internet Users 153

C. eDemographics 154

D. B2C eCommerce 159

E. B2B eCommerce 161

F.eWireless 163

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VII Finland 165

A. Overview 166

B. Internet Users 167

C. eDemographics 168

D. B2C eCommerce 173

E. B2B eCommerce 175

F.eWireless 176 VIII France 179

A. Overview 180

B. Internet Users 181

C. eDemographics 183

D. B2C eCommerce 191

E. B2B eCommerce 195

F.eAdvertising 197

G. eFinance 198

H. eWireless 199 IX Germany 205

A. Overview 206

B. Internet Users 207

C. eDemographics 209

D. B2C eCommerce 220

E. B2B eCommerce 227

F.eAdvertising 228

G. eFinance 229

H. eWireless 231 X Italy 235

A. Overview 236

B. Internet Users 237

C. eDemographics 239

D. B2C eCommerce 245

E. B2B eCommerce 248

F.eFinance 250

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G. eWireless 252 XI The Netherlands 255

A. Overview 256

B. Internet Users 257

C. eDemographics 259

D. B2C eCommerce 263

E. B2B eCommerce 265

F.eFinance 266

G. eWireless 267 XII Norway 269

A. Overview 270

B. Internet Users 271

C. eDemographics 273

D. B2C eCommerce 276

E. B2B eCommerce 277

F.eWireless 278 XIII Poland 279

A. Overview 280

B. Internet Users 281

C. eDemographics 282

D. B2C eCommerce 289

E. B2B eCommerce 290

F.eWireless 291 XIV Russia 295

A. Overview 296

B. Internet Users 297

C. eDemographics 299

D. B2C eCommerce 301

E. B2B eCommerce 305

F.eWireless 306 XV Spain 309

A. Overview 310

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B. Internet Users 311

C. eDemographics 312

D. B2C eCommerce 319

E. B2B eCommerce 321

F.eFinance 322

G. eWireless 324 XVI Sweden 327

A. Overview 328

B. Internet Users 329

C. eDemographics 330

D. B2C eCommerce 332

E. B2B eCommerce 334

F.eFinance 335

G. eWireless 336 XVII United Kingdom 341

A. Overview 342

B. Internet Users 343

C. eDemographics 345

D. B2C eCommerce 353

E. B2B eCommerce 357

F.eFinance 358

G. eAdvertising 361

H. eWireless 363 Index of Charts 367

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April 2001

Welcome to eMarketer

Dear Reader:

Nevin Cohen eMarketer’s March 2001 eEurope Report™ offers the most comprehensive and accurate picture Senior Analyst, Europe [email protected] available of the internet and e-commerce development in this exciting region of the globe. Prepared by our eEurope analyst Nevin Cohen, along with the eMarketer analyst and research team, eMarketer, inc. this report is a valuable reference tool for tracking the internet market in Western and Eastern Europe. 821 Broadway New York, NY 10003 It provides critical data and insights to develop business and marketing plans, create presentations, T: 212.677.6300 answer vital, “need-to-know-now” questions and make informed decisions about online ventures. F: 212.777.1172 Presenting statistical information from a wide range of authoritative research sources, the eEurope Report™ provides quick answers to hundreds of questions, such as: How many people will be using the internet in Europe? What are their preferred online activities? Which country has the highest internet penetration rate? How fast is e-commerce growing in France? In Germany? In Russia? How many people subscribe to wireless services and what is the future of the wireless internet in Europe? What are the major trends in the online advertising market?

If you have any questions or comments concerning eMarketer or any of the material in this report, please call, fax or e-mail us.

Nevin Cohen eEurope Analyst

Learn more about eEurope at www.eMarketer.com and receive a free weekly e-mail newsletter with the latest news, research and analysis.

Written by Nevin Cohen

Also contributing to this report: Reuse of information in this document, without prior authorization, Noah Elkin, Senior Analyst is prohibited. If you would like to license this report for your Darren Allen, Senior Analyst organization, please contact David Iankelevich at Paul Mulligan, Senior Analyst [email protected], or 212.677.6300 ext 213. Claudine Thompson, Senior Analyst Yael Marmon, Researcher Mustafa Sakarya, Researcher Marius Meland, Editor Pascale Gabbey, Copyeditor Dana Hill, Production Artist Terry King, Production Artist

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The eEurope Report

Methodology: The eMarketer Difference 9

I Economy,Infrastructure and Users

II eCommerce

III eAdvertising

IV eFinance

V eWireless

VI Denmark

VII Finland

VIII France

IX Germany

X Italy

XI The Netherlands

XII Norway

XIII Poland

IX Russia

XI Spain

XII Sweden

XII United Kingdom

Index of Charts

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Methodology Methodology: The eMarketer Difference Economy,Infrastructure, Users eCommerce eAdvertising eMarketer research is founded on a simple philosophy of aggregation: eFinance eWireless

Denmark The key to approaching quantitative truth – particularly when

Finland examining the internet marketplace – is to consider data from as many France reputable sources as possible. No one has all the answers. But taken Germany together, multiple sources, coupled with healthy doses of common Italy sense and business intelligence, create a reasonably accurate picture. The Netherlands

Norway

Poland eMarketer has no testing technique to protect, no research bias, and no Russia clients to please. The eMarketer research team begins each report by Spain examining research studies, surveys, and reports from hundreds of Sweden published, publicly available sources; we then filter, organize, and United Kingdom

Index of Charts synthesize the information into tables, and graphs. Finally, we present the comparative source data along with our own analysis, estimates, and projections. As a result, each set of findings reflects the collected wisdom of numerous research firms and industry analysts. The benefits to our readers are threefold: Information is more objective and comprehensive than that provided by any other single research source Information is available in one place – easy to find, evaluate, and compare Information can be quickly accessed to make intelligent, well- informed business decisions

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Methodology: The eMarketer Difference I Economy, Infrastructure and Users 11 A. Population and Economy 12 B. Technology Infrastructure 18 C. Internet Users 40 I II eCommerce III eAdvertising

IV eFinance

V eWireless

VI Denmark

VII Finland

VIII France

IX Germany

X Italy

XI The Netherlands

XII Norway

XIII Poland

XIV Russia

XV Spain

XVI Sweden

XVII United Kingdom

Index of Charts

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Methodology A. Population and Economy Economy, Infrastructure, Users eCommerce The European economy grew steadily throughout 2000. GDP has increased eAdvertising at a rate of 3.6% according to PricewaterhouseCoopers (PwC) and 3.4% eFinance according to the Organization for Economic Cooperation and Development eWireless

Denmark (OECD). A central question is whether comparable growth rates can be

Finland sustained in 2001. France The US is entering a period of slower economic growth that will put a Germany damper on European economic activity, resulting in a European growth Italy rate of approximately 3% in 2001, according to both PwC and the OECD. If, The Netherlands

Norway as some economists fear, the US economy experiences a more severe Poland recession, or if oil prices rise and European business confidence falters, the Russia European economy may grow even more slowly, as the low estimates from Spain PwC indicate. Sweden An economic slowdown in Europe would hinder the growth of the United Kingdom

Index of Charts region’s internet economy, drying up venture capital, making businesses more cautious about investing in new online ventures, and causing consumers to delay purchases of computers and internet-enabled devices. Online advertising revenue, e-commerce purchases, and investments in supporting infrastructure may all diminish.

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Methodology

Economy, Infrastructure, Users Outlook for Western European GDP Growth, 2001 eCommerce Germany eAdvertising 1.8% eFinance eWireless 3.8% Denmark France Finland 2.3% France

Germany 4.3% Italy Italy The Netherlands 1.8% Norway 3.8% Poland Russia Spain Spain 2.5% Sweden 4.5% United Kingdom Index of Charts Netherlands 2.5% 4.5%

UK 1.5% 3.5%

Other Western Europe 2.0% 4.0%

Western Europe 2.0% 4.0%

Low estimate High estimate Source: PricewaterhouseCoopers, 2000

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Methodology Notwithstanding these clouds on the European economic horizon, the Economy, Infrastructure, Users region’s internet market remains quite formidable. With a population 27% eCommerce bigger than that of the US and a relatively high per capita income in eAdvertising eFinance Western Europe, internet penetration levels have a lot of room to grow, and eWireless the adoption of new information and communication technologies could Denmark occur at a rate rivaling that of the US. Among four countries containing Finland two-thirds of Europe’s population — Germany, Italy, France and the UK – France

Germany demand for internet connections continues to expand. The capacity to go

Italy online with PCs, mobile phones and other access devices will increase as The Netherlands telecommunications costs fall and access device penetration grows. Norway In fact, the European Union (EU) remains quite bullish about internet Poland growth among EU member countries. An EU report in November 2000 Russia

Spain suggests that the percentage of EU households with internet access grew

Sweden from 18% in March 2000 to 28% in October 2000. Various public policies United Kingdom adopted by the EU – from wiring schools and libraries, to enacting Index of Charts legislation to facilitate the export of encryption products — have helped to boost internet adoption.

“The year 2000 has truly been the year of the internet in Europe.” — Erkki Liikanen, European Union Commissioner

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Methodology

Economy, Infrastructure, Users Population of Western Europe, 2000 (in millions) eCommerce Denmark Total Population Population 14+1 eAdvertising 5.3 eFinance 4.4 eWireless Finland Denmark

Finland 5.2

France 4.3 Germany France Italy 59.3 The Netherlands 48.9 Norway Germany Poland 82.8 Russia 70.7 Spain

Sweden Italy United Kingdom 57.6 Index of Charts 50.0 Netherlands 15.9 13.2 Norway 4.5 3.6 Spain 40.0 34.5 Sweden 8.9 7.4 United Kingdom 59.5 49.0 Core Country Total 339.0 286.0 Rest of Western Europe 51.6 43.4 Total Western Europe 390.6 329.4 Source: US Census Bureau, 2000; 1eMarketer calculation

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Methodology As a potential market, Eastern Europe (including Russia, the Baltics, and Economy, Infrastructure, Users the countries of the former Soviet Union) is formidable in sheer size, if not eCommerce in economic strength. With nearly 412 million people, the region has a eAdvertising eFinance larger population than Western Europe. Russia’s 146 million citizens eWireless exceed the populations of Germany and the UK combined. Denmark Finland Population of Eastern Europe, 2000 (in millions) France

Germany Poland Total Population Population 14+1

Italy 38.6 The Netherlands 31.9 Norway Russia Poland 146.0 Russia 121.9 Spain

Sweden Core Country Total

United Kingdom 184.6

Index of Charts 153.8 Eastern Europe 120.9 100.0 The Baltics 7.5 6.2 Commonwealth of Independent States (CIS) 283.2 226.0 Total Eastern Europe 411.6 332.2

Source: US Census Bureau, 2000; 1eMarketer calculation

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Methodology

Economy, Infrastructure, Users Population of Adults 14+ in Core European Countries, eCommerce 2000–2004 (in millions) eAdvertising 2000 2001 2002 2003 2004 eFinance Denmark 4.4 4.4 4.4 4.4 4.5 eWireless Finland 4.3 4.3 4.3 4.3 4.4 Denmark

Finland France 48.9 49.2 49.5 49.7 49.9 France Germany 70.7 71.1 71.4 71.8 72.1 Germany Italy 50.0 50.1 50.1 50.2 50.3 Italy

The Netherlands Netherlands 13.2 13.2 13.3 13.4 13.5

Norway Norway 3.6 3.7 3.7 3.7 3.7 Poland Spain 34.5 34.6 34.7 34.7 34.8 Russia Sweden 7.4 7.4 7.4 7.4 7.5 Spain

Sweden United Kingdom 49.0 49.2 49.4 49.6 49.9

United Kingdom Poland 31.9 32.1 32.3 32.4 32.5 Index of Charts Russia 121.9 122.4 122.9 123.3 123.5 Total 439.8 441.7 443.4 444.9 446.6 Source: eMarketer calculation based on US Census Department data, 2001

Economic, technological, linguistic, and cultural differences among European nations have led to tremendous variations in the rates of internet use and e-commerce within the region. Of the four largest Western European nations, Germany and the UK have the most advanced internet economies, with Italy a relative latecomer. The Nordic countries have highly developed internet markets, but small populations. Russia’s poor economic health has kept its internet relatively undeveloped, as has the economic condition of much of Eastern Europe and the former Soviet countries. However, more robust economies like those of Poland, Hungary (and even Estonia) have been able to make strides in internet development.

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Methodology B. Technology Infrastructure Economy, Infrastructure, Users eCommerce eAdvertising Dial-Up Access eFinance Fixed telephone lines are well diffused throughout Western Europe. With a eWireless

Denmark median rate of 57.9 telephones per 100 inhabitants and an average

Finland household size above two, virtually all Western Europeans have the France capacity to dial up internet service providers (ISPs) if they have a computer Germany with a modem. In Russia and Poland, by contrast, telephone availability is Italy much more limited, with spotty service. The Netherlands

Norway Poland Main Telephone Lines per 100 Inhabitants in Selected Russia European Countries, 1999 Spain

Sweden Norway 71.2

United Kingdom Switzerland 69.9 Index of Charts Denmark 68.3

Sweden 66.5

Netherlands 60.6

Germany 58.8

France 57.9

Median 57.9

UK 55.7

Finland 55.3

Italy 46.2

Spain 41.8

Poland 26.0

Russia 19.7

Source: International Telecommunication Union (ITU), 2000

Between 1999 and 2000, the cost of phone service declined throughout Europe. According to a survey of telecommunications and ISP charges throughout the OECD, between October 1999 and September 2000, the cost of phone service fell by an average of 23% for 20 hours per month of surfing at peak times and 20% at off-peak times. Thanks to the introduction of unmetered access in several European countries, the cost fell 27% for users logging on for 40 hours per month at peak times and 24% at off-peak times.

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Methodology

Economy, Infrastructure, Users Cost of Internet Access for 20 Hours at Peak Times, eCommerce 2000 (in purchasing power parity) eAdvertising eFinance Poland $69.73 eWireless UK $53.55 Denmark

Finland Denmark $48.34

France Netherlands $47.53 Germany Italy Spain $45.79 The Netherlands Norway $42.79 Norway Poland Median $42.79 Russia

Spain Germany $38.84 Sweden Sweden $35.90 United Kingdom

Index of Charts France $34.00

Finland $28.68

Italy $27.85

Note: Includes VAT Source: Organization for Economic Cooperation and Development (OECD), 2000

Broadband Access Broadband technology — available for years in the US but only now becoming popular in Europe – enables internet users to get much more value from the internet by surfing at higher speeds and by allowing users to view movies, listen to music, and watch television online. The wider availability of telephone lines across Europe compared with cable subscriptions may provide DSL with a larger near-term market for broadband internet access.

Households with TV and Cable and Number of Subscribers, in Europe, 2000 & 2005 (in millions)

Households with a TV 237 248

Homes reached by cable 123 146

Number of basic subscribers 68 85

2000 2005 Source: Kagan World Media, 2000

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Methodology A study from Van Dusseldorp & Partners and Screen Digest suggests that by Economy, Infrastructure, Users 2002, assuming that European countries unbundle the local loop which eCommerce would allow access to telephone exchanges by competing companies, DSL eAdvertising eFinance broadband services will exceed cable services in most markets, capturing eWireless approximately 70% of the broadband market. Denmark Germany is an interesting case study. Due to a dearth of investment in Finland the country’s cable infrastructure, DSL leads the internet market, with France

Germany approximately 400,000 DSL subscribers and only 1,000 cable internet

Italy subscribers by the end of 2000, according to the Van Dusseldorp & Partners The Netherlands study. By comparison, France has 60,000 DSL and 122,000 cable internet Norway subscribers, and the UK has only 30,000 DSL subscribers. By 2003, the total Poland European market will include 18.8 million cable and DSL subscribers, 13.3 Russia

Spain million of whom will be DSL subscribers compared with 5.5 million cable

Sweden subscribers.

United Kingdom Index of Charts Broadband DSL and Cable Internet Subscribers in Europe, 2003 (in millions)

Cable 5.5

DSL 13.3

Total = 18.8 Source: Van Dusseldorp & Partners and Screen Digest, 2000

Access Devices: Personal Computers Europe has significantly fewer PCs per 100 (a median of 38.7 per 100) than the US (51.1 PCs per 100), both at home and in the workplace. Furthermore, region-wide averages mask disparities country to country. As the ITU data below illustrate, the PC penetration rate per capita is vastly higher in Scandinavia than in Southern or Eastern Europe.

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Methodology

Economy, Infrastructure, Users PCs per 100 Inhabitants in Selected European Countries, eCommerce 1999 eAdvertising eFinance Sweden 45.1 eWireless Norway 45.0 Denmark

Finland Denmark 41.4

France Finland 36.0 Germany Italy Netherlands 36.0 The Netherlands UK 30.6 Norway Poland Median 38.7 Russia

Spain Germany 29.7 Sweden France 22.1 United Kingdom

Index of Charts Italy 19.2

Spain 12.2

Poland 6.2

Russia 3.7

US 51.1

Source: International Telecommunication Union (ITU), 2000

Morgan Stanley Dean Witter, looking at all of Western Europe, has suggested similar disparities. Household PC penetration in Western Europe is roughly half what it is in the US, with workplace PC penetration nearly two-thirds the US rate.

Household and Business PC Penetration in the US and Western Europe, 2000

Household PC penetration 40% 20%

Business PC penetration 65% 45%

US Western Europe Source: Morgan Stanley Dean Witter Technology Research, 2000

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Methodology “European PC sales are leveling off, with increasing Economy, Infrastructure, Users PC penetration leading to a saturated home PC eCommerce eAdvertising market.” eFinance — Edwin van der Harst, Forrester Research eWireless

Denmark

Finland According to Forrester Research, by 2005, 61% of Europeans will have France

Germany home PCs. However, Forrester predicts that the increasing penetration of Italy home PCs in Europe will gradually level off toward 2005, with a compound The Netherlands annual growth rate of 7% between 2000 and 2005. While the growth of Norway first-time PC purchasers flattens, multiple PC owners are forecast to Poland

Russia increase by 19% annually between 2000 and 2005, somewhat offsetting the

Spain slowdown of first-time buyers. Sweden Still, the Mediterranean region will remain 4 years behind the UK and United Kingdom Germany, and more than 5 years behind the Scandinavian PC markets, Index of Charts according to Forrester. Nearly half of the consumers in Mediterranean countries will not own a home PC in 5 years. As the following illustrates, only a small percentage of individuals in some Western European countries with a home PC typically use it to connect to the internet. This may be due to the lack of a modem, the cost of internet connections or simply the lack of interest in being online.

Online and Offline PCs in Selected European Countries, 1999 Users of Users of Total PC online PCs/100 offline PCs/100 users 1999 1999 (millions) Denmark 30.8 25.3 56.1 Finland 28.0 24.4 52.4 France 8.8 22.3 31.1 Germany 15.7 36.5 52.2 Ireland 14.7 26.2 40.9 Italy 9.1 28.5 37.6 Netherlands 32.7 38.2 70.9 Spain 7.4 33.3 40.7 Sweden 20.0 39.9 59.9 UK 19.0 25.3 44.3 Source: Morgan Stanley Dean Witter Technology Research, 2000

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Methodology Access Devices: Television Economy, Infrastructure, Users For the past several years, internet analysts have predicted that while the eCommerce eAdvertising US will remain ahead of Europe in PC-based internet access, Europeans eFinance (particularly from wealthier countries) will eclipse Americans in the use of eWireless alternative technologies to surf the web, from digital television to mobile Denmark phones and dedicated internet access devices. Finland

France One technology – internet TV – appears to be promising. Since the

Germany beginning of 1996, Europe’s digital TV market has grown steadily in Italy numbers of subscribers and in market-value terms. This trend is forecast to The Netherlands continue apace during the period 2000 to 2005. According to Kagan World Norway Media, by 2005, 37% of all cable subscribers in Europe will have digital Poland

Russia services.

Spain Sweden Digital Cable Market in Europe, 1999–2005 (in millions) United Kingdom 1999 Index of Charts 115 3 (3%) 2000 123 7 (6%) 2001 129 13 (10%) 2002 134 22 (16%) 2003 139 31 (22%) 2004 143 43 (30%) 2005 146 54 (37%)

Homes with the potential for cable (millions) Digital cable home subscribers (millions and subscribers as a % of homes with the potential for cable) Source: Kagan World Media, 2000

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Methodology By 2005, digital cable TV will comprise about one-fifth of homes with TVs Economy, Infrastructure, Users in Europe, according to Kagan – a huge increase from 2000, when only 3% eCommerce of homes with TVs had digital cable. eAdvertising eFinance eWireless Interactive TV-Capable Households in Europe, 2000 & 2005

Denmark (in millions) Finland 2000 2005 France Homes with TVs 237 248 Germany Homes with digital cable 7 54 Italy

The Netherlands Percent of homes with TVs 3% 22%

Norway that have digital cable

Poland Source: Kagan World Media, 2000

Russia

Spain Despite this growth, the number of “early adopters” of digital cable

Sweden subscriptions remains relatively low in most of the region, especially United Kingdom compared with the US. As Screen Digest reports, in 2000 the number of Index of Charts European homes with digital TV was roughly 65% of the number of US homes with the technology. By 2003, Europe will surpass the US in digital TV penetration.

Households with Digital TV in the US and Europe, 1999–2005 (in millions)

65 63.8

50.6

45 39.3 46.3 32.6 42.0 37.5 27.0 21.4 29.1 15.5 20.3 14.0 9.8

1999 2000 2001 2002 2003 2004 2005 US Europe Source: Screen Digest, 2000

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Methodology As the following data from Strategy Analytics illustrate, the UK is a leader Economy, Infrastructure, Users in digital television. As of 2000, the UK’s share of the technology eCommerce worldwide surpassed that of the US. The rest of Europe lags far behind. eAdvertising eFinance eWireless Leading Countries in Digital TV Adoption, 2000 Denmark (a % of worldwide market)

Finland

France Rest of Germany world Italy UK 17% 29% The Netherlands Norway Spain Poland 15% Russia

Spain France Sweden US 15% 24% United Kingdom

Index of Charts Source: Strategy Analytics, 2000

One important question is how economically viable internet-TV will be. If, as the data from Jupiter MMXI indicate, the portion of worldwide advertising and e-commerce revenues remains PC-based, even 3 years down the road, subscription fees and non-internet advertising may be the mainstay of support for digital television.

Worldwide Online Advertising and eCommerce Revenues for PC, Digital TV and WAP, 2003 (as a % of total revenues)

Digital WAP TV 2% 11%

PC 87%

Source: Jupiter MMXI, Oct. 2000

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Methodology Access Devices: Mobile Telephones Economy, Infrastructure, Users Europe has been a worldwide leader in the use of mobile telephones, with a eCommerce eAdvertising median “celledensity” rate (mobile subscribers per 100 inhabitants) of 44. eFinance Finland leads the region in mobile phone use with 66.7 per 100 inhabitants. eWireless As of June 1999, more Finnish households had mobile telephones than Denmark fixed-line phones, with 20% of households exclusively using mobiles, Finland

France according to the Ministry of Transport and Communications. By contrast,

Germany Poland has a penetration rate one-sixth as large. While Poland’s mobile Italy accounts grew 137% between 1998 and 1999, the expansion was from a The Netherlands relatively tiny subscriber base. Norway Poland "Celledensity" Rate: Number of Cellular Mobile Russia Subscribers per 100 Inhabitants in Selected European Spain Countries, 1999 Sweden

United Kingdom Finland 66.7 Index of Charts Norway 61.8

Sweden 57.8

Italy 52.8

Denmark 49.9

Portugal 46.8

Netherlands 43.5

Median 43.5

UK 40.8

France 36.4

Spain 31.2

Germany 28.6

Poland 10.2

Russia 0.9

Source: International Telecommunication Union (ITU), 2000

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Methodology And, as Datamonitor suggests, central Western European countries that are Economy, Infrastructure, Users more populous and economically advanced will lead in the total number of eCommerce cellular subscriptions over the next 5 years. eAdvertising eFinance eWireless Total Number of Cellular Subscriptions in Europe,

Denmark 2000–2005 (in millions)

Finland 2000 Northern Europe France 20 Southern Europe Germany 58 Central W. Europe Italy 100 The Netherlands

Norway 2001

Poland 24

Russia 68

Spain 140 Sweden 2002 United Kingdom 24 Index of Charts 70 160 2003 25 75 170 2004 25 78 175 2005 25 80 178 Source: Datamonitor, 2000

k kt Most analysts forecast steady growth in mobile internet use in the region, as the following figures illustrate.

"Celledensity" Rate: Number of Cellular Mobile Subscribers per 100 Inhabitants in Selected European Countries, 1999

1999 3.5

2000 7.5

2001 12.5

2002 19.0

2003 29.0

Source: Universal Mobile Telecommunications System (UMTS) Forum, 1999

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Methodology

Economy, Infrastructure, Users Total Number of WAP-Enabled Subscriptions in eCommerce Europe, 2000–2005 (in millions) eAdvertising 2000 Northern Europe eFinance 2 Southern Europe eWireless 3 Central W. Europe Denmark 10 Finland

France 2001

Germany 3

Italy 12

The Netherlands 30 Norway 2002 Poland 8 Russia 21 Spain 58 Sweden

United Kingdom 2003

Index of Charts 10 30 82 2004 12 40 100 2005 15 50 122 Source: Datamonitor, 2000

Western European Mobile Internet Users, 1999–2019 (in millions) 350 310 300 305 280 265

250 255

225 200 175 150 100 125

1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 Source: Universal Mobile Telecommunications System (UMTS) Forum, 1999

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Methodology However, data from The Strategis Group suggest that Asia – not Europe — Economy, Infrastructure, Users will be the leader in advanced mobile internet products over the next eCommerce decade. China and Japan will dominate the subscriber market for both 2.5G eAdvertising eFinance and 3G services by 2006. In a somewhat bold forecast 11 years into the eWireless future (many generations in ICT time), Kalba International predicts that Denmark China alone will have as many 3G wireless subscribers as all of Europe. Finland France Leading Markets for 2.5G and 3G Products, 2006 Germany (in millions) Italy Country 2.5G 3G The Netherlands subscribers subscribers Norway

Poland China 48.9 26.3

Russia Japan 14.4 21.5 Spain Germany 16.0 8.6 Sweden UK 14.7 7.9 United Kingdom

Index of Charts France 12.3 6.6 Italy 10.5 5.7 US 11.1 2.8 Spain 7.6 4.1 Korea 5.3 5.3 Australia 3.9 2.1 Source: The Strategis Group, 2000

Global Users of 3G Wireless Data, 2011 (in millions)

Japan 96 Europe 251

US 208

China 247

Source: Kalba International, 2000

Forrester Research has begun to raise questions about the economic viability of mobile phone service providers. According to Forrester, European mobile operators will see an overall 36% decrease in traditional revenues over the next 5 years, as the price of voice transmission, SMS messaging, and data connections for faxes and laptops declines due to increased competition in the industry. This will cause the average revenue per user to fall by 15% by 2005, from EUR 490 ($460) in 2000 to EUR 419 ($393) in 2005.

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Methodology And, according to Forrester Research, m-commerce will remain fairly Economy, Infrastructure, Users limited over this period. European e-commerce over mobile phones, ITV, eCommerce and PDAs will amount to only 19% of online retail in Europe by 2005, with eAdvertising eFinance mobile phones accounting for only 3%. While mobile phones are good for eWireless quick, simple transactions, like ordering flowers, or items frequently Denmark purchased in transit, like movie tickets, few purchases of more complex Finland items – from books to PCs – will be made on mobile devices. France

Germany Even those applications perfectly suited for a WAP phone, like

Italy conducting banking transactions, may be slow to take off. As the following The Netherlands indicates, WAP bank accounts numbered only 2 million throughout all of Norway Europe in 2000. Except for Scandinavia, a relatively small percentage of Poland bank accounts are even WAP-enabled. The number of patrons conducting Russia

Spain many of their transactions via their mobile phone is likely to be

Sweden significantly smaller.

United Kingdom Index of Charts WAP-Enabled Bank Accounts in Western Europe, 2000–2004 (in millions of accounts)

2000 2

2001 5

2002 13

2003 24

2004 32

Source: International Data Corporation (IDC), 2000

Percentage of WAP-Enabled Banking in Western Europe, 2000 (as a % of total number of accounts) Italy & Spain 5%

France Others 5% 7%

Germany 13% Scandinavia 48% UK 22%

Source: eMarketer, 2001

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Methodology Other Internet Access Devices Economy, Infrastructure, Users Internet services are available through a wider range of devices, from eCommerce eAdvertising digital TVs to web-enabled games. According to Datamonitor, eFinance approximately three-quarters of the population in Western Europe own one eWireless or more internet devices – not even counting dedicated web appliances and Denmark PDAs. Within several years, homes will be thoroughly connected to the Finland

France internet through multiple technologies. By 2004, Datamonitor forecasts

Germany that 86.1% of Western Europeans are expected to own at least one internet Italy device, with 76.3% owning two or more. Not everyone will use them to The Netherlands connect to the internet, but having the potential to log on through more Norway than just the traditional PC increases the propensity and intensity of Poland

Russia surfing.

Spain

Sweden Internet Access Devices in Europe, 2000 United Kingdom Device Index of Charts P 13.0% M 12.1% G 3.9% T 1.2% P&T 0.7% P&G 5.1% P&M 16.7% T&G 0.5% M&G 4.5% M&T 1.4% P&T&G 0.7% P&M&G 0.3% P&M&T 8.7% M&T&G 0.9% P&M&G&T 2.2% None 28.2% TOTAL 100.1% Note: Non-P Devices 24.50%; P = PC; M= Mobile Phone; G= Games Console; T= Interactive TV Source: Datamonitor, 2000

According to Datamonitor, 28.2% of Western Europeans are completely “unwired.” Datamonitor forecasts that this portion of the population will decrease to 13.9% by 2004, as interactive TV diffuses throughout Europe and as PC prices drop further. In a forecast that is much rosier than that of firms like Kagan World Media, Datamonitor predicts that by mid 2001, internet TV will reach more consumers in the UK and Spain than the PC- accessed internet.

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Methodology The web appliance market is also poised to experience rapid growth. Economy, Infrastructure, Users Information appliances in use in Western Europe will increase from 7.4 eCommerce million units at the end of 2000 to 158 million units in 2005, according to eAdvertising eFinance Datamonitor (allNet Devices offers similar estimates). In Eastern Europe, eWireless these devices will grow from 2 million to 86 million units. Denmark Finland Internet Appliances in Western Europe, 2000, 2002, France & 2005 (in millions) Germany W. Europe 2000 2002 2005 Italy

The Netherlands Internet appliances in use 3.0 25.0 126.4 Norway Internet appliance share 3.2% 18.0% 56.4% Poland of internet users Russia Source: allNet Devices, 2000 Spain

Sweden United Kingdom Strategy Analytics projects that internet appliance penetration will increase Index of Charts in Europe and the US at the same rate for the next 5 years. However, as the following illustrates, Europe will remain about a year ahead of the US in household penetration levels.

Households with Internet Appliances in Europe and the US, 1999–2005 (in millions) 1999 Europe US 11.3 2.2 2000 21.5 6.3 2001 35.8 17.2 2002 52.0 33.3 2003 68.9 50.5 2004 82.4 63.9 2005 93.6 75.4

Source: Strategy Analytics, 2000

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Methodology Internet Infrastructure Economy, Infrastructure, Users Sufficient bandwidth is critical to support advanced multimedia internet eCommerce eAdvertising content. As the following illustrates, there is a digital bandwidth divide eFinance between the US and most European nations. Even an internet-savvy eWireless country like Finland has only 2.4% of the international bandwidth of the Denmark US. The short-term fix, routing internet connections through countries Finland

France with larger bandwidth capacity, is both inefficient and expensive.

Germany

Italy Bandwidth in the US and Europe, 1999 (Mbps)

The Netherlands US Norway

Poland 28,308 Russia UK Spain 18,338 Sweden United Kingdom Germany Index of Charts 11,612

Netherlands 10,874

France 9,687

Sweden 4,388

Italy 2,200

Denmark 1,274

Finland 670

Spain 618

Norway 490

Note: Data drawn from the top 50 internet hub cities in 1999 Source: Teleography, in Organization for Economic Cooperation and Development (OECD), 2000

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Methodology The US has 141.5 internet hosts per 1,000 inhabitants, compared with a Economy, Infrastructure, Users median of 103.8 for the European countries charted below, a significant eCommerce gap in internet infrastructure capacity. Furthermore, the gap appears to be eAdvertising eFinance growing, not closing, according to longitudinal data from the Organization eWireless for Economic Cooperation and Development (OECD). Between 1999 and Denmark March 2000, the US added an additional 25.1 internet hosts per 1,000 Finland inhabitants, while the UK added only 5.5 more, Germany added 3, and France

Germany France added 2.7.

Italy Differences in host counts do not necessarily mean a dearth of European The Netherlands internet content. The US tends to be a hub for online activity that Norway originates elsewhere, so many hosts for companies located in Europe may Poland actually reside in the US. For example, four of the top 10 most accessed Russia

Spain websites under the domain name .fr (France), and five of the top 10

Sweden websites under .uk (UK) are located in Sweden, Germany and the US. United Kingdom Nevertheless, the disparity in host counts reflects a less well-established Index of Charts internet market, especially in Southern and Eastern Europe.

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Methodology

Economy, Infrastructure, Users Internet Hosts per 1,000 People in Selected European eCommerce Countries, January 2000 eAdvertising Finland eFinance 148.1 eWireless Denmark Norway Finland 120.3 France

Germany Sweden Italy 114.8 The Netherlands

Norway Denmark

Poland 92.7

Russia Netherlands Spain 84.8 Sweden United Kingdom UK Index of Charts 60.3

Median 103.8

Germany 634.0

France 29.8

Spain 22.8

Italy 18.9

Poland 6.0

Source: Organization for Economic Cooperation and Development (OECD), 2000

One of the key factors determining the number of internet hosts in a country appears to be whether local internet access – both the ISP and the telephone connection — is metered or unmetered. According to OECD research, nations with virtually limitless internet access have a better- developed internet infrastructure. OECD member countries that have unmetered access have more than three times the number of internet hosts per capita than countries in which internet users have to essentially “watch the clock” as they surf.

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Methodology

Economy, Infrastructure, Users Hosts per 1,000 in OECD Member Nations with eCommerce Metered and Unmetered Internet Access, Jan. 2000 eAdvertising eFinance Unmetered 104.9 eWireless Metered 30.8 Denmark Finland Source: Organization for Economic Cooperation and Development (OECD), France 2000

Germany Italy Another important indicator of a country’s internet infrastructure is its The Netherlands number of secure socket layer (SSL) servers, which are essential for secure Norway e-commerce transactions. As the data below indicate, a tremendous Poland

Russia disparity exists in the number of secure servers among European countries, Spain and between Europe and the US. As of March 2000, Netcraft measured Sweden approximately five times as many secure servers per capita in the US as in United Kingdom the entire European Union area. The US had nine times more servers than Index of Charts France and over 15 times more than Italy.

Most and Least eCommerce-Ready Countries in Europe, March 2000 (by secure servers per million inhabitants)

Most eCommerce Ready Sweden 71.0

UK 55.2

Finland 54.4

Norway 49.3

Denmark 39.8

Germany 34.5

Least eCommerce Ready Netherlands 29.4

France 18.0

Spain 15.6

Italy 10.8

Poland 3.1

Source: Netcraft, 2000

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Methodology The growth of secure servers has been much more rapid over the past Economy, Infrastructure, Users several years in the US than in Europe. As the following indicates, the rate eCommerce of growth in the US exceeds that of even internet-advanced Scandinavia. eAdvertising eFinance eWireless Secure Servers per Million Inhabitants in Scandinavia Denmark and the US, 1997–2000 Finland 200 Scandinavia France 170.4 US Germany 147.7 Italy

The Netherlands

Norway 116.0

Poland 89.9 Russia 100 Spain Sweden 60.8 58.0 United Kingdom 51.4 40.9 Index of Charts 35.8 27.6 26.4 16.6 8.9 5.0

Sep–97Feb–98 Aug–98 Feb–99 Jul–99 Jan–00 Mar–00 Source: Organization for Economic Cooperation and Development (OECD), 2000

Furthermore, just as the growth of internet hosts per capita is more rapid in countries with unmetered local internet access charges, so is the growth in the number of secure servers per capita. Simply put, e-commerce development tracks the capacity of potential customers to surf online for extended periods.

Secure Servers per Million Inhabitants in Unmetered and Metered OECD Countries, 1997–2000 150 Unmetered 122.9 Metered 106.6

83.0

64.6

60 43.8 30.1 20.0 18.3 21.0 12.5 5.5 9.2 2.0 3.4

Sep–97Feb–98 Aug–98 Feb–99 Jul–99 Jan–00 Mar–00 Source: Organization for Economic Cooperation and Development (OECD), 2000

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Methodology Content – the information that fills computer and PDA screens — is an Economy, Infrastructure, Users increasingly important component of the emerging European digital eCommerce economy. In a report released in 2000 by the European Commission (EC), eAdvertising eFinance Western Europe’s content sector – including media publishing, marketing, eWireless and advertising – was estimated to contribute 5%, or $394 billion, to the Denmark region’s GDP. The content industry is larger than its telecommunications Finland sector ($212 billion) and computer hardware and software ($181 billion) France

Germany industry, and employs 4 million Western Europeans. However, measured by

Italy the number of websites per 1,000 inhabitants, Europe lags behind the US. The Netherlands The median number of websites per capita in Europe is only about one-fifth Norway the number in the US. Poland Russia Websites per 1,000 Inhabitants in the US and Selected Spain European Countries, 2000 Sweden United Kingdom US Index of Charts 27.0

UK 15.2

Denmark 12.1

Germany 9.7

Netherlands 9.1

Sweden 8.5

Norway 6.4

Finland 5.8

Italy 1.4

Poland 1.2

France 1.1

Spain 0.7

Source: Netcraft, 2000

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Methodology Advanced websites use audio and video, and the amount of online Economy, Infrastructure, Users multimedia content in a country is an indicator of the maturity of its eCommerce internet and the sophistication of its websites. On this measure, Europe also eAdvertising eFinance lags behind the US. On just one indicator of multimedia capacity — the eWireless number of web-based radio stations per million inhabitants – the median Denmark for selected European countries was 2 per million, compared with 7 per Finland million in the US as of 1999. Similar disparities also exist for other France

Germany multimedia formats including music, films, advertisements and webcasts.

Italy Not surprisingly, the critical factor is the cost of remaining online to The Netherlands listen to a webcast or to download streaming video. Data analyzed by the Norway OECD suggest that suppliers of multimedia content have been more Poland inclined to locate their content in countries with unmetered internet Russia

Spain charges. The OECD observed that 79% of internet radio stations in member

Sweden countries were located in countries with unmetered internet access, while United Kingdom only 21% were located in countries with metered access. On a per capita Index of Charts basis there are five times as many internet radio stations in countries with unmetered internet access charges as in countries with metered access charges. As of February 2000, 73% of multimedia files were located in countries with unmetered internet access compared with 27% in countries with metered access. Finally, there were four times as many audio and video files located in countries with unmetered internet access as in countries with metered access.

Multimedia Content on the Internet in the US and Selected European Countries, 1999 Radio Radio Internet Internet stations stations multimedia multimedia on the web on the web files files per million per million inhabitants inhabitants US 1,922 7.0 159,653 578 Sweden 14 1.6 4,168 468 Norway 12 2.7 1,369 308 Finland 16 3.1 1,500 290 UK 73 1.2 1,587 256 Denmark 8 1.5 1,180 223 Netherlands 32 2.0 3,329 211 Germany 68 0.8 8,280 100 France 76 1.3 5,544 94 Spain 20 0.5 2,132 53 Italy 53 0.9 2,533 44 Poland 23 0.6 495 12 Source: Organization for Economic Cooperation and Development

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Methodology

Economy, Infrastructure, Users Multimedia Content on the Internet in Europe, 2000 eCommerce (as a % of countries with metered and unmetered eAdvertising internet access) eFinance eWireless

Denmark Unmetered Finland 27% France

Germany Italy Metered The Netherlands 73%

Norway

Poland

Russia

Spain Source: Organization for Economic Cooperation and Development (OECD), 2000 Sweden

United Kingdom

Index of Charts

C. Internet Users At present, there are 70.1 million adults actively using the internet in Europe. By 2004, this number will reach 254.9 million. This estimate takes into account forecasts of a moderate slowdown in the global economy from the past few high-growth years. However, if the US faces a more serious- than-expected recession in 2001 internet penetration is likely to proceed much more slowly, particularly in large portions of the region, like Russia and Eastern Europe, with nascent market economies.

Active Adult Internet Users 14+ in Europe, 2000–2004 (in millions) 300

254.9

206.5 200

152.7

107.8

70.1

2000 2001 2002 2003 2004 Source: eMarketer, 2001

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Methodology Research firms, government agencies, and non-government organizations Economy, Infrastructure, Users (NGOs) not only employ different methodologies for counting internet eCommerce users, but they also define the users differently and delineate Europe and eAdvertising eFinance Eastern Europe differently. eMarketer’s universe of internet users comprises eWireless individuals 14 years and older who use the internet for at least one hour per Denmark week. Our definition of Europe includes all of Western Europe, Eastern Finland Europe, the Baltic States, Russia, and the nations of the former Soviet France

Germany Union as enumerated by the US Census Bureau. For comparison, the

Italy following table compares eMarketer’s regional internet user estimate with The Netherlands 14 estimates from various private firms and NGOs. Norway Poland Comparative Estimates: Internet Users in Europe, Russia 1999–2005 (in millions) Spain Source Region 1999 2000 2001 2002 2003 2004 2005 Sweden

United Kingdom CommerceNet Europe – 70.0 – – – – – Index of Charts Computer Europe 37.9 – 49.5 – 62.3 – 76.6 Economics Computer Western – 87.7 – – – – 213.7 Industry Europe Almanac Eastern – 10.8 – – – – 45.5 Europe Datamonitor Europe 53.0 64.0 – 78.0 – – 88.0 eMarketer Europe – 70.1 107.8 152.7 206.5 254.9 – Fletcher Western 45.0 59.0 75.0 93.0 108.0 121.0 – Research Europe Iconocast Europe – 76.3 – – – – – IDC Western 81.4 – – – 210.8 – – Europe International Europe 70.26 – – – – – – Telecommun- ications Union Jupiter Western 57.9 71.6 87.0 103.0 112.0 – – Research Europe Eastern 5.8 9.0 13.0 17.9 24.1 – – Europe Morgan Western 48.0 64.0 76.0 91.0 100.0 110.0 – Stanley Europe Dean Witter NetSizer Europe – 57.94 – – – – – Simba Western 49.8 – – – – – – Europe Eastern 4.18 – – – – – – Europe Warburg Europe 63.0 87.0 114.0 136.0 – – – Dillon Read World Bank’s Eastern 2.5 3.7 5.3 7.3 9.7 12.5 – InfoDev Europe Source: eMarketer, 2001; various, as noted, 2000

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Methodology Despite a wide variation in the absolute values of the comparative internet Economy, Infrastructure, Users user estimates, the eMarketer projected growth rate for the region is eCommerce comparable to several other major market research firms, as the following eAdvertising eFinance figures show. eWireless Denmark Growth Rate of Internet Users in Europe, 1999-2005 Finland (in millions) France 300 Germany 254.9 259.2 Italy

The Netherlands

Norway

Poland

Russia

Spain

Sweden United Kingdom 150 Index of Charts 98.5 136.1

63.7 70.1 19992000 2001 2002 2003 2004 2005

eMarketer, 2001 Jupiter Research, 2000 Computer Industry Almanac, 2000 Source: eMarketer, 2001

Internet Users by Country Unlike the relatively homogenous US market, economic, technological, linguistic, and cultural differences among European nations have led to tremendous variations in the rates of internet use and e-commerce within the region. Of the four largest Western European nations, Germany and the UK have the most advanced internet economies, with Italy comparatively offline. The Scandinavian countries have highly developed internet markets, but much smaller populations. Russia’s internet is relatively undeveloped, as it is in the rest of Eastern Europe and the former Soviet countries.

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Methodology

Economy, Infrastructure, Users Internet Users by European Country, 2000–2004 eCommerce (in millions) eAdvertising Europe 2000 2001 2002 2003 2004 eFinance (West & East) eWireless Denmark 1.7 2.0 2.2 2.3 2.5 Denmark Finland 1.9 2.3 2.5 2.7 2.8 Finland France 6.0 7.4 8.3 9.1 9.7 France

Germany Germany 15.1 18.1 20.8 23.3 25.5 Italy Italy 5.4 6.0 6.4 6.8 7.0 The Netherlands Netherlands 4.0 4.4 4.8 5.0 5.2 Norway Norway 1.6 1.9 2.2 2.3 2.4 Poland

Russia Poland 1.6 2.1 2.5 3.0 3.4 Spain Russia 2.9 3.8 5.0 6.4 7.9 Sweden Spain 2.6 3.1 3.4 3.6 3.8 United Kingdom

Index of Charts Sweden 3.9 4.3 4.6 4.9 5.1 UK 16.1 19.1 21.4 22.8 23.9 Core Countries 62.8 74.5 84.1 92.2 99.2 Rest of Region 7.2 33.4 68.4 114.4 155.6 Europe Total 70.1 107.8 152.7 206.5 254.9 Source: eMarketer, 2001

As firms have sought to increase their visibility across borders, website localization has become a growing industry. As the internet attracts more and more users around the world, more of these individuals will speak a language other than English. Worldwide, 43% of internet users speak a language other than English, but that percentage is forecast to rise to 57% by 2005, according to Computer Economics. In Europe, as the following table shows, at least 12 different languages are the native tongues of millions of European internet users. As the Eastern European internet markets grow, the diversity of languages on the internet will increase. However, in Europe as in much of the world, many people speak or understand second languages well enough to navigate the web or even partake in online banter in those languages. A survey by the European Union shows that nearly half the population of the EU can converse in a language other than their native tongue. There are wide variations across the continent. More than 80% of Swedes, Danes and Dutch speak a second language well enough to converse in it. The British, on the other hand are the most linguistically homogenous in Europe – only 19% of UK residents and 28% of Irish citizens speak a language other than English well enough to carry on a conversation.

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Methodology The median internet penetration rate for 2000 among the European Economy, Infrastructure, Users countries below is 26%. Scandinavian countries have some of the highest eCommerce penetration rates in the region – and indeed the world — while Poland, eAdvertising eFinance Russia and the countries in Southern Europe and around the Mediterranean eWireless remain far below the median. Denmark Finland Active Internet Users 14+, 2000–2004 (as a % of France population 14+) Germany 2000 2001 2002 2003 2004 Italy

The Netherlands Sweden 53% 58% 63% 66% 68%

Norway Norway 45% 53% 59% 63% 66% Poland Finland 44% 52% 59% 62% 65% Russia Denmark 38% 44% 50% 53% 55% Spain

Sweden UK 33% 39% 43% 46% 48% United Kingdom Netherlands 31% 34% 36% 37% 39% Index of Charts Germany 21% 25% 29% 32% 35% France 12% 15% 17% 18% 20% Italy 11% 12% 13% 13% 14% Spain 7% 9% 10% 10% 11% Poland 5% 6% 8% 9% 10% Russia 2% 3% 4% 5% 6% Source: eMarketer, 2001

Currently, the US has the highest percentage of the world’s internet users. Over the next 2 years, as the rate of increase in US internet adoption slows and as European internet use continues to expand, Europe will have the lion’s share of the world’s internet users. In fact, as the following figure illustrates, by 2004, North America (largely the US) will assume third place behind both Europe and Asia Pacific.

Active Internet Users 14+ Worldwide, 2000-2004 (as a % of active internet users worldwide) 2000 2001 2002 2003 2004 North America 42% 37% 33% 29% 25% Europe 31% 35% 38% 40% 40% Asia Pacific 21% 21% 21% 23% 27% Latin America 4% 5% 6% 6% 6% Africa/Middle East 2% 2% 2% 2% 2% Worldwide 100% 100% 100% 100% 100% Source: eMarketer, 2001

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Methodology: The eMarketer Difference

I Economy,Infrastructure and Users II eCommerce 45 A. Overview 46 B. B2C eCommerce 54 C. B2B eCommerce 72 II D. eCommerce Barriers and Drivers 75 III eAdvertising

IV eFinance

V eWireless

VI Denmark

VII Finland

VIII France

IX Germany

X Italy

XI The Netherlands

XII Norway

XIII Poland

XIV Russia

XV Spain

XVI Sweden

XVII United Kingdom

Index of Charts

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Methodology A. Overview Economy,Infrastructure, Users eCommerce European e-commerce revenues will grow by a compound annual rate of eAdvertising 132% between 2000 and 2004.This rapid expansion of e-commerce activity eFinance depends on increased investment in information technology, steadily eWireless

Denmark increasing internet access, and public policies to make e-business more

Finland secure and appealing.

France Germany eCommerce in Europe, 2000–2004 (in billions) Italy 2000 (Total = $34.3) B2B B2C The Netherlands $26.2 Norway

Poland $8.1

Russia 2001 (Total = $68.9) Spain $52.4 Sweden $16.4 United Kingdom 2002 (Total = $169.7) Index of Charts $132.7 $37.0 2003 (Total = $415.8) $334.1 $81.7 2004 (Total = $979.6) $797.3 $182.3 Source: eMarketer, 2001

Europe continues to be a poor stepchild to the US when it comes to e- commerce activity, and will lag behind the US in e-commerce revenue over the next four years. However, the proportion of e-commerce dollars generated in Western Europe compared to the US will rise over the next several years, so that by 2004, Western European e-commerce will equal 61% of the total US e-commerce, and will amount to nearly one third of the world’s e-commerce dollars.

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Methodology

Economy,Infrastructure, Users eCommerce Revenues in Europe and the World, 2000– eCommerce 2004 (in billions) eAdvertising 2000 Global eCommerce eFinance $286 European eCommerce eWireless $34 (12%) (Europe as % of Global) Denmark 2001 Finland

France $550

Germany $69 (13%) Italy 2002 The Netherlands $1,007 Norway $170 (17%) Poland 2003 Russia $1,792 Spain $416 (23%) Sweden

United Kingdom 2004

Index of Charts $3,203 $980 (31%) Source: eMarketer, 2001

Germany and the UK will remain the European e-commerce powerhouses for at least the next four years, as the following table shows. In fact, the two countries represent more than half of the region’s total e-commerce dollars. And, although the Mediterranean countries continue to grow their internet markets, we do not forecast that France, Spain, or Italy will catch up with their northern neighbors over the next four years.

eCommerce Revenues in Europe,by Country, 2000–2004 (in billions) 2000 2001 2002 2003 2004 Denmark $1.1 $2.3 $5.7 $14.2 $32.0 Finland $2.0 $4.1 $10.0 $23.8 $53.6 France $3.6 $7.2 $18.1 $44.9 $109.0 Germany $9.5 $19.1 $47.9 $118.7 $288.4 Italy $1.7 $3.4 $7.6 $15.5 $31.0 Netherlands $2.7 $5.3 $13.3 $33.2 $74.7 Norway $1.1 $2.2 $5.5 $13.7 $30.8 Poland $0.2 $0.3 $0.6 $1.3 $2.9 Russia $0.2 $0.3 $0.6 $1.4 $3.1 Spain $0.6 $1.3 $2.9 $5.2 $11.8 Sweden $2.5 $5.0 $12.3 $31.0 $69.7 United Kingdom $8.8 $17.8 $44.4 $110.1 $267.5 Rest of Region $0.3 $0.6 $1.1 $2.4 $5.4 Source: eMarketer, 2001

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Methodology Poland and Russia remain the internet laggards in the region, with e- Economy,Infrastructure, Users commerce revenues in the hundreds of millions. Despite Russia’s size and eCommerce well-educated populace, its economy continues to flounder, and the eAdvertising eFinance memory of the 1998 financial crisis, during which ATMs were turned off eWireless and Visa cards were rendered useless, continues to make Russians wary of Denmark buying, banking, and selling online. And, like Russia, Poland’s low GDP Finland and underdeveloped telecommunications infrastructure has hindered e- France

Germany commerce growth.

Italy

The Netherlands eCommerce Revenues in Europe, 2000–2004 (by %

Norway share of country) Poland 2000 2001 2002 2003 2004 Russia Denmark 3.3% 3.3% 3.3% 3.4% 3.3% Spain Finland 5.9% 5.9% 5.9% 5.7% 5.5% Sweden

United Kingdom France 10.4% 10.5% 10.7% 10.8% 11.1% Index of Charts Germany 27.6% 27.8% 28.2% 28.5% 29.4% Italy 4.9% 4.9% 4.5% 3.7% 3.2% Netherlands 7.7% 7.7% 7.8% 8.0% 7.6% Norway 3.2% 3.2% 3.2% 3.3% 3.1% Poland 0.6% 0.5% 0.4% 0.3% 0.3% Russia 0.6% 0.5% 0.4% 0.3% 0.3% Spain 1.9% 1.9% 1.7% 1.4% 1.2% Sweden 7.2% 7.2% 7.2% 7.5% 7.1% United Kingdom 25.6% 25.8% 26.1% 26.5% 27.3% Rest of Region 1.0% 0.9% 0.7% 0.6% 0.5% Total 100% 100% 100% 100% 100% Source: eMarketer, 2001

eCommerce in Europe, 2000 (by % share of country) 2000 Denmark 3.3% Finland 5.9% France 10.4% Germany 27.6% Italy 4.9% Netherlands 7.7% Norway 3.2% Poland 0.6% Russia 0.6% Spain 1.9% Sweden 7.2% United Kingdom 25.6% Rest of Region 1.0% Total 100% Source: eMarketer, 2001

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Methodology As the following table indicates, B2B e-commerce continues to represent Economy,Infrastructure, Users the lion’s share of total e-commerce revenue in each European country we eCommerce have analyzed. eAdvertising eFinance eWireless eCommerce Revenues by Country, 2000–2004 Denmark (in billions) Finland 2000 2001 2002 2003 2004 France Denmark Germany

Italy B2B $0.8 $1.6 $4.3 $11.2 $25.6

The Netherlands B2C $0.3 $0.6 $1.4 $3.0 $6.4 Norway Total eCommerce $1.1 $2.3 $5.7 $14.2 $32.0 Poland Finland Russia

Spain B2B $1.6 $3.3 $8.8 $21.4 $49.3

Sweden B2C $0.4 $0.7 $1.2 $2.4 $4.3 United Kingdom Total eCommerce $2.0 $4.1 $10.0 $23.8 $53.6 Index of Charts France B2B $2.5 $5.4 $13.9 $35.4 $87.2 B2C $1.1 $1.8 $4.2 $9.4 $21.8 Total eCommerce $3.6 $7.2 $18.1 $44.9 $109.0 Germany B2B $7.2 $14.4 $36.9 $93.8 $230.7 B2C $2.3 $4.8 $11.0 $24.9 $57.7 Total eCommerce $9.5 $19.1 $47.9 $118.7 $288.4 Italy B2B $1.4 $3.0 $6.7 $14.0 $28.2 B2C $0.3 $0.4 $0.8 $1.6 $2.8 Total eCommerce $1.7 $3.4 $7.6 $15.5 $31.0 Netherlands B2B $1.9 $3.8 $10.0 $26.2 $59.7 B2C $0.8 $1.5 $3.3 $7.0 $14.9 Total eCommerce $2.7 $5.3 $13.3 $33.2 $74.7 Norway B2B $0.8 $1.6 $4.0 $10.8 $25.6 B2C $0.3 $0.6 $1.5 $2.9 $5.2 Total eCommerce $1.1 $2.2 $5.5 $13.7 $30.8 Poland B2B $0.2 $0.3 $0.5 $1.2 $2.6 B2C $0.0 $0.0 $0.1 $0.1 $0.2 Total eCommerce $0.2 $0.3 $0.6 $1.3 $2.9 Russia B2B $0.2 $0.3 $0.6 $1.2 $2.8 B2C $0.0 $0.0 $0.1 $0.1 $0.3 Total eCommerce $0.2 $0.3 $0.6 $1.4 $3.1

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Methodology

Economy,Infrastructure, Users Spain eCommerce B2B $0.6 $1.1 $2.6 $5.3 $10.8 eAdvertising B2C $0.1 $0.2 $0.3 $0.6 $1.1 eFinance Total eCommerce $0.6 $1.3 $3.0 $5.9 $11.8 eWireless

Denmark Sweden

Finland B2B $1.8 $3.7 $9.4 $24.5 $55.8 France B2C $0.6 $1.2 $2.9 $6.5 $14.0 Germany Total eCommerce $2.5 $5.0 $12.3 $31.0 $69.7 Italy

The Netherlands United Kingdom Norway B2B $7.0 $13.3 $34.2 $87.0 $214.0 Poland B2C $1.8 $4.4 $10.2 $23.1 $53.5 Russia Total eCommerce $8.8 $17.8 $44.4 $110.1 $267.5 Spain

Sweden Rest of Region United Kingdom B2B $0.3 $0.5 $1.0 $2.1 $4.9 Index of Charts B2C $0.1 $0.1 $0.1 $0.2 $0.4 Total eCommerce $0.3 $0.6 $1.1 $2.4 $5.4 Total Europe B2B $26.2 $52.4 $132.7 $334.1 $797.3 B2C $8.1 $16.5 $37.1 $81.8 $182.5 Total eCommerce $34.3 $68.9 $169.8 $416.0 $979.8 Source: eMarketer, 2001

Forecasting e-commerce activity is made difficult by the lack of longitudinal data on internet use and online buying habits. Uncertainty is only increased by the advent of novel business models and consolidation and failures of dot-com businesses. The range and variability of market estimates become apparent when one compares several side by side, as we do throughout this report. In computing eMarketer’s forecasts of e-commerce revenue we have attempted to normalize data from other research firms, but the comparative figures we publish are unadjusted estimates reported in various reports, articles, and papers. While we have made every effort to compare apples to apples, each research firm employs different economic assumptions, uses different data and methodologies, and covers somewhat different geographical regions. For example, Forrester Research has made some of the rosiest predictions of e-commerce growth in Europe, forecasting that online revenues will grow at triple-digit rates to reach $1.66 trillion by 2004, from $88 billion in 2000. The Forrester model assumes that e-commerce follows the same path of diffusion as other technologies — an s-shaped curve that approaches a theoretical saturation point for each country.

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Methodology Forrester estimates that adoption of e-commerce occurs rapidly (along the Economy,Infrastructure, Users steeply rising part of the s-curve) once the online market in a country eCommerce reaches 10% of the theoretical saturation level. The data underpinning the eAdvertising eFinance Forrester model are derived from interviews with marketing and eWireless purchasing business leaders, along with detailed modeling of key industries Denmark on a country-by-country basis. Finland France eCommerce Revenues in Europe, 2000–2004 Germany (in billions) Italy

The Netherlands 2000 (Total = $87.9) B2B B2C

Norway $78.8

Poland $9.1 Russia 2001 (Total = $199.5) Spain $175.6 Sweden $23.9 United Kingdom 2002 (Total = $441.3) Index of Charts $382.0 $59.3 2003 (Total = $910.4) $778.4 $132.0 2004 (Total = $1,659.0) $1,410.7 $248.3 Source: Forrester Research, 1999

At the other end of the spectrum is the International Data Corporation (IDC). IDC’s forecasts have tended to be significantly more conservative than Forrester’s. In part, this is because IDC relies more heavily on data gathered from online buyers rather than corporate leaders (who may be considered either overly optimistic or particularly insightful). IDC has forecast that total e-commerce for Western Europe will reach $511.1 billion by 2003, a little more than half the size of Forrester’s estimate. According to IDC, Western Europe’s share of worldwide e-commerce grows from 21.9% in 1999 to 39.3% in 2002, before falling to 34.1% in 2003

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Methodology

Economy,Infrastructure, Users eCommerce Revenues in Europe, 1999–2003 eCommerce (in billions) eAdvertising 1999 Worldwide eFinance $111.4 Western Europe eWireless $24.4 (21.9%) (as % of Worldwide) Denmark 2000 Finland

France $217.8

Germany $69.5 (31.9%) Italy 2001 The Netherlands $398.1 Norway $151.8 (38.1%) Poland 2002 Russia $733.6 Spain $288.5 (39.3%) Sweden

United Kingdom 2003

Index of Charts $1,497.0 $511.1 (34.1%) Source: International Data Corp. (IDC), 2000

IDC’s year 2000 estimates country-by-country show Germany and the UK as comprising 55% of the region’s total e-commerce revenues. Not surprisingly, countries in the Mediterranean region have relatively less developed e-commerce markets.

eCommerce Revenues in Selected Countries in Western Europe, 2000 (in billions) Country Billions % of Total Germany $20.9 30% UK $17.4 25% France $4.9 7% Italy $4.9 7% Netherlands $4.2 6% Sweden $3.5 5% Austria $2.1 3% Spain $2.1 3% Switzerland $2.1 3% Belgium $1.4 2% Denmark $1.4 2% Finland $1.4 2% Norway $1.4 2% Greece $0.7 1% Ireland $0.7 1% Portugal $0.7 1% Total $69.6 100% Source: International Data Corp. (IDC), 2000

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Methodology Warburg Dillon Read’s forecast is close to IDC’s. Warburg predicts Economy,Infrastructure, Users e-commerce spending in Western Europe will grow from $18.9 billion in eCommerce 1999 to $223 billion by year-end 2002, figures that are approximately half eAdvertising eFinance as large as Forrester’s. eWireless Denmark eCommerce Revenues in Europe, by Country, 2002 Finland (in billions) France Germany $62.8 Germany UK $47.6 Italy

The Netherlands France $28.5

Norway Italy $18.1 Poland Netherlands $12.6 Russia Sweden $8.7 Spain

Sweden Spain $8.0 United Kingdom Switzerland $7.8 Index of Charts Austria $5.8 Denmark $5.2 Norway $4.7 Belgium $4.4 Finland $3.7 Portugal $1.8 Ireland $1.7 Greece $1.7 Total $223.0 Source: Warburg Dillon Read, 2000

One of the smallest estimates comes from ProActive International’s Pan European Internet Monitor. The ProActive study tracks internet use in 14 countries:Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Italy, Norway, Spain, Sweden, Switzerland, the Netherlands and the United Kingdom. The research relies on a combination of more than 150,000 online surveys – a method that can result in a skewed sample – as well as telephone and face-to-face interviews among a statistically representative sample of 14,500 Europeans who are15 and older. Based on its May 2000 study, ProActive estimates that the total number of “private” (i.e., B2C) purchases will be 200 million for year 2000, averaging 106 Euros ($93) each, adding up to approximately 21 billion Euro ($19 billion). Approximately 2/3 of these purchases are estimated to come from internet users in the UK or Germany, 11% from Scandinavia, 5% from Switzerland, 4% from the Netherlands, and 3% each from France, Italy and Spain.

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Methodology The Pan European Internet Monitor estimated that over the year 2000, Economy,Infrastructure, Users businesses in Europe would make 80 million online purchases, averaging eCommerce 339 Euro ($298) apiece, adding up to approximately 28 billion Euro ($25 eAdvertising eFinance billion). Approximately 60% of these purchases will be made in Germany eWireless and the UK, with Scandinavia accounting for 14% of the value of European Denmark business purchases, versus 6% for both Switzerland and the Netherlands, Finland 5% for both France and Italy and 2% for Spain and 1% for Belgium. France

Germany

Italy eCommerce in Europe, 2000 (in billions)

The Netherlands

Norway B2C Purchases in Europe $19.0

Poland B2B Purchases in Europe $25.0 Russia Spain Source: ProActive International, 2000 Total = $44.0 Sweden

United Kingdom

Index of Charts

B. B2C eCommerce Since the last eEurope report, we have revised our forecast of B2C e-commerce revenue upward. As long as the region’s internet use continues to grow, mobile e-commerce develops, and basic economic conditions remain healthy, retail e-commerce spending should increase exponentially from 2000 to 2004, as the following graph illustrates.

European B2C eCommerce Revenues, 2000–2004 (in billions) 2000 2000 Report 2001 Report $6.4 $8.1 2001 $11.4 $16.4 2002 $25.2 $37.0 2003 $63.0 $81.7 2004 $182.3 Source: eMarketer, 2000

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Methodology Notwithstanding anticipated growth over the next four years, only a small Economy,Infrastructure, Users number of European internet users are currently buying online. Surveys eCommerce such as the European Commission’s Eurobarometer survey show that eAdvertising eFinance buying is low on the list of activities Europeans engage in online. Passive eWireless e-commerce activities – searching for product information, comparison Denmark shopping, registering on commerce sites, and paying bills – tend to be more Finland popular, as illustrated by similar results uncovered by the European Union’s France

Germany Electronic Commerce and Telework Trends (ECaTT) pan-Europe survey,

Italy conducted by the firm empirica.

The Netherlands Norway Online Activities of Europeans, among countries in Poland the European Union, 2000 Russia eMail 69% Spain Educational searches 47% Sweden

United Kingdom Product searches 47%

Index of Charts Downloading free software 43% Sports/leisure searches 42% Holiday searches 38% Online newspapers 31% Computer games 28% Financial transactions 25% Job searches 23% Health searches 23% Listening to radio or music 21% Local authority website 19% Museum website 18% Government websites 15% Buying CDs 14% Buying books 14% Building websites 11% Political party websites 10% Purchasing software 9% Making phone calls 9% Responding to polls 8% Purchasing stocks or shares 7% Watching TV Channels 6% Bidding in online auctions 4% Video-conferencing 3% Something else (spontaneous) 5% Don’t know 4% Source: European Commission, Eurobarometer 53, 2000

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Methodology

Economy,Infrastructure, Users Internet Users in Europe Engaging in eCommerce- 1 eCommerce Related Activities, 1999 & 2001 eAdvertising All Users All Users eFinance 1999 2001 eWireless Searching for information about suppliers 14.2 24.2 Denmark Searching for travel information 14.2 25.1 Finland

France Searching for price information 13.9 24.5

Germany Searching for information on the availability of tickets 7.5 21.3 Italy Online game-playing 7.4 14.3 The Netherlands Getting information from the bank 6.4 19.1 Norway

Poland Registering as website user 4.9 15.4 Russia Viewing/downloading price information 4.5 14.1 Spain Making money transfers 4.4 15.0 Sweden Making payments online 4.3 10.4 United Kingdom

Index of Charts Ordering books/cds/videos 4.3 16.8 Ordering train/hotel tickets 4.0 19.5 Ordering computer software and hardware 3.9 15.2 Ordering admission tickets 3.3 19.0 Ordering other things 2.8 16.2 Ordering paid online services 2.4 12.0 Ordering groceries, clothes, appliances 1.7 9.9 1Includes Denmark, Finland, France, Germany, Ireland, Italy, Netherlands, Spain, Sweden, and the UK Source: empirica, 2000, for ECaTT project

Empirica’s survey also found that the median percentage of internet users who had previously shopped online was 17.5% in 1999. When asked if they intend to shop online by 2001, 33.9% of the survey respondents replied “yes.” Of course, surveys that simply ask one’s intention (e.g., “do you intend to eat less fattening foods?”) are often fraught with bias as respondents say what they think is an appropriate answer regardless of their actual commitment.

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Methodology

Economy,Infrastructure, Users % of European Internet Users Who Have Shopped eCommerce Online in 1999 and Who Say They Intend to Shop eAdvertising Online in 2001 eFinance 1999 2001 eWireless Denmark 19.2% 42.5% Denmark Finland 17.9% 43.9% Finland

France France 19.9% 35.3% Germany Germany 13.8% 26.5% Italy Ireland 12.4% 29.5% The Netherlands

Norway Italy 8.3% 17.7%

Poland Netherlands 22.4% 41.2% Russia Spain 5.9% 15.0% Spain Sweden 25.7% 54.2% Sweden

United Kingdom UK 17.0% 32.4%

Index of Charts Median 17.5% 33.9% Source: empirica, 2000

Internet Users Shopping Online in Selected European Countries,1998–2002 1998 1999 2000 2001 2002 Germany 13.1% 19.5% 25.3% 30.3% 38.3% United Kingdom 17.2% 18.5% 24.1% 28.6% 35.9% France 11.7% 17.0% 21.5% 26.1% 33.6% Denmark 10.9% 17.6% 22.7% 28.8% 36.8% Italy 7.7% 13.6% 18.1% 23.5% 28.7% Netherlands 14.0% 17.5% 22.0% 27.5% 34.5% Finland 13.2% 18.4% 22.7% 28.7% 36.8% Sweden 13.6% 18.4% 22.7% 28.7% 36.8% Norway 15.1% 17.4% 22.5% 28.4% 36.4% Spain 11.8% 14.7% 17.7% 23.7% 30.8% European average 12.5% 17.0% 22.0% 27.1% 34.2% Source: Jupiter Research/ Merrill Lynch, 1999

Other studies have measured more modest online shopping activity. In its Face of the Web survey, Angus Reid estimated the proportion of all adults in numerous countries who shop online. For Western Europe, the figure was 11.5%, with as few as 3% of Italian and 5% of French adults shopping via the web. In Poland and Russia, only 1% of the countries’ population shopped online. Keep in mind, however, that because these figures are percentages of the entire population (on- and offline), it reflects a much higher percentage of the subset of internet users who shop online.

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Methodology

Economy,Infrastructure, Users % of Adults Who Have Shopped Online, 2000 eCommerce Sweden eAdvertising 21% eFinance Switzerland eWireless 19% Denmark

Finland Germany

France 14%

Germany Finland

Italy 13% The Netherlands UK Norway 12% Poland Netherlands Russia 11% Spain Belgium Sweden 6% United Kingdom France Index of Charts 5% Italy 3% Spain 2% Median W. Europe 11.5% Poland 1% Russia 1% Median Europe 8.5% Source: Angus Reid Group, Inc., 2000

The propensity to buy online is different from the propensity to shop online. Only a portion – in some countries, as little as a fifth — of those internet users who browse for products online actually buy online, as Nielsen//NetRatings statistics show.

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Methodology

Economy,Infrastructure, Users Internet Users Age 16+ Browsing and Shopping eCommerce Online within Previous 6 Months, 2000 eAdvertising Browsing for Purchasing eFinance Products Online Products Online eWireless Denmark 31% 11% Denmark Finland 22% 9% Finland

France France 5% 2%

Germany Germany 18% 10% Italy Italy 6% 2% The Netherlands Netherlands 18% 5% Norway

Poland Norway 23% 10% Russia Spain 5% 1% Spain Sweden 31% 17% Sweden UK 14% 9% United Kingdom

Index of Charts Source: Nielsen//NetRatings, 2000

Studies of purchasing habits also vary by the buying parameters measured. For example, according to research by Taylor Nelson Sofres International (TNSI), the median percentage of internet users who purchased something online in the previous month was 11.5% for the countries they surveyed, a useful statistic if one is marketing to currently active web buyers. Compared to the Nielsen figures, which measure the percent of users purchasing something within the previous six months, the TNSI statistics may reflect a population of newer web buyers or more frequent web buyers likely to have purchased something in the previous month because they often shop online.

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Methodology

Economy,Infrastructure, Users Users Who Have Bought Goods or Services Online eCommerce Previous Month, 2000 eAdvertising Belgium eFinance 11% eWireless Denmark Denmark 16% Finland France France 7% Germany

Italy Germany

The Netherlands 17%

Norway Great Britain Poland 18% Russia Italy Spain 7% Sweden Netherlands United Kingdom 12% Index of Charts Norway 19% Portugal 10% Spain 7% Median Western Europe 11.5% Source: Taylor Nelson Sofres, 2000

The figures below from IDC and ProActive, are percentages of all internet users who had purchased online as of year-end 1999 and 2000, respectively, and so reflect a wider segment of the online buying population. Curiously, the ProActive figures are lower than IDC’s, even though IDC’s data are for 1999 and ProActive’s Pan European Internet Monitor was published in May 2000. The drop is more likely to be a mere statistical artifact than an actual drop in online buyers.

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Methodology

Economy,Infrastructure, Users Online Buyers in Selected Countries, Year-End 1999 eCommerce (as a % of internet users) eAdvertising UK eFinance 19% eWireless Germany Denmark 17% Finland Sweden France 16% Germany

Italy Western Europe Average

The Netherlands 15%

Norway Denmark Poland 15% Russia Norway Spain 15% Sweden Netherlands United Kingdom 14% Index of Charts Finland 14% Italy 12% France 11% Spain 9% Source: International Data Corp. (IDC), 2000

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Methodology

Economy,Infrastructure, Users Percent of Internet Users Who Have Ever Purchased eCommerce Online, 2000 eAdvertising Europe Median eFinance 9.8% eWireless Austria Denmark 8.1% Finland Belgium France 3.4% Germany

Italy Denmark

The Netherlands 17.9%

Norway Finland Poland 12.5% Russia France Spain 3.7% Sweden Germany United Kingdom 9.8% Index of Charts Ireland 3.1% Italy 2.9% Netherlands 13.2% Norway 13.1% Poland 0.3% Spain 1.8% Sweden 23.6% Switzerland 17.2% UK 13.1% Source: Proactive International, Pan European Internet Monitor, May 2000

Forecasting into the future, one can assume that a higher percentage of internet users will buy online, as the internet user population becomes more comfortable with internet shopping, as laws and regulations are adopted protecting consumers, as more goods and services are offered online, and as internet merchants make their websites easier to use. As the following figure shows, IDC predicts that by 2003, 37% of internet users will purchase online.

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Methodology

Economy,Infrastructure, Users Internet Buyers, 2000–2003 (as % a of all internet eCommerce users in W. Europe) eAdvertising eFinance 37% eWireless

Denmark

Finland France 31% Germany

Italy

The Netherlands

Norway 25% Poland

Russia

Spain Sweden 20% United Kingdom Index of Charts 2000 2001 2002 2003 Source: International Data Corp. (IDC), 2000

Web Users and Web Buyers in Major European Countries 2002, (in millions) Germany 32.9 8.6 (26%) France 23.0 5.6 (24%) United Kingdom 23.0 5.9 (26%) Italy 13.3 3.3 (25%) Spain 8.4 Web users 2.0 (24%) Web buyers Nordic (buyers as % of users) 10.8 3.4 (31%) Benelux 11.0 2.8 (25%)

Source: European Information Technology Observatory (EITO), 2000

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Methodology For eMarketer’s analysis of consumer online spending in Europe, we have Economy,Infrastructure, Users made an even more conservative assumption than either IDC or EITO, eCommerce projecting that the average percentage of active internet users in Europe eAdvertising eFinance who buy online will grow from 14% in 2000 to one-quarter (25%) of all eWireless internet users by 2004. Denmark Finland Number of Active Internet Users in Europe Purchasing France Online, 2000–2004 (in millions) Germany Italy 2000 9.8 (14%) The Netherlands

Norway 2001 16.2 (16%)

Poland

Russia 2002 22.9 (18%)

Spain 2003 41.3 (20%) Sweden United Kingdom 2004 63.7 (25%) Index of Charts Source: eMarketer, 2001

The amount each internet buyer spends per year is forecast to increase from $821 to $2,865 over the next four years, as the following figure illustrates. By comparison, empirica’s survey research found that the median online spending in eight European countries in 1999 was $783 for the year, a figure that is roughly comparable to eMarketer’s 2000 estimate. IDC’s estimate of $1,045 for 2000 (for Europe without Poland and Russia included) is higher than eMarketer’s, but the firm’s forecast to 2004 assumes slower growth in B2C spending per internet user.

Average Annual B2C Expenditure per Year per Internet User in Europe, 2000–2004

2000 $821

2001 $1,019

2002 $1,619

2003 $1,981

2004 $2,865

Source: eMarketer, 2001

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Methodology

Economy,Infrastructure, Users Average Monthly and Yearly B2C Online Spending per eCommerce Buyer in Selected Countries, 1999 eAdvertising Denmark eFinance $1,221 eWireless Finland Denmark $877 Finland Italy France $814 Germany

Italy France

The Netherlands $793

Norway UK Poland $773 Russia Germany Spain $762 Sweden Spain United Kingdom $616 Index of Charts Sweden $386 Median $783 Source: empirica, 2000

Average Annual per Capita Internet Spending by European Country, 2000–2004 2000 2001 2002 2003 2004 Denmark $1,144 $1,429 $1,619 $1,799 $1,982 Finland $820 $1,042 $1,246 $1,404 $1,538 France $845 $1,056 $1,257 $1,394 $1,549 Germany $1,031 $1,264 $1,482 $1,630 $1,788 Italy $869 $1,063 $1,155 $1,200 $1,288 Netherlands $774 $1,038 $1,218 $1,334 $1,475 Norway $1,331 $1,602 $1,820 $2,024 $2,193 Spain $718 $866 $929 $961 $993 Sweden $1,067 $1,302 $1,475 $1,672 $1,848 UK $1,225 $1,415 $1,528 $1,623 $1,728 Western Europe Ave. $1,045 $1,243 $1,383 $1,478 $1,591 eMarketer extrapolation from quarterly data in Euros at conversion rate of .88 Euros/Dollar Source: International Data Corp. (IDC), 2000; eMarketer, 2000

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Methodology As in the rest of the world, the value of B2C e-commerce in Europe is Economy,Infrastructure, Users significantly smaller than the value of B2B transactions. As the following eCommerce figure illustrates, retail (B2C) e-commerce represents less than a quarter of eAdvertising eFinance Europe’s total e-commerce revenue in 2000, dropping to less than one-fifth eWireless by 2004 because of a quicker pace of growth in the B2B sector. Denmark Finland B2C Share of Total eCommerce in Europe, 2000–2004 France

Germany 2000

Italy 23% The Netherlands 2001 Norway 24% Poland

Russia 2002 Spain 22% Sweden 2003 United Kingdom

Index of Charts 20% 2004 19%

Source: eMarketer, 2001

Despite the evolution of retail e-commerce, B2C sales still account for only a very small share of overall retail transactions. The Boston Consulting Group (BCG) estimated that in the Nordic countries, 1999 e-commerce revenues amounted to about 0.4% of retail sales, with B2C e-commerce in Sweden topping the list at 0.7% of total sales. By comparison, the BCG has estimated that online sales are 1.2% of total retail sales in the United States. Of course, for some products – like insurance, computers, books and music — internet sales account for a higher percentage of total sales. In contrast, the OECD reports that European B2C revenues are approximately 0.2% of all retail sales in the region, though in some countries (Sweden, the Netherlands, and the UK) the percentage is higher.

eCommerce Revenues, by Country The European countries with the largest B2C markets are, not surprisingly, Germany and the UK, followed by France. The smaller populations of Scandinavia are well-wired, but simply generate less retail e-commerce revenue in total.

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Methodology

Economy,Infrastructure, Users B2C eCommerce Revenues by Country, 2000–2004 eCommerce (in billions) eAdvertising 2000 2001 2002 2003 2004 eFinance Denmark $0.3 $0.6 $1.4 $3.0 $6.4 eWireless Finland $0.4 $0.7 $1.2 $2.4 $4.3 Denmark

Finland France $1.1 $1.8 $4.2 $9.4 $21.8 France Germany $2.3 $4.8 $11.0 $24.9 $57.7 Germany Italy $0.3 $0.4 $0.8 $1.6 $2.8 Italy Netherlands $0.8 $1.5 $3.3 $7.0 $14.9 The Netherlands

Norway Norway $0.3 $0.6 $1.5 $2.9 $5.2 Poland Poland $0.0 $0.0 $0.1 $0.1 $0.2 Russia Russia $0.0 $0.0 $0.1 $0.1 $0.3 Spain Spain $0.1 $0.2 $0.3 $0.6 $1.1 Sweden

United Kingdom Sweden $0.6 $1.2 $2.9 $6.5 $14.0 Index of Charts United Kingdom $1.8 $4.4 $10.2 $23.1 $53.5 Rest of Region $0.1 $0.1 $0.1 $0.2 $0.4 Source: eMarketer, 2001

According to data from IDC, the majority (59%) of these e-commerce dollars are being spent on five categories of goods that are, for various reasons, particularly suited to online sales. Computer hardware is 24% of the European B2C market because the goods have a relatively high value per unit, are easily specifiable, and because early internet adopters (and those most likely to have advanced to internet shopping) tend to be computer “geeks” who buy computer equipment. Travel is another high value product category for which detailed and accurate descriptions (i.e., flight information and ticket prices) are more important than physical interaction with a sales person or the items themselves. Books, software, and music are also goods for which searching capabilities, low price, and relatively low shipping costs make them particularly suited for internet sales.

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Methodology

Economy,Infrastructure, Users eCommerce Expenditures by Product in Western eCommerce Europe, 1999 (as a % of total B2C expenditures) eAdvertising 1 Computer hardware 24% eFinance 2 Travel, transportation, tourism 17% eWireless 3 Books and Magazines 7% Denmark

Finland 4 Computer software and services 6% France 5 Music and videos 5% Germany 6 Appliances and electronics 4% Italy 7 Banking, finance, insurance 4% The Netherlands

Norway 8 Tickets and events 4% Poland 9 Clothing 4% Russia 10 Food, drink, tobacco 4% Spain

Sweden 11 Office equipment 3%

United Kingdom 12 Adult entertainment 3% Index of Charts 13 Other services 3% 14 Sports, toys, leisure 3% 15 Online news and reference 2% 16 Health and beauty 1% 17 Home and garden 1% 18 Cards, flowers, miscellaneous 1% 19 Cars and motors 1% Total 100% Source: International Data Corp. (IDC), 2000

One surprise is how low online banking ranked, despite the fact that moving fungible dollars and cents is a function well suited to the internet. A recent poll by Market and Opinion Research International (MORI) involving adults in Belgium, Germany, France, the United Kingdom, Italy, the Netherlands and Spain found that only one in twenty-five Europeans currently bank on-line, ranging from just 1% in Italy to 15% in the Netherlands. Moreover, in France, Spain, and Italy, a majority reported that they could not imagine ever banking on-line. Measuring by the number of purchases instead of the value produces a different product breakdown because some popular product categories, like books, generate less overall revenue per item than expensive products like airplane tickets and computers. According to ProActive International’s Pan European Internet Monitor, more than 40% of the number of all purchases made in Europe were for books and CDs. Travel and computer equipment (hardware and software) each accounted for little more than 5% of the number of B2C purchases made. National differences are discussed in the individual country sections. For example, Germans tend to buy more electronics online than other Europeans, while the Dutch buy the most music and CDs online, according to survey research by TNSI.

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Methodology

Economy,Infrastructure, Users Purchases among Internet Users Who Have Shopped eCommerce Online during Previous Month, 2000 (as a % of users eAdvertising purchasing items) eFinance Denmark France Germany Nethlds. Norway Spain UK eWireless Food 8% 11% 2% 3% 4% 6% 8% Denmark Clothes 8% 11% 19% 6% 9% 6% 10% Finland

France Jewelry 1% 0% 2% 1% 1% 0% 1% Germany Toys/games 5% 17% 2% 1% 3% 0% 6% Italy Music/CDs 12% 39% 19% 40% 21% 24% 19% The Netherlands Videos 5% 6% 4% 1% 5% 12% 3% Norway

Poland Books 28% 17%` 52% 38% 21% 35% 38%` Russia Sports equipment 2% 6% 0% 4% 4% 18% 1% Spain Furniture 3% 11% 2% 2% 3% 0% 1% Sweden

United Kingdom Electronics 12% 6% 13% 8% 8% 12% 6%

Index of Charts PC hardware 7% 17% 8% 7% 9% 24% 13% PC software 6% 17% 15% 12% 8% 41% 13% Business travel 3% 6% 0% 3% 0% 0% 3% Leisure travel 7% 44% 2% 9% 6% 24% 7% Tickets 5% 0% 2% 3% 2% 24% 9% Toiletries 2% 0% 0% 1% 0% 6% 0% Stocks 2% 17% 0% 2% 3% 6% 2% Car 0% 0% 2% 1% 1% 6% 1% Other 22% 0% 15% 14% 17% 12% 12% Source: Taylor Nelson Sofres Interactive, 2000

It is difficult to estimate precisely how much internet users spend on individual purchases. Research firms sometimes rely on the reported spending activity of survey respondents, a method that can result in significant recall bias. Survey results from the ECaTT project, asking respondents how much they spent purchasing online in 1999, suggests that the median quarterly expenditure online of internet buyers in Europe is $193, while Warburg Dillon Read forecasts that it will be $700 in 2002, more than 3 ? times that amount.

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Methodology

Economy,Infrastructure, Users Online Shopping Expenditure by Online Buyer, 1999 eCommerce Monthly Quarterly Yearly eAdvertising Denmark $102 $305 $1,221 eFinance Finland $73 $219 $877 eWireless

Denmark France $66 $198 $793 Finland Germany $64 $191 $762 France Italy $68 $204 $814 Germany Spain $51 $154 $616 Italy

The Netherlands Sweden $32 $97 $386 Norway UK $64 $193 $773 Poland Median $64 $193 $773 Russia

Spain Source: empirica, 2000 for ECaTT

Sweden United Kingdom Projected Average Quarterly Online Spending per Index of Charts Internet Buyer by Country, 2002 Denmark $877 Finland $701 France $625 Germany $822 Italy $371 Netherlands $699 Norway $937 Spain $285 Sweden $689 UK $928 Median $700 Source: Warburg Dillon Read, The Internet in Europe, Jan. 2000

Projecting sales revenue in a market as rapidly changing and as varied as online commerce can be difficult, especially given the large number of variables – from consumer behavior to legal protections to venture capital investments – that influence how people feel about online shopping and what goods are available for sale. Nevertheless, the comparative estimates of B2C revenues fall within a relatively small range, especially over the next few years.

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Methodology

Economy,Infrastructure, Users Comparative Estimates: B2C eCommerce Revenue in eCommerce Europe, 1999–2005 (in billions) eAdvertising 1999 2000 2001 2002 2003 2004 2005 eFinance eMarketer – $8.1 $16.4 $37.0 $81.7 $182.3 – eWireless Jupiter Research – $7.5 $13.8 –– –$60.0 Denmark

Finland Gartner Group $5.4 –––$115.0 –– France Forrester Research – $8.5 $19.2 $40.2 $74.8 $122.6 – Germany Boston Consulting – $8.9 –––– – Italy Group The Netherlands IDC $5.3 $12.0 $22.2 $37.4 $58.5 –– Norway

Poland Source: eMarketer, 2000; various, as noted

Russia Spain Mobile commerce has been held up as a technology that could vault Europe Sweden ahead of the US in online retail and financial transactions. According to United Kingdom research firm Ovum, Western Europe will exceed North America in both Index of Charts total mobile commerce revenue and per subscriber monthly expenditures. However, wireless application protocol (WAP) phones only allow people with advanced handsets access to a sample of internet functions and a subset of websites. Moreover, WAP applications to date have been limited in functionality, are often clunky to use, and are not available in all markets. As a result, overall e-commerce revenues are unlikely to be dramatically altered by mobile phone purchases for the next few years.

Worldwide Mobile Commerce Revenues, 2000–2005 (in billions) 2000 2001 2002 2003 2004 2005 North America $1 $4 $9 $19 $32 $47 Western Europe $1 $5 $14 $29 $49 $74 Rest of World $2 $7 $16 $35 $59 $90 Total $4 $16 $39 $83 $140 $211 Source: Ovum, March 2000

Worldwide Mobile Commerce Revenues, 2000–2005 (in billions) Region 2000 2001 2002 2003 2004 2005 North America – $0.1 $0.2 $0.7 $1.8 $3.5 Western Europe – $0.1 $0.5 $1.7 $4.6 $7.8 Asia $0.4 $1.3 $2.6 $5.0 $7.4 $9.4 Latin America ––– $0.1 $0.2 $0.5 Other –– $0.1 $0.2 $0.4 $1.0 Global $0.4 $1.5 $3.4 $7.6 $14.5 $22.2 Source: Jupiter Research, 2000 (cited in cyberatlas)

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Methodology

Economy,Infrastructure, Users Average Monthly per-Subscriber mCommerce eCommerce Purchase in Western Europe, 2000–2005 eAdvertising eFinance 2000 $14 eWireless 2001 $18 Denmark

Finland 2002 $23 France Germany 2003 $28 Italy The Netherlands 2004 $33 Norway

Poland 2005 $37

Russia Source: Ovum, March 2000 Spain

Sweden

United Kingdom

Index of Charts C. B2B eCommerce The B2B sector will grow exponentially over the next four years, from $26 billion in 2000 to $797 billion in 2004. However, based on a revised model, including a tempered estimate of the maturation of vertical marketplaces, our estimated revenues are slightly smaller over the next few years than we projected in the previous eEurope report.

B2B eCommerce Revenues in Europe, 2000–2004 (in billions) 2000 eMarketer 2000 eMarketer 2001 $27.2 $26.2 2001 $55.8 $52.4 2002 $142.9 $132.7 2003 $357.2 $334.1 2004 $797.3 Source: eMarketer, 2001

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Methodology The majority of e-commerce revenues worldwide come from business to Economy,Infrastructure, Users business transactions. Over time, the B2B share of total e-commerce in eCommerce Europe will increase further, from 77% of total e-commerce in 2000 to 81% eAdvertising eFinance in 2004. eWireless

Denmark B2B Share of Total eCommerce in Europe, 2000–2004

Finland

France 2000 77%

Germany

Italy 2001 76%

The Netherlands 2002 78% Norway

Poland 2003 80% Russia Spain 2004 81% Sweden United Kingdom B2B Share of Total eCommerce Index of Charts Source: eMarketer, 2001

As the following data illustrate, the countries with the largest B2B revenues are Germany, the UK, and France, large economic powerhouses in the region. But there is tremendous potential for growth in the B2B sector throughout Europe. B2B represents 12.5% of GDP on average throughout Europe, according to Durlacher. Germany comes in fifth among nations surveyed by Durlacher, suggesting that its B2B e-commerce has a long way to grow.

B2B eCommerce Revenues by Country, 2000–2004 (in billions) 2000 2001 2002 2003 2004 Denmark $0.8 $1.6 $4.3 $11.2 $25.6 Finland $1.6 $3.3 $8.8 $21.4 $49.3 France $2.5 $5.4 $13.9 $35.4 $87.2 Germany $7.2 $14.4 $36.9 $93.8 $230.7 Italy $1.4 $3.0 $6.7 $14.0 $28.2 Netherlands $1.9 $3.8 $10.0 $26.2 $59.7 Norway $0.8 $1.6 $4.0 $10.8 $25.6 Poland $0.2 $0.3 $0.5 $1.2 $2.6 Russia $0.2 $0.3 $0.6 $1.2 $2.8 Spain $0.6 $1.1 $2.6 $5.3 $10.8 Sweden $1.8 $3.7 $9.4 $24.5 $55.8 United Kingdom $7.0 $13.3 $34.2 $87.0 $214.0 Rest of Region $0.3 $0.5 $1.0 $2.1 $4.9 Source: eMarketer, 2001

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Methodology

Economy,Infrastructure, Users B2B eCommerce Revenues in Europe by Country, 2000 eCommerce (as a % of total B2B e-commerce in Europe) eAdvertising Germany 27% eFinance United Kingdom 27% eWireless France 10% Denmark

Finland Netherlands 7% France Sweden 7% Germany Finland 6% Italy

The Netherlands Italy 5%

Norway Denmark 3% Poland Norway 3% Russia Spain 2% Spain

Sweden Rest of Region 1%

United Kingdom Poland 1% Index of Charts Russia 1% Total 100% Source: eMarketer, 2001

B2B eCommerce in Europe by Country (as a % of GDP)

Sweden 23.5% Finland 22.5% UK 18.5% Denmark 18.0% Germany 17.0% France 9.0% Italy 4.0% Europe Average 12.5% Source: Durlacher Research, 2000

eMarketer’s estimates of B2B e-commerce are significantly more conservative than the forecasts of other research firms, as the figure below illustrates. Growth will follow an exponential path, but not ramp up significantly until 2004. As a result, our estimated B2B revenues for 2000 are less than half as large as Forrester’s and Durlacher’s, and our out-year forecasts are more modest, too. We also believe that e-commerce will take several years to diffuse to small and medium size enterprises.

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Methodology

Economy,Infrastructure, Users Comparative Estimates: B2B eCommerce in Europe, eCommerce 1999–2005 (in billions) eAdvertising 1999 2000 2001 2002 2003 2004 2005 eFinance eMarketer 2001 – $26.2 $52.4 $132.7 $334.1 $797.3 – eWireless Durlacher Research – $76.0 $159.0 $366.0 $766.0 $1,272.0 – Denmark

Finland Goldman Sachs (EU) $26.4 $103.9 $227.7 $428.1 $673.5 $1,024.6 $1,516.0 France Goldman Sachs (EE) – – $1.4 $5.4 $12.0 $22.6 $35.8 Germany IDC $15.0 $40.3 – – $366.6 – – Italy Forrester – $78.8 $175.6 $382.0 $778.4 $1,410.7 – The Netherlands

Norway Source: eMarketer, 2001; various, as noted

Poland

Russia

Spain

Sweden

United Kingdom D. eCommerce Barriers and Drivers

Index of Charts Barriers Some countries in Europe are more eCommerce-ready than others by virtue of having more computer servers using secure socket layer (SSL) protocol. Secure servers — used for secure transmission over the internet of information like credit card numbers — are an indicator of e-commerce readiness, or the potential for e-commerce to be conducted on hosts located within a particular country. According to UK-based Netcraft’s survey of secure servers, a tremendous disparity is apparent between Europe and the US, and among different European nations. As of March 2000, Netcraft measured approximately six times as many secure servers, per capita, in the US as in the entire European Union area. The US had nine times more servers than France and over 15 times more than Italy.

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Methodology Internet users typically cite selection, speed, convenience, and good prices Economy,Infrastructure, Users as the reasons they like to shop online, according to ECaTT. However, eCommerce European consumers currently get less value from shopping online than eAdvertising eFinance their counterparts in the US, according to research from Booz-Allen & eWireless Hamilton. As the following figure illustrates, it is more cost-effective to Denmark shop online in the US than in the EU for a number of goods typically Finland purchased online. Sales tax, while waived for US e-commerce, still applies France

Germany to the European e-consumer. Delivery charges often add a significant extra

Italy cost. In dense European countries, with attractive center city shopping The Netherlands districts, the internet will have to offer significantly better value than Norway in-person shopping to lure European consumers. Poland

Russia Difference in the Cost of Goods Bought Online vs. Spain Traditional Retailers, UK vs. US, 1999 Sweden

United Kingdom Travel UK US Index of Charts -17% -31% Electronics -10% -22% Books +10% -5% Groceries +22% +13% Source: Booz-Allen & Hamilton, 2000

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Methodology Perhaps as a result of this poor value proposition, a large majority of those Economy,Infrastructure, Users who do not use online services (i.e., the internet or Minitel) report that they eCommerce have no interest in online shopping. And, as the figures in the previous section eAdvertising eFinance illustrated, the majority of internet users are more interested in getting eWireless information and communicating with others online than shopping online. Denmark Finland Interest in Online Shopping among Non-Users of France Online Services, 1999 Germany Very Interested Interested Not Interested Italy

The Netherlands Denmark 0.4% 8.9% 90.7% Norway Finland 0.9% 6.4% 92.7% Poland France 1.1% 10.1% 88.8% Russia Germany 1.6% 13.7% 84.7% Spain

Sweden Ireland 6.2% 20.2% 73.6% United Kingdom Italy 2.1% 14.0% 84.0% Index of Charts Netherlands 1.2% 11.3% 87.5% Spain 0.6% 11.2% 88.1% Sweden 0.7% 15.0% 84.3% UK 3.0% 17.2% 79.8% EUR10 1.7% 13.3% 85.0% Source: ECaTT National Report, 2000

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Methodology Some portion of those who do not shop online will do so over time if it gets Economy,Infrastructure, Users easier, cheaper, and more reliable. However, one critical obstacle is the eCommerce ability to pay for online purchases. Europe has a much lower level of credit eAdvertising eFinance card use than the US. In the emerging economies of Eastern Europe and eWireless Russia, low personal income and mistrust of financial institutions have Denmark kept credit card penetration at miniscule levels. In Western Europe, Finland substantial concerns about credit card security and online privacy, and France

Germany cultural barriers to assuming consumer debt have kept the number of cards

Italy issued significantly lower than in the US despite relatively high living The Netherlands standards. For example, the UK has roughly half the number of credit or Norway debit cards per capita as the US, and it is the most credit card-carrying Poland country in Europe, according to a recent report by the Bank for Russia

Spain International Settlements.

Sweden United Kingdom Number of Cards with Debit or Credit Function per Index of Charts 1,000 Inhabitants, 1998 (by country) US 2,767 Japan 2,030 UK 1,421 Belgium 1,178 Germany 1,114 Switzerland 1,060 Sweden 776 France 514 Italy 471 Netherlands 261 Median Europe 918 Source: Bank for International Settlements, 2000

Not surprisingly, disparate credit card ownership is reflected in disparate numbers of internet purchases made using a credit card from region to region. A study by Angus Reid confirmed that only 50% of Internet users outside North America had paid for an online purchase using a credit card, compared to 74% of Internet users in the US and Canada. In Western Europe, the percentage was 41%.

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Methodology

Economy,Infrastructure, Users Respondents Providing Credit Card Information eCommerce Online at Time of Purchase in US and Western Europe, eAdvertising 2000 eFinance US 74% eWireless

Denmark Western Europe 41% Finland France Source: Angus Reid Group, Inc., 2000 Germany

Italy Differential ownership of a credit card is one factor; fear of fraud is a major The Netherlands

Norway related reason why Europeans are reluctant to use their credit or debit cards

Poland online. According to a survey by the French firm Raffour Interactif, 67% of Russia French Internet users consider that online payment security is an obstacle Spain to online purchasing and 47% fear their personal data might be misused. Sweden Overall, 72% of the French online population is more wary of e-commerce United Kingdom

Index of Charts than about traditional commerce. In the UK, a general population survey by MORI found that 77% of respondents envision the internet being misused by criminals. According to the same survey conducted in Germany, fewer fear internet crime, but a significant 59% of the population believed that the internet is a source of criminal misuse. Fear of fraud may also inhibit some bricks and mortar retailers – particularly smaller businesses — from establishing online stores. A survey from the firm Experian found that 11% of UK online retailers admitted that their websites had been hacked – with 40% of those hit having been hacked by the same intruder more than once. According to the Experian study, only 15% of British companies are equipped with fraud detection programs, and as a result, 48% of interviewed firms reported that discovering fraud can take them more than a month. Negative reports like these get much more attention in the media, and have a greater effect on peoples’ attitudes toward the internet, than articles about how easy it is to shop online. Another important factor is that the proportion of debit to credit cards is higher in Europe than in the US. While debit cards have the same utility as credit cards, they distribute the risk of purchasing differently because they are more like cash. Individuals using a debit card online are charged immediately, subject to a reversal if the charge was in error, making a debit card holder more at risk of fraud. With credit cards, the card issuer bears the immediate risk of a false transaction, and the consumer is afforded the opportunity to contest suspect charges before relinquishing any money. One important lesson for e-businesses in Europe is that security systems and policies to protect consumers are essential to boost the confidence of shoppers. Another is the need to develop a variety of payment systems – including in-person payment, or cash-on-delivery — to enable those unable or reluctant to use non-cash forms of money to order goods online.

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Methodology Drivers Economy,Infrastructure, Users To increase online business transactions, the EU adopted a directive on eCommerce eAdvertising electronic signatures in 1999 that will ensure the legal recognition of e- eFinance signatures across countries. EU member states have until September 2001 eWireless to turn the Directive into national laws. The EU also adopted a directive Denmark (called, simply, the “e-commerce directive”) to eliminate the legal obstacles Finland

France from conflicting or overlapping national legislation. This action by the EU

Germany will allow companies legally established in any member state of the EU to Italy more easily market services in all other Member States. It also sets the place The Netherlands of a company’s establishment as where an operator pursues an economic Norway activity through a fixed location, regardless of where its web-sites or Poland

Russia servers are situated. The directive covers both B2B and B2C and other

Spain electronic transactions such as television shopping. Member states must Sweden adopt the e-commerce directive into national law and implement it by United Kingdom January 2002. Index of Charts Several other EU initiatives will help to reassure European consumers– who tend to be more reluctant to shop online than their US counterparts – that it is safe and private to engage in e-commerce. The European Commission formed a stakeholders’ group to develop a code of conduct for on-line business, and is working on an alternative dispute resolution mechanism. The EU adopted legislation in June 2000 authorizing the export of encryption products and services – which are essential for online security — within the EU, and from the EU to 10 designated countries, including the United States. Security of personal information weighs heavily on the minds of many European consumers, as it does in the US. The United States’ Safe Harbor program, agreed to by the European Commission in July 2000, requires companies that abide by Safe Harbor obligations to tell customers why they are collecting personal information, how they intend to use it and whether they will transfer it to third parties. People have to be given the chance to say no, and must affirmatively okay the collection of particularly sensitive data. Efforts to deregulate and privatize the telecommunications sectors have been effective at increasing competition and causing the telephone component of internet access costs to plummet by double digits in the past year. However, incumbent operators continue to dominate local lines and those costs remain relatively high, serving to discourage the kind of extensive surfing and browsing that leads to online buying. As European countries work to increase competition in local access networks and succeed in “unbundling” the local telecommunications loops, prices should continue to drop, increasing internet use and boosting e-commerce levels.

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Methodology In 1999, one in five US households ordered items from “infomercials” or Economy,Infrastructure, Users “home shopping networks” via TV, according to Jupiter Research. One eCommerce potential driver of online shopping in Europe will be the long anticipated eAdvertising eFinance convergence of the internet and TV in a region that has already avidly eWireless embraced interactive TV. According to Jupiter, by 2003 more than 47 Denmark million European households will be able to surf the web, play games, and Finland potentially order goods and services through their televisions. A big France

Germany question is whether consumers in Europe will feel more comfortable

Italy ordering from their television rather than their computer screen.

The Netherlands Norway Growth in European Online PC and Interactive TV Poland Households, 1999–2005 (in millions) Russia 80 Spain

Sweden 72.8 United Kingdom 48.8 Index of Charts 35.8 47.3 40 21.8

20.5 5.6 1999 2001 2003 2005 European online PC households European interactive TV households Source: Jupiter Research in Industry Standard, September 2000

B2B eCommerce Drivers and Barriers Europe’s investment in information technology (IT) has been growing at a rate slower than in the US, suggesting that the B2B e-commerce gap between the two regions may in fact widen, not narrow, if European countries do not change course. In the manufacturing sector, for example, IT spending in the US grew 3.8% from 1997 to 1999, but by only 2.8% in the European Union during the same period. The technology gap between Europe and the US will continue to widen unless European investments accelerate even faster. The average US investment in IT as a percentage of GDP was almost double the European level in 1998 (the most recently reported year) according to the European Information Technology Office (EITO). Because per capita GDP is higher in the US than in Europe, the gap in spending between the two regions remains substantial.

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Methodology

Economy,Infrastructure, Users Relative IT Spending Growth, 1997–1999 eCommerce Manufacturing US EU eAdvertising 3.8% eFinance 2.8% eWireless Transportation, Communications and Utilities Denmark

Finland 7.7%

France 2.5% Germany Retail/Wholesale Italy 3.9% The Netherlands 1.7% Norway

Poland Source: International Data Corp. (IDC); Booz-Allen & Hamilton, 2000

Russia Spain It is more difficult to start a new business in the EU than in the US, a factor Sweden which, in addition to the smaller pool of venture capital has resulted in United Kingdom

Index of Charts fewer internet startups in Europe. According to the EU, setting up a business in the US takes an average of ten days and costs approximately $500 in legal fees, compared to 11 weeks and $1,600 in Europe. Small and medium size enterprises (SMEs) have a harder time than larger firms taking advantage of new technologies. Compared to big businesses with large IT budgets and separate marketing divisions, the staff in small and even medium size enterprises usually have many other responsibilities besides developing an internet presence. In March 2000, the Eurobarometer, a regular survey of European attitudes, asked small and medium size businesses how they use e- commerce technologies. Of the respondents throughout the region, only 27% had a web site with a unique domain name. Nearly one-third had no internet access whatsoever. For the most part, those companies with internet access use it as a research tool, not a selling or procurement technology.

% of Small- and Medium-Sized Businesses with B2B eCommerce Technologies Complete website with your own domain name 27% Website depending on a larger domain 8% Website with a few web pages 5% Internet access but no webpages on site 30% No internet access 29%

Source: Flash Eurobarometer 78, March 2000

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Methodology As expected, Scandinavia came out ahead in terms of the degree to which Economy,Infrastructure, Users its small and medium size businesses were “e-commerce ready.” Spain, eCommerce France, Italy, and the UK lagged behind. eAdvertising eFinance eWireless The eCommerce Readiness of Small–to–Medium Size

Denmark Businesses in Europe, 2000 Finland Above Average: Denmark, Germany, Netherlands, Finland, Sweden France Below Average: Spain, France, Italy, UK Germany Source: Flash Eurobarometer 78, March 2000 Italy

The Netherlands Norway % of Small- and Medium-Sized Businesses That Use Poland the Internet for the Following Activities, 2000 Russia Researching information on your markets and competition 79% Spain

Sweden Advertising/promoting your products/services 51%

United Kingdom Collaborating, from a distance, on a specific project with

Index of Charts other companies 44% Providing after-sales services to your clients 32% Communicating with local administrations and national authorities 27% Selling directly to other companies 27% Managing your company’s financial accounts 26% Selling directly to consumers 26% Managing orders and invoices with your providers 23% Allowing staff to work from a distance 22% Publishing vacancies and recruiting staff 18% Answering public calls for tender 13% Source: Flash Eurobarometer 78, March 2000

eCommerce has yet to significantly facilitate cross-border sales in Europe. As Andersen Consulting’s survey suggests, business leaders are not confident that the internet can help to sell successfully to consumers in countries across Europe.

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Methodology

Economy,Infrastructure, Users Executives Reporting That eCommerce Enables eCommerce Sales to Consumers across Europe, 1999 eAdvertising Europe eFinance 14% eWireless Finland Denmark 6% Finland

France Norway

Germany 0%

Italy Sweden

The Netherlands 9% Norway UK Poland 6% Russia Netherlands Spain 17% Sweden France United Kingdom 23% Index of Charts Germany 13% Italy 20% Spain 16% Source: Andersen Consulting, 2000

In Europe, linguistic and cultural differences require companies to make significant investments to tailor their products and websites to individual countries. It is necessary to use local currency on national websites because consumers prefer them to “international” currencies such as the euro or dollar. Payment systems also vary from country to country. Some countries have proprietary credit and debit card systems, others have very low credit card penetration, so international sales require the costly implementation of different payment solutions.

B2B eCommerce Drivers and Barriers One of the most fundamental precursors to B2B growth is interest in e- commerce among business leaders. In eMarketer’s last eGlobal report, we reported that executives in Europe were less enthusiastic about the internet and e-commerce than their counterparts in the US, but this distinction appears to be diminishing, at least according to recent survey research. Anderson Consulting’s survey of Western European executives found that 44% of Western European businesses in 1999 had plans for exploiting e-commerce opportunities in the future, up from 31% in 1998. The European CEOs surveyed generally felt that the internet can lead to greater efficiency and benefit first movers.

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Methodology

Economy,Infrastructure, Users Executive Survey: Plans and Attitudes toward eCommerce eCommerce, 1998–1999 eAdvertising 1998 1999 eFinance Plans for exploiting future opportunities in e-commerce 31% 44% eWireless Much more reliant on e-commerce in 5 years time than Denmark you are now 50% 59% Finland

France Senior management is committed to developing e-commerce 25% 25% Germany

Italy eCommerce enables your company to sell successfully to

The Netherlands consumers across Europe N/A 14%

Norway Source: Andersen Consulting, 2000

Poland Russia Another critical driver is internet penetration in business. For years, Spain tradition-bound European businesses lagged behind the US in computers Sweden

United Kingdom per employee and internet access. But according to recent research by Index of Charts empirica, approximately two-thirds of European businesses had access to the internet as of the end of 1999. Mirroring PC and internet penetration patterns generally, firms in Scandinavia and Switzerland are the most wired, while Italy and France lag behind. Not surprisingly, use of the internet is much higher in larger European firms than small enterprises, as the following data indicate.

Businesses Using eMail,Internet, and Intranet in Europe, 1999 (by business size) 0–9 10–49 50–199 200–499 >500 All Sizes Staff Staff Staff Staff Staff Use of eMail 29.9% 53.5% 78.8% 91.9% 96.3% 61.7% Internet Access 36.6% 60.2% 80.6% 92.9% 95.5% 66.0% Use of Intranet 9.9% 21.0% 41.5% 47.6% 70.3% 30.6% Source: empirica, Electronic Commerce and Telework Trends (ECaTT), 2000

A more recent international survey found internet penetration in businesses to be significantly higher than empirica in five benchmark countries. Firms in the UK, Germany, and Sweden had penetrations nearly as high as the US. However, the Gallup Organization measured significantly lower levels of business internet penetration, as the table below indicates.

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Methodology

Economy,Infrastructure, Users Businesses with Internet Access, by Country 2000 eCommerce eAdvertising UK 90% eFinance France 80% eWireless

Denmark Germany 87% Finland France Italy 74% Germany Italy Sweden 91% The Netherlands

Norway US 93%

Poland Source: UK Online, 2000; International Benchmarking Study, 2000 Russia

Spain Sweden Businesses with Websites and Internet Access United Kingdom by Country, 2000 Index of Charts Site with Site Site Internet Does Not Own Depending with a Access Have Domain on Larger Few Only Internet Name Domain Webpages Access Denmark 48% 6% 3% 27% 15% Germany 37% 11% 6% 30% 15% Spain 18% 11% 4% 34% 33% France 21% 6% 5% 27% 41% Italy 25% 8% 6% 29% 33% Netherlands. 34% 9% 4% 33% 17% Finland 19% 27% 2% 28% 22% Sweden 28% 10% 8% 25% 25% UK 27% 6% 6% 31% 30% Source: EOS Gallup Europe, March 2000

While the internet access penetration gap has narrowed, far fewer European businesses have an on-line presence than US businesses, as indicated by the percentage of companies with a website in the US and EU. While the European financial sector is as wired as the US, sectors such as manufacturing and transport lag far behind. On a positive note, as European businesses actually move on-line, a greater proportion seem to ‘leapfrog’ to using the web for transactions. As the data below show, a larger percentage of businesses with websites in Europe have sites with transactional capacity than businesses with websites in the US.

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Methodology

Economy,Infrastructure, Users Companies with a Website in Europe and the US, 1999 eCommerce Sector US EU eAdvertising Manufacturing 86% 24% eFinance with transactional capacity 16% 2% eWireless

Denmark Transportation, Communications and Utilities 71% 24% Finland with transactional capacity 17% 12% France Finance 57% 59% Germany

Italy with transactional capacity 11% 16%

The Netherlands Source: Booz-Allen & Hamilton, 2000

Norway Poland Businesses That Have a Marketing Website, by Russia Country, 2000 Spain Sweden UK 66% United Kingdom Index of Charts France 49%

Germany 66%

Italy 44%

Sweden 76%

US 68%

Source: UK Department of Trade and Industry, 2000

Only a relatively small percentage of firms in five European countries surveyed by UK Online reported that they allow their customers to make payments over the internet. Nevertheless, Germany and the UK seem to be as advanced as businesses in the US in enabling online payments.

Businesses That Allow Customers to Make Online Payments, 2000

UK 13%

France 4%

Germany 15%

Italy 7%

Sweden 4%

US 15%

Source: UK Department of Trade and Industry, 2000

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Methodology However, even of the firms that allow online ordering, the clear majority Economy,Infrastructure, Users have only a small percentage – less than 10% by value – of goods ordered eCommerce online. eAdvertising eFinance eWireless Businesses That Allow Customers to Order

Denmark Online, by Country, 2000

Finland

France UK 27%

Germany France 17% Italy

The Netherlands Germany 40% Norway Poland Italy 20% Russia Spain Sweden 25% Sweden

United Kingdom US 28%

Index of Charts Source: UK Department of Trade and Industry, 2000

Customer’s Purchases Ordered Online, by Country, 2000 (by value of purchases)

UK Less than 10% 10% or More 67% 33% France 51% 49% Germany 71% 29% Italy 77% 23% Sweden 69% 31% US 56% 44%

Source: UK Department of Trade and Industry, 2000

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Methodology

Economy,Infrastructure, Users Businesses Ordering Supplies Online, by Country, 2000 eCommerce eAdvertising UK 45% eFinance France 21% eWireless

Denmark Germany 45% Finland France Italy 28% Germany Italy Sweden 50% The Netherlands

Norway US 53%

Poland Source: UK Department of Trade and Industry, 2000 Russia

Spain Sweden Having internet access in a business is important, but enabling workers United Kingdom within the firm to use the internet has at least two important effects. First, Index of Charts the more employees use the web, the easier it is to migrate a variety of internal business transactions online. Second, workplace access helps to diffuse the internet more broadly in a country, as employees who learn to surf at work are likely to seek home internet access. Based on research by Durlacher, the percentage of white collar workers in Europe who have internet access from work is expected to increase from 50% in 2000 to 70% in 2004.

Access to Internet by White-Collar Workers in Europe, 1999–2004 Year Total White-Collar White-Collar Percent Workers Workers with (millions) Internet Access (millions) 1999 106 42 40% 2000 107 53 50% 2001 108 58.9 55% 2002 109 64.8 59% 2003 109 70.9 65% 2004 110 77 70% Source: Durlacher Research, 2000, in Collective Wisdom, Europe Profile, 2nd Q 2000

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Methodology

Economy,Infrastructure, Users Employees Using the Internet at Least Monthly, eCommerce by Country, 2000 eAdvertising eFinance UK 32% eWireless France 23% Denmark

Finland Germany 29% France Germany Italy 25% Italy The Netherlands Sweden 61% Norway

Poland US 46%

Russia Source: UK Online, 2000; International Benchmarking Study, 2000 Spain

Sweden United Kingdom Still, for the most part, e-commerce is primarily used as a souped-up form Index of Charts of public relations for the sales and marketing departments, as the following figures from Andersen Consulting’s survey indicate. Fewer companies use e-commerce for purchasing, where it can help them procure more efficiently, or in logistics, where enormous efficiencies can be gained. Not surprisingly, mobile commerce applications are far less frequent, though the high percentage of French respondents reporting their use of e- commerce in mobile applications is noteworthy. According to empirica’s research, 37% of the European firms they surveyed have websites, yet the vast majority use the web merely for marketing (76%) and information dissemination (79%) but not online sales. Out of all businesses, only 9% sold online as of 1999.

Various Business Divisions Using eCommerce in Selected Countries, 2000 Sales and Purchasing Logistics mCommerce Marketing Finland 83% 47% 33% 13% France 70% 47% 23% 37% Germany 75% 50% 38% 19% Italy 65% 26% 35% 3% Netherlands 93% 33% 30% 3% Norway 59% 53% 31% 19% Poland 84% 28% 28% 6% Spain 57% 33% 27% 3% Sweden 77% 57% 23% 13% UK 74% 61% 45% 13% USA 80% 52% 34% 6% Source: Andersen Consulting, 2000

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Methodology

Economy,Infrastructure, Users Business Use of the Internet, by Country, 2000 eCommerce Denmark Germany Spain France Italy Netherlands Finland Sweden UK eAdvertising Advertising 59% 53% 38% 47% 50% 46% 57% 51% 63% eFinance Selling directly to other cons. 24% 28% 25% 31% 20% 23% 20% 23% 36% eWireless

Denmark Selling directly to cons. 29% 37% 18% 18% 18% 12% 21% 26% 32% Finland Distant Collaboration 38% 45% 32% 47% 42% 36% 49% 41% 53% France Providing after-sales svce. 29% 39% 23% 20% 35% 26% 25% 41% 38% Germany

Italy Managing orders/invoicing 27% 16% 32% 20% 25% 20% 35% 31% 26%

The Netherlands Answering public calls 13% 8% 12% 7% 8% 6% 18% 22% 29% Norway Communications/Admin. 45% 22% 38% 20% 31% 18% 41% 40% 31% Poland Managing financial accts. 28% 32% 45% 18% 25% 18% 12% 43% 15% Russia

Spain Recruiting 23% 28% 8% 11% 12% 20% 46% 20% 14%

Sweden Allowing telecommuting 23% 24% 16% 26% 14% 22% 26% 20% 26% United Kingdom Researching market info. 69% 87% 76% 71% 85% 79% 75% 77% 75% Index of Charts Source: European Commission, Flash Eurobarometer, 2000

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The eEurope Report

Methodology: The eMarketer Difference

I Economy,Infrastructure and Users

II eCommerce III eAdvertising 93 A. Overview 94 B. Advertising Spending by Country 96

IV eFinance IIIV eWireless VI Denmark

VII Finland

VIII France

IX Germany

X Italy

XI The Netherlands

XII Norway

XIII Poland

XIV Russia

XV Spain

XVI Sweden

XVII United Kingdom

Index of Charts

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Methodology A. Overview Economy,Infrastructure, Users eCommerce The expansion of internet penetration in Europe will fuel the growth of e- eAdvertising advertising in this region over the next few years. eMarketer expects total eFinance eAdvertising expenditure in Europe to reach $901 million in 2000, growing eWireless

Denmark to $6.4 billion by the end of 2005.

Finland

France eAdvertising Spending in Europe, 1998-2005 Germany (in billions)

Italy

The Netherlands 1998 $114

Norway 1999 $395 Poland

Russia 2000 $901

Spain 2001 $1,526 Sweden United Kingdom 2002 $2,544 Index of Charts 2003 $3,766

2004 $4,626

2005 $6,409 Source: eMarketer, 2000

In addition to eMarketer’s forecast, six other researchers have forecast increases in European web ad spending. The range can be seen, for example, in the forecast for 2003, where Jupiter expects $3.1 billion in web ad spending, while Data Monitor forecasts $9.4 billion. eMarketer’s forecast for that year is $3.77 billion.

Comparative Estimates: eAdvertising Spending in Europe, 1998-2005 (in billions) 1998 1999 2000 2001 2002 2003 2004 2005 Forrester Research – $0.29 $0.62 $1.20 $2.17 $3.58 $5.48 – Morgan Stanley – $0.22 $0.66 $1.34 $2.00 $4.00 $5.50 – Dean Witter Jupiter – $0.43 $0.90 $1.53 $2.26 $3.12 $4.11 $5.26 Communications eMarketer $0.11 $0.40 $0.90 $1.53 $2.54 $3.77 $4.63 $6.41 IDC ––$0.68 – $2.17 ––– 24/7 Media – $0.49 – $1.60 ––$5.00 – Data Monitor $0.30 $0.60 $1.10 $2.20 $5.10 $9.40 –– Source: eMarketer; various, as noted

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Methodology Economy,Infrastructure, Users eAdvertising spending in Europe is expected to increase steadily over the eCommerce next several years. The region’s online ad spending as a percentage of the eAdvertising eFinance world’s will double from 10% in 2000 to more than 15% by 2005. eWireless Denmark eAdvertising in Europe by Country, 1998-2005 (in Finland millions) France 1998 1999 2000 2001 2002 2003 2004 2005 Germany Denmark $5.0 $10.5 $17.2 $28.8 $41.2 $54.3 $61.6 $85.3 Italy

The Netherlands Finland $10.0 $21.0 $34.3 $57.6 $82.3 $108.6 $123.2 $170.6 Norway France $5.0 $35.6 $87.7 $145.7 $295.0 $449.0 $564.2 $781.7 Poland Germany $26.6 $106.7 $247.8 $424.2 $737.8 $1,175.6 $1,430.0 $1,981.1 Russia Italy $5.0 $16.4 $36.0 $69.0 $116.4 $166.0 $196.0 $271.6 Spain

Sweden Netherlands $2.6 $12.9 $31.8 $55.9 $88.0 $131.5 $174.9 $242.4 United Kingdom Norway $8.5 $17.9 $29.2 $49.1 $70.2 $92.6 $104.9 $145.4 Index of Charts Other $1.1 $18.3 $73.2 $113.1 $177.0 $241.6 $350.8 $486.0 Poland $0.6 $2.0 $4.6 $8.4 $15.0 $24.1 $31.6 $43.8 Russia $0.5 $1.8 $4.1 $7.9 $15.1 $26.0 $36.8 $50.9 Spain $1.7 $8.0 $19.5 $32.8 $59.2 $88.1 $108.7 $150.6 Sweden $21.5 $45.3 $74.0 $124.2 $177.5 $234.1 $265.4 $367.7 UK $26.0 $98.8 $241.9 $409.2 $669.4 $974.0 $1,177.9 $1,631.9 Total $114.1 $395.2 $901.3 $1,526.0 $2,544.0 $3,765.6 $4,626.0 $6,409.0 Source: eMarketer, 2000

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Methodology B. Advertising Spending by Country Economy,Infrastructure, Users eCommerce Germany will continue to be the largest web advertising market in Europe, eAdvertising growing from $272 million in 2000 to nearly $2 billion in 2005. The UK is eFinance in second place, with $245 million in 2000, growing to over $1.6 billion in eWireless

Denmark 2005. The Scandinavian countries, taken as a group, are in the third

Finland position, spending $155 million in 2000, and growing to $910 million in France 2005. Germany Italy eAdvertising Spending in Europe, 1998-2005 (in The Netherlands billions and a % of global spending) Norway Europe Worldwide Europe as Poland % of world Russia 1998 $0.1 $1.9 6% Spain

Sweden 1999 $0.4 $4.3 9% United Kingdom 2000 $0.9 $8.7 10% Index of Charts 2001 $1.5 $13.2 12% 2002 $2.5 $19.8 13% 2003 $3.8 $26.7 14% 2004 $4.6 $33.3 14% 2005 $6.4 $43.0 15% Source: eMarketer, 2000

Germany will emerge as the leader in web ad spending, growing from 28% of European spending to 31% in 2005. The UK, France, and Sweden will follow.

eAdvertising Spending in Europe by Country, 1998–2005 (% of total) 1998 1999 2000 2001 2002 2003 2004 2005 Denmark 4% 3% 2% 2% 2% 1% 1% 1% Finland 9% 5% 4% 4% 3% 3% 3% 3% France 4% 9% 10% 10% 12% 12% 12% 12% Germany 23% 27% 28% 28% 29% 31% 31% 31% Italy 4% 4% 4% 5% 5% 4% 4% 4% Netherlands 2% 3% 4% 4% 3% 3% 4% 4% Norway 7% 5% 3% 3% 3% 2% 2% 2% Other 1% 5% 8% 7% 7% 6% 8% 8% Poland 1% 1% 1% 1% 1% 1% 1% 1% Russia 0% 0% 0% 1% 1% 1% 1% 1% Spain 1% 2% 2% 2% 2% 2% 2% 2% Sweden 19% 11% 8% 8% 7% 6% 6% 6% UK 23% 25% 27% 27% 26% 26% 25% 25% Total 100% 100% 100% 100% 100% 100% 100% 100% Source: eMarketer, 2000

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Methodology: The eMarketer Difference

I Economy,Infrastructure and Users

II eCommerce

III eAdvertising IV eFinance 97 A. eBanking 98 B. eInvesting 103 C. IT Spending 104 IVD. Expectations: Supply-Side Vs. Buy-Side 108 V eWireless

VI Denmark

VII Finland

VIII France

IX Germany

X Italy

XI The Netherlands

XII Norway

XIII Poland

XIV Russia

XV Spain

XVI Sweden

XVII United Kingdom

Index of Charts

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Methodology A. eBanking Economy,Infrastructure, Users eCommerce Bank branches and automatic teller machines (ATMs) still hold a firm grip eAdvertising on consumers in Eastern and Western Europe, according to a September eFinance 2000 study by PSI Global called European Financial Delivery Systems. Only eWireless

Denmark 10% of those surveyed said they used remote banking (including internet

Finland banking) most frequently.

France Germany Bank Delivery Channel Used Most Often by European Italy Households, 2000 The Netherlands

Norway Remote Poland (mail, PC Russia Don’t or telephone) Spain know/ 10%

Sweden none 17% United Kingdom

Index of Charts ATM 41% Branch cashier 32%

Source: PSI Global, 2000

Despite a growing familiarity with PCs and the internet, consumers express an overwhelming unease about giving account details out over the internet, according to PSI Global. In fact, the firm found that the use of PC-internet during a 3 month period came in dead last among available channels.

Delivery Channels Used by European Households in a 3 Month Period, 2000

Branch cashier 59%

ATM 53%

Mail 18%

Telephone 15%

PC-internet 4%

Don’t know 17%

Source: PSI Global, 2000

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Methodology “Customers still see a personalized service as Economy,Infrastructure, Users fundamental in their relationship with their eCommerce eAdvertising financial services provider. However, this comes at eFinance a price which neither the customers (through eWireless charges) or the service providers are prepared to Denmark pay. Personal service, in its traditional sense, is Finland

France now just too expensive to provide for the vast

Germany majority of account holders.” Italy — John Reeve, financial services specialist, Deloitte Consulting The Netherlands

Norway PSI Global’s findings closely match those of a survey of European bank Poland

Russia executives by Cap Gemini Ernst & Young. The study also found that the

Spain internet only accounts for some 4% of transaction, but the executives Sweden interviewed anticipate that the share will grow to 25% of all retail United Kingdom transactions by 2003. Index of Charts Retail Transactions Conducted via the Internet and via Branches, 2000 & 2003 (as a % of all transactions)

2000 45% 4%

2003 29% 25%

Branch Internet Source: Cap Gemini Ernst & Young, 2000

Perhaps the anticipated dramatic increase in internet use as well as the equally dramatic decrease in branch transactions represent wishful thinking. Expanded use of online banking services would certainly be helpful to any bank’s bottom line. The cost difference between a customer transacting business at a branch and doing the same online is euros 1.32 per transaction, a rather significant savings, according to Spain’s Banco Bilbao Vizcaya Argentaria (BBVA).

European Banking Transaction Costs by Distribution Channel, 2000 (in euros)

Branch 1.37

Telephone 0.84

ATM 0.53

PC 0.28

Internet 0.05

Source: Banco Bilbao Vizcaya Argentaria (BBVA), 2000

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Methodology Nonetheless, online banking in Europe is in its infancy and there are few Economy,Infrastructure, Users reliable points of comparison that can lend support for the hopeful eCommerce predictions of the executives surveyed by Cap Gemini. eAdvertising eFinance As J.P. Morgan points out: “[M]any banks have slow, cumbersome eWireless internet offerings, with poor customer service and little value added. It is Denmark no surprise that few people bank online.” Finland Deloitte Consulting found that 63% of European retail bank customers France

Germany rated responsive service and being treated as a valued customer as the most

Italy important factors driving their satisfaction. The Netherlands This desire by European bank customers for prompt responsiveness is Norway often not satiated by online banks, according to Cap Gemini Ernst & Poland Young. The consultancy found, for instance, that half of the e-mails from Russia

Spain online banks in Europe were not answered within 8 hours. If European

Sweden bank executives expect to see 25% of retail transactions happen online by United Kingdom 2003, they are going to have to put more effort into their online initiatives Index of Charts during 2001.

eMail Queries Unanswered Within 8 Hours by Online Banks in the US and Europe, 2000

United States 63%

Europe 50%

Source: Cap Gemini Ernst & Young, 2000

Market Size and Growth In 2000, there were 7.2 million persons managing their current and savings accounts through online banking services in Western Europe, which is nearly 14% of all internet users. By 2004, almost 18% of internet users will bank at least partially online as another 15.2 million persons join the ranks, making the total 22.4 million.

Western European Internet Users and Online Banking Customers, 2000-2004 (in millions) 2000 2001 2002 2003 2004 Internet 52.4 68.4 84.4 111.2 125.7 users Online 7.2 11.2 15.7 19.8 22.4 bankers % of 13.7% 16.4% 18.6% 17.8% 17.8% internet users Note: Forecasts for France, Germany, Italy, the Netherlands, Spain, Sweden, Switzerland and the United Kingdom Source: eMarketer, 2000

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Methodology Researchers use different methodologies as well as different definitions Economy,Infrastructure, Users when counting the numerical growth and size of online banking. J.P. eCommerce Morgan defines Western Europe in the same manner as eMarketer—namely, eAdvertising eFinance Germany, Italy, Netherlands, Spain, Sweden, Switzerland & the United eWireless Kingdom. However, J.P. Morgan offers their estimates in numbers of Denmark current, savings, and other online banking accounts rather than in the Finland numbers of users. J.P. Morgan also contends (as does eMarketer) that France

Germany people will sign up with their existing banks because of the difficulties with

Italy changing direct debit and standing order payment methods as well as their The Netherlands appeal for multi-channel banking. Norway J.P. Morgan estimates that in 2000, there were 20.2 million online Poland banking accounts in use. By 2003, the firm forecasts that online banking Russia

Spain accounts will blossom to 54.5 million.

Sweden United Kingdom Online Banking Accounts in Europe, 2000–2003 (in Index of Charts millions)

2000 20.2

2001 33.4

2002 45.4

2003 54.5

Note: Forecasts for France, Germany, Italy, Netherlands, Spain, Sweden, Switzerland and the United Kingdom Source: JP Morgan, 2000

Like eMarketer, Jupiter Communications estimates online banking growth in terms of users. Unlike eMarketer, the firm covers online banking in the Nordic countries as well as Austria. Jupiter estimates there were 9.7 million and 14.3 million online bankers in Europe in 1999 and 2000, respectively. By 2003, Jupiter expects the number of European online bankers to nearly reach 35 million.

Online Banking Accounts in Europe, 1999–2003 (in millions) 1999 2000 2001 2002 2003 Internet 57.9 71.6 87.0 102.5 112.0 users* Online 9.7 14.3 20.0 26.7 34.7 bankers Penetration 17% 20% 23% 26% 31% rate Note: *1999 data for internet users Source: Jupiter Communications, 2000

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Methodology Datamonitor covers the same countries in Western Europe as eMarketer and Economy,Infrastructure, Users also forecasts the growth of online banking services in terms of users. eCommerce Accordingly, Datamonitor matches eMarketer’s forecast for comparison eAdvertising eFinance purposes. eWireless With an estimate of 7.5 million online bankers in 2000, Datamonitor is Denmark slightly ahead of eMarketer’s assertion of 7.2 million online bankers. In Finland 2001, both companies estimate 11.2 million online bankers. From 2002 to France

Germany 2004, however, Datamonitor forecasts a more conservative growth rate.

Italy

The Netherlands Online Banking Customers in Europe, 2000–2004 (in Norway millions)

Poland

Russia 2000 7.5

Spain 2001 11.2 Sweden United Kingdom 2002 14.7 Index of Charts 2003 18.4

2004 21.2

Note: Forecasts for France, Germany, Italy, Netherlands, Spain, Sweden, Switzerland and the United Kingdom Source: Datamonitor, 2000

Datamonitor also provides a breakdown of European online banking customers who will access their accounts through iTV and mobile phones. For 2000, Datamonitor estimated more than a half-million (573 million) Western Europeans used iTV to access their online bank accounts. By 2004, the firm expects the number of iTV banking customers to total more than 6.1 million.

European iTV Banking Customers, 2000–2004 (in thousands)

2000 573

2001 1,525

2002 3,065

2003 4,700

2004 6,121

Source: Datamonitor, 2000

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Methodology While Datamonitor estimates only 175,000 Europeans banked with their Economy,Infrastructure, Users mobile phones in 2000, the firm predicts this number will rise dramatically eCommerce to nearly 14 million by 2004. eAdvertising eFinance eWireless European Mobile Phone Banking Customers, 2000–2004

Denmark (in thousands)

Finland

France 2000 175 Germany 2001 1,348 Italy

The Netherlands 2002 4,194

Norway 2003 8,425 Poland Russia 2004 13,890 Spain

Sweden Source: Datamonitor, 2000

United Kingdom

Index of Charts

B. eInvesting Many analysts contend that Western Europe could match the United States in online brokerage accounts within 4 to 5 years. Despite the fact that only 1 in every 8 Europeans (12.5%) own shares, compared with one-third of citizens in the United States, online trading in Europe has rapidly gained momentum since 1999, when it began from scratch. Indeed, many European banks may not being doing as well as with their online banking initiatives as they would like to be, but their online brokerage activities are exceeding expectations. In a September 2000 report, Banks Win Brokerage Race, Forrester Research found 61% of European online investors prefer to trade through their bank. Only 21% prefer to do so with a pure brokerage firm.

European Online Traders’ Channel Preference, 2000

Banks 61%

Brokerages 21%

Source: Forrester Research, 2000

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Methodology Forrester found 50% of customers who bank online are also involved in Economy,Infrastructure, Users buying or researching shares, compared to just 11% of offline bank eCommerce customers. eAdvertising eFinance eWireless European Banking Customers Who Buy or Research

Denmark Shares, 2000

Finland

France Online banking customers 50% Germany Offline banking customers 11% Italy The Netherlands Source: Forrester Research, 2000 Norway

Poland Online brokerages essentially introduced discount brokering to Europeans. Russia

Spain As the European population ages and public pension systems begin to show

Sweden their wear, and as mass privatization of utilities guarantee growth in the United Kingdom supply of equities, online brokerages will find a waiting market. Index of Charts

C. IT Spending According to Cap Gemini Ernst & Young’s ninth annual survey of financial service executives, PC-internet spending still garners the most attention globally. In 1999, surveyed executives in the financial services-industry predicted that 40% of their total IT budget would focus on their PC-internet initiatives. By 2003, these same executives expect 58% of their IT budget will be spent in this area.

IT Spending by European Financial-Services Institutions Dedicated to PC-Internet Development, 1999 & 2003 (as a % of total IT spending)

1999 40%

2003 58%

Source: Cap Gemini Ernst & Young, 2000

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Methodology In Europe, however, financial services providers recognize the use of Economy,Infrastructure, Users devices other than PCs by consumers in order to access the internet. eCommerce According to Cap Gemini, financial-services industry executives have eAdvertising eFinance increased their expectations of expenditure on mobile devices and iTV eWireless quite significantly. Executives now expect 5% and 2.5% of their IT budgets Denmark will focus on mobile devices and iTV respectively by 2003. Finland France IT Spending by European Financial Services Germany Institutions Dedicated to Mobile Devices and iTV, Italy 1999 & 2003 (as a % of total IT spending) The Netherlands Norway Mobile Poland 0.75% Russia 5.00% Spain

Sweden iTV United Kingdom 0.00% Index of Charts 2.50%

1999 2003 Source: Cap Gemini Ernst & Young, 2000

International Data Corporation (IDC) contends that mobile banking is the top IT priority for banks. IDC also expects that European banks will increase spending on “knowledge management” solutions (systems that assure the right information gets to the right place at the right time) from $155.4 million in 2000 to $511.4 million by 2004.

IT Spending on Knowledge Management Systems by European Banks, 2000 & 2004 (in millions)

2000 $155.4

2004 $511.5

Source: International Data Corporation, (IDC) 2000

Datamonitor reports that spending by Western European banks to implement online banking solutions totaled $362 million in 1999 and will increase almost four-fold in the next few years, reaching $1.4 billion by 2004.

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Methodology In 1999, banks in the United Kingdom, Germany and France accounted for Economy,Infrastructure, Users slightly more than 70% of this spending, according to Datamonitor. eCommerce eAdvertising eFinance Online Banking Solution Expenditures by Selected eWireless Western European Countries, 1999 (in millions)

Denmark United Kingdom $98.8 27.3% Finland Germany $88.0 24.3% France France $69.5 19.2% Germany

Italy Sweden $26.1 7.2% The Netherlands Spain $25.7 7.1% Norway Italy $20.6 5.7% Poland Switzerland $17.4 4.8% Russia

Spain Netherlands $15.9 4.4% Sweden Total $362.0 100% United Kingdom Source: Datamonitor, 2000 Index of Charts

Datamonitor further contends the UK, Germany and France will still be outspending the other 5 European countries (Italy, Netherlands, Spain, Sweden, and Switzerland) well into 2004, accounting for $909 million of the $1.4 billion they estimate will be spent.

Online Banking Expenditures in Western Europe, 2004 (in millions)

United Rest of Western Kingdom Europe* $395 (28.2%) $491 (35.0%)

France Germany $271 (19.4%) $243 (17.4%)

Note: *Italy, Netherlands, Spain, Sweden, and Switzerland Source: Datamonitor, 2000

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Methodology Meridien Research estimates strategic IT spending for such applications as Economy,Infrastructure, Users account aggregation, privacy management and m-commerce will increase eCommerce $2.75 billion from $33.25 billion in 2000 to $36 billion in 2001. European eAdvertising eFinance financial services institutions will account for 32% of this spending. eWireless Denmark Global Strategic IT Spending by Region, 2001 (in billions) Finland France Other Germany $3.24 Italy (9%)

The Netherlands Asia/Pacific North America

Norway Rim $12.96 (36%) $8.28 (23%) Poland

Russia

Spain

Sweden Europe $11.52 (32%) United Kingdom

Index of Charts Source: Meridien Research, 2000

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Methodology D. Expectations: Supply-Side Vs. Buy-Side Economy,Infrastructure, Users eCommerce eAdvertising The Sell-Side Perspective eFinance The reasons why financial services institutions spend so much money on eWireless

Denmark their internet initiatives has changed quite a bit over the past few years,

Finland according to Cap Gemini Ernst & Young.

France Germany Financial Services Institutions’ Objectives for Their Italy eCommerce Development, 1997 & 2000 The Netherlands

Norway Open up new markets

Poland 12% Russia 22% Spain

Sweden Retaining existing customers

United Kingdom 31% Index of Charts 17%

Sell more to existing customers 4% 16%

Gain new customers in existing markets 12% 15%

Decrease cost of operations 23% 9%

Achieve channel integration 18%* 6%

1997 2000 Note: *1998 data Source: Cap Gemini Ernst & Young, 2000

Interestingly, many financial services institutions surveyed by Cap Gemini Ernst & Young no longer report decreasing operational costs as a primary objective for their online initiatives. Globally, Cap Gemini Ernst & Young found only 9% of financial services institutions stated “cost-savings” as the main reason for developing their IT strategies, down from 23% in 1997. When it comes to their customer relationship management (CRM) initiatives, banks still can’t seem to get a multi-channel approach together, according to Cap Gemini Ernst & Young.. Cap Gemini reports that 48% of bank executives cannot use their CRM technologies to estimate a customer’s profitability. Worse, 68% of bank executives have no idea if their customers’ profitability has increased or decreased because of their spending on CRM solutions.

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Methodology

Economy,Infrastructure, Users Ineffective Use of Customer Relationship Management eCommerce Solutions by Eurpean Banks, 2000 eAdvertising eFinance Cannot estimate customer profitability eWireless 48%

Denmark No idea if customer profitability has increased or decreased Finland

France 68% Germany No idea if customer cross-sell ratio has increased or decreased Italy 68% The Netherlands Norway Source: Cap Gemini Ernst & Young, 2000 Poland

Russia

Spain

Sweden The Buy-Side Perspective

United Kingdom From a consumer point of view, the importance of a multi-channel Index of Charts approach for both banks and brokerages cannot be stressed enough, according to Deloitte Research (a joint consortium of Deloitte Consulting and Deloitte Touche Tohmatsu). Deloitte found few banking customers in France, Germany and the United Kingdom rated online banking services as important. In all three countries, the highest rating went to convenient branches and ATMs.

How Consumers in France, Germany and the UK Rank Importance of Banking Channels, 2000

Convenient brances/offices 51% 57% 58%

Convenient ATMs 55% 53% 64%

Call center 30% 27% 27%

Online services 19% 26% 15%

France Germany UK Source: Deloitte Research, 2000

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Methodology For channels involving investments, online services faired much better in Economy,Infrastructure, Users France and Germany, but slightly worse in the United Kingdom. Actually, eCommerce no channel was considered particularly important for the participant’s eAdvertising eFinance investment purposes. Rather, low fees (43% in France), sound advice (61% eWireless in Germany) and being treated like a valued customer (51% in the UK) Denmark ranked highest in investors’ stated importance. Finland

France How Consumers in France, Germany and the UK Rank Germany Importance of Investing Channels, 2000 Italy

The Netherlands France Germany UK Norway Convenient Branches/Offices 34% 31% 18% Poland Call Center 26% 20% 13% Russia Online Services 23% 29% 12% Spain

Sweden Source: Deloitte Research, 2000

United Kingdom

Index of Charts “It is unrealistic to expect to do business just through an e-channel. It has to be complemented by the phone and there has to be a support infrastructure. Single channels won’t cut it.” — Jeffrey Peel, Vice President of Global Marketing, Amacis, a CRM solutions provider

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Methodology: The eMarketer Difference

I Economy,Infrastructure and Users

II eCommerce

III eAdvertising

IV eFinance V eWireless 111 A. Overview 112 B. Technology Infrastructure 113 C. Mobile Internet Users and Usage 135 V D. mCommerce 141 E. mFinance 144 F.mAdvertising 147

VI Denmark

VII Finland

VIII France

IX Germany

X Italy

XI The Netherlands

XII Norway

XIII Poland

XIV Russia

XV Spain

XVI Sweden

XVII United Kingdom

Index of Charts

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Methodology A. Overview Economy,Infrastructure, Users eCommerce For the past several years, internet analysts have predicted that while the eAdvertising US would remain ahead of Europe in fixed internet access, Europeans eFinance (particularly from wealthier Western European countries) would eclipse eWireless

Denmark Americans in the use of mobile devices to surf the web. Indeed, third

Finland generation wireless technology that allows reasonably fast mobile internet France access will lead to a substantial increase in the number of web access Germany devices and, consequently, in internet use as well, even in countries where Italy PC penetration remains low. The Netherlands

Norway Merrill Lynch, for example, predicts that total cellular subscribers in Poland Europe will begin to exceed the region’s fixed-line penetration by 2001, Russia and that the number of wireless internet users will surpass PC-based users Spain by 2004. Industries with large traveling sales forces, such as insurance, Sweden pharmaceuticals and utilities, will benefit greatly from mobile intra- and United Kingdom

Index of Charts internets. The International Data Corp. (IDC) predicts that the average minutes of use per month (MOU) will rise from 26.1 billion in 2000 to 55 billion in 2004 in Western Europe alone. Most of this activity occurs in Western Europe due to the economic and technological gulf that still exists between East and West. Although some small Eastern European countries, like Estonia, have made great advances in adopting computers, cellphones, and the internet, much of the region remains grossly underserved by information technology. Throughout this chapter, data that are Western Europe-specific are identified as such, and statistics on two key Eastern European countries – Russia and Poland – are presented at the end.

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Methodology B. Technology Infrastructure Economy,Infrastructure, Users eCommerce According to estimates by The Strategis Group, GSM (Global System for eAdvertising Mobile Communications) is the wireless technology that dominates across eFinance the world, aided in no small part by the fact that Europe long ago settled on eWireless

Denmark GSM as its standard platform. Unlike CDMA (Code Division Multiple

Finland Access), which was developed by Qualcomm and is increasingly diffuse in France the US, GSM is an open standard, not a proprietary technology. Both GSM Germany and CDMA, as well as other standards not used in Europe (such as TDMA — Italy Time Division Multiple Access — and the analog standard, AMPS — The Netherlands

Norway Advanced Mobile Phone System), refer to the different ways data are Poland broken into bits at the transmitting device, sent out over radio waves, and Russia then reassembled at the receiving device. The speed, efficiency, and Spain accuracy of transmission vary according to each standard. CDMA is Sweden considered the most efficient and secure, but European nations settled on United Kingdom

Index of Charts the open GSM standard rather than licensing expensive proprietary technology. Agreement on this common platform has simplified the ability to roam across Europe using the same phone and has helped spur the development of handsets with increasingly advanced functionality. In turn, these developments have facilitated the expansion of Europe’s wireless subscriber base. Europeans are now in the process of upgrading their wireless networks to 2.5G and third generation (3G, also know as UMTS or Universal Mobile Telecommunications System) platforms. The goal of this costly, labor- intensive process is to provide wireless subscribers with increased data transmission rates and traffic capacity, better security over wireless airwaves, and enhanced, more personalized service options, all while making more efficient use of the available spectrum. Once the upgrade networks are in place, wireless users will benefit from “terminal mobility” and “service portability”æthe ability to access services and transmit data from differing (and eventually, perhaps, any) locations, even while in motion. The focus on offering greater bandwidth and “always on” connections comes from the belief that wireless data transmission–from document transfers to commercial and business transactions of all sizes— will become more important than voice.

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Methodology Auctions of 3G licenses have proved controversial, largely due to the high Economy,Infrastructure, Users fees charged by European governments. In April, the UK became the first eCommerce country to auction off next-generation licenses, and four operators bid a eAdvertising eFinance total of $32 billion. Germany awarded six licenses in July 2000, with the eWireless bidders paying a total of $44.8 billion (DM 100 million). Soaring fees Denmark subsequently led many operators to question their 3G strategies, especially Finland given that the license cost is only a small part of the expense of mounting a France

Germany 3G network. The Netherlands auction, also held in July, topped out at $2.4

Italy billion, 70% less than expected. Italy’s auction, held in October 2000, also The Netherlands fell short of expectations, netting the government $12 billion. Some Norway countries, like France, have established fixed prices for licenses, while Poland others, like Finland and Spain, have awarded them free of charge based on Russia

Spain the viability of applicants’ business plans (the so-called “beauty plan”

Sweden model).

United Kingdom

Index of Charts “It is currently difficult to justify the exorbitant sums paid in Germany and the UK to secure licenses for third generation networks.” — Johan Montelius, European wireless analyst, Jupiter Research

In order to upgrade Europe’s wireless networks, operators must move from circuit switched to packet switched transmission. Once the conversion takes place, in essence, what will happen is that both voice and data will be compressed into bundles and transmitted in short bursts across the wireless network. By bundling information, operators will be able to better exploit the available bandwidth, and thereby offer users faster, more reliable data transmission. The upgrades, which range from software to hardware modifications, require a varying degree of investment and expense and will therefore take place in stages. General Packet Radio System (GPRS), part of the wave of 2.5G enhancements, will come first. It supports an “always on” connection between users and the wireless network. At best, GPRS promises data transmission rates of 115 Kbps (kilobits per second). Although actual rates may be considerably lower, they will nonetheless represent a distinct improvement over the 9.6 Kbps rates that predominate over most existing wireless networks. Most operators across Europe are in the process of making necessary modifications to existing base stations to allow GPRS, and some have already deployed GPRS systems. Most operators aim to have GPRS in place by the end of 2001.

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Methodology 3G networks are the next step. Because the world is currently divided Economy,Infrastructure, Users among at least five competing and somewhat incompatible wireless eCommerce standards, the 3G technologies in development reflect this technological eAdvertising eFinance disarray. European operators have largely committed to Wideband-CDMA eWireless (W-CDMA), which, when implemented towards the middle of the decade, Denmark will allow data transmission rates of 2 Mbps, although rates will be far Finland lower in mobile environments, such as a moving car or train. France

Germany The German investment bank Dresdner Kleinwort Benson estimates that

Italy by 2005, Europe will account for 27% of total worldwide investments in 3G The Netherlands technology. Spending in Asia will likewise constitute 27% of the total, Norway followed by Japan, with 21%, and North America, with 17%. According to Poland Goldman Sachs, however, despite the billions being invested in next Russia

Spain generation conversion, most users will find that existing 2G and 2.5G will

Sweden satisfy their needs. The additional cost of conversion is generally factored United Kingdom into the cellular bill and will greatly sour the allure of using 3G technology. Index of Charts According to The Strategis Group, these investments should begin to bear fruit by the second half of the decade. By 2006, European nations, led by Germany, the UK, and France, will account for five of the top ten markets for 2.5G and 3G technology subscribers.

Top Markets for 2.5/3G Subscribers, 2006 (in millions) Country 2.5G Subscribers 3G Subscribers China 48.9 26.3 Japan 14.4 21.5 Germany 16.0 8.6 UK 14.7 7.9 France 12.3 6.6 US 11.1 2.8 Italy 10.5 5.7 Spain 7.6 4.1 Korea 5.3 5.3 Australia 3.9 2.1 Source: The Strategis Group, 2000

Much of the investment will go towards building out the infrastructure that will facilitate more efficient transmission of voice and data traffic. The Strategis Group estimates that by 2007, European countries will spend $125 billion on base stations, base-station controllers, and voice- and data- switching technology. The number of base-stations is forecast to nearly triple by 2007; at 28%, Germany will retain the majority of Europe’s base stations, more than double the percentage of second-place UK. By 2007, Europe’s cells will be almost evenly divided between third-generation GSM and W-CDMA base stations.

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Methodology

Economy,Infrastructure, Users Base Station Market Share by Country, 2007 eCommerce Germany eAdvertising eFinance 28.1% eWireless UK Denmark 14.8% Finland France France Germany 11.8% Italy

The Netherlands Italy

Norway 11.0%

Poland Spain Russia

Spain 8.3% Sweden Netherlands United Kingdom 5.7% Index of Charts Sweden 4.5%

Finland 3.1%

Belgium 2.7%

Austria 2.4%

Denmark 2.2%

Switzerland 2.0%

Greece 1.6%

Norway 1.0%

Ireland 0.7%

Note: Figures may not add up precisely due to rounding Source: The Strategis Group, 2000

Although voice switches currently predominate in Europe by a large margin, The Strategis Group expects the number of installed data switches to take the lead by year-end 2003. By 2007, data switches will outnumber voice switches by a margin of three to one.

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Methodology

Economy,Infrastructure, Users Number of Installed Data and Voice Switches, 2000–2007 eCommerce 2000 eAdvertising 65 eFinance eWireless 689 Denmark 2001 Finland 294 France

Germany 757 Italy 2002 The Netherlands 564 Norway 775 Poland Russia 2003 Spain 1037 Sweden 768 United Kingdom Index of Charts 2004 1610 742

2005 1773 712

2006 1818 677

2007 1804 641

Installed data switches Installed voice switches Source: The Strategis Group, 2000

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Methodology According to the investment bank Sanford C. Bernstein & Co., European Economy,Infrastructure, Users manufacturers, led by Sweden’s Ericsson and Finland’s Nokia, will eCommerce dominate the wireless infrastructure market around the world. Together, eAdvertising eFinance these two companies will maintain just about a 40% market share through eWireless 2004. Among other leading manufacturers, only the US’ Lucent will see Denmark significant gains. Finland

France Worldwide Wireless Infrastructure Revenue by Germany Manufacturer Market Share, 2000–2004 Italy

The Netherlands 2000 2001 2002 2003 2004

Norway Ericsson 28% 29% 29% 28% 27% Poland Lucent 13% 14% 14% 16% 17% Russia Motorola 12% 11% 11% 11% 11% Spain

Sweden Nokia 11% 12% 12% 13% 13%

United Kingdom Nortel 8% 7% 7% 8% 8% Index of Charts Others 28% 27% 27% 25% 24% Note: Figures may not add up precisely due to rounding Source: Sanford C. Bernstein & Co., 2000

Cellular Phones Cellular penetration rates are soaring exponentially in the very wealthy and, paradoxically, in poorer nations, particularly those with a more antiquated and less developed fixed-line infrastructure. At the end of 1998, Finland became the first nation to top a 50% mobile telephone penetration rate, with the number of mobile subscribers surpassing that of fixed-line subscribers. In regions like Scandinavia, where every other person now has a mobile phone, the cellular penetration rate is forecast to approach 100%. Other developed nations are likely to follow this pattern. In fact, mobile telephone density surpassed 50% in Western Europe in mid-2000. At the same time, countries such as Russia and those in Eastern Europe, whose fixed-line infrastructure is inadequate, stand to benefit from the technological advances of wireless networks, which are less costly to install and upgrade than the existing wireline networks.

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Methodology

Economy,Infrastructure, Users Nations with More Mobile Than Fixed Telephone eCommerce Subscribers, Year-End 1999 (in thousands) eAdvertising Country Mobile Fixed-line eFinance subscribers (000) subscribers (000) eWireless Cambodia 89 28 Denmark Finland 3,445 2,856 Finland

France Paraguay 436 297

Germany Uganda 87 59 Italy Venezuela 3,400 2,586 The Netherlands Italy 30,296 26,500 Norway

Poland Portugal 4,671 4,230

Russia Côte d’Ivoire 257 219 Spain South Korea 23,443 21,250 Sweden Source: ITU Telecommunication Indicators Update, April-May-June 2000, p. 3 United Kingdom

Index of Charts Europe has the largest number of cellular subscribers of any region of the world, and, currently, the greatest share of subscribers worldwide. According to Merrill Lynch projections, Europe will fall behind the Asia Pacific region by 2003, due largely to an anticipated explosion in the number of subscribers in China. Projections for the number of subscribers in Europe vary considerably, and some are predicated on a rapid increase in subscribers in Eastern Europe and Russia, where cellular penetration is lower than Western Europe.

Comparative Estimates: Wireless Subscribers in Europe, 2000–2004 (in millions) 2000 2001 2002 2003 2004 Merrill Lynch 244.3 324.3 404.3 484.3 – EMC 238.2 301.6 359.4 465.9 439.3 Sanford C. Bernstein 267.6 383.8 496.6 593.0 663.2 & Co. Gartner Group 191.5 228.3 259.1 285.3 – Datamonitor 178.0 232.0 254.0 270.0 278.0 Source: various, as noted, 2000

According to EMC, Europe is currently home to 64% of worldwide GSM subscribers. Moreover, EMC predicts that the number of subscribers on GSM phones will double by 2004, with Europe’s share dropping to 55%.

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Methodology

Economy,Infrastructure, Users European GSM Subscribers as a Percentage of GSM eCommerce Subscribers Worldwide, 2000-2004 (in Millions) eAdvertising 2000 eFinance 252.0 (63.9%) eWireless 394.1 Denmark 2001 Finland

France 320.2 (62.6%)

Germany 511.2 Italy 2002 The Netherlands 379.5 (60.7%) Norway 624.7 Poland 2003 Russia 418.9 (58.0%) Spain

Sweden 721.9

United Kingdom 2004 Index of Charts 439.2 (54.9%) 800.5

Europe (%) Total GSM Subscribers Source: EMC, 2000

Mobile teledensity is an indicator, not only of overall cellular usage, but also of a nation’s overall economic condition and technological development. Countries with higher mobile phone penetration rates are also more likely to have more mature cellular markets, with operators that offer sophisticated wireless services, including mobile web browsing, messaging, and data transmission. The Research Centre of Bornholm (RCB) estimates that five countries–Germany, Italy, UK, France, and Spain–account for an astounding 76% of all mobile phones in use in Western Europe.

Mobile Phones in Use in Western Europe by Country, 2000

Rest of Germany Western 20% Europe 24%

Spain Italy 11% 17% France UK 12% 16%

Source: Research Centre of Bornholm, 2000

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Methodology However, because Eastern Europe lags far behind Western Europe in mobile Economy,Infrastructure, Users phone penetration (although subscriptions and usage are increasing eCommerce quickly), Europe as a whole lags behind North America. The subscriber base eAdvertising eFinance in Eastern Europe will begin to equal that of Western Europe around 2002, eWireless at which point Europe will have the highest cellular density of any region Denmark (although single Asian countries, such as Japan, will have a denser Finland subscriber base). Estimates from the ITU, calculated on the basis of France

Germany subscriber data reported at the end of 1999, put Europe in the lead, but that

Italy is because the ITU counts the Americas, including Canada, the US, Latin The Netherlands America, and the Caribbean, as a single region. Lower wireless penetration Norway in Latin America, particularly in major markets like Brazil and Mexico, Poland dragged down the Americas’ overall rating. In addition, the ITU separates Russia

Spain Oceania from other Asian nations, whereas many other estimates include

Sweden Asia/Pacific Rim as a single region. High penetration rates in Australia and United Kingdom New Zealand boost Oceania’s overall mobile density, whereas low Index of Charts penetration rates in China and India, the world’s two most populous nations, bring down Asia’s overall penetration rate.

Mobile Subscribers per 100 Inhabitants, 1999 (by region)

Africa 0.5

Americas 16.4

US 31.2

Asia 4.4

Japan 44.9

Europe 21.8

UK 40.8

Finland 66.7

Oceania 29.9

Australia 35.0

Source: International Telecommunication Union, 2000

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Methodology

Economy,Infrastructure, Users Comparative Estimates: Mobile Phone Penetration in eCommerce Europe, 2000–2004 eAdvertising 2000 2001 2002 2003 2004 eFinance EMC W. Europe 46.1% 56.1% 63.9% 69.7% 73.7% eWireless E. Europe 10.4% 14.6% 18.4% 22.5% 23.5% Denmark Sanford C. – 34.0% 49.0% 63.0% 75.0% 84.0% Finland Bernstein France & Co. Germany Kagan W. Europe 39.0% – – – – Italy International E. Europe 4.8% – – – – The Netherlands Cellular Norway Research W. Europe 62.0% 72.0% 78.0% 83.0% – Poland Centre of Russia Bornholm Spain Source: various, as noted, 2000 Sweden

United Kingdom The ITU’s ranking of the top 20 nations in wireless penetration shows the Index of Charts degree to which Western European, and, specifically, Scandinavian nations have taken the lead in wireless adoption.

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Methodology

Economy,Infrastructure, Users Top 20 Nations in Mobile Cellular Penetration, 1999 eCommerce eAdvertising Finland 66.7% eFinance Norway 61.8% eWireless

Denmark Sweden 57.8%

Finland Hong Kong 57.7% France Germany Italy 52.8% Italy

The Netherlands Taiwan 52.1% Norway Korea 50.4% Poland

Russia Denmark 49.9%

Spain Austria 48.9% Sweden

United Kingdom Luxembourg 48.7%

Index of Charts Singapore 47.5%

Portugal 46.8%

Israel 45.9%

Japan 44.9%

Netherlands 43.5%

Switzerland 42.0%

UK 40.8%

Iceland 39.2%

Ireland 37.8%

France 36.4%

Source: ITU Telecommunication Indicators Update, April-June 2000

Research by the Organization for Economic Cooperation and Development (OECD), which has examined trends in the adoption of wireless technology, displays the phenomenal growth in wireless usage in Europe in the past 5 years.

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Methodology

Economy,Infrastructure, Users Mobile Subscribers per 100 Inhabitants in European eCommerce OECD Countries, 1990, 1995 & 1999 eAdvertising 1990 1995 June 1999 eFinance Finland 4.5 19.9 60.7 eWireless Norway 4.6 22.6 54.7 Denmark

Finland Iceland 3.9 11.5 53.0 France Sweden 5.4 22.8 49.9 Germany Denmark 2.9 15.7 43.7 Italy

The Netherlands Italy 0.5 6.9 42.8

Norway Luxembourg 0.2 6.6 39.3 Poland Portugal 0.1 3.5 38.3 Russia Austria 1.0 4.8 38.3 Spain

Sweden Netherlands 0.5 3.5 32.0

United Kingdom Switzerland 1.8 6.2 30.8 Index of Charts UK 1.9 9.8 28.9 Ireland 0.7 3.7 27.3 Spain 0.1 2.3 27.2 Greece – 5.3 26.7 France 0.5 2.5 24.3 Belgium 0.4 2.3 21.5 Germany 0.3 4.6 21.2 Hungary – 2.6 12.8 Czech Republic – 0.4 12.5 Poland – 0.2 7.9 OECD Average 1.0 6.7 26.8 Note: Other OECD countries are Australia, Canada, Korea, Japan, Mexico, New Zealand, Turkey, and the US Source: Organization for Economic Cooperation and Development (OECD), 2000

Even though usage of mobile telephones is booming in Europe, enormous differences in penetration rates among countries remain.Finland – with a reputation for being one of the most “wireless” countries in Europe – leads the region in mobile phone use with a “cellular density” (mobile subscribers per 100) of 66.7. As of June 1999, more Finnish households had mobile telephones than fixed-line phones, with 20% of households exclusively using mobiles, according to the Ministry of Transport and Communications. By contrast, Poland has a penetration rate one sixth as large.While Poland’s mobile accounts grew 137% between 1998 and 1999, the growth was from a relatively tiny subscriber base. In theory, developing nations can leapfrog 20th-century technologies, but in practice, they still lack the resources to catch up to wealthier countries that have the capacity to more quickly diffuse new devices among the population.

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Methodology

Economy,Infrastructure, Users Number of Cellular Mobile Subscribers per 100 eCommerce Inhabitants in Selected Countries in Europe, 1999 eAdvertising eFinance Finland 66.7 eWireless Iceland 62.0 Denmark

Finland Norway 61.8

France Sweden 57.8 Germany Italy Italy 52.8 The Netherlands Austria 51.9 Norway Poland Denmark 49.9 Russia

Spain Luxembourg 48.7 Sweden Portugal 46.8 United Kingdom

Index of Charts Netherlands 43.5

Switzerland 42.0

UK 40.8

Ireland 37.8

France 36.4

Belgium 31.5

Spain 31.2

Greece 31.1

Germany 28.6

Estonia 26.8

Czech Republic 19.0

Hungary 16.0

Poland 10.2

Russia 0.9

Median 40.8

Source: International Telecommunication Union (ITU), 2000; Organization for Economic Cooperation and Development (OECD), Cellular Mobile Pricing Structures and Trends, May 2000

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Methodology

Economy,Infrastructure, Users Share of Population with Mobile Telephones in eCommerce Selected Countries in Europe, 1999 eAdvertising eFinance Finland 64.4% eWireless Sweden 60.3% Denmark

Finland Italy 44.2%

France Denmark 43.1% Germany Italy Luxembourg 36.9% The Netherlands Austria 35.7% Norway Poland UK 32.2% Russia

Spain Portugal 29.9% Sweden Greece 29.3% United Kingdom

Index of Charts Ireland 28.3%

Spain 26.3%

Belgium 25.8%

France 25.5%

Netherlands 24.2%

Germany 19.4%

Average 30.2%

Source: European Commission, 1999

Share of Population with Mobile Telephones in Selected Countries in Europe, 2000

Sweden 55%

Italy 50%

UK 32%

France 28%

Germany 21%

Source: Forrester Research, 2000

Because the fixed-line infrastructure in Eastern Europe is limited, mobile telephone use is growing at a much faster rate than that of fixed lines. As a result, the share of the total of all telephone lines has increased, growing from 5% to 27% between 1996 and 1999, according to the European Survey of Information Society (ESIS). The Strategis Group predicts that cellular connections in Eastern Europe will reach a projected total of 80 million in 2000, 51% of which will be accounted for by the Russian and Polish markets alone.

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Methodology

Economy,Infrastructure, Users Mobile Subscriptions per 100 Inhabitants in Eastern eCommerce Europe, by Country, 1999 eAdvertising Estonia 26.77 eFinance Czech Republic 18.95 eWireless

Denmark Slovakia 17.06

Finland Hungary 15.95 France Latvia 11.25 Germany Poland 10.21 Italy

The Netherlands Lithuania 8.97 Norway Slovenia 8.11 Poland Croatia 6.59 Russia Romania 6.25 Spain

Sweden Yugoslavia 5.69 United Kingdom Bulgaria 4.23 Index of Charts Macedonia 2.47 Bosnia 1.37 Russia 0.92 Moldova 0.41 Albania 0.29 Belarus 0.23 Ukraine 0.23 Source: International Telecommunication Union, 1999

The innovation most likely to bolster mobile phone use – and narrow the “wireless divide” – is not a sophisticated new piece of hardware, but rather a simple marketing tool: prepaid card service. By reducing the financial risks to vendors, prepaid service opens the door to a wider portion of the population, albeit at a higher per-call rate than traditional plans. Teens and college-age kids who cannot otherwise establish credit, and their parents who wish to give them phone service at a fixed monthly cost, are other lucrative markets. In countries like Italy and Portugal, which had low mobile phone penetration rates in the mid-1990s, the introduction of prepaid cards resulted in a substantial jump in users. By 1999, for example, Italy grew to 52.8 mobile subscribers per 100 from 6.9 in 1995. Portugal’s mobile telephone penetration rate jumped from 3.5 per 100 in 1995 to 46.8 in 1999, thanks largely to prepaid service. In countries with very little credit card use, prepaid phone cards might also function as digital wallets, enabling mobile users to have the price of small items purchased online deducted from the value of the card. Cellular subscribers on prepaid plans now account for a large and growing portion of the overall subscriber base. In major markets like Italy, prepaid subscribers represent more than three-quarters of the subscriber base. Finland, which has the highest cellular density of any country, has a very small prepaid subscriber base, in large part because monthly subscriptions are available at low rates.

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Methodology

Economy,Infrastructure, Users Prepaid Cellular Subscribers in Selected European eCommerce Countries, 2000 eAdvertising Country Operator Subscribers Prepaid eFinance as of as % eWireless Jan 1 2000 of base

Denmark Denmark Tele Danmark Mobil 1,311,000 23%

Finland Mobilix 284,000 50% France Finland Sonera Mobile 2,161,000 5% Germany France France Telecom 10,250,000 35% Italy SFR 7,400,000 47% The Netherlands Bouygues Telecom 3,200,000 50% Norway Germany D1 9,100,000 22% Poland D2 9,500,000 23% Russia E-Plus 3,798,000 33%

Spain VIAG Interkom 950,000 21%

Sweden Italy TIM 18,500,000 73%

United Kingdom OPI 10,418,321 80% Index of Charts Netherlands KPN 3,479,000 44% Libertel 2,179,000 60% Dutchtone 370,000 57% Ben Nederland 30,000 40% Norway Telenor Mobil 1,783,432 44% NetCom GSM 743,000 45% Poland Centertel 600,000 20% Era GSM 1,850,000 20% Plus GSM 1,500,000 25% Spain Telfonica Moviles 9,052,000 60% Sweden Telia Mobitel 2,507,000 41% Europolitan 864,000 20% Comviq 1,635,000 58% UK BTCellnet 6,745,000 45% Vodafone 7,940,000 53% Orange 4,900,000 50% One2One 4,157,000 54% Source: Merrill Lynch, 2000

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Methodology Telematics/Telemetry Economy,Infrastructure, Users Telematics, the integration of wireless communications, vehicle monitoring eCommerce eAdvertising systems, and location devices such as GPS (Global Positioning System)— eFinance “in-car intelligence” or location-based service – is a growing industry in eWireless Europe. Ultimately, like SIM (Subscriber Identification Module, which can Denmark store personal, financial and consumer preference data and contain Finland

France security encryption keys), telematics could allow consumers to purchase

Germany gas or other services without dispensing cash. Consumers could also benefit Italy from more easily accessible and quicker response roadside or emergency The Netherlands assistance when a vehicle’s communication system notifies a central Norway network of an airbag deployment, engine malfunction, or tire blowout. In Poland

Russia addition, they may be able to receive messages from traffic monitoring

Spain systems that warn them of congestion and suggest alternate routes. Sweden Telematics solutions are in the early stages of development, but with United Kingdom Europe’s heavily trafficked highways and urban areas, the potential for the Index of Charts telematics market is considerable. Telemetry, or remote utility meter reading, is another application that stands to benefit from cellular technology. According to Merrill Lynch, utility companies could save on labor and gasoline costs by installing cellular units inside utility meters, thereby bypassing a residential visit by a company representative. Libertel of the Netherlands has adapted this technology to parking meters. The system still requires a call to a central Libertel number to activate the service, but charges are deducted automatically from consumers’ bills. Eventually, Bluetooth may enable the transaction to be entirely automatic. In all, Merrill forecasts $2.2 billion in revenues from telematics, telemetry, and other machine applications (such as cellular-enabled vending machines) in Western Europe by 2005, rising to $15 billion in 2010.

Total Revenue from Telematics, Telemetry, and Other Machine Applications, 2005–2010 (in billions)

2005 $2.2

2006 $3.2

2007 $4.7

2008 $7.0

2009 $10.2

2010 $15.0

Note: Compounded annual growth rate (CAGR)=682% Source: Merrill Lynch, 2000

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Methodology Handset Sales Economy,Infrastructure, Users Because of the changes in progress in Europe’s underlying wireless eCommerce eAdvertising technology, many subscribers will be compelled to replace their current eFinance mobile handsets. As a result, the handset market will experience brisk eWireless growth over the next 5 years, with replacement handsets constituting the Denmark majority of sales. Features, functionality, and cost will be key factors in Finland

France determining product life cycles and replacement choices. The Research

Germany Centre of Bornholm predicts that the average lifetime of a mobile phone in Italy Europe will be 1.5 years in 2000, falling to 1.3 years in 2003. The Netherlands According to The Yankee Group, whose forecasts cover the Western Norway European market (not the region as a whole), replacement handsets Poland

Russia represented 55% of total sales in 2000. However, by 2005, they will

Spain comprise an astounding 98% of the overall handset market. The Yankee Sweden Group predicts sales of $22 billion in 2000, and forecasts that they will United Kingdom nearly double, to $43 billion, in 2005. Meanwhile, Sanford C. Bernstein & Index of Charts Co., whose estimates cover all of Europe, forecasts extremely aggressive growth, with sales reaching nearly 600 million units by 2004. In addition, growth in the number of subscribers on prepaid plans means that manufacturers will be selling a higher volume of less expensive, low- end phones. Prepaid subscribers who limit their use of airtime are less likely to invest in expensive handsets.

Cellular Handset Sales in W. Europe, by New and Replacement Phones, 2000-2005 (in millions and as % of total sales)

2000 74.5 (45%) 90.5 (55%)

2001 48.6 (25%) 146.8 (75%)

2002 25.6 (12%) 193.3 (88%)

2003 13.6 (6%) 221.6 (94%)

2004 7.4 (3%) 243.1 (97%)

2005 4.1 (2%) 261.2 (98%)

New sales Replacements Source: The Yankee Group, 2000

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Methodology

Economy,Infrastructure, Users Cellular Handset Sales in Europe, 2000-2004 (in eCommerce millions) eAdvertising 2000 179.7 eFinance eWireless 2001 276.5 Denmark 2002 380.1 Finland France 2003 481.6 Germany 2004 599.9 Italy

The Netherlands Source: Sanford C. Berstein & Co., 2000

Norway Poland Finland’s Nokia continues to dominate the handset market, with a 28% Russia share at mid-year 2000. European manufacturers, including Nokia, Spain

Sweden Sweden’s Ericsson, France’s Alcatel, and Germany’s Siemens, represent an

United Kingdom overwhelming 49% of the handset market.

Index of Charts Mobile Phone Sales Estimates Worldwide, Q2 2000 (in millions and as a % of total market share) Company Q2 2000 Q2 2000 shipments market share (%) Nokia 26.9 27.5% Motorola 15.3 15.6% Ericsson 10.1 10.3% Panasonic 5.5 5.6% Alcatel 5.5 5.6% Siemens 5.4 5.5% Samsung 5.4 5.5% Others 23.8 24.3% Total market 97.9 100% Note: Figures may not add up precisely due to rounding Source: Dataquest, Sept. 2000

Moreover, Merrill Lynch predicts that Nokia will increase its dominance of the handset market by 2003, ultimately accounting for 40% of worldwide sales. Motorola will be a very distant second.

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Methodology

Economy,Infrastructure, Users Handset Market Share Worldwide, by Company, eCommerce 2000–2003 eAdvertising Company 2000 2001 2002 2003 eFinance Nokia 33% 36% 38% 40% eWireless Motorola 18% 16% 16% 16% Denmark

Finland Ericsson 10% 10% 9% 9% France Samsung 6% 6% 7% 7% Germany Matsushita/Panasonic 5% 6% 6% 7% Italy Siemens 6% 8% 8% 8% The Netherlands

Norway Alcatel 5% 4% 3% 2% Poland Mitsubishi 4% 3% 3% 2% Russia Philips 3% 2% 1% 1% Spain

Sweden Others 10% 9% 9% 8%

United Kingdom Note: Figures may not add up precisely due to rounding

Index of Charts Source: Merrill Lynch, Sept. 2000

Wireless Charges The ITU’s World Telecommunication Development Report 1999: Mobile Cellular shows that the cost of the average cellular call was $0.35 per minute at mid-year 1999. According to Merrill Lynch, this represents seven times premium over the cost of a comparable voice call. By comparison, Merrill estimates that voice tariffs are only five times as expensive as data on a fixed line, and expects that the cellular premium on voice traffic will decline from 2000 to 2010.

Cellular Tariffs in Selected Countries in Europe, 1999 Per Minute Monthly Peak Off- 100 Minutes Subscription peak Basket Belgium $24.79 $0.72 $0.15 $42 Finland $1.37 $0.33 $0.19 $27 France $34.75 $0.34 $0.34 $35 Germany $14.18 $0.73 $0.22 $62 Italy $27.65 $0.66 $0.10 $49 Netherlands $25.18 $0.13 $0.13 $30 Portugal $22.76 $0.43 $0.17 $35 Spain $50.20 $0.40 $0.40 $50 Sweden $14.47 $0.35 $0.23 $43 UK $41.40 $0.40 $0.08 $41 Note: Tariffs from June-August 1999 and from least expensive tariff plan for each country (50 minutes of off-peak and 50 minutes of peak used in weighting) Source: International Telecommunication Union (ITU), 1999

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Methodology The Yankee Group has analyzed pricing trends across Europe and has found Economy,Infrastructure, Users that low-rate users save approximately 71% by purchasing prepaid card eCommerce service (as opposed to an annual subscription billed on a monthly basis). eAdvertising eFinance Their study also revealed that, on average, prepaid service is less expensive eWireless than even fixed-line service when users restrict their calls to 25 minutes of Denmark use (MOU) per month. Finland offers the least expensive monthly Finland subscription in Europe, at $12.37 per month (considerably higher than the France

Germany $1.37 noted in the 1999 ITU study), while monthly service in France is the

Italy most expensive, totaling $31.04. Italy offers the most economical prepaid The Netherlands service, while France again has the highest tariffs. Norway Poland Average Monthly Expenditure Comparison between Russia Prepaid, Postpaid, and Fixed-Line Services in Europe, Spain 2000 Sweden

United Kingdom 200 Minutes of use (MOU) Index of Charts $20.00 $45.42 $77.65

150 MOU $17.83 $37.11 $58.24

100 MOU $15.67 $28.65 $38.82

50 MOU $13.28 $19.80 $19.41

10 MOU $11.54 $13.76 $3.88

Fixed Postpaid Prepaid Source: The Yankee Group, 2000

Merrill Lynch forecasts increasing Average Revenue per User (ARPU) from 2000 to 2010, but believes that all of the growth will be in data transmission, primarily portal content, transactions, and subscription services. Moreover, Merrill Lynch believes that ARPU, not an increasing subscriber base, will drive operator revenues by the middle of the decade, largely due to changes in the ARPU mix. Voice currently accounts for 96% of European wireless operator revenues, but by 2010 will comprise only 50% of the revenue mix. Data will account for the other half.

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Methodology One factor to remember is that when GPRS networks are rolled out, Economy,Infrastructure, Users subscribers will benefit from instant, always-on connectivity. This will eCommerce likely result in a number of different billing options, as airtime will no eAdvertising longer be as relevant a metric as it is today. Particularly for the corporate eFinance users who will account for the majority of data transmission, operators eWireless

Denmark may charge for location-based services, data “packets” (i.e. per byte

Finland transmitted), or flat rates for a set of interactive services and content.

France However, these plans will be less viable for price-sensitive consumers.

Germany

Italy European Wireless Operator ARPU/Month, 2000, 2005 The Netherlands & 2010 Norway 2000 Poland $31.68 Russia

Spain $0.88 Sweden 2005 United Kingdom $29.04 Index of Charts $10.56 2010 $29.04 $29.04

Voice Data Notes: Figures quoted in Euros in report; converted at 12/14/00 rate of 1 Euro/0.88 $US and may not add up due to rounding Source: Merrill Lynch, 2000

European Wireless Operator Revenues from Voice and Data, 2000, 2005 & 2010

Data 4% Data 26%

Voice Voice 96% 74%

2000 2005

Data 50%

Voice 50%

2010 Source: Merrill Lynch, 2000

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Methodology C. Mobile Internet Users and Usage Economy,Infrastructure, Users eCommerce Mobile phones and other portable electronics such as PDAs may become eAdvertising the primary internet access devices for many people in Europe. The eFinance maturity of the European wireless market, combined with the fact that eWireless

Denmark nearly all of Europe is on a single wireless standard, have helped produce a

Finland market for sophisticated handsets. The most advanced combine PDA and France phone and allow for increasingly advanced applications. Germany The market for mobile internet content will undoubtedly evolve over the Italy next few years, particularly as next generation technology gets phased in. The Netherlands

Norway Mobile operators will have the most direct access to end users, and, Poland consequently, will be in the most advantageous position to provide value- Russia added services. One result may be that operators will partner with or look Spain to take over content providers. Sweden

United Kingdom

Index of Charts Short Messaging Just as e-mail has become ubiquitous, an even more truncated form of communication – short messaging (up to 164 alphanumeric characters in length) – is sweeping the European wireless web by storm. In one month (April 1999), Europeans sent nearly one billion short messages (SMS). With a growing number of websites that enable internet users to send messages as easily as an e-mail, the number of SMS likely reached 15 billion by the end of 2000.

SMS per Month in Selected European Countries, April 1999 (in millions)

Germany 200

Italy 150

Finland 75

UK 70

Norway 70

Sweden 70

Portugal 60

France 60

Spain 60

Denmark 50

Belgium 25

Greece 15

Source: GSM Association, 2000

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Methodology

Economy,Infrastructure, Users Number of SMS per Subscriber per Month in Selected eCommerce European Countries, 2000 eAdvertising Operator No. of SMS/ eFinance Subscriber/Month eWireless Finland Sonera 23 Denmark Norway NetCom 25 Finland Telenor 30 France Denmark TeleDanmark 40 Germany

Italy Italy OPI 18 TIM 10 The Netherlands

Norway Germany D1 32 D2 20 Poland

Russia UK Cellnet 15

Spain Vodafone 25 Orange 33 Sweden One 2 One N/A United Kingdom France Itineris N/A Index of Charts Bouygues 5 Spain Telefonica 13 Portugal Telecel 4 Greece Panafon 30 Stet Hellas 25 Netherlands Libertel N/A Switzerland Swisscom 9.8 Ireland Eircell 30 Source: Merrill Lynch, 2000

Growth in Number of SMS Sent via Mobile Phone in Western Europe, 1999–2000 (in billions)

April 1999 1

December 1999 3

March 2000 5

May 2000 8

October 2000 12

December 2000 15

Source: GSM Association, 2000

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Methodology With a growing number of websites that enable internet users to send Economy,Infrastructure, Users messages as easily as an e-mail, the number of SMS is likely to explode eCommerce further in the next year. SMS customers who are comfortable using their eAdvertising eFinance mobile phones as a source of text-based data are poised to become regular eWireless mobile internet users once more sophisticated handsets become available. Denmark Durlacher has estimated that 90% of SMS are person-to-person Finland communications and voice-mail notifications, while the remaining 10% France

Germany consists of content “pushed” to mobile handsets, such as news, stock

Italy quotes, sports scores, weather reports, and horoscopes. The Netherlands An important question is how quickly SMS customers who are Norway comfortable using their mobile phones as a source of text-based data grow Poland into full-fledged mobile internet users – who also read webpages and buy Russia

Spain online – once advanced cellphones become more affordable. At this point,

Sweden we lack sufficient data to predict the speed and degree to which people will United Kingdom transition from one technology to the other, although the following figures Index of Charts from IDC do indicate the potential size of the market.

SMS Users in Western Europe, 2000–2004 (in millions and as a % of total users and population) 2000 2001 2002 2003 2004 SMS Users 53.8 82.3 107.5 128.9 142.8 Percentage 26.6% 34.3% 40.3% 44.9% 47.0% of Total Users Percentage 13.8% 21.1% 27.4% 32.8% 36.2% of Population Source: International Data Corp. (IDC), 2000

Reassessing WAP Over the next few years, technologically advanced mobile devices will diffuse through the market, replacing more primitive models that are not internet-ready.According to IDC, by 2003 virtually all cellular or PCS mobile phones will be compatible with the Wireless Application Protocol (WAP), which, using Wireless Markup Language (WML), permits mobile phones to interface with computer networks. So far, WAP has been a disappointment in Europe, where subscribers have been discouraged by a lack of content, slow data transmission rates, and the cost of upgrading their handsets to WAP-compatible models. Industry analysts expect the quality of service and, hence, the experience of using the wireless web to improve markedly in 2001. The Yankee Group, for example, has designated 2001 as the “year of WAP” in Europe.

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Methodology

Economy,Infrastructure, Users WAP Users in Western Europe, 2000–2004 (in millions eCommerce and as a % of total users and population) eAdvertising 2000 2001 2002 2003 2004 eFinance WAP Users 7.1 17.8 30.5 42.0 51.8 eWireless Percentage 3.5% 7.4% 11.4% 14.6% 17.1% Denmark of Total Users Finland Percentage 1.8% 4.6% 7.8% 10.7% 13.1% France of Population Germany

Italy Note: Includes the number of users accessing WML content across the mobile data network, using either SMS, circuit-switched, or packet data The Netherlands Source: International Data Corp. (IDC), 2000 Norway

Poland

Russia Still, given the small screen size and keyboards of phones and PDAs, it will Spain take substantial marketing efforts, improved technology, and lower access Sweden costs for mobile internet use to be more than an adjunct to PC-based United Kingdom internet use for most of the population. For example, to maximize usability, Index of Charts mobile browsers will need to be voice activated, and devices will have to transmit content to larger viewing devices or have screens that unfold into bigger viewing areas, particularly for the large potential audience of data users that IDC predicts will emerge in 2001 and beyond.

Internet-Enabled Mobile/Handheld Computers in Europe, 2000–2003 (in millions)

2000 20.2

2001 104.6

2002 204.7

2003 273.5

Source: Dataquest, 2000

Data Users in Western Europe, 2000–2004 (in millions and as a % of total users and population) 2000 2001 2002 2003 2004 Data Users 13.1 26.3 40.9 54.6 67.1 Percentage 6.5% 11.0% 15.3% 19.0% 22.1% of Total Users Percentage 3.4% 6.7% 10.4% 13.9% 17.0% of Population Note: Data users include all circuit-switched and packet data users, but not SMS users Source: International Data Corp. (IDC), 2000

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Methodology Given the growing ubiquity of wireless phones in Europe, Ovum’s Economy,Infrastructure, Users prediction that Europe will eventually have the highest number of wireless eCommerce web users is not surprising. However, what remains unclear is whether eAdvertising eFinance Europeans will continue to use the wireless web to send short messages or eWireless whether they will adopt WAP applications, which to date have received a Denmark lukewarm reception. With NTT DoCoMo looking to acquire or partner with Finland European wireless operators, the possible entrance of the phenomenally France

Germany successful (in Japan) i-mode into the European market remains a wild card.

Italy

The Netherlands European Wireless Internet Users as a Percentage of

Norway Wireless Internet Users Worldwide, 2000-2005

Poland (in millions) Russia 2000 Spain 0.07 (1.2%) Sweden 6.0 United Kingdom

Index of Charts 2001 0.9 (5.5%) 16.2 2002 25.0(32.8%) 76.3 2003 68.4 (36.0%) 190.0 2004 115.5 (35.8%) 322.5 2005 171.6 (35.4%) 484.4

Europe (%) Worldwide Source: Ovum, 2000

In any case, most research firms see WAP users totaling approximately one-fifth to one-fourth of Europe’s population by 2003. The Research Centre of Bornholm predicts that 20% of Europe’s total population will be unique WAP users by 2003, meaning that they may access the web using other devices as well. Durlacher, on the other hand, is far more bullish on the future of the wireless internet in Europe, and is predicting 200 million mobile internet users in 2003, which corresponds to 85% of all mobile phone owners.

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Methodology

Economy,Infrastructure, Users WAP-Enabled Subscriptions in Europe, 2000–2005 (in eCommerce millions) eAdvertising eFinance 2000 15 eWireless 2001 45 Denmark

Finland 2002 87

France 2003 122 Germany Italy 2004 152 The Netherlands

Norway 2005 187

Poland Source: Datamonitor, 2000 Russia

Spain

Sweden Unique WAP Users in Europe, 2000–2003 (as a % of total

United Kingdom population)

Index of Charts 2000 3%

2001 9%

2002 15%

2003 20%

Source: Research Centre of Bornholm, 2000

WAP Users in Europe, 2000-2003 (as % of total mobile phone owners)

2000 8.9%

2001 22.0%

2002 50.7%

2003 85.4%

Source: Durlacher, 1999

One way to put in perspective the wireless internet’s projected impact in Europe is Morgan Stanley Dean Witter’s estimate that only 0.6% of households worldwide will connect to the internet through a wireless device in 2002.

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Methodology

Economy,Infrastructure, Users Mode of Connecting to the Internet Worldwide, 1998 eCommerce & 2002 (as a % of households) eAdvertising Dial-up modem eFinance 90.8% eWireless

Denmark 66.8%

Finland ISDN France 8.0% Germany

Italy 20.4% The Netherlands DSL Norway 0.1% Poland

Russia 4.4% Spain Cable modem Sweden 0.9% United Kingdom 7.7% Index of Charts Wireless 0.2% 0.6%

1998 2002 Source: Morgan Stanley Dean Witter, The European Internet Report, 1999

D. mCommerce The question is not whether more people will subscribe to mobile internet services. Rather, what remains unclear is the sort of experience they will have online, on-the-go, and therefore what kinds of commerce activities they will be able to engage in via their mobile phones. Until handset technology improves, wireless surfers will have to contend with limited content and tiny screens, suitable mainly for very brief snippets of information and truncated written exchanges.Eventually, mobile phones may function more as portable modems, connecting wirelessly to the nearest full-size keyboard and monitor.But for the next few years, the handset-based mobile internet experience will not compare with the internet viewed from a standard monitor. Mobile commerce has been touted as a means for Europe to advance beyond the US in online retail sales and financial transactions. According to research firm Ovum, Western Europe will exceed North America in both total mobile commerce revenue and per subscriber monthly expenditures. However, WAP-enabled phones only allow people with advanced handsets access to a sample of internet functions and a subset of websites. Moreover, WAP applications, so far limited in functionality, are often clunky to use and are not available in all markets.

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Methodology This qualitative difference has not been lost on the European e-consumer. Economy,Infrastructure, Users Despite heavy marketing and high cellular density rates, m-commerce services eCommerce are so far receiving tepid responses from internet users. According to Merrill eAdvertising Lynch, low credit card penetration rates may be partially to blame: credit card eFinance eWireless payment accounts for 90% of online purchases in the US but less than 20% in

Denmark Norway. Moreover, only 14% of Germans and Italians, two of Europe’s largest Finland mobile phone populations, have credit cards. However, because GSM mobile France phones will be increasingly based around SIM cards, they can be personalized Germany to store personal, financial, and customer information that will facilitate Italy transactions in countries in which a smaller percentage of the population has The Netherlands a credit card. It will also help to increase the security of transactions Norway

Poland performed with wireless devices. If customer information and the payment

Russia system are built into a mobile device, this will also speed transactions Spain performed with wireless devices, and with customers paying by the minute, Sweden speed is crucial. United Kingdom Forrester Research has forecast that by 2005, mobile phones will be the Index of Charts source for just 3% of total online retail sales in Western Europe, or $4.6 billion. By then, PCs will be used for 80% of online retail sales. Interactive digital TV, by contrast, is expected to account for 16% of online retail sales in the same period, amounting to $24.9 billion. However, both Ovum and Jupiter Research forecast that by 2005, one-third of the mobile e-commerce revenue will come from Western Europe. Durlacher believes that Italy, Germany, and the UK will generate the majority of m-commerce revenues by 2003.

European Mobile Commerce Revenue, 2000-2004 (in billions)

2000 $0.0 $0.4

2001 $0.1 $1.5

2002 $0.5 $3.4

2003 $1.7 $7.6

2004 $4.6 $14.5

2005 $7.8 $22.2

Western Europe Global Source: Jupiter Research Wireless Internet Model, September 25, 2000

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Methodology

Economy,Infrastructure, Users Mobile Commerce Revenues in Western Europe, eCommerce 2000–2005 (in billions) eAdvertising 2000 2001 2002 2003 2004 2005 eFinance Western Europe $0.0 $0.1 $0.5 $1.7 $4.6 $7.8 eWireless Global $0.4 $1.5 $3.4 $7.6 $14.5 $22.2 Denmark

Finland Source: Jupiter Research Wireless Internet Model, September 25, 2000

France Germany Mobile Commerce Revenues in Europe, 2000–2003 Italy (in billions) The Netherlands Norway 2000 $4.3 Poland

Russia 2001 $6.0 Spain 2002 $13.1 Sweden

United Kingdom 2003 $23.6

Index of Charts Source: Durlacher, 1999

Mobile Commerce Revenues in Europe by Country, 2003

Italy 19%

Germany 18%

UK 15%

France 12%

Spain 10%

Netherlands 4%

Portugal 3%

Sweden 3%

Austria 3%

Others 13%

Source: Durlacher, 1999

Ovum predicts that the average monthly purchase value per mobile subscriber will remain relatively equal in both North America and Western Europe through 2005. In both cases, the value will be low. Durlacher, despite its more optimistic forecast for overall m-commerce revenues, expects that revenues per subscriber will be lower. This would imply a large user base for m-commerce services.

Average Monthly per-Subscriber Purchase in North America and Western Europe, 2000–2005 2000 2001 2002 2003 2004 2005 North America $13 $21 $22 $27 $31 $35 Western Europe $14 $18 $23 $28 $33 $37 Source: Ovum, March 2000

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Methodology

Economy,Infrastructure, Users Mobile Commerce Revenues per Subscriber, eCommerce 2000–2003 eAdvertising eFinance 2000 $4.10 eWireless 2001 $5.00 Denmark

Finland 2002 $12.00

France 2003 $15.00 Germany Italy Source: Durlacher, 1999 The Netherlands

Norway Wireless gaming, which has already been a huge success on the fixed Poland

Russia internet, is an area with tremendous potential on the mobile internet as well,

Spain as the following forecast from Datamonitor indicates. The data transmission Sweden rates initially available on GSM networks may not allow for the kinds of United Kingdom interactive games that have proven popular on the fixed internet. However, Index of Charts betting on time-specific events, such as sports matches and lotteries, may prove more viable. Wireless subscribers will have the ability to enter a bet on a soccer game or even on the performance of a particular player in the game. They will also have access to lotteries across Europe, and undoubtedly, will be able to receive notifications when jackpots rise above certain preset levels. The Yankee Group has a more modest forecast for 2005, predicting that wireless gaming will account for $1.76 billion of traffic revenues. However, The Yankee Group cautions that even this revenue level is contingent on creating accessible games that cater to communities in different segments of the market.

Wireless Gaming Revenues in Western Europe and the US, 2000–2005 (in billions) 2000 2001 2002 2003 2004 2005 W. Europe $3.2 $29.3 $397.7 $1,180.6 $2,191.5 $3,610.9 US $2.0 $3.8 $130.3 $482.7 $1,250.9 $2,423.6 TOTAL $3.4 $33.1 $528.0 $1,663.3 $3,442.4 $6,034.5 Source: Datamonitor, 2000

E. mFinance TowerGroup predicts that the use of wireless financial services will grow precipitously over the next 5 years, with nearly 86 million users of wireless financial content and transaction capabilities expected by 2005 (counting Western and Eastern Europe and the former USSR). The European region will edge out the Asia/Pacific Rim region in total users. Banks are looking to wireless as a new channel into which they can profitably expand, offering not only value-added services like transactional capabilities but also a means of extending their reach beyond their core base of PC-based online banking subscribers. Wireless banking represents one of the most developed (and utilized) applications of WAP to date.

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Methodology

Economy,Infrastructure, Users Projected Users of Wireless Financial Services, 2000 & eCommerce 2005 (in millions) eAdvertising Asia/Pacific Rim eFinance 4.8 eWireless

Denmark 83.7 Finland Europe France 4.3 Germany

Italy 86.0 The Netherlands North America Norway 0.5 Poland 35.0 Russia Spain South America/Caribbean Sweden 0.3 United Kingdom 24.8 Index of Charts Africa/Middle East 1.1

Total 9.9 230.6

2000 2005 Source: TowerGroup, 2000

Current IDC estimates put the number of mobile bank accounts in Western Europe at 1.8 million, representing 14% of total online bank accounts in the region. However, IDC expects the number to increase to 31.8 million by 2004, taking into account that one person may have and regularly access more than one mobile bank account.

Mobile Bank Accounts in Western Europe, 2000 & 2004 (in millions)

2000 1.8

2004 31.8

Source: International Data Corp. (IDC), eBusiness Trends, Dec. 7, 2000

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Methodology Scandinavians have the highest percentage of mobile bank accounts, aided Economy,Infrastructure, Users in no small part by the extremely high cellular density rates in Northern eCommerce European countries and the advanced applications that subscribers enjoy as eAdvertising eFinance a result. The UK is a distant second. According to IDC, UK banks have been eWireless actively recruiting mobile banking customers, going even so far as to give Denmark away WAP-enabled phones. Finland France WAP-Enabled Mobile Banking Accounting in Germany Western Europe, 2000 Italy

The Netherlands Scandinavia 48% Norway Poland UK 22% Russia Germany 13% Spain Sweden France 5% United Kingdom

Index of Charts Italy 5% Spain 5%

Other 7%

Source: International Data Corp. (IDC), eBusiness Trends, Dec. 7, 2000

WAP-Enabled Mobile Phone Banking Customers in Europe, 2000–2004 (in thousands)

2000 175

2001 1,348

2002 4,194

2003 8,425

2004 13,890

Source: Datamonitor, 2000

Spending on the development, maintenance, and delivery of wireless financial services will rise commensurately, from $88.1 million in 2000 to $583.1 million in 2005. Western Europe, currently the leader in spending on the development of wireless financial, will cede the top spot to North America by 2005. However, its share of worldwide spending on wireless financial services will show only a modest decline. IDC, meanwhile, predicts a more modest level of IT spending in both 2000 and 2004, noting that its projections for increased revenues are contingent on the growing adoption of WAP among European wireless subscribers.

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Methodology

Economy,Infrastructure, Users Projected Information Technology Spending on eCommerce Wireless Financial Services, 2000 & 2004 (in millions) eAdvertising eFinance 2000 $43 eWireless 2004 $344 Denmark Finland Source: International Data Corp. (IDC); eBusiness Trends, December 7 , France 2000

Germany

Italy

The Netherlands

Norway

Poland F.mAdvertising Russia According to Ovum, Europe will lag behind the Asia Pacific region and Spain North America in mobile advertising spending through the end of this year. Sweden However, by 2002, Europe will assume the lead, and by 2004, will represent United Kingdom

Index of Charts 37% of global mobile advertising expenditures.

Worldwide Mobile Advertising Spending, 2000–2005 (in millions) 2000 2002 2003 2005 Europe $2 $443 $1,522 $5,979 Asia Pacific $7 $409 $1,271 $4,705 North America $4 $363 $1,212 $4,558 Latin America/Caribbean – – $20 $631 Middle East/Africa – $10 $60 $528 Total $13 $1,225 $4,085 $16,401 Source: Ovum, 2000

Worldwide Mobile Advertising Spending by Region, 2004 (in millions and as a % of total) Middle Latin East/Africa America $247.0 $190.0 (2.4%) (1.8%) North Amercia Europe $3,069.0 $3,882.0 (29.3%) (37.1%)

Asia Pacific $3,086.0 (29.5%) Total = $10,474.0 Source: Ovum, 2000

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Methodology Although somewhat pessimistic about wireless advertising in the near term, Economy,Infrastructure, Users Arthur Andersen estimates that advertising revenue will balloon from $884 eCommerce million in 2005 to more than $6 billion in 2010. eAdvertising eFinance eWireless Wireless Revenues per Application in Europe, 2000–2010 Denmark (in billions) Finland 2000 2002 2004 2006 2008 2010 France Voice $75.7 $89.4 $76.4 $72.2 $73.5 $73.6 Germany SMS $3.7 $7.2 $9.6 $10.0 $8.0 $3.2 Italy

The Netherlands eMail $0.1 $3.2 $7.0 $6.3 $5.2 $4.9 Norway Info services $0.1 $1.6 $8.0 $13.4 $14.2 $14. Poland and surfing Russia Advertising $0 $0.0 $0.3 $1.8 $4.0 $6.0 Spain Transactions $0 $0.3 $5.9 $12.6 $19.3 $26.0 Sweden

United Kingdom Business data $0 $2.0 $5.7 $7.3 $6.2 $6.0 Index of Charts Machine $0 $0.8 $3.2 $5.2 $6.9 $8.3 to machine Multimedia $0 $0 $0 $4.4 $8.3 $13.2 Total $79.6 $104.5 $116.1 $133.2 $145.6 $156.0 Source: Arthur Andersen, 2000

“Ads are not a business model.M-commerce will be the next big letdown.” — Shane Ginsberg, Managing Director, Razorfish

Average Mobile Advertising Revenue per User in Europe, 2000–2010 25

$19

15 $13

$6

5 $1 $0 $0 2000 2002 2004 2006 2008 2010 Source: Arthur Andersen, 2000

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Methodology Arthur Andersen also believes that ARPU will be remarkably consistent Economy,Infrastructure, Users among the European countries but should rise steadily over the next decade. eCommerce eAdvertising eFinance Average Mobile Advertising Revenue per User, 2000–2010 eWireless (by European country)

Denmark 2000 2002 2004 2006 2008 2010 Finland UK $0 $0 $1 $6 $13 $19 France France $0 $0 $1 $6 $13 $20 Germany

Italy Spain $0 $0 $1 $6 $13 $19

The Netherlands Scandinavia $0 $0 $1 $6 $13 $19 Norway Netherlands $0 $0 $1 $6 $13 $19 Poland Italy $0 $0 $1 $6 $13 $18 Russia

Spain Germany $0 $0 $1 $6 $14 $20

Sweden Portugal $0 $0 $1 $6 $12 $18 United Kingdom Greece $0 $0 $1 $6 $12 $18 Index of Charts Belgium $0 $0 $1 $6 $12 $18 Source: Arthur Andersen, 2000

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The eEurope Report

Methodology: The eMarketer Difference

I Economy,Infrastructure and Users

II eCommerce

III eAdvertising

IV eFinance

V eWireless VI Denmark 151 A. Overview 152 B. Internet Users 153 C. eDemographics 154 VID. B2C eCommerce 159 E. B2B eCommerce 161 F.eWireless 163

VII Finland

VIII France

IX Germany

X Italy

XI The Netherlands

XII Norway

XIII Poland

XIV Russia

XV Spain

XVI Sweden

XVII United Kingdom

Index of Charts

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Methodology A. Overview Economy,Infrastructure, Users eCommerce eAdvertising QuickStats: Denmark, 2001 eFinance Total population (in millions)1 5.4 eWireless 1 Denmark Population 14+ (in millions) 4.4 2 Finland Population living in urban areas (1999) 85% France GDP (PPP adjusted, in billions) (1999)3 $128 Germany GDP per capita (PPP adjusted) (1999)3 $23,800 Italy 4 The Netherlands PCs per 100 inhabitants (1999) 41.4 4 Norway Main telephone lines per 100 inhabitants (1999) 68.28 Poland Cellular subscribers per 100 inhabitants (1999)4 49.87 Russia ISPs (1999)3 12 Spain

Sweden Internet users (in millions) 2.0 United Kingdom Internet users as % of pop. 14+ 45% Index of Charts Compounded annual growth in users, 2001–2004 8% Total e-commerce (in billions) $2.28 Compounded annual growth in e-commerce, 2001–2004 141% B2B e-commerce (in billions) $1.64 B2C e-commerce (in billions) $0.64 Source: eMarketer, 2001; 1) US Census Bureau, 2001 (interpolated by eMarketer); 2) World Bank, 2000; 3) CIA World Fact Book, 2000; 4) International Telecommunication Union (ITU), 2000

Denmark’s strong technology infrastructure and service-focused economy account for the country’s widespread use of the internet.In fact, Denmark is among Europe’s greatest investors in, and users of, IT, PCs and the internet. One key reason for Danes being so wired is a national tax policy that allows employers to deduct from their taxes computers supplied to their employees, as long as they are used for work-related tasks.

Adult Population 14+ in Denmark, 2000–2004 (in millions)

2000 4.41

2001 4.42

2002 4.43

2003 4.44

2004 4.46

Source: US Census Bureau, 2000

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Methodology B. Internet Users Economy,Infrastructure, Users eCommerce Denmark’s 4.4 million adults represent a fairly small internet market, but eAdvertising the Danes are technophiles and voracious internet users. In 2000, 1.7 eFinance million Danes (14 and older), or 38% of the population, were active internet eWireless

Denmark users.

Finland By 2002, half of the entire 14 and older population will be active internet France users. This number will grow to 2.5 million by 2004, at which point the Germany penetration rate will be 55%. Italy

The Netherlands

Norway Active Internet Users 14+ in Denmark, 2000-2004 (in

Poland millions)

Russia

Spain 2000 1.7 Sweden 2001 2.0 United Kingdom

Index of Charts 2002 2.2

2003 2.3

2004 2.5

Source: eMarketer, 2001

Our estimates for Danish internet use are more conservative than those of Forrester Research and Taylor Nelson Sofres, but are higher than Danish market research firm PLS Rambøll Management.

Comparative Estimates: Internet Users in Denmark, 1999–2004 (in millions) 1999 2000 2001 2002 2003 2004 eMarketer – 1.7 2.0 2.2 2.3 2.5 International 1.5 – – – – – Telecom- munication Union Forrester Research – 2.4 2.9 3.3 3.6 3.8 PLS Rambøll – 1.4 – – – – Management Taylor Nelson – 2.3 – – – – Sofres Nielsen// – 1.5 – – – – NetRatings empirica 1.3 – – – – – Jupiter Research 1.9 – – – – – Source: eMarketer, 2001; various, as noted, 2000

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Methodology

Economy,Infrastructure, Users Internet Penetration in Denmark, 2000–2004 (active eCommerce internet users 14+ as % of population 14+) eAdvertising eFinance 2000 38% eWireless 2001 44% Denmark Finland 2002 50% France Germany 2003 53% Italy The Netherlands 2004 55% Norway Source: eMarketer, 2001 Poland

Russia

Spain

Sweden United Kingdom C. eDemographics Index of Charts Like internet users worldwide, Danish internet users tend to be fairly young. As the following figures from empirica show, in 1999 all of those under 18 and 81% of those surveyed in the 18 to 29 age group reported having used the internet, compared with a much lower 6% among Danes 65 and older.

Internet Use by Age in Denmark, 1999 (as a % of respondents in each age range reporting internet use)

<18 100.0%

18–29 80.7%

30–49 62.5%

50–64 30.9%

>64 5.9%

Source: empirica, 1999

When one examines the proportion of Danish internet users by age group (instead of the proportion of each age group that has ever used the internet) a normal curve takes shape. According to NetValue, the largest portion of Danish internet users – one-third of all internet users — are in the 35 to 49 age group.

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Methodology

Economy,Infrastructure, Users Internet Use by Age in Denmark, 2000 (as a % of eCommerce internet users in each age range) eAdvertising eFinance >64 <15 eWireless 7.4% 50–64 2.7% Denmark 16.8% 15–24 Finland 18.3%

France

Germany

Italy

The Netherlands 35–49 25–34

Norway 33.0% 21.9%

Poland

Russia

Spain Note: does not add to 100% due to rounding Source: NetValue, 2000 Sweden

United Kingdom Index of Charts Danish internet users are predominantly male, although a comparison of two estimates – one from early 2000 and the other from year-end 2000 – may reflect an actual increase in the number of female internet users in Denmark (instead of merely a discrepancy in methodology or a statistical artifact). That would be a positive sign in a country with fairly progressive ideas about gender equality.

Gender of Internet Users in Denmark, 2000 Male Female

NetValue 62.3% 37.7%

MMXI Europe 58% 42%

Source: NetValue, 2000; MMXI Europe, year–end 2000

Not surprisingly, internet use is higher among Danes with more education, as the following data illustrate. As of 1999, empirica’s surveys found that those with the highest educational attainment were more than two times as likely to be internet users than those with the least education.

Use of Internet or Other Online Services in Denmark, 1999 (by level of education)

Low Education 30.4%

Medium Education 61.2%

Higher Education 59.7%

Source: empirica, 1999

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Methodology The dearth of Danish content on the web is not likely to hinder Danish Economy,Infrastructure, Users internet users. As the following data from a recent Eurobarometer survey eCommerce show, three-quarters of the Danish population speaks English as a second eAdvertising eFinance language. As the survey covers a random sample of the population, the eWireless subset of internet users – who are more likely than the population at large Denmark to have graduated from secondary school and a university – are virtually Finland all fluent enough in English to navigate webpages. France

Germany

Italy Three Most Widely Spoken “Second” Languages in

The Netherlands Denmark, 2000 (as a % of the population that speaks

Norway them) Poland English Russia 76% Spain

Sweden German

United Kingdom 50% Index of Charts French and Swedish 8%

Source: Eurobarometer 52, 2000

For a nation known for its high internet penetration rates, it is curious that Danish internet users spend less time surfing than other Europeans – less than 5 hours per month as the following table indicates, compared with 8 hours per month in Germany. Even the time spent per surfing session, 24 minutes, is briefer than for a typical German or even Italian internet user. This is likely to be due to the higher internet access charges in Denmark than in Germany and Italy, although without a more detailed analysis it would be premature to assume this as the primary factor.

Average Duration and Frequency of Internet Access in Denmark, 2000 Number of sessions per month 12 Number of unique sites visited 16 Time spent per site (minutes) 18 Time spent per month (hours and minutes) 4:52 Time spent during surfing session (minutes) 24 Duration of a page viewed (seconds) 36 Active internet universe 1,502,195 Current internet universe estimate 2,581,270 Source: Nielsen//NetRatings, 2000

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Methodology NetValue’s estimate of days connected and duration online, shown for Economy,Infrastructure, Users comparison below, is fairly close to the Nielsen//NetRatings data. eCommerce eAdvertising Average Number of Days and Hours Connected to the eFinance Internet per Month in Denmark, 2000 eWireless

Denmark Days connected 10.3 Finland Duration (hours) 4.5 France Source: NetValue, 2000 Germany

Italy The Netherlands According to the International Data Corp. (IDC), at the end of 1999, more Norway than two-thirds of all Danish internet users surfed from home and nearly Poland half were online from the workplace. Keep in mind that these statistics do Russia

Spain not indicate the length or quality of surfing at each respective location;

Sweden workplace internet users can be online all day for business, spend hours at United Kingdom the office shopping online, or log on only once for e-mail. The data also do Index of Charts not show how much overlap there is between home and office internet use.

Home and Work Internet Users in Denmark, Year-End 1999 (as a % of all users)

Home 68%

Work 47%

Source: International Data Corp. (IDC), 2000

The following two charts confirm what internet researchers have observed over the past few years: e-mail and web browsers are killer applications that virtually all internet users report using. Online shopping didn’t even make it into NetValue’s top five online activities reported by Danish internet users, and is fairly low on the list of activities reported by respondents in a Eurobarometer survey in 2000.

Percentage of Internet Users in Denmark Engaging in Various Online Activities, 2000 Web browsing 97.8% Mail 71.8% Instant messaging 11.8% Audio-Video 14.5% Chatting 3.7%

Source: NetValue, 2000

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Methodology

Economy,Infrastructure, Users Online Activities in Denmark in Last 3 Months, 2000 eCommerce eMailed family, friends, or colleagues 86% eAdvertising Searched for information about specific product 54% eFinance Searched for educational material and documents 47% eWireless

Denmark Searched for vacation information 46% Finland Read newspaper articles 42% France Carried out bank operations 40% Germany

Italy Visited website of local authority 38%

The Netherlands Downloaded free software 38% Norway Searched for sports or leisure information 37% Poland Searched for health information 32% Russia

Spain Held video conferencing over internet 32%

Sweden Played computer games 28% United Kingdom Searched for job opportunities 23% Index of Charts Visited website of political party 21% Listened to radio or music using RealAudio, Windows Media, or QuickTime 20% Visited website of museum 19% Visited website of government 19% Bought a book 17% Answered a public opinion survey or market research survey 16% Bought a CD 13% Built own website 11% Watched TV channels on internet 10% Bought software 9% Made a telephone call via internet 9% Made a bid in online auction 7% Bought stocks 6% Something else 5% Don't know 3% Source: European Commission, Eurobarometer 53, 2000

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Methodology Not surprisingly, popular websites in Denmark include Tele Danmark and Economy,Infrastructure, Users Scandinavia Online, as the following data from Nielsen//NetRatings show. eCommerce eAdvertising Top 10 Web Properties in Denmark as of November eFinance 2000 eWireless

Denmark Property Unique Audience (in thousands) Reach % Finland 1. Lycos Network 837 55.7% France 2. Tele Danmark 766 51.0% Germany 3. Scandinavia Online 562 37.5% Italy

The Netherlands 4. MSN 508 33.9% Norway 5. Microsoft 507 33.8% Poland 6. Yahoo! 497 33.1% Russia 7. TV 2 336 22.4% Spain

Sweden 8. Kraks Fond 324 21.6% United Kingdom 9. Get2Net 299 19.9% Index of Charts 10. DR Online 240 16.0% Source: Nielsen//NetRatings, 2000

D. B2C eCommerce

eCommerce: B2C Revenues in Denmark, 2000–2004 (in billions)

2000 $0.3

2001 $0.6

2002 $1.4

2003 $3.0

2004 $6.4

Source: eMarketer, 2000

Denmark is well-wired, with an internet penetration rate of 38%. However, mail order shopping – a sector somewhat analogous to online retail — has not been a big business in Denmark, accounting for only 0.2% of total retail sales in 1999, according to the OECD. In part as a result of a lack of consumer enthusiasm for remote purchasing, B2C e-commerce appears to be developing modestly in Denmark and is not expected to amount to a very large portion of the consumer retail market for several years. We forecast B2C e-commerce rising from $341 million in 2000 to approximately $6.4 billion by 2004.

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Methodology

Economy,Infrastructure, Users Comparative Estimates: eCommerce in Denmark, eCommerce 2000–2004 (in trillions) eAdvertising 2000 2001 2002 2003 2004 eFinance eMarketer B2B $795.2 $1,644.0 $4,264.2 $11,229.1 $25,585.3 eWireless B2C $340.8 $639.3 $1,421.4 $2,984.9 $6,396.3 Denmark

Finland Forrester Research B2C $0.20 $0.50 $1.10 $2.30 $3.60 France Computer Economics B2B $14.12 $28.23 $35.29 $49.76 – Germany Forrester Research B2B $3.10 $6.90 $14.40 $26.60 $41.20 Italy IDC Total $1.18 $2.66 $5.190 –– The Netherlands

Norway Source: eMarketer, 2000; various, as noted

Poland Russia eCommerce in Scandinavia, 1999 & 2003 (in billions) Spain

Sweden B2B 1999 United Kingdom $2.0 Index of Charts B2B 2003 $43.0 B2C 1999 $0.7 B2C 2003 $6.1 Source: EbusinessEurope.com, 2000

A significant level of uncertainty in B2C e-commerce forecasts is the result of highly variable estimates of the portion of internet users who shop and buy online. For example, Taylor Nelson Sofres Interactive survey found that 16% of Danish internet users have purchased a good or service online during the previous month, yet the OECD reports that only 8% of Danish internet users are internet buyers.

Danish Internet Users Shopping Online, 1999 & 2001

1999 19.2%

2001 42.5%

Source: Electronic Commerce and Telework Trends (ECaTT), 2000

As the results of empirica’s survey of Danish citizens show, internet users in Denmark report that the biggest obstacle to online shopping, aside from not having the right equipment, is fear of fraud. Concerns about security will only be overcome through effective consumer protection policies and experience using the internet. Over time, e-consumers should become less fearful about shopping online.

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Methodology

Economy,Infrastructure, Users Barriers to Online Selling in Denmark, 1999 eCommerce Missing Customer Demand eAdvertising 38.0% eFinance No Need eWireless 48.6% Denmark

Finland Costs

France 3.5%

Germany Lack of Knowledge

Italy 9.6% The Netherlands Dangers (data security) Norway 0.0% Poland Dangers (fraud) Russia 0.0% Spain Product Characteristics Sweden 1.5% United Kingdom External Conditions Index of Charts 0.0% Others 0.0% Source: ECaTT National Report/empirica 1999

E. B2B eCommerce

B2B eCommerce Revenues in Denmark, 2000–2004 (in billions)

2000 $0.8

2001 $1.6

2002 $4.2

2003 $11.3

2004 $25.6

Source: eMarketer, 2000

In contrast to the B2C sector, B2B e-commerce in Denmark will grow from $795 million in 2000 to $25.6 billion in 2004. Many Danish companies are fully computerized, and a recent survey by the Danish Green’s Institute shows that 98% of all Danish companies have Internet access (although the European Survey of Information Society (ESIS) pegs the penetration rate at 91%). Approximately 57% of firms use EDI systems.

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Methodology In countries with fairly extensive government sectors, like Denmark, online Economy,Infrastructure, Users government procurement (B2G) is a potentially important market. Danish eCommerce government procurement of goods and services totaled approximately $14 eAdvertising eFinance billion in 1999, and to the extent even a few percent can be moved online, eWireless the impact on Danish e-commerce could be significant. Denmark Another area with enormous potential is in financial services. While Finland Europeans, for the most part, have not warmed to electronic banking, most France

Germany Danish banks offer internet services. In addition, the real estate industry

Italy has begun to move online, both advertising homes and providing access to The Netherlands financing and related services online. Tax filing and insurance are also Norway moving to the internet in Denmark. Poland Russia Business Internet Penetration, Year-End 1999 Spain

Sweden Estimation of internet penetration rate in companies United Kingdom 91% Index of Charts Estimation of extranet penetration rate in companies 28% Estimation of intranet penetration rate in companies 56% Estimation of EDI penetration rate in companies 57% Source: Danmarks Statistik, 2000

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Methodology F.eWireless Economy,Infrastructure, Users eCommerce With only 5.3 million people, Denmark presents a small, yet lucrative eAdvertising market for telecommunications services. This wealthy nation’s standard of eFinance living is among the highest in the world and according to the International eWireless

Denmark Telecommunication Union (ITU) over 68% of Danes have a telephone.

Finland It is not surprising, then, that the Danes also have high cellular France penetration rates. The most conservative figures estimate that 50% of Germany Danes (age 14 and older) subscribe to wireless services. Telestyrelsen, Italy Denmark’s national telecommunications agency and regulator, also reports The Netherlands

Norway that there were 3.0 million wireless subscribers as of the middle of 2000, Poland 1.2 million of whom were on prepaid plans. Russia Spain Comparative Estimates: Wireless Subscribers, 2000 (in Sweden millions and as a % of population) United Kingdom Index of Charts Telestyrelsen 3.0 (57%)

The Strategis Group 3.5 (67%)

FT Mobile Communications 2.2 (50%)

Note: FT Mobile Communications includes only subscribers over the age of 14 Source: Telestyrelsen (National Telecom Agency); The Strategis Group; FT Mobile Communications, 2000

Denmark’s maturity as a wireless market is evident in the volume of short messages transmitted by wireless internet users. By June 2000, Telestyrelsen had transmitted 278 million short messages sent by Danish users—an increase of 456% from April 1999.

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The eEurope Report

Methodology: The eMarketer Difference

I Economy,Infrastructure and Users

II eCommerce

III eAdvertising

IV eFinance

V eWireless

VI Denmark VII Finland 165 A. Overview 166 B. Internet Users 167 C. eDemographics 168 VIID. B2C eCommerce 173 E. B2B eCommerce 175 F.eWireless 176

VIII France

IX Germany

X Italy

XI The Netherlands

XII Norway

XIII Poland

XIV Russia

XV Spain

XVI Sweden

XVII United Kingdom

Index of Charts

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Methodology A. Overview Economy,Infrastructure, Users eCommerce eAdvertising QuickStats: Finland, 2001 eFinance Total population (in millions)1 5.2 eWireless 1 Denmark Population 14+ (in millions) 4.3 2 Finland Population living in urban areas (1999) 66% France GDP (PPP adjusted, in billions) (1999)3 $109 Germany GDP per capita (PPP adjusted) (1999)3 $21,000 Italy 4 The Netherlands PCs per 100 inhabitants (1999) 36.01 4 Norway Main telephone lines per 100 inhabitants (1999) 55.29 Poland Cellular subscribers per 100 inhabitants (1999)4 66.7 Russia ISPs (1999)3 36 Spain

Sweden Internet users (in millions) 2.3 United Kingdom Internet users as % of pop. 14+ 53% Index of Charts Compounded annual growth in users, 2001–2004 7% Total e-commerce (in billions) $4.07 Compounded annual growth in e-commerce, 2001–2004 136% B2B e-commerce (in billions) $3.34 B2C e-commerce (in billions) $0.73 Source: eMarketer, 2001; 1) US Census Bureau, 2001 (interpolated by eMarketer); 2) World Bank, 2000; 3) CIA World Fact Book, 2000; 4) International Telecommunication Union (ITU), 2000

Though a small country, with only 4.3 million adults, Finlands advanced telecommunications infrastructure gives consumers a strong incentive to communicate and shop. The economy has shifted from one that was export-led (with paper and wood products major sectors) to one led by communications (Nokia) and services.

Adult Population 14+ in Finland, 2000–2004 (in millions)

2000 4.3

2001 4.3

2002 4.3

2003 4.3

2004 4.4

Source: eMarketer, 2001

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Methodology Finland has also had one of the world’s least-regulated telecom markets, Economy,Infrastructure, Users fostering a tradition of competition and innovation. Low eCommerce telecommunications access charges are an important factor in the country’s eAdvertising eFinance advanced internet use. Finland has one of Europe’s least expensive costs eWireless for accessing the internet (only Italy is less expensive) according to the Denmark OECD. Finland

France

Germany

Italy The Netherlands B. Internet Users Norway In 2000, 44% of the Finnish adult population – 1.9 million individuals – Poland

Russia were active internet users. In 4 years, this number should increase to 2.8

Spain million, when nearly two-thirds of the adult population (65%) will be Sweden actively using the internet. United Kingdom Index of Charts Active Internet Users 14+ in Finland, 2000–2004 (in millions)

2000 1.9

2001 2.3

2002 2.5

2003 2.7

2004 2.8

Source: eMarketer, 2001

As presented in the table below, eMarketer’s internet user estimate falls between a range of comparative figures, from PLS Rambøll’s lower figure of 1.4 million internet users to Forrester’s 2.4 million. Forrester’s comparative estimate appears to be unrealistic, as it forecasts that 86% of the population (3.8 million Finns) will be online by 2004.

Comparative Estimates: Internet Users in Finland, 1999–2004 (in millions) 1999 2000 2001 2002 2003 2004 eMarketer – 1.9 2.3 2.5 2.7 2.8 ITU 1.5 ––––– Forrester Research – 2.4 2.9 3.3 3.6 3.8 PLS Rambøll Management – 1.4 –– –– Taylor Nelson Sofres – 2.3 –– –– Pan European Monitor – 1.9 –– –– empirica 1.3 ––––– Jupiter Research 1.9 ––––– Source: eMarketer, 2001; various, as noted, 2000

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Methodology This year, Finland will exceed a 50% internet penetration rate. By 2004, Economy,Infrastructure, Users when 65% of the adult population (14 and older) will be online, the nation eCommerce will be one of the most wired in the world. eAdvertising eFinance eWireless Internet Penetration in Finland, 2000–2004 (active

Denmark internet users 14+ as % of population 14+)

Finland

France 2000 44%

Germany 2001 52% Italy The Netherlands 2002 59% Norway Poland 2003 62% Russia Spain 2004 65% Sweden Source: eMarketer, 2001 United Kingdom

Index of Charts

C. eDemographics While somewhat dated by internet market research standards (it is from 1999), the table below illustrates two important demographic characteristics of the Finnish internet. As in other Nordic countries, Finnish men use the internet more than Finnish women, and younger Finns use it more than older ones.

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Methodology

Economy,Infrastructure, Users Non–Work Use of Computers and Internet in Finland, eCommerce 1999 (by gender and age group) eAdvertising Men <15 15–19 20–29 30–39 40–49 50–59 60+ Total eFinance Access to a home computer 82% 79% 50% 58% 51% 52% 15% 51% eWireless Use a PC weekly at home 70% 60% 34% 39% 29% 31% 10% 25% Denmark

Finland Access to the net at home 46% 34% 23% 25% 21% 20% 6% 23% France Use the net weekly at home 29% 28% 23% 24% 17% 17% 4% 19% Germany Use e-mail often in spare time 21% 32% 20% 21% 11% 16% 3% 16% Italy Use websites often in spare time 32% 36% 22% 21% 11% 11% 2% 17% The Netherlands

Norway Uses a chat line often in

Poland spare time 12% 17% 1% 1% 0% 0% 0% 3%

Russia Use word processing often in

Spain spare time 17% 36% 25% 22% 19% 22% 8% 20% Sweden Use graphics software often in United Kingdom spare time 11% 20% 12% 11% 3% 6% 3% 9% Index of Charts Have used the CD ROM of a home PC in the past 2 weeks 50% 47% 31% 27% 17% 11% 5% 23% Women <15 15–19 20–29 30–39 40–49 50–59 60+ Total Access to a home computer 74% 68% 46% 62% 62% 43% 8% 47% Use a PC weekly at home 55% 49% 32% 29% 32% 15% 2% 26% Access to the net at home 31% 29% 20% 19% 22% 8% 1% 16% Use the net weekly at home 17% 24% 18% 14% 13% 2% 1% 12% Use e-mail often in spare time 20% 28% 16% 12% 12% 8% 1% 12% Use websites often in spare time 18% 30% 14% 11% 6% 3% 0% 9% Use a chat line often in spare time 13% 14% 1% 1% 0% 0% 0% 2% Use word processing often in spare time 21% 32% 31% 21% 27% 11% 1% 19% Use graphics software often in spare time 10% 7% 9% 1% 6% 1% 0% 4% Have used the CD ROM of a home PC in the past 2 weeks 25% 27% 11% 12% 15% 1% 1% 10% Source: Information Society Advisory Board, 1999

Similar findings from empirica research substantiate that there is, indeed, a generation gap on the internet. Close to all under-29–year-old Finns report using the internet, while only a third of those 50 to 64 do so. By contrast, less than 10% of those in retirement (older than 64) are internet users.

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Methodology

Economy,Infrastructure, Users Internet Use by Age in Finland, 1999 (as a % of eCommerce respondents in each age range) eAdvertising eFinance Under 18 96.1% eWireless 18–29 93.2% Denmark Finland 30–49 68.6% France Germany 50–64 33.3% Italy The Netherlands 64+ 8.5% Norway Source: empirica, 1999 Poland

Russia Spain The research firm IM Cybersc@n presents a similar age distribution of Sweden internet users based on November 2000 data. Because of possible United Kingdom methodological differences, however, it is not possible to directly compare Index of Charts these estimates with the empirica figures above.

Internet Use in Finland by Age, November 2000 (as a % of population accessing internet)

15–24 58.9%

25–34 61.5%

35–44 52.7%

45–54 45.8%

55+ 11.3%

Source: IM Cybersc@n, 2000

As noted above, more Finnish men use the internet than Finnish women. While the difference is not as large as in some European countries like Italy and Spain, it is still significant, especially considering that the US has already reached gender parity.

Internet Use in Finland by Gender, November 2000 (as a % of population accessing internet)

Male 47.4%

Female 38.3%

Source: IM Cybersc@n, 2000

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Methodology Compared with Denmark, fewer Finns speak English as a second language. Economy,Infrastructure, Users For the internet to diffuse to those with lower levels of educational eCommerce attainment, local content will be extremely important. eAdvertising eFinance eWireless Three Most Widely Spoken “Second” Languages in Denmark Finland, 2000 (as a % of population speaking them) Finland

France English 51%

Germany

Italy Swedish 33%

The Netherlands German 11% Norway Poland Source: Eurobarometer 52, 2000 Russia

Spain

Sweden Despite substantially lower internet costs ($29 compared with $48 for a 20 United Kingdom hour bundle of access) than in Denmark, Finns surf slightly less frequently Index of Charts and for shorter periods each surfing session than Danes, as the following table shows. Without cross-national user survey data, however, it is unclear what accounts for this difference in duration and frequency.

Duration and Frequency of Internet Access in Finland, 2000 Number of sessions per month 11 Number of unique sites visited 15 Time spent per site (minutes) 19 Time spent per month (hours and minutes) 4:36 Time spent during surfing session (minutes) 25 Duration of a page viewed (seconds) 39 Active internet universe 970,795 Current internet universe estimate 1,706,956 Source: Nielsen//NetRatings, 2000

The table below shows that internet use has increased from 1999 to 2000 for all levels of intensity, from occasional to daily use.

Frequency of Internet Use in Finland, 1999–2000 (in millions) 1999 2000 Have sometimes used the internet 1.9 2.3 Have used at least one other internet application besides e–mail in past 3 months 1.6 2.1 Use the internet at least weekly 1.4 1.8 Use the internet daily/almost daily 0.7 1.0 Source: TOY, 2000

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Methodology Just as in Denmark, Finnish internet users tend to surf more from home Economy,Infrastructure, Users than from the workplace. As the following data from Taloustutkimus Oy eCommerce suggest, schools and universities are also important access points. eAdvertising eFinance eWireless Home and Work Internet Users in Finland, Year-End

Denmark 1999 (as a % of all users)

Finland

France Home 64%

Germany Work 48% Italy The Netherlands Source: International Data Corp. (IDC), 2000 Norway

Poland

Russia Number of Weekly Internet Users in Finland by

Spain Location of Access, 2000 (in thousands)

Sweden Home 1,132 United Kingdom

Index of Charts Work 954

School/university 341

Source: TOY, 2000

As expected, 7 of the top 10 web properties in Finland are Finnish. Sonera tops the list, with an audience of 446,000, or 23% of total internet users in Finland.

Top 10 Web Properties in Finland as of November 2000 Property Unique Audience (in thousands) Reach % 1. Sonera 446 46.0% 2. Jippii Group 347 35.7% 3. MSN 340 35.0% 4. Alma Media 273 28.1% 5. AltaVista 254 26.7% 6. Microsoft 252 26.7% 7. MeritaNordbanken 245 25.7% 8. Sanoma–WSOY 231 23.7% 9. Elisa Communications 214 22.7% 10. Osuuspankki 211 21.7% Source: Nielsen//NetRatings, 2000

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Methodology D. B2C eCommerce Economy,Infrastructure, Users eCommerce eAdvertising B2C eCommerce Revenues in Finland, 2000–2004 eFinance (in billions) eWireless Denmark 2000 $0.4 Finland

France 2001 $0.7

Germany

Italy 2002 $1.2

The Netherlands 2003 $2.3 Norway

Poland 2004 $4.3 Russia

Spain Source: eMarketer, 2000

Sweden

United Kingdom

Index of Charts Finns are quite technophilic. An estimated 44% of Finland’s 4.3 million people (14 and older) are active internet users. Although the OECD found that only 10% of Finnish internet users – and 4.7% of working age Finns — have actually made online purchases as of 2000, an estimated 44% of those surveyed in 1999 said that they intend to buy online by 2001. Jupiter Research predicts the percentage of internet buyers will reach only 37% after four years. As of 1999, Finnish B2C e-commerce was estimated to be only 0.2% of total retail sales, according to the OECD. However, we forecast significant growth in Finnish B2C e-commerce from $407 million in 2000 to $4.3 billion by 2004.

Shopping Online, 1999–2001 1999 2000 2001 ECaTT (% of Internet Users) 17.9% – 43.9% Angus Reid Group (% of All Adults) – 13.0% – Source: various, as noted, 2000

According to research from empirica, the median online expenditure in Finland per quarter in 1999 was $222. By 2002, Warburg Dillon Read estimates that quarterly online spending will increase to $701. If m-commerce succeeds anywhere, it will succeed in Finland. The country’s most popular wireless website in the beginning of 2000 was NetAnttila, an electronic department store. The widespread use of mobile telephones (67% of the population has a mobile phone) has encouraged Finland’s Nokia to invest heavily in this application.

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Methodology Online banking is fairly popular, with an estimated 1.5 million Finns with Economy,Infrastructure, Users internet-accessible accounts, 800,000 customers of Merita Nordbanken eCommerce alone. Of course, having an internet-accessible account, like owning a eAdvertising eFinance WAP-enabled phone, is quite different from using the application. Not all eWireless of those Finnish account holders move their money around online, Denmark although the bank reports 3.4 million logins per month. In the coming year, Finland Merita Nordbanken – and presumably other Finnish banks — will begin France

Germany offering life insurance and pension management over the Internet.

Italy

The Netherlands Comparative Estimates: eCommerce in Finland, Norway 2000–2004 (in billions) Poland 2000 2001 2002 2003 2004 Russia eMarketer B2B $1.6 $3.3 $8.8 $21.4 $49.3 Spain

Sweden B2C $0.4 $0.7 $1.2 $2.4 $4.3

United Kingdom Forrester Research B2C $0.2 $0.4 $1.0 $1.8 $2.8 Index of Charts Computer Economics B2B $10.2 $20.4 $25.5 $35.9 – Forrester Research B2B $2.0 $4.5 $ 9.6 $18.7 $30.6 IDC Total $1.3 $3.0 $5.8 –– Source: eMarketer, 2000; various, as noted

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Methodology E. B2B eCommerce Economy,Infrastructure, Users eCommerce eAdvertising B2B eCommerce Revenues in Finland, 2000–2004 eFinance (in billions) eWireless Denmark 2000 $1.6 Finland

France 2001 $3.3

Germany

Italy 2002 $8.8

The Netherlands 2003 $21.4 Norway

Poland 2004 $49.3 Russia

Spain Source: eMarketer, 2000

Sweden

United Kingdom

Index of Charts Finnish B2B e-commerce should grow rapidly. According to a survey by Statistics Finland, 95% of Finnish enterprises with 20 or more employees had Internet access at the end of 1999. Although only 10% of Finnish companies offer their products via the Internet at this time, Statistics Finland found that 52% of Finnish businesses had ordered some goods or services via the Internet. According to the Information Society Promotion Office (ISPO), 36% of Finnish companies used EDI systems. The potential exists for these companies to migrate from EDI systems to the internet.

Business Internet Penetration, 2000 Internet penetration rate in companies 95% Extranet penetration rate in companies 31% EDI penetration rate in companies 36% Intranet penetration rate in companies 56% Source: Danmarks Statistik, 2000

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Methodology F.eWireless Economy,Infrastructure, Users eCommerce The Finns are the world’s most intensive users of mobile phones (by 1999, eAdvertising 76% of Finnish households eschewed their landline phones and went eFinance totally mobile). In fact, ITU’s research found that only 55% of Finns have eWireless

Denmark telephones while 67% have mobile phones. According to the Ministry of Finland Transport and Telecommunications, revenues from mobile subscriptions France and services (excluding handsets) have exceeded those generated by fixed- Germany line service (sum of revenues from rentals, local and national long-distance Italy calls) since 1997. And because Finland has the lowest monthly subscription The Netherlands

Norway tariffs in Europe, prepaid service has not made the same inroads as in other Poland countries. As a result, revenue per subscriber has been increasing rather Russia than decreasing, as it has in other European nations. Spain The Strategis Group reported 3.7 million wireless subscribers in mid- Sweden 2000. Merrill Lynch forecasts a year-end total of 3.9 million, but given the United Kingdom

Index of Charts rate at which the subscriber base is growing the year-end total is likely to be higher.

Comparative Estimates: Wireless Subscribers and Penetration Rates in Finland, 1999–2000 (in millions and as a % of population)

FT Mobile Communications 2.8 (65%)

The Strategis Group 3.7 (87%)

McKinsey & Group 3.0 (67%)

OECD 2.8 (65%)

IDC 3.0 (70%)

ITU 2.9 (67%)

Merrill Lynch 3.9 (91%)

1999 2000 Source: various, as noted, 2000

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Methodology According to market research provider CIT-Online, revenues from data Economy,Infrastructure, Users transmission will increase nearly five-fold between 2000 and 2010. eCommerce Voice-based revenues will show only marginal decline. eAdvertising eFinance eWireless Voice and Data Revenues, 2000, 2005, & 2010 (in millions)

Denmark Voice Finland $1,396 France

Germany $1,263

Italy $1,156

The Netherlands Data Norway $180 Poland

Russia $459 Spain $881 Sweden

United Kingdom 2000 2005 2010 Index of Charts Source: CIT-Online, 2000

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The eEurope Report

Methodology: The eMarketer Difference

I Economy,Infrastructure and Users

II eCommerce

III eAdvertising

IV eFinance

V eWireless

VI Denmark

VII Finland VIII France 179 A. Overview 180 B. Internet Users 181 C. eDemographics 183 VIIID. B2C eCommerce 191 E. B2B eCommerce 195 F.eAdvertising 197 G. eFinance 198 H. eWireless 199

IX Germany

X Italy

XI The Netherlands

XII Norway

XIII Poland

XIV Russia

XV Spain

XVI Sweden

XVII United Kingdom

Index of Charts

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Methodology A. Overview Economy,Infrastructure, Users eCommerce eAdvertising QuickStats: France, 2001 eFinance Total population (in millions)1 59.6 eWireless 1 Denmark Population 14+ (in millions) 49.2 2 Finland Population living in urban areas (1999) 75% France GDP (PPP adjusted, in billions) (1999)3 $1,373 Germany GDP per capita (PPP adjusted) (1999)3 $23,300 Italy 4 The Netherlands PCs per 100 inhabitants (1999) 22.08 4 Norway Main telephone lines per 100 inhabitants (1999) 57.91 Poland Cellular subscribers per 100 inhabitants (1999)4 36.4 Russia ISPs (1999)3 128 Spain

Sweden Internet users (in millions) 7.4 United Kingdom Internet users as % of pop. 14+ 15% Index of Charts Compounded annual growth in users, 2001–2004 9% Total e-commerce (in billions) $7.23 Compounded annual growth in e-commerce, 2001–2004 147% B2B e-commerce (in billions) $5.43 B2C e-commerce (in billions) $1.81 Source: eMarketer, 2001; 1) US Census Bureau, 2001 (interpolated by eMarketer); 2) World Bank, 2000; 3) CIA World Fact Book, 2000; 4) International Telecommunication Union (ITU), 2000

With 49 million adults (14 and older), France is a formidable market for internet services. If content in French increases, access costs continue to drop, and alternative methods of accessing the web — like mobile phones – diffuse widely, the number of active adult internet users will grow to 9.7 million in 2004.If free ISP service becomes available, the duration of internet sessions are likely to increase, bolstering the number of active, one-hour-per-week French internet surfers.

Adult Population 14+ in France, 2000–2004 (in millions)

2000 48.9

2001 49.2

2002 49.5

2003 49.7

2004 49.9

Source: eMarketer, 2001

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Methodology Ironically, while the Minitel has been accused of slowing the growth of Economy,Infrastructure, Users internet use in France, the ubiquitous device may have gotten the French so eCommerce familiar with electronic transactions that they choose to embrace internet- eAdvertising eFinance based commerce.B2C sales will grow from $1.81 billion in 2001 to $21.8 eWireless billion in 2004 with much of that growth occurring in the travel and Denmark transport, computer equipment and software, and books/music/videos Finland sectors.Despite this growth, many French internet users report being France

Germany concerned about putting their personal information on the web.French law

Italy is fairly strict in the area of privacy, requiring firms compiling or exporting The Netherlands information allowing the identification of an individual to communicate Norway this to French regulatory authorities.Nevertheless, fears – however Poland unfounded –still inhibit online shopping. Russia

Spain

Sweden

United Kingdom Index of Charts B. Internet Users In the previous eEurope Report, France was described as an internet laggard. Use of the internet has been increasing steadily, though for 2000 we estimate that just over 6 million French adults actively used the internet, a mere 12% of the population.

Active Internet Users 14+ in France, 2000–2004 (in millions)

2000 6.0

2001 7.4

2002 8.3

2003 9.1

2004 9.7

Source: eMarketer, 2001

While this estimate is more modest than some market research firms (see table below) it is higher than a recent survey by France-based Médiamétrie. Based on a representative sample of the population, Médiamétrie found that 4.7 million French adults (18 and older) were regular internet users as of the first quarter of 2000. Of these, 2.2 million were daily users.

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Methodology

Economy,Infrastructure, Users Comparative Estimates: Internet Users in France, eCommerce 1999–2004 (in millions) eAdvertising 1999 2000 2001 2002 2003 2004 eFinance eMarketer – 6.0 7.4 8.3 9.1 9.7 eWireless ITU 5.7 ––– –– Denmark

Finland World Bank 10.5 13.8 15.8 17.5 19.6 20.1 France Angus Reid Group, Inc. 9.9 ––– –– Germany Médiamétrie 4.7 –––– Italy empirica 5.8 ––– –– The Netherlands

Norway Pan European Monitor – 9.2 –––– Poland Forrester Research 5.1 7.6 10.4 13.4 16.0 18.0 Russia Institut de l'Audiovisuel Spain et des Télécommunications Sweden en Europe (IDATE) – 5.6 8.0 10.0 12.0 – United Kingdom Taylor Nelson Sofres – 12.5 –––– Index of Charts Fletcher Research –––––18.0 eTForecasts – 6.3 –––– HSBC 3.2 ––– –– NetValue – 4.0 –––– European Information Technology Observatory (EITO) 5.5 7.7 10.1 13.0 15.9 18.6 ABN Amro Bank 5.5 ––14.5 –– Ernst & Young – 8.3 –––– Source: eMarketer, 2001; various, as noted, 2000

One factor that may affect our estimates is the possibility that, by summer 2001, French internet users will have unlimited, unmetered access plans. France Telecom is considering a new connection pricing plan for ISPs that would allow them to competitively offer such a service. France Telecom had previously rejected the idea of unmetered access because of the large volume of data traffic that would be generated and the potential for a loss of local call revenue to ISP user traffic. One of the factors behind the change is Prime Minister Lionel Jospin’s effort to improve internet access throughout the country. ISPs have also been fighting for France Telecom to offer a flat-rate connection plan. Virtually all ISPs that offered unlimited use internet service – with the exception of AOL France — have had to cancel them outright because the ISPs cannot afford to pay per-minute connection fees.

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Methodology

Economy,Infrastructure, Users Internet Penetration in France, 2000–2004 (active eCommerce internet users 14+ as a % of population 14+) eAdvertising eFinance 2000 12% eWireless 2001 15% Denmark Finland 2002 17% France Germany 2003 18% Italy The Netherlands 2004 20% Norway Source: eMarketer, 2001 Poland

Russia

Spain

Sweden United Kingdom C. eDemographics Index of Charts According to survey research by empirica, which measures the use of the internet as well as other online services, as with the French Minitel, the age distribution of users is older than in other European countries such as Denmark and Finland. Because the Minitel has been available for many years, is fairly simple to use, and is widely diffused throughout the country, it has an appeal to older French users that the internet has not yet cultivated.

Internet or Other Online Service Use by Age in France, 1999 (as a % of respondents in each age range reporting internet use)

Under 18 61.5%

18–29 66.5%

30–49 51.6%

50–64 38.6%

Over 64 17.2%

Source: empirica, 1999

Other estimates of age distribution, from NetValue and Médiamétrie, show that young people are heavy users and that those 50 and above are essentially unwired.

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Methodology

Economy,Infrastructure, Users Internet Use in France by Age, 2000 (as a % of eCommerce internet users in each age range) eAdvertising eFinance Under 14 4.7% eWireless 15–24 27.8% Denmark Finland 25–34 23.4% France Germany 35–49 29.9% Italy The Netherlands 50–64 11.2% Norway

Poland >64 2.9% Russia Note: does not add to 100% due to rounding Spain Source: NetValue, 2000 Sweden

United Kingdom

Index of Charts Internet Users in France by Age, 2000 (in thousands) 15–17 613 7.8% 18–24 2,283 29.0% 25–34 1,719 21.8% 35–49 2,088 26.5% 50–64 1,019 12.9% 65 + 147 1.9% Total 7,869 100% Source: Médiamétrie, 2000

The French internet is male dominated. According to Jupiter MMXI, 58% of French men use the internet at home compared with 33% of French women. Higher internet penetration by men occurs in all age groups.

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Methodology

Economy,Infrastructure, Users Home Internet Use in France by Gender and Age, 2000 eCommerce (as a % of internet users in each age range) eAdvertising 2–14 (Boys and Girls) Men Women eFinance 9.7% eWireless 15+ Denmark 57.8% Finland

France 32.5%

Germany 15–24 Italy 14.7% The Netherlands 10.1% Norway 25–34 Poland 19.7% Russia 11.2% Spain

Sweden 35–49

United Kingdom 16.9%

Index of Charts 9.3% 50+ 6.5% 1.9%

Source: MMXI Europe at Home Panel, 2000

NetValue’s survey of all locations of internet use found a gender imbalance of 60 to 40, men to women, while Médiamétrie measured approximately 57% to 43%.

Internet Users in France by Gender, 2000 Male Female

59.6% 40.4%

Source: NetValue, 2000

Internet Users (15+) in France by Gender, 2000 (in thousands)

Female Male 3,338 (42.4%) 4,531 (57.6%)

Total = 7,869 Source: Médiamétrie, 2000

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Methodology The French are fiercely proud of their language and are careful to defend it Economy,Infrastructure, Users against the global hegemony of English. Localization of websites is eCommerce critically important in France. In fact, as the Eurobarometer data indicate, eAdvertising eFinance only 30% of French people speak English as a second language. eWireless Denmark Three Most Widely Spoken ”Second“ Languages in Finland France, 2000 (as a % of the population that speaks France them) Germany English Italy

The Netherlands 30% Norway Spanish Poland 7% Russia

Spain German Sweden 6% United Kingdom

Index of Charts Source: Eurobarometer 52, 2000

The French are more frequent internet surfers – at 14 sessions per month – than the average Dane or Finn. Moreover, French ‘internauts’ spend a bit over 6 hours per month online, according to Nielsen//NetRatings. Comparable data from NetValue suggest that French surfing activity is not quite as intense.

Duration and Frequency of Internet Access in France, 2000 Number of sessions per month 14 Number of unique sites visited 16 Time spent per site (minutes) 23 Time spent per month (hours and minutes) 6:10 Time spent during surfing session (minutes) 27 Duration of a page viewed (seconds) 42 Active internet universe 4,779,171 Current internet universe estimate 8,589,013 Source: Nielsen//NetRatings, 2000

Average Number of Days and Hours Connected to the Internet per Month in France, 2000 Days connected 9.3 Duration (hours) 5.9 Source: NetValue, 2000

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Methodology According to Médiamétrie, about one-third of all French internet users are Economy,Infrastructure, Users online daily or close to every day. By contrast, eMarketer estimated that in eCommerce 2000, 6 million internet users were online an hour or more each week. Even eAdvertising eFinance adding Médiamétrie’s estimate for daily and “more than monthly” users, eWireless their figure amounts to only 5.3 million users. Denmark Finland Frequency of Internet Use in France, 2000 (users 15+ France in thousands) Germany

Italy

The Netherlands

Norway Once a month Daily or Poland or less nearly daily Russia 2,524 (32.1%) 2,518 (32.1%)

Spain

Sweden

United Kingdom More than Index of Charts once a month 2,827 (35.9%) Total = 7,869 Source: Médiamétrie, 2000

As in other countries, home is where the surfing occurs. However, an estimated 42% of French internet users log on from a different location – either school, a cybercafe, or a public place like a library.

Location of Internet Access in France, 2000 (in thousands) Work 2,908 (37.0%) Home 3,726 (47.4%) Other locations (schools, cybercafes, libraries, universities) 3,289 (41.8%)

Source: Médiamétrie, 2000

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Methodology Communication and information retrieval, more than shopping, are the Economy,Infrastructure, Users main activities of French internet users, as the following table illustrates. eCommerce Three times as many respondents to the Eurobarometer survey reported eAdvertising eFinance sending e-mail to a family, friend or colleague as purchasing a CD online. eWireless Only 10% of respondents said they purchased a book online. Denmark Finland Online Activities in France in Last 3 Months, 2000 France eMailed family, friends, or colleagues 59% Germany

Italy Searched for educational material and documents 43%

The Netherlands Searched for sports or leisure information 42% Norway Downloaded free software 41% Poland Searched for information about specific product 41% Russia

Spain Searched for vacation information 38% Sweden Read newspaper articles 29% United Kingdom Visited website of museum 27% Index of Charts Played computer games 24% Searched for job opportunities 23% Listened to radio or music using RealAudio, Windows Media, or QuickTime 20% Bought a CD 19% Visited website of local authority 18% Visited website of government 18% Carried out bank operations 16% Searched for health information 15% Bought a book 10% Built own website 10% Made a telephone call via internet 10% Bought software 6% Bought stocks 6% Something else 6% Don't know 5% Watched TV channels on internet 4% Made a bid in online auction 4% Answered a public opinion survey or market research survey 4% Visited website of political party 3% Held video conferencing over internet 3% Source: European Commission, Eurobarometer 53, 2000

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Methodology NetValue’s survey results, though slightly different than those of the Economy,Infrastructure, Users Eurobarometer survey, paint essentially the same picture. In France, the eCommerce internet is primarily a means to send e-mail (or instant messaging or to eAdvertising eFinance chat) and to search for information. eWireless Denmark Online Activities of Internet Users in France, 2000 (as Finland a % engaging in each activity) France Web browsing Germany

Italy 96.9% The Netherlands Mail Norway 66.3% Poland

Russia Audio-Video

Spain 20.3% Sweden Instant messaging United Kingdom 11.9% Index of Charts Chatting 11.1%

Source: NetValue, 2000

The number one internet service provider in France, as of the end of 1999, was Wanadoo. AOL France came in third. If, as expected, France Telecom will implement a telecommunications rate that allows flat rate and free ISPs, this popularity list will change.

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Methodology In 2000, wanadoo was the number one domain in France, reaching more Economy,Infrastructure, Users than half of the internet population. According to NetValue, wanadoo.fr eCommerce reached 54.1% of French internet surfers; Nielsen//NetRatings estimates eAdvertising eFinance that it reached 66%. eWireless Denmark Top 10 Domains in France, 2000 Finland Domain Reach (%) France wanadoo.fr 54.1 % Germany

Italy voila.fr 44.8 % The Netherlands yahoo.fr 38.3 % Norway yahoo.com 37.2 % Poland free.fr 36.7 % Russia

Spain multimania.fr 29.6 % Sweden libertysurf.fr 29.6 % United Kingdom msn.com 25.2 % Index of Charts club–internet.fr 25.1 % msn.fr 22.5 % Source: NetValue, 2000

Top 10 Web Properties in France, as of November 2000 Property Unique Audience (in millions) Reach % 1. Wanadoo 3.1 65.8% 2. Yahoo! 2.0 41.1% 3. LibertySurf 1.9 38.6% 4. ProXad 1.7 36.1% 5. Lycos Network 1.7 34.7% 6. Groupe MultiMania 1.4 30.2% 7. AOL Websites 1.4 30.0% 8. MSN 1.4 29.3% 9. Vivendi 1.4 28.5% 10. Microsoft 1.4 28.4% Source: Nielsen//NetRatings, 2000

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Methodology D. B2C eCommerce Economy,Infrastructure, Users eCommerce eAdvertising B2C eCommerce Revenues in France, 2000–2004 eFinance (in billions) eWireless

Denmark 2000 $1.1

Finland

France 2001 $1.8

Germany 2002 $4.2 Italy

The Netherlands 2003 $9.4 Norway Poland 2004 $21.8 Russia

Spain Source: eMarketer, 2000

Sweden

United Kingdom

Index of Charts B2C sales have grown from $1 billion in 2000 to $21.8 billion in 2004 with much of that growth occurring in the travel and transport, computer equipment and software, and books/music/videos sectors. Despite this growth, many French internet users report being concerned about putting their personal information on the web. French law is fairly strict in the area of privacy, requiring firms compiling or exporting information allowing the identification of an individual to communicate this to French regulatory authorities. Nevertheless, fears – however unfounded –still inhibit online shopping.

Ten Leading eCommerce Sites in France, July 2000 Rank Unique Visitors Penetration (in Thousands) (%) 1 sncf.fr 429 9.5% 2 fnac.com 420 9.3% 3 ibazar.fr 406 9.0% 4 rueducommerce.fr 325 7.2% 5 alapage.com 307 6.8% 6 degriftour.fr 254 5.6% 7 cdiscount.com 194 4.3% 8 credit-agricole.fr 169 3.7% 9 socgen.com 144 3.2% 10 aucland.fr 141 3.1%

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Methodology

Economy,Infrastructure, Users Online Shoppers Buying, 2000 (by category of eCommerce purchase) eAdvertising Leisure Travel eFinance 44% eWireless

Denmark Music Finland 39% France Toys Germany

Italy 17% The Netherlands Books Norway 17% Poland

Russia Stocks/Mutual Funds Spain 17% Sweden

United Kingdom Source: Taylor Nelson Sofres, July 2000

Index of Charts This inhibition may be reflected in the fact that French internet users make fewer unique visits to e-commerce sites than their counterparts in countries like Germany and the UK, as the following figure from MMXI shows. According to a survey for ECaTT, nearly 20% of French internet users shopped online in 1999. Yet, Taylor Nelson Sofres Interactive found that only 7% of those French internet users they surveyed purchased goods or services online in the month prior to the survey, and the OECD reports that 8% of French internet users are internet buyers. Only a survey by IPSOS suggests that French internet users are more likely than internet users in other European countries to have already purchased something online or plan to buy online in the future. And, according to Mediangle, the number of French internet buyers (including those influenced by the internet to make a purchase offline) grew by approximately 36% between the end of 1998 and the end of 1999.

Unique Visitors to Online eCommerce Sites in France, Germany, and the UK, July 2000 (in millions)

France 2.4

Germany 4.3

UK 5.8

Source: MMXI Europe, 2000

Shopping Online in France, 1999–2001 1999 2000 2001 ECaTT (% of internet users) 19.9% – 35.3% Angus Reid Group (% of all adults) – 5% – Source: various, as noted, 2000

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Methodology

Economy,Infrastructure, Users Purchasing Behavior of Internet Users, 2000 eCommerce eAdvertising Don't Have already eFinance know purchased online eWireless 1% 15% Denmark Finland Do not intend to France purchase online

Germany 36% Intend to purchase Italy in future The Netherlands 48% Norway Total Yes = 63% Poland Source: IPSOS, 2000 Russia

Spain Sweden Number of French Internet Users Having Made a United Kingdom Direct or Indirect Online Purchase, 1998–1999 Index of Charts November 1998–April 1999 580,000

May 1999–October 1999 790,000

Source: Mediangle, 2000

Online buyers tend to be early adopters. Thus, an overwhelming majority of online buyers in France, like those in the UK and Italy, are men, according to a survey by Ernst and Young.

Online Buyers in France, 2000 (by gender) Male Female

76% 24%

Source: Ernst & Young, 2000

Online banking appears to be gaining in popularity in France. Over 500,000 internet users with bank accounts now subscribe to the online home banking services offered by almost 90 banks in France. The e-brokerage market has also been expanding rapidly, with the number of brokers offering online services growing from four in 1997 to 30 at the end of 1999.

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Methodology

Economy,Infrastructure, Users Actual Purchases among Internet Users Who Have eCommerce Shopped Online during Past Month in France, 2000 eAdvertising Food 11% eFinance Clothes 11% eWireless Jewelry 0% Denmark

Finland Toys/games 17% France Music/CDs 39% Germany Videos 6% Italy

The Netherlands Books 17%

Norway Sports equipment 6% Poland Furniture 11% Russia Electronics 6% Spain

Sweden PC Hardware 17%

United Kingdom PC software 17% Index of Charts Business travel 6% Leisure travel 44% Tickets 0% Toiletries 0% Stocks 17% Car 0 Other 0 Source: Taylor Nelson Sofres, 2000

Why French Internet Users Choose Not to Shop Online, 2000 Uncomfortable sending credit card information 79% Prefer to see product before purchasing 35% No credit card 11% Can’t get enough information about products to make decision 8% Not confident with online merchants 39% Can’t talk to salesperson 22%

Source: Ernst & Young, 2000

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Methodology E. B2B eCommerce Economy,Infrastructure, Users eCommerce eAdvertising B2B eCommerce Revenues in France, 2000–2004 eFinance (in billions) eWireless Denmark 2000 $2.5 Finland France 2001 $5.4

Germany

Italy 2002 $13.9

The Netherlands 2003 $35.4 Norway

Poland 2004 $87.2 Russia

Spain Source: eMarketer, 2000

Sweden

United Kingdom

Index of Charts Total e-commerce in France is expected to increase from $3.6 billion in 2000 to $109 billion in 2004, in large measure due to increasing B2B e-commerce – the lion’s share of e-commerce dollars. B2B e-commerce is forecast to increase from $2.5 billion in 2000 to $87 billion in 2004.

eCommerce in France, 2000–2004 (in billions) 2000 B2C B2B $0.8 $9.1 2001 $1.8 $20.4 2002 $3.8 $45.3 2003 $7.9 $96.9 2004 $15.0 $191.4 Source: Forrester Research, 2000

eCommerce in France, 1999 & 2003 (in billions) B2C 1999 $0.2 B2C 2003 $9.1 B2B 1999 $1.1 B2B 2003 $33.5 Source: EbusinessEurope.com, 2000

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Methodology But French firms have not adopted e-commerce as voraciously as their Economy,Infrastructure, Users Scandinavian counterparts. As of January 2000, there were almost two eCommerce thousand French businesses selling over the Internet, a 100% increase in eAdvertising eFinance one year. However, the percentage of businesses using the internet is 69%, eWireless compared to close to 100% internet penetration in some Northern European Denmark countries, as the figure below shows. Finland France French Businesses That Use Electronic Data Germany Interchange, 1999–2000 Italy

The Netherlands 1999 28% Norway

Poland 2000 46% Russia

Spain Source: UK Online, 2000; International Benchmarking Study, 2000

Sweden United Kingdom Businesses with Internet Access in France, Index of Charts 1997–2000

1997 13%

1998 24%

1999 34%

2000 80%

Source: UK online International Benchmarking Study, 2000

Internet Penetration in Businesses, Year-End 1999 Estimation of internet penetration rate in companies 69% Estimation of extranet penetration rate in companies 15% Estimation of intranet penetration rate in companies 30%

Source: Sessi-Enquête TIC, 1999

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Methodology F.eAdvertising Economy,Infrastructure, Users eCommerce France, as opposed to Germany and the UK, has been relatively slow to eAdvertising embrace the internet. By all accounts though France’s progress going eFinance forward may be surprisingly fast. eAd spending in France is expected to eWireless

Denmark grow from about $88 million in 2000 to $782 million in 2005.

Finland France eAdvertising Spending in France, 1998-2005 (in Germany millions) Italy

The Netherlands 1998 $5.0 Norway 1999 $35.6 Poland

Russia 2000 $87.7 Spain 2001 $145.7 Sweden

United Kingdom 2002 $295.0 Index of Charts 2003 $449.0

2004 $564.2

2005 $781.7

Source: eMarketer, 2000

Compared to web ad spending estimates in France by other researchers, eMarketer expects somewhat higher growth through 2003, but somewhat slower growth thereafter.

Comparative Estimates: eAdvertising Spending in France, 1998-2004 (in millions) Source 1998 1999 2000 2001 2002 2003 2004 24/7 Media – $26.0 –– – – – DoubleClick France – $52.5 $75.0 –––– eMarketer $5.0 $35.6 $87.7 $145.7 $295.0 $449.0 $564.2 Forrester Research – $33.0 $71.0 $135.0 $243.0 $425.0 $679.0 Zenith Media ––$85.0 –––– Source: various, as noted, 2001

J.P. Morgan estimates there were 2 million online banking accounts in France as of 2000 and that there will be 9.5 million by 2003.

Online Banking Accounts in France, 2000–2003 (in millions )

2000 2.0

2001 5.0

2002 7.0

2003 9.5

Source: J.P. Morgan, 2000

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Methodology Datamonitor estimates that there were only 370,000 online banking Economy,Infrastructure, Users customers in 2000, but that this number will grow to 2.1 million online eCommerce bankers by 2004. eAdvertising eFinance eWireless Online Banking Customers in France, 2000–2004 (in

Denmark millions)

Finland

France 2000 0.37 Germany 2001 0.67 Italy

The Netherlands 2002 1.1

Norway 2003 1.6 Poland Russia 2004 2.1 Spain

Sweden Source: Datamonitor, 2000

United Kingdom

Index of Charts

G. eFinance

eInvesting J.P. Morgan asserts that a growing interest by both the public and media in equity investments has fueled a strong demand for market access and investment advice. In 2000, J.P. Morgan estimates 500,000 online brokerage customers in France, accounting for 9.4% of all French retail shareholders. By 2003, nearly 38% of French retail shareholders will be online brokerage customers.

Retail Shareholders and Online Brokerage Customers in France, 2000-2003 (in millions) 2000 2001 2002 2003 Retail 5.3 5.5 6.0 6.6 shareholders Online 0.5 0.9 1.6 2.5 brokerage customers % of retail 9.4% 16.4% 26.6% 39.7% shareholders Source: JP Morgan, 2000

Similarly, BNP Paribas finds wide-ranging advertising campaigns by many brokerages have led to strong growth in the number of accounts. BNP Paribas estimates 400,000 online brokerage accounts were established by year’s-end 2000. By 2005, BNP Paribas expects 3.2 million accounts.

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Methodology

Economy,Infrastructure, Users Online Brokerage Accounts in France, 2000-2005 (in eCommerce millions) eAdvertising eFinance 2000 0.4 eWireless 2001 0.9 Denmark

Finland 2002 1.3 France 2003 1.8 Germany Italy 2004 2.5 The Netherlands

Norway 2005 3.2

Poland Source: BNP Paribas Equities, 2000 Russia

Spain

Sweden

United Kingdom Index of Charts H. eWireless Deregulation, increased competition, decreased tariffs, and fixed-price next-generation licenses have all contributed to France’s remarkable growth in new telecommunications services. Although mobile telecommunication services have developed more slowly in France than in Scandinavia, over half of France’s population today has a wireless phone. According to Merrill Lynch the wireless penetration rate will reach nearly 90% by 2004. The number of subscribers will rise from 30 million in 2000 to 54 million in 2004. ABN Amro Bank’s projections follow a similar trajectory. France Telecom estimates that France had only 22 million subscribers in 2000, but predicts the number will double to 45 million by 2004. CIT-Online, on the other hand, predicts subscriber volume will level out at 34.1 million in 2005. The variance among research estimates is due, in part, to different definitions of a wireless subscriber. For example, some firms include teens (ages 14 to 17) in their analyses while others do not. Given the pervasiveness of cellular use among younger individuals (especially in mature European markets) excluding teen users greatly prejudices the validity of wireless market research.

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Methodology

Economy,Infrastructure, Users Comparative Estimates: Wireless Subscribers in eCommerce France, 1999–2000 (in millions) eAdvertising ITU eFinance 21.4 eWireless Denmark The Strategis Group Finland 24.0 France

Germany World Bank Italy 16.9 The Netherlands 26.0 Norway

Poland France Telecom Russia 22.0

Spain CIT-Online Sweden

United Kingdom 20.3

Index of Charts 31.3

Global Mobile 20.3

ABN Amro Bank 20.6 31.3

Merrill Lynch 30.0

FT Mobile communications 14.6

Forrester Research* 16.6

1999 2000 Notes: *Figure based on estimate of 28% penetration and a base population of 59.3 million people (all ages) Source: various, as noted, 2000

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Methodology

Economy,Infrastructure, Users Comparative Estimates: Wireless Subscribers and eCommerce Penetration Rates in France, 2000–2004 (in millions eAdvertising and as a % of total population) eFinance 2000 eWireless 30.0 (51%) Denmark

Finland 31.3 France 2001 Germany 37.1 (62%) Italy

The Netherlands 37.7 Norway 2002 Poland 41.8 (70%) Russia 43.0 Spain Sweden 2003 United Kingdom 48.0 (80%) Index of Charts 47.7

2004 53.8 (89%) 52.0

Merrill Lynch ABN AMro Bank Source: various, as noted, 2000

Datamonitor predicts vigorous growth in the sales of PDA and other handheld devices.

Sales of Handheld Devices in France, 2000–2005 (in millions)

2000 20.0

2001 23.5

2002 27.7

2003 32.6

2004 38.3

2005 45.0

Source: Datamonitor, 2000

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Methodology As a share of total information service revenues, the mobile Economy,Infrastructure, Users telecommunications industry still lags behind traditional Public Switched eCommerce Telephone Network (PSTN) services. eAdvertising eFinance eWireless Information Service Revenues in France, 2000

Denmark (in billions and as a % share of total)

Finland Leased Line France Internet $2.1 (6%) Germany $3.6 (10%)

Italy

The Netherlands PSTN Norway $21.9 (58%) Poland Mobile $10.2 (27%) Russia

Spain

Sweden

United Kingdom Total = $37.8 Index of Charts Note: Figures may not add up to 100% due to rounding Source: World Bank, 2000

As in other countries, CIT-Online expects revenues from data transmission to increase markedly in the next decade, reaching $7.8 billion in 2010.

Voice and Data Revenues in France, 2000, 2005 & 2010 (in billions)

Voice $11.5 $11.9 $9.6

Data $0.3 $4.0 $7.8

2000 2005 2010 Source: CIT-Online, 2000

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Methodology France Telecom, the country’s leading wireless operator, launched WAP- Economy,Infrastructure, Users based services in the first quarter of 2000. According to company data, eCommerce 8,000 customers signed up for the service in March. The number of eAdvertising eFinance connections totaled 150,000, averaging 16 connections per subscriber per eWireless month. Each subscriber consulted an average of 50 pages per month. Denmark France Telecom expects to have 18 million subscribers for its wireless Finland internet services by 2004, reaching 45% of business and enterprise clients France

Germany by 2003. Revenue from the mobile commerce in France is expected to reach

Italy $2.8 billion by 2003 – accounting for 12% of Europe’s total m-commerce.

The Netherlands Norway Mobile Commerce Revenue in France, 2003 Poland (in billions and as a % of Europe) Russia

Spain

Sweden France $2.8 (12%) United Kingdom

Index of Charts

Rest of Europe $20.8 (88%)

Europe Total = Source: Durlacher, 1999 $23.6

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The eEurope Report

Methodology: The eMarketer Difference

I Economy,Infrastructure and Users

II eCommerce

III eAdvertising

IV eFinance

V eWireless

VI Denmark

VII Finland

VIII France IX Germany 205 A. Overview 206 B. Internet Users 207 C. eDemographics 209 IXD. B2C eCommerce 220 E. B2B eCommerce 227 F.eAdvertising 228 G. eFinance 229 H. eWireless 231

X Italy

XI The Netherlands

XII Norway

XIII Poland

XIV Russia

XV Spain

XVI Sweden

XVII United Kingdom

Index of Charts

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Methodology A. Overview Economy,Infrastructure, Users eCommerce eAdvertising QuickStats: Germany, 2001 eFinance Total population (in millions)1 83.0 eWireless 1 Denmark Population 14+ (in millions) 71.1 2 Finland Population living in urban areas (1999) 87% France GDP (PPP adjusted, in billions) (1999)3 $1,864 Germany GDP per capita (PPP adjusted) (1999)3 $22,700 Italy 4 The Netherlands PCs per 100 inhabitants (1999) 29.69 4 Norway Main telephone lines per 100 inhabitants (1999) 58.78 Poland Cellular subscribers per 100 inhabitants (1999)4 28.56 Russia ISPs (1999)3 625 Spain

Sweden Internet users (in millions) 18.1 United Kingdom Internet users as % of pop. 14+ 25% Index of Charts Compounded annual growth in users, 2001–2004 12% Total e-commerce (in billions) $19.14 Compounded annual growth in e-commerce, 2001–2004 147% B2B e-commerce (in billions) $14.36 B2C e-commerce (in billions) $4.79 Source: eMarketer, 2001; 1) US Census Bureau, 2001 (interpolated by eMarketer); 2) World Bank, 2000; 3) CIA World Fact Book, 2000; 4) International Telecommunication Union (ITU), 2000

With approximately 71 million adults (14 and older), Germany’s internet market is formidable.With a strong economy, large telecommunications and internet market, and history with internet providers like T-Online and Deutsche Telekom’s ISP, the country’s internet use should continue to climb steadily.

Adult Population 14+ in Germany, 2000–2004 (in millions)

2000 70.7

2001 71.1

2002 71.4

2003 71.8

2004 72.1

Source: US Census Bureau, 2000; eMarketer extrapolation

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Methodology The nation’s telecommunications infrastructure is quite good, with a high Economy,Infrastructure, Users proportion of fiber optic and broadband cable. The eastern part of the eCommerce country, the former East Germany, has a modern telecommunications eAdvertising eFinance network that essentially was built from scratch following unification. The eWireless telecom market is completely liberalized, with over 200 service providers. Denmark Germany has the world’s most technologically powerful economy after Finland the US and Japan. The German economy accounts for about one-third of France

Germany the total GDP of all countries that have adopted the Euro.

Italy In recent years, the country has faced a series of challenges – from a high The Netherlands rate of government outlays for social benefits to an aging population to the Norway cost of upgrading the eastern German economy. Due largely to lower Poland export demand and low business confidence, growth slowed to 1.5% in Russia

Spain 1999 but picked up again in 2000.

Sweden For 2001, forecasters expect continued economic growth, with real GDP United Kingdom rising by about 3%. Exports and industrial investment will again be the Index of Charts main motors of growth. However, the eastern part of the country has been hard hit by a slowdown in the construction sector and lower business confidence, which may drag the entire economy in 2001. If the US recession deepens, German exports may slow down, affecting business confidence and reducing investment. A lower growth scenario might mean GDP growth falling to below 2% in 2001.

B. Internet Users Based on current market research data, eMarketer forecasts that by 2004, some 25.5 million German adults – or 35% of all adults — will be actively surfing the internet. Getting another 5% of the population online by 2005 is achievable, especially with the diffusion of internet-enabled mobile phones and other internet access devices.

Active Internet Users 14+ in Germany, 2000–2004 (in millions)

2000 15.1

2001 18.1

2002 20.8

2003 23.3

2004 25.5

Source: eMarketer, 2001

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Methodology eMarketer’s internet user estimate for 2000 – 15.1 million adults – is Economy,Infrastructure, Users somewhat more modest than recent survey data from the Pan European eCommerce Monitor (16.7 million) and Taylor Nelson Sofres (19.7 million), but higher eAdvertising eFinance than Forrester Research (12.9 million), as the following table shows. eWireless Denmark Comparative Estimates: Internet Users in Germany, Finland 1999–2004 (in millions) France 1999 2000 2001 2002 2003 2004 Germany eMarketer – 15.1 18.1 20.8 23.3 25.5 Italy

The Netherlands International Telecommunication

Norway Union (ITU) 15.9

Poland World Bank’s Info Dev 20.1 25.5 30.3 34.3 37.8 37.3 Russia Angus Reid Group, Inc. 13.0 Spain empirica 13.9 Sweden

United Kingdom Pan European Monitor 16.7 Index of Charts Forrester Research 8.9 12.9 17.4 21.6 25.3 27.9 Institut de l'Audiovisuel et des Télécommunications en Europe (IDATE) 11.0 Taylor Nelson Sofres 19.7 Fletcher Research 4.6 30.0 Computer Industry Almanac13.0 KPMG/NOP Business 14.0 ZDF 20.5 HSBC 6.7 eTForecasts 14.3 NetValue 8.5 European Information Technology Observatory (EITO) 16.0 32.9 ABN Amro Bank 18.3 30.0 Deutsche Telekom 10.0 Source: eMarketer, 2001; various, as noted, 2000

Germany’s penetration rate is actually quite modest for such a healthy, technologically advanced economy. With Scandinavia achieving well over 50% penetration rates over the next few years, Germany’s adoption of the internet seems paltry by comparison. Even the UK is expected to have 48% of its adult population online by 2004.

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Methodology

Economy,Infrastructure, Users Internet Penetration in Germany, 2000–2004 (active eCommerce internet users 14+ as % of population 14+) eAdvertising eFinance 2000 21% eWireless 2001 25% Denmark Finland 2002 29% France Germany 2003 32% Italy The Netherlands 2004 35% Norway Source: eMarketer, 2001 Poland

Russia

Spain

Sweden United Kingdom C. eDemographics Index of Charts The internet’s age distribution is skewed towards the young in Germany as it is throughout the world. According to empirica research, more than half of the under-30 population has logged onto the internet as of 1999.

Internet Users in Germany by Age, 1999 (as a % of respondents in each age range reporting internet use)

<18 60.2%

18–29 53.2%

30–49 39.7%

50–64 22.3%

>64 6.0%

Source: empirica, 1999

NetValue’s age breakdown – by the percentage of all internet users in each age range, not the percentage of the population in each age range that uses the internet – shows that more than half of German internet users are under 35. Only 2% of internet users are 64 and older.

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Methodology

Economy,Infrastructure, Users Internet Users in Germany by Age, 2000 (as a % of eCommerce internet users in each age range) eAdvertising eFinance <15 3.7% eWireless 15–24 22.3% Denmark

Finland 25–34 28.0% France Germany 35–49 30.0% Italy The Netherlands 50–64 14.0% Norway

Poland 64+ 2.1%

Russia Note: does not add to 100% due to rounding Spain Source: NetValue, 2000 Sweden

United Kingdom

Index of Charts According to data compiled by Collective Wisdom, 20–somethings comprise nearly one third of the German internet user population.

Internet Users in Germany by Age, 2000 (as a % of internet users in each age range)

50+ <19 12% 5%

40–49 20–29 19% 30%

30–39 34%

Source: Collective Wisdom, 2000

According to two different firms, internet users in Germany tend to be male, as the following figure illustrates. An interesting study by G&J Electronic Media Service shows that among those individuals with internet access, the ratio of men to women was 61 to 39. However, for those who are internet users, the ratio is somewhat more equal, at 55% male, 45% female.

Internet Users in Germany by Gender, 2000 (as a % of internet users) Male Female

NetValue 62% 38%

G&J 61% 39%

G&J 55% 45%

Source: NetValue, 2000; G&J Electronic Media Service, 2000

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Methodology If one looks at the intensity of internet use, it appears that German men use Economy,Infrastructure, Users the internet more in a given month than women. According to survey data eCommerce from G&J, men are online 10.8 days per month compared with 8.3 days per eAdvertising eFinance month for women. eWireless Denmark Days Online per Month by Internet Users in Germany, Finland 2000 (by gender) France Germany Male 10.8 Italy

The Netherlands Female 8.3

Norway Source: G&J Electronic Media Service, April 2000 Poland

Russia

Spain As in much of the world, income is a significant factor distinguishing

Sweden internet users from non-users. As the following illustrates, in a survey of United Kingdom German internet users, most (27.5%) report that their net monthly income Index of Charts is 6,000 DM ($2,878) or higher. Far fewer internet users earn 3,000 DM ($1,440) per month or less.

Net Monthly Income of Internet Users in Germany, 2000 Under 1,000 DM ($480) 1.8% 1,000–2,000 DM ($481–$960) 3.4% 2,000–3,000 DM ($961–$1,440) 8.9% 3,000–4,000 ($1,441–$1,920) 14.0% 4,000–5,000 ($1,921–$2,400) 15.8% 5,000–6,000 ($2,401–$2,880) 12.6% 6,000 DM or more ($2,880) 27.5% No response 16.0% Source: G&J Electronic Media Service, 2000

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Methodology Given that the internet is more accessible to those with higher incomes and Economy,Infrastructure, Users higher educations, it is not surprising that internet use is concentrated eCommerce among those who are employed or self-employed, and that government eAdvertising eFinance workers (presumably with lower salaries) have significantly lower internet eWireless use rates. Students also account for 21% of internet users in Germany. Denmark Finland Employment of Internet Users in Germany, 2000 (in France millions) Germany

Italy Doctor 0.2 (2%) Other The Netherlands 1.4 (9%) Norway

Poland Russia Student Spain 3.3 (21%) Employed Sweden 7.8 (49%)

United Kingdom

Index of Charts Self- Employed 2.4 (15%) State worker Total = 15.9 0.8 (5%) Source: Collective Wisdom, 2000

Similarly, internet users are sharply divided by educational attainment.

Educational Level of Internet Users in Germany, 2000

No basic Primary education School 2% 11%

Secondary School 27% High School 60%

Source: Collective Wisdom, 2000

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Methodology Among those Germans in international business and those who have Economy,Infrastructure, Users completed university, English is a fairly common second language. Of the eCommerce total German population, 41% consider English their second language. eAdvertising eFinance eWireless Three Most Widely Spoken “Second” Languages in

Denmark Germany (as a % of population that speaks them) Finland English France 41% Germany

Italy French The Netherlands 9% Norway Other* Poland

Russia 7% Spain *Other = none of EU 11 Languages nor Russian or Arabic Sweden Source: Eurobarometer 52, 2000 United Kingdom Index of Charts The average German goes online 16 times a month, according to Nielsen//NetRatings. This is higher than French users (14 times/month) and significantly higher than UK users (11 times/month). In fact, according to Jupiter MMXI, Germany leads the region in the number of days its internet users are online each month.

Duration and Frequency of Internet Access in Germany, 2000 Number of sessions per month 16 Number of unique sites visited 25 Time spent per site (minutes) 19 Time spent per month (hours and minutes) 8:05 Time spent during surfing session (minutes) 30 Duration of a page viewed (seconds) 37 Active internet universe 11,935,282 Current internet universe estimate 21,944,483 Source: Nielsen//NetRatings, 2000

Days Online per Month in Selected European Countries, 2000

Germany 11.4

Denmark 11.2

Sweden 10.8

France 9.3

UK 9.0

Spain 6.8

Source: Jupiter MMXI, 2000

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Methodology More than one-third of German internet users are online every day, Economy,Infrastructure, Users according to Symposion Publishing. eCommerce eAdvertising Frequency of Internet Use in Germany, 2000 eFinance eWireless Denmark Less Finland 13.6%

France Every day Germany Once a week 34.2% Italy 15.7%

The Netherlands

Norway Poland Several times a week Russia 36.5% Spain

Sweden Source: Symposion Publishing, 2000 United Kingdom Index of Charts Germany’s status as number one in the number of days its internet users are online each month is in accordance with a finding from G&J Electronic Media Service which found that nearly three-quarters of German internet users (73%) logged on within the previous week of being surveyed.

Time of Last Internet Use among Internet Users in Germany, 2000 (as a % of internet users) Yesterday or today 44% Within last week 29% Within last 14 days 9% More than 14 days ago 19% Source: G&J Electronic Media Service, 2000

According to Nielsen//NetRatings, the average surfing session among German internet users is 30 minutes. However, according to survey research from Symposion Publishing, Germans stay on for an average of 1 hour per session. Fewer than 6% of German internet users are online for more than 2 hours.

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Methodology

Economy,Infrastructure, Users Average Time Spent Surfing the Internet in Germany, eCommerce 2000 eAdvertising eFinance >120 mins Up to 10 eWireless 61 to 120 5.9% minutes Denmark minutes 10.5% 12.9% 11 to 20 Finland minutes France 16.8%

Germany Italy 31 to 60 The Netherlands minutes 21 to 30 29.6% Norway minutes

Poland 24.3%

Russia

Spain Source: Symposion Publishing, 2000

Sweden United Kingdom Most Germans access the internet from their home, according to the Index of Charts following figure. About one-fifth of internet use occurs at non-home and non-work locations, from friends’ homes to schools to internet cafes.

Location of Internet Access in Germany, 2000 At home 70.7% At work 37.8% School/ place of training/ college 13.9% At friends’ homes 5.2% Internet café 2.5%

Source: Symposion Publishing, 2000

Similar results were obtained by research from G&J Electronic Media Service, although G&J observed that nearly half of their respondents reported logging on from the workplace.

Location of Internet Access in Germany, 2000

Work 46.5%

University 22.1%

Home 68.3%

Source: G&J Electronic Media Service, 2000

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Methodology In Germany, as elsewhere, sending private e-mails and surfing the net are Economy,Infrastructure, Users the main online activities. An interesting finding from G&J is that more eCommerce than a third of respondents report seeking product information and eAdvertising eFinance engaging in online shopping – a much higher percentage than respondents eWireless of surveys like the Eurobarometer. Denmark Finland Ten Most Popular Online Activities in Germany, 2000 France Private e–mails 67.8% Germany

Italy Surfing for fun 62.3% The Netherlands Current events 43.4% Norway Business e–mails 40.2% Poland Economic news 38.9% Russia

Spain Downloading software 37.2% Sweden Searching databanks 37.1% United Kingdom Travel offers or information 35.9% Index of Charts School or professional development 35.2% Product information and online shopping 34.9% Source: G&J Electronic Media Service, 2000

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Methodology

Economy,Infrastructure, Users Online Activities in Germany in Last 3 Months, 2000 eCommerce eMailed family, friends, or colleagues 73% eAdvertising Searched for information about specific product 53% eFinance Downloaded free software 51% eWireless

Denmark Searched for educational material and documents 51% Finland Searched for vacation information 35% France Carried out bank operations 35% Germany Searched for sports or leisure information 34% Italy

The Netherlands Played computer games 30% Norway Searched for health information 25% Poland Read newspaper articles 25% Russia

Spain Visited website of local authority 21%

Sweden Searched for job opportunities 21% United Kingdom Bought a book 16% Index of Charts Listened to radio or music using RealAudio, Windows Media, or QuickTime 16% Built own website 12% Visited website of museum 11% Bought a CD 11% Bought software 11% Visited website of government 10% Bought stocks 9% Visited website of political party 8% Made a telephone call via internet 6% Made a bid in online auction 6% Answered a public opinion survey or market research survey 6% Don't know 5% Watched TV channels on internet 4% Something else 4% Held video conferencing over internet 3% Source: European Commission, Eurobarometer 53, 2000

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Methodology According to G&J, one quarter of the German internet population are Economy,Infrastructure, Users described as “clickers,” those who surf for fun. Game players and online eCommerce shoppers are also significant slices of the user pie. Business users and eAdvertising eFinance internet professionals (i.e., programmers) are the smallest segment of the eWireless population. Denmark Finland Types of Internet Users in Germany, 2000 France

Germany

Italy Internet pros. The Netherlands “Clickers” Business 8.9% Norway users (surfers) 24.7% Poland 12.1%

Russia Travelers Spain 13.0% “Gamers” Sweden 14.2% “News United Kingdom freaks” Index of Charts eShoppers 13.2% 13.9%

Source: G&J Electronic Media Service, 2000

T-Online, one of Germany’s longest online information services, was its most popular web portal as of the end of 1999, according to MMXI Europe. The service comes up as number one on both Nielsen//NetRatings and NetValue’s surveys, as well.

Popular Web Portals in Germany, Year-End 1999 Company Websites T-Online www.t-online.de Yahoo! www.yahoo.de AOL www.aol.de Lycos www.lycos.de MSN www.msn.de Netscape www.netscape.de Excite www.excite.de AltaVista www.altavista.de Source: MMXI Europe, 2000

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Methodology

Economy,Infrastructure, Users Top 10 Domains in Germany, 2000 eCommerce Top 10 Domains Reach (%) Unique Visitors (in millions) eAdvertising t-online.de 50.1% 5.6 eFinance eWireless t-online.prop 43.7% 4.9

Denmark yahoo.com 35.2% 4.0 Finland yahoo.de 29.5% 3.3 France msn.com 28.0% 3.1 Germany

Italy lycos.de 26.6% 3.0

The Netherlands freenet.de 25.1% 2.8 Norway msn.de 21.1% 2.4 Poland microsoft.de 19.5% 2.2 Russia

Spain web.de 18.4% 2.1 Sweden Source: NetValue, 2000 United Kingdom Index of Charts Top 10 Web Properties in Germany, as of November 2000 Property Unique Audience (in millions) Reach % 1. T-Online 6.3 52.6% 2. Lycos Network 5.2 43.8% 3. AOL Websites 4.3 35.6% 4. Yahoo! 4.2 35.6% 5. Microsoft 3.7 31.4% 6. MSN 3.5 29.0% 7. Web.de 2.4 20.0% 8. Walt Disney Internet Group 2.3 19.7% 9. Deutsche Telekom 2.3 19.6% 10. Gruner+Jahr (G&J) 2.2 18.4% Source: Nielsen//NetRatings, 2000

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Methodology D. B2C eCommerce Economy,Infrastructure, Users eCommerce eAdvertising B2C eCommerce Revenues in Germany, 2000–2004 eFinance (in billions) eWireless

Denmark 2000 $2.3

Finland

France 2001 $4.8

Germany 2002 $11.0 Italy

The Netherlands 2003 $24.9 Norway Poland 2004 $57.7 Russia

Spain Source: eMarketer, 2000

Sweden

United Kingdom

Index of Charts Germans are reluctant to use the Internet for e-commerce and hesitant to use credit cards for consumer purchases. Many distrust the internet and fear misuse of their personal data. Nevertheless,17% of internet users had purchased an item online in the month prior to a TNSI survey, although the OECD reports that 13% of German internet users are internet buyers.

Germans Shopping Online, 1999–2001 1999 2000 2001 ECaTT (% of Internet Users) 13.8% – 26.5% Angus Reid (% of all Adults) – 14.0% – Source: various, as noted, 2000

The total value of e-commerce is expected to increase from $9.5 billion in 2000 to $288.4 billion in 2004.One reason is that information technology is diffusing rapidly throughout Germany.According to the European Information Technology Observatory (EITO), the German IT market grew by 10 percent from 1998 to 1999, and is forecast to grow by 9.6% and 8.6% in 2000 and 2001, respectively. However, the use of IT is different from the use of the internet for business.According to ISPO, the internet penetration rate in businesses is only 69.2%.Another study suggests that 70% of Germany’s medium size companies (with a maximum of 500 employees) refuse to use the Internet. Only 30 percent have discovered the advantages of online use for their firms; 26 percent of the surveyed firms had any interest in setting up a website.

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Methodology

Economy,Infrastructure, Users Comparative Estimates: eCommerce in Finland, eCommerce 2000–2004 (in billions) eAdvertising 2000 2001 2002 2003 2004 eFinance eMarketer B2B $7.2 $14.4 $36.9 $93.8 $230.7 eWireless B2C $2.3 $4.8 $11.0 $24.9 $57.7 Denmark

Finland Computer Economics B2B $173.5 $347.0 $433.8 $611.6 – France Forrester Research B2B $18.3 $41.2 $91.2 $190.8 $353.0 Germany Forrester Research B2C $2.3 $5.2 $10.8 $20.3 $33.5 Italy Source: eMarketer, 2000; various, as noted The Netherlands

Norway Poland eCommerce in Germany, 1999 & 2003 (in billions) Russia

Spain B2C 1999 Sweden $1.6 United Kingdom B2C 2003 Index of Charts $16.3 B2B 1999 $5.1 B2B 2003 $118.0 Source: EbusinessEurope.com, 2000

B2C Spending at German Sites, 1997–2002 (in billions)

1997 $0.0

1998 $0.2

1999 $0.4

2000 $0.7

2001 $1.3

2002 $1.9

Source: Datamonitor, 2000

According to the German Retail Trade Association B2C trade accounts for approximately 0.25% of total retail volume. For 2001, they expect online retail sales to triple. Still, B2C would amount to a little more than half of all conventional mail order sales in Germany.

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Methodology One of the drivers of B2C e-commerce in Germany is the country’s efficient Economy,Infrastructure, Users parcel delivery systems. According to the German Retail Trade Association, eCommerce 90% of e-commerce shipments reach customers the next day. eAdvertising eFinance eWireless Reasons Why German Internet Users Shop Online,

Denmark 2000 Finland Unlimited shopping hours France 92% Germany

Italy Saves time The Netherlands 88% Norway Larger selection Poland

Russia 62% Spain Possibility of spur-of-the-moment purchases Sweden 53% United Kingdom

Index of Charts It’s fun 50% Attractive prices 41% Privacy 24%

Source: Forit, 1999

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Methodology

Economy,Infrastructure, Users Demographics of German Internet Shoppers eCommerce 1999–2000 eAdvertising Gender Online Purchases… eFinance None 1 to 9 10 times eWireless times or more Denmark Male 49.8% 57.9% 70.7% Finland

France Female 50.2% 42.1% 29.3% Germany Total 100.0% 100.0% 100.0% Italy Age The Netherlands Under 20 years old 7.4% 4.0% 2.1% Norway

Poland 20 to 29 years old 37.2% 33.3% 29.3% Russia 30 to 39 years old 32.8% 39.2% 42.6% Spain 40 to 49 years old 15.5% 17.7% 19.8% Sweden 50 years or older 7.1% 5.8% 6.2% United Kingdom

Index of Charts Total 100.0% 100.0% 100.0% Employment Status Employees 49.8% 59.9% 62.5% Students 15.2% 9.9% 7.6% Self-employed 7.7% 8.5% 12.6% Civil servants 5.4% 6.4% 5.9% Pupil/trainees 9.6% 4.9% 2.7% Other 12.2% 10.3% 8.8% Total 100.0% 100.0% 100.0% Income (net personal monthly) Less than DM 2,000 30.4% 21.2% 13.7% DM 2,000 to less than DM 4,000 38.4% 43.3% 44.1% DM 4,000 to less than DM 6,000 11.1% 16.2% 19.1% DM 6,000 or more 3.5% 5.4% 8.4% No details given 16.7% 13.8% 14.5% Total 100.0% 100.0% 100.0% Period of Internet Activity Less than a year 55.9% 31.2% 8.7% 1 to 3 years 32.4% 47.0% 43.8% 3 years or more 11.7% 21.8% 47.5% Total 100.0% 100.0% 100.0% Source: Symposion Publishing, 2000

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Methodology

Economy,Infrastructure, Users Products and Services Ordered Online, in Germany, 2000 eCommerce Books eAdvertising 60.3% eFinance Computer products eWireless 52.4% Denmark

Finland Clothing

France 40.0%

Germany Music products

Italy 32.3% The Netherlands Travel, flight/transportation tickets Norway 20.1% Poland Consumer electronics Russia 18.6% Spain Furniture, household appliances Sweden 15.2% United Kingdom Newspapers, magazines Index of Charts 13.6% Tickets to events 12.6% Sport accessories 10.3% Videos 8.8% Food, drinks 5.4% Other 13.3% Source: Symposion Publishing, 2000

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Methodology

Economy,Infrastructure, Users Actual Purchases among Internet Users Who Have eCommerce Shopped Online in the Last Month in Germany, 2000 eAdvertising Books 52% eFinance Clothes 19% eWireless Music/CDs 19% Denmark

Finland PC software 15% France Other 15% Germany Electronics 13% Italy

The Netherlands PC hardware 8%

Norway Videos 4% Poland Food 2% Russia Jewelry 2% Spain

Sweden Toys/Games 2%

United Kingdom Furniture 2% Index of Charts Leisure travel 2% Tickets 2% Car 2% Sports equipment 0% Business travel 0% Toiletries 0% Stocks 0% Source: Taylor Nelson Sofres, 2000

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Methodology eConsumer attitudes & behavior Economy,Infrastructure, Users eCommerce Reasons for Abandoning Online Orders, in Germany 2000 eAdvertising eFinance Amount of costs for delivery or shopping eWireless 78.7% Denmark User-guidance Finland 75.5% France Trustworthiness of the provider Germany 70.6% Italy

The Netherlands Security of the payment method

Norway 70.1%

Poland No price advantage to offline purchase

Russia 59.9% Spain Data security Sweden 57.1% United Kingdom Data security Index of Charts 49.7% Product selection 34.0% Other 6.2% None 0.8% I have never purchased anything online 1.0% Source: Symposion Publishing, 2000

Online Payment Methods in Germany, 2000

On account 90.6% COD 35.9% Debit 31.0% Credit card per e-mail (with encoded data) 30.1% Electronic currency (e.g. e-cash, cyber-cash) 11.7% Credit Card per Telephone, Fax, or Mail 6.7% Advance check 3.6% Credit Card per e-mail (without encoded data) 1.5% None 0.2%. Cannot say 0.8% Source: Symposion Publishing, 2000

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Methodology E. B2B eCommerce Economy,Infrastructure, Users eCommerce eAdvertising B2B eCommerce Revenues in Germany, 2000–2004 eFinance (in billions) eWireless

Denmark 2000 $7.2

Finland

France 2001 $14.4

Germany 2002 $36.9 Italy

The Netherlands 2003 $93.8 Norway Poland 2004 $230.7 Russia

Spain Source: eMarketer, 2000

Sweden

United Kingdom

Index of Charts B2B e-commerce is growing very rapidly in Germany. In 2000, total B2B revenues will equal $7.2, growing to approximately $231 billion by 2004. Although only an estimated 69% of German businesses use the internet, according to the internet society promotion office, a number of very large German firms from diverse industries are adopting e-commerce solutions. For example, chemical firms BASF, Henkel, Degussa-Hüls, and Metallgesellschaft have created an alliance to jointly trade online in raw materials, plastics and commodity chemicals. In the food industry, Germany’s Metro has joined with GNX to take bids via the internet.

Businesses in Germany with Internet or Electronic Data Interchange, 1997–2000 1997 With Internet Access 27% That Use EDI 27% 1998 44% 34% 1999 65% 39% 2000 87% 34%

Source: UK online International Benchmarking Study, 2000

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Methodology F.eAdvertising Economy,Infrastructure, Users eCommerce Germany is a leader in the European economy and is expected to reap many eAdvertising of the benefits from the expansion of eCommerce. German eAdvertising will eFinance grow from $248 million in 2000 to nearly $2 billion in 2005. eWireless

Denmark

Finland eAdvertising Spending in Germany, 1998-2005 (in

France millions)

Germany

Italy 1998 $26.6 The Netherlands 1999 $106.7 Norway

Poland 2000 $247.2

Russia 2001 $424.2 Spain

Sweden 2002 $737.8

United Kingdom 2003 $1,175.6 Index of Charts 2004 $1,430

2005 $1,981.1

Source: eMarketer, 2000

Compared to forecasts by other researchers, eMarketer projects more rapid growth during the period 2000–2002, but a relatively slower growth rate thereafter.

Comparative Estimates: eAdvertising Spending in Germany, 1998-2004 (in millions) Source 1998 1999 2000 2001 2002 2003 2004

DM $29.0 $90.0 $188.0 –– – – News International eMarketer $26.6 $106.7 $247.8 $424.2 $737.8 $1,175.6 $1,430.0 Forrester – $92.0 $202.0 $397.0 $730.0 $1,241.0 $1,861.0 Research Merrill – $88.2 $192.6 $379.4 $697.2 $1,184.8 – Lynch/ IDC Prognos $82.0 –––– – – AG Reuters – $75.6 $151.2 –– – – Zenith ––$102.3 –– – – Media Source: eMarketer; various, as noted

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Methodology G. eFinance Economy,Infrastructure, Users eCommerce eAdvertising eBanking eFinance For a cash culture with the lowest home ownership rate (40%) in Europe, eWireless

Denmark Germany has been one of the biggest surprises for its rapid and aggressive

Finland adoption of online financial services. J.P. Morgan estimates German online France bankers already have 7 million accounts and they expect another 8 million Germany accounts by 2003, for total of 15 million accounts. Italy

The Netherlands

Norway Online Banking Accounts in Germany, 2000-2003 (in

Poland millions)

Russia 2000 7.0 Spain Sweden 2001 10.0 United Kingdom

Index of Charts 2002 14.0 2003 15.0

Source: JP Morgan, 2000

Datamonitor states online banking customers in Germany numbered 1.6 million in 2000 and predicts that there will be 4.9 million online bankers by 2004.

Online Banking Customers in Germany, 2000-2004 (in millions)

2000 1.6

2001 2.5

2002 3.4

2003 4.2

2004 4.9

Source: Datamonitor, 2000

Far more aggressive than Datamonitor, financial services industry researcher Infratest Burke contends there were already 4.5 million online bankers in Germany by 2Q 2000, up from 3.1 million just a year before.

Online Banking Customer Growth in Germany, Q2 1999 & Q2 2000 (in millions)

Q2 1999 3.1

Q2 2000 4.5

Source: Infratest Burke Finance Research, 2000

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Methodology “Five or six years ago, no one would have said Economy,Infrastructure, Users Germany would be the center of Europe’s discount eCommerce eAdvertising brokerage industry. Now, out of the seven largest eFinance in Europe, five are German.” eWireless — Roland Folz, joint CEO, Direkt Anlage Denmark

Finland

France

Germany Germany has the strongest discount brokerages in all of Europe and a Italy population that has very recently developed a taste (and an extreme The Netherlands appetite) for equities. Norway Poland Retail Shareholders and Online Brokerage Customers Russia in Germany, 2000-2003 (in millions) Spain

Sweden 2000 2001 2002 2003 United Kingdom Retail 7.2 8.6 10.3 12.0 Index of Charts shareholders Online 1.7 2.8 4.0 5.2 brokerage customers % of retail 23.6% 32.6% 38.8% 43.3% shareholders Source: JP Morgan, 2000

BNP Paribas estimates that there were 1.9 million online brokerage accounts in 2000 and this number will increase to 6 million by 2005.

Online Brokerage Accounts in Germany, 2000-2005 (in millions)

2000 1.9

2001 2.6

2002 3.4

2003 4.3

2004 5.2

2005 6.0

Source: BNP Paribas Equities, 2000

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Methodology In their latest Online Brokerage Monitor, Infratest Burke asserts online Economy,Infrastructure, Users brokerage customers have doubled in growth from 800,000 in Q3 1999 to eCommerce 1.6 million in 3Q 2000. eAdvertising eFinance eWireless Online Brokerage Customer Growth in Germany,

Denmark Q3 1999 & Q3 2000 (in millions)

Finland

France Q3 1999 0.8

Germany Q3 2000 1.6 Italy The Netherlands Source: Infratest Burke Finance Research, 2000 Norway

Poland However, Infratest Burke also states that brokerages have increased worries Russia

Spain about customer loyalty and retention alongside this customer growth.

Sweden There is a strong correlation between a customer’s degree of experience United Kingdom with online trading and their expectations about their brokerage’s services, Index of Charts according to Infratest Burke. In 1999, German brokerages needed to only be concerned about 1 out of 9 customers moving elsewhere. In 2000, this ratio decreased to 1 out of 6 customers.

Online Brokerage Customer Loss in Germany, 1999 & 2000 1999 1 out of 9 customers 11.1% 2000 1 out of 6 customers 16.6% Source: Infratest Burke Finance Research, 2000

H. eWireless Germany is home to the largest telecommunications company, Deutsche Telekom. Not only is Germany’s Deutsche Telekom the largest carrier in Europe, it is also the third largest provider of telecommunications services worldwide. Like France, deregulation and tariff controls have aided the expansion of the German telecommunications market. With its large population, Germany is one of the leading countries in Europe in terms of the total number of subscribers. However, wireless penetration currently lags behind other countries in Western Europe, largely due to the continued disparity between the eastern and western parts of the country. As a result, penetration rates should rise quickly as Deutsche Telekom and others work to expand the wireless infrastructure. As a result, Merrill Lynch sees penetration rates more than doubling between 2000 and 2004, to the point of reaching almost 100% penetration. ABN Amro Bank, on the other hand, sees the phenomenal growth rate slowing down after 2002.

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Methodology

Economy,Infrastructure, Users Comparative Estimates: Wireless Subscribers in eCommerce Germany, 1999–2000 (in millions) eAdvertising ITU eFinance 23.5 eWireless Denmark The Strategis Group Finland 35.8 France Germany World Bank Italy 20.3 The Netherlands 26.0 Norway Poland CIT-Online Russia 23.5 Spain 31.5 Sweden United Kingdom Global Mobile Index of Charts 23.2

ABN Amro Bank 23.9 35.1

Merrill Lynch 18.3

FT Mobile Communications 18.3

McKinsey & Co. 19.0

OECD 20.2

Forrester Research* 17.4

1999 2000 Notes: *Figure based on estimate of 21% penetration and a base population of 82.8 million people of all ages Source: various, as noted, 2000

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Methodology

Economy,Infrastructure, Users Comparative Estimates: Wireless Subscribers and eCommerce Penetration Rates in Germany, 2000-2004 (in millions) eAdvertising 2000 eFinance eWireless 26.0

Denmark 35.1 Finland 33.7 France

Germany 2001

Italy 31.2 The Netherlands 45.8 Norway 45.5 Poland

Russia 2002 Spain 36.0 Sweden 55.0 United Kingdom 59.2 Index of Charts 2003 40.2 61.7 71.0

2004 44.0 66.8 79.7

World Bank ABN Amro Bank Merrill Lynch Source: various, as noted

Datamonitor predicts vigorous growth in the sales of PDA and other handheld devices.

Sales of Handheld Devices in Germany, 2000–2005 (in millions)

2000 26.2

2001 31.1

2002 36.9

2003 43.9

2004 52.2

2005 62.0

Source: Datamonitor, 2000

Germany’s low cellular tariff rates and high per capita income contribute to the expansion of the cellular market, and, subsequently, wireless revenues.As the German wireless market continues to develop new users

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Methodology and technologies, the Worldbank projects steady growth in wireless Economy,Infrastructure, Users revenues as a result. Despite this growth, traditional PSTN service revenues eCommerce will continue to outpace the performance of the mobile eAdvertising eFinance telecommunications industry. eWireless Denmark Cellular Industry Revenues in Germany, 2000–2005 (in Finland billions and as a % share of all information services) France 2000 2001 2002 2003 2004 2005 Germany Billions $12.0 $13.5 $14.6 $15.4 $15.9 $16.1 Italy of revenue The Netherlands Percentage 22% 23% 23% 23% 23% 23% Norway share of all Poland information Russia services Spain Source: Worldbank, 2000 Sweden

United Kingdom

Index of Charts Information Service Revenues in Germany, 2000 (in billions and as a % share of total)

Internet $6.6 (12%) Leased Line $5.6 (10%) PSTN $29.4 (55%) Mobile $12.0 (22%)

Total = $53.6 Note: May not add up to 100% due to rounding Sourse: Worldbank, 2000

The demand for data transmission in Germany will grow extensively as internet usage expands to the wireless market. However, according to CIT- Online’s forecast, Germany is one of the few countries that will not see a decline in revenues from voice transmission.

Voice and Data Revenues, 2000, 2005 & 2010 (in billions)

Voice $11.5 $15.8 $14.4

Data $0.8 $4.7 $9.7

2000 2005 2010 Source: CIT-Online, 2000

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Methodology: The eMarketer Difference

I Economy,Infrastructure and Users

II eCommerce

III eAdvertising

IV eFinance

V eWireless

VI Denmark

VII Finland

VIII France

IX Germany X Italy 235 A. Overview 236 B. Internet Users 237 C. eDemographics 239 X D. B2C eCommerce 245 E. B2B eCommerce 248 F.eFinance 250 G. eWireless 252

XI The Netherlands

XII Norway

XIII Poland

XIV Russia

XV Spain

XVI Sweden

XVII United Kingdom

Index of Charts

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Methodology A. Overview Economy,Infrastructure, Users eCommerce eAdvertising QuickStats: Italy, 2001 eFinance Total population (in millions)1 57.7 eWireless 1 Denmark Population 14+ (in millions) 50.1 2 Finland Population living in urban areas (1999) 67% France GDP (PPP adjusted, in billions) (1999)3 $1,212 Germany GDP per capita (PPP adjusted) (1999)3 $21,400 Italy 4 The Netherlands PCs per 100 inhabitants (1999) 19.18 Norway Main telephone lines per 100 inhabitants (1999)4 46.22 Poland Cellular subscribers per 100 inhabitants (1999)4 52.83 Russia ISPs (1999)3 219 Spain

Sweden Internet users (in millions) 6.0 United Kingdom Internet users as % of pop. 14+ 12% Index of Charts Compounded annual growth in users, 2001–2004 5% Total e-commerce (in billions) $3.36 Compounded annual growth in e-commerce, 2001–2004 110% B2B e-commerce (in billions) $2.96 B2C e-commerce (in billions) $0.40 Source: eMarketer, 2001; 1) US Census Bureau, 2001 (interpolated by eMarketer); 2) World Bank, 2000; 3) CIA World Fact Book, 2000; 4) International Telecommunication Union (ITU), 2000

An estimated 6.0 million Italian adults, 12% of those 14 and older, are actively using the internet, a sharp jump from a previous eMarketer estimate of 7%. The leap is due to the effects of telecom deregulation, which has ratcheted the price of 20 hours of internet access down to $27.85, among the lowest cost in the OECD. The elimination of fixed subscription costs for Internet access and a massive marketing campaign by ISPs, telecom operators and online traders have combined to drive increasing numbers of Italians onto the internet. That, combined with high mobile phone penetration, has boosted internet use substantially. Business-to-consumer transactions via the internet have been marginal in Italy. According to American Express, only 6% of Italian internet users shop online (7% according to Taylor Nelson Sofres and 12% according to the OECD), and only 4% use or expect to use it for online banking. However, B2C is forecast to grow at a very high rate in the next several years. If survey data from ECATT is reliable, nearly 18% of internet users will shop online in 2001. Recent market surveys from Spectrum ICT indicate that 87% of Italian companies are now connected to the Internet. As a result of this high level of internet penetration in businesses, virtually all major Italian industrial groups are developing e-commerce solutions, and ISPO forecasts that by 2004, at least half of all company purchases will be via the internet.

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Methodology B. Internet Users Economy,Infrastructure, Users eCommerce The previous eEurope Report forecast a very modest 7% internet eAdvertising penetration rate for Italy in 2000. Based on new market research, we have eFinance increased our estimate to 5.4 million adults, 11% of those 14 and older. eWireless

Denmark

Finland Active Internet Users 14+ in Italy, 2000–2004 (in

France millions)

Germany

Italy 2000 5.4

The Netherlands 2001 6.0 Norway Poland 2002 6.4 Russia Spain 2003 6.8 Sweden United Kingdom 2004 7.0 Index of Charts Source: eMarketer, 2001

However, high mobile phone use notwithstanding, low levels of PC use in Italy, especially outside of major cities, remain an obstacle to broader internet penetration. According to the International Telecommunication Union (ITU), Italy had 19.2 PCs per 100 individuals in 1999, compared with a European median of 27.7 per 100. Hence, eMarketer’s forecast is for steady expansion of the internet to 2004, rather than a sharp upward growth. Compared with other market research firms, our penetration estimates are more modest.

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Methodology

Economy,Infrastructure, Users Comparative Estimates: Internet Users in Italy, eCommerce 1999–2004 (in millions) eAdvertising 1999 2000 2001 2002 2003 2004 eFinance eMarketer – 5.4 6.0 6.4 6.8 7.0 eWireless ITU 5.0 –– –– – Denmark

Finland World Bank’s Info/Dev 9.3 11.9 14.4 16.7 18.9 19.8 France Angus Reid Group 10.5 –– –– – Germany empirica 6.6 –– –– – Italy Pan European Monitor – 8.8 –––– The Netherlands

Norway Forrester Research 5.5 8.0 11.0 14.1 16.8 18.9 Poland Institut de l'Audiovisuel – 7.6 –––– Russia et des Télécommunications Spain en Europe (IDATE) Sweden Taylor Nelson Sofres – 8.3 –––– United Kingdom Fletcher Research ––– ––10.0 Index of Charts Computer Industry 4.8 –– –– – Almanac Between and MT&T – 7.3 –––– Between ICT Brokers – 11.6 –––– HSBC 1.2 –––– eTForecasts – 8.7 –––– European Information 5.3 ––13.3 –– Technology Observatory (EITO) ABN Amro Bank 4.0 ––13.0 –– Databank Consulting – 10.3 –––– Ernst & Young – 2.9 –––– Source: eMarketer, 2001; various, as noted, 2000

Internet Penetration in Italy, 2000–2004 (active internet users 14+ as a % of population 14+)

2000 11%

2001 12%

2002 13%

2003 13%

2004 14%

Source: eMarketer, 2001

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Methodology C. eDemographics Economy,Infrastructure, Users eCommerce According to survey research by empirica, a smaller percentage of young eAdvertising Italians report using the internet than young people in Northern European eFinance countries. This smaller penetration rate in the under-29 age range of early eWireless

Denmark adopters of technology (a rate less than half of Denmark’s, for example)

Finland suggests that diffusion of the internet will occur at a slower rate. American France Express and Ipsos have reported similar data for 2000. Germany Italy Internet Use in Italy by Age, 1999 (as a % of The Netherlands respondents in each age range reporting internet use) Norway Poland <18 36.4% Russia Spain 18–29 44.4% Sweden

United Kingdom 30–49 27.7%

Index of Charts 50–64 6.1%

>64 1.9%

Source: empirica, 1999

Internet Use in Italy by Age, 2000 (as a % of respondents in each age range reporting internet use)

65 and older 19% Under 35 37% 55–64 14%

45–54 14% 35–44 16% Note: average age = 44 Source: American Express, 2000

Internet Users in Italy by Age, 2000

55–64 Over 65 5% 2% 45–54 15% Under 24 36%

35–44 20% 25–34 22%

Source: Ipsos, 2000

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Methodology There are conflicting data about the gender composition of Italian internet Economy,Infrastructure, Users users. Survey data from Ipsos suggested that men dominate Italy’s internet, eCommerce but an American Express survey, also conducted in 2000, found gender eAdvertising eFinance equality. By comparison, Spanish internet users are among the most gender eWireless unequal in Southern Europe, with ratios of men to women online Denmark approximately 65 to 35. Finland France Internet Users in Italy by Gender, 2000 Germany

Italy Male Female

The Netherlands Ipsos 59% 41% Norway Poland American Express 49% 51% Russia

Spain Source: various, as noted, 2000

Sweden United Kingdom Italian internet users tend to come from higher socioeconomic classes than Index of Charts non-users, as the following data show. An American Express survey found that high-income households had more than twice the internet penetration rate than low-income households. An even greater disparity was observed by Ipsos, which found that only 1% of low-income Italian households were online, compared with 30% of high-income households.

Population Online in Italy by Level of Household Income, 2000

Low 9%

Middle 16%

High 22%

Source: American Express, 2000

Population Online in Italy by Level of Monthly Household Income, 2000

Low 1%

Middle 10%

High 30%

Source: Ipsos, 2000

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Methodology There is a digital divide in Italy based on professional class as well as Economy,Infrastructure, Users income. Manual laborers have the lowest internet penetration rate in Italy, eCommerce 9% compared with 25% for managerial workers, as the following Ipsos data eAdvertising eFinance show. eWireless Denmark Internet Users in Italy by Profession, 2000 Finland

France

Germany Retired Italy 18% Managerial

The Netherlands 25%

Norway

Poland

Russia Self-Employed 23% Spain

Sweden Clerical Manual 25% United Kingdom 9% Index of Charts Source: Ipsos, 2000

Far fewer Italians speak English as a second language than Nordic or even German and French citizens, according to the Eurobarometer. With less than a third of the population able to speak English, increased Italian content is essential to growing the internet market in Italy.

Three Most Widely Spoken “Second” Languages in Italy, 2000 (as a % of population) English 28% French 17% German 3% Source: Eurobarometer 52, 2000

Given the low cost of accessing the internet in Italy – 20 hours per month of access is the lowest in Western Europe — one would expect Italians to be online far longer than residents of other European countries. However, according to Nielsen//NetRatings, the average monthly time online is a little under 6 hours, compared with a little over 5 hours in the UK – the country with the most expensive access charges for 20 hours of service. In fact, the average surfing session in Italy lasts only 1 minute longer than the average session in the UK. Further market research is needed to understand which factors influence surfing duration. Online activities among Italians and UK residents are quite similar, so other variables – perhaps the relative dearth of Italian content — may account for the differences in duration online.

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Methodology

Economy,Infrastructure, Users Duration and Frequency of Internet Use in Italy, 2000 eCommerce Number of sessions per month 12 eAdvertising Number of unique sites visited 16 eFinance eWireless Time spent per site (minutes) 21

Denmark Time spent per month (hours and minutes) 5:53 Finland Time spent during surfing session (minutes) 30 France Duration of a page viewed (seconds) 42 Germany

Italy Active internet universe 6,305,938

The Netherlands Current internet universe estimate 13,420,406 Norway Source: Nielsen//NetRatings, 2000 Poland

Russia

Spain As in much of the developed world, most Italians access the internet from

Sweden both home and work, as the following figure illustrates. Home is still the United Kingdom predominant single access point for internet users. Index of Charts Percent of Population Online in Italy by Location of Access, 2000

Home only 10%

Work only 7%

Home and work 15% Source: Ipsos, 2000

eMailing is the number one internet activity in Italy, as it is throughout most of the world. Italians have a particular attraction to sports and leisure information – the second most popular online activity according to the Eurobarometer survey. Online banking and online buying are much further down the list of online activities.

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Methodology

Economy,Infrastructure, Users Online Activities in Italy in Last 3 Months, 2000 eCommerce eMailed family, friends, or colleagues 63% eAdvertising Searched for sports or leisure information 48% eFinance eWireless Searched for information about specific product 40%

Denmark Searched for vacation information 38% Finland Downloaded free software 37% France Read newspaper articles 36% Germany

Italy Searched for educational material and documents 33%

The Netherlands Searched for job opportunities 22% Norway Listened to radio or music using RealAudio, Poland Windows Media, or QuickTime 20% Russia Played computer games 20% Spain Visited website of museum 19% Sweden

United Kingdom Visited website of government 19% Index of Charts Searched for health information 15% Visited website of political party 12% Visited website of local authority 12% Built own website 11% Carried out bank operations 10% Made a telephone call via internet 10% Bought a CD 9% Answered a public opinion survey or market research survey 9% Something else 9% Bought a book 8% Bought stocks 8% Watched TV channels on internet 8% Held video conferencing over internet 5% Bought software 4% Made a bid in online auction 4% Don't know 1% Source: European Commission, Eurobarometer 53, 2000

These findings were echoed by an Italian research firm. Information searching and e-mail were the most popular activities, with shopping engaged in by only 11% of those surveyed.

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Methodology

Economy,Infrastructure, Users Online Activities in Italy, 2000 eCommerce Searching eAdvertising 91% eFinance eWireless eMail Denmark 73% Finland Web publishing France

Germany 17% Italy Shopping The Netherlands 11% Norway

Poland Source: Censis-Unicab, 2000

Russia Spain Aside from the usual US-based websites – Yahoo!, MSN, Lycos and Sweden

United Kingdom Microsoft — Italian internet users tend to view Italian websites, as the

Index of Charts following table indicates.

Top 10 Web Properties in Italy as of November 2000 Property Unique Audience (in millions) Reach % 1. SEAT Pagine Gialle 3.7 58.3% 2. Infostrada 2.8 45.0% 3. Yahoo! 2.5 39.5% 4. Tiscali 2.4 37.3% 5. MSN 2.3 36.3% 6. Lycos Network 2.3 36.0% 7. Microsoft 2.3 35.8% 8. Kataweb Network 2.1 33.9% 9. Jumpy 1.9 29.7% 10. Dada 1.5 24.0% Source: Nielsen//NetRatings, 2000

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Methodology D. B2C eCommerce Economy,Infrastructure, Users eCommerce eAdvertising B2C eCommerce Revenues in Italy, 2000–2004 eFinance (in billions) eWireless Denmark 2000 $0.3 Finland

France 2001 $0.4

Germany

Italy 2002 $0.8

The Netherlands 2003 $1.5 Norway

Poland 2004 $2.8 Russia

Spain Source: eMarketer, 2000

Sweden

United Kingdom

Index of Charts Business-to-consumer transactions via the Internet have been marginal in Italy. According to American Express, only 6% of Italian internet users use the internet to shop online (7% according to Taylor Nelson Sofres and 12% according to the OECD), and only 4% use or expect to use it for online banking. However, B2C is forecast to grow at a very high rate in the next several years. If survey data from ECaTT is reliable, nearly 18% of internet users will shop online in 2001.

Italian Users Shopping Online, 1999–2001 1999 2000 2001 ECaTT (% of internet users) 8.3% – 17.7% Angus Reid (% of all adults – 3.0% – Source: Electronic Commerce and Telework Trends (ECaTT), 2000

One of the obstacles is concern about security or privacy, a concern stated by 68% of those responding to a recent American Express survey. The relatively low diffusion of personal computers has been another critical obstacle to the development of the B2C market.

Online Italian Buyers, 2000 (by gender) Male Female

85% 15%

Source: Ernst & Young, 2000

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Methodology The Italian Government has recently approved an Action Plan to accelerate Economy,Infrastructure, Users the diffusion of information technology in the Italian economy. $650 eCommerce million was allocated for the year 2000 to promote IT in private companies eAdvertising eFinance and schools, and over $165 million was allocated to promote electronic eWireless commerce and new technologies in the textile, apparel, and shoe-making Denmark sectors. Trade associations, major organizations and local governments are Finland also actively promoting initiatives to foster innovation and to promote France

Germany eCommerce amongSMEs by offering them hosting solutions for both B2B

Italy and B2C eCommerce applications (malls, virtual marketplaces, portals, etc.). The Netherlands The increasing availability of inexpensive personal computers and set- Norway top-boxes, and the decreasing costs of internet-related telephone calls, will Poland help to expand online shopping. Furthermore, with mobile phone diffusion Russia

Spain among the highest in the world, m-commerce should be an important

Sweden contributor to total e-commerce levels. United Kingdom eCommerce was $252 million in 2000, and will rise to $2.8 billion by Index of Charts 2004. The most promising sectors for B2C in Italy are computers and software, publishing, music and videos, and bookings for entertainment events, vacation and travel.

B2C Revenue in Italy, 2000 (by products and services) Millions % of B2C Computer software and hardware $75.6 7% Books, CDs, recorded music, videos $97.2 9% Magazines $86.4 8% Information/data $108.0 10% Tickets $75.6 7% Travel, Hotel $97.2 9% Groceries, clothing, household goods $43.2 4% Games $118.8 11% Others $378.0 35% Total $1,080.0 100% Source: empirica; Net Profit, 2000

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Methodology

Economy,Infrastructure, Users B2C Purchases in Italy, 2000 (as a % of products) eCommerce Books eAdvertising 43.7% eFinance PC eWireless 25.1% Denmark

Finland Travels

France 11.1%

Germany Software

Italy 11.6%` The Netherlands Bookings Norway 6.8% Poland Clothes Russia 6.3% Spain Gifts Sweden 6.2% United Kingdom Hobby Index of Charts 3.8% Home products 1.8% Source: European Information Technology Observatory (EITO), 2000

Anticipated Online Purchases in Italy, 2000

Event tickets (e.g. sports, theatre, concerts) 27% Books 16% CDs, videos or computer games 19% Stocks and shares 13% Electronics (e.g. cameras) 16% Household i tems (e.g. appliances) 9% Toys 3% Clothes 3% Groceries 2% Jewelry/watches 2% Source: American Express Global internet survey, October 2000

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Methodology On-line trading of financialservices has grown from 4% of all traded Economy,Infrastructure, Users securities in 1999 to what has been forecast to reach 20% to 30% in the eCommerce next two to three years. Banks are investing considerable resources in eAdvertising eFinance eCommerce applications both to sell their own home and corporate eWireless banking services, and to support the e-business strategies of their clients by Denmark developing virtual malls and vertical portals and by supporting them with Finland secure transactions. France

Germany

Italy Reasons for Not Shopping Online in Italy, 2000 The Netherlands Uncomfortable sending credit card information Norway 74% Poland

Russia Prefer to see product before purchasing Spain 35% Sweden No credit card United Kingdom

Index of Charts 24% Can’t get enough information about products to make decision 17% Not confident with online merchants 11% Can’t talk to salesperson 14%

Source: Ernst & Young, 2000

E. B2B eCommerce

B2B eCommerce Revenues in Italy, 2000–2004 (in billions)

2000 $1.4

2001 $3.0

2002 $6.7

2003 $13.9

2004 $28.2

Source: eMarketer, 2000

Only 1.5 million Italian businesses were estimated to be connected to the internet at the end of 1998 — out of a total of 3.4 million businesses nationwide. Recent market surveys from Spectrum ICT indicate that 87% of Italian companies are now connected to the Internet.

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Methodology

Economy,Infrastructure, Users Businesses in Italy with Internet or Electronic Data eCommerce Interchange, 2000 eAdvertising eFinance With Internet Access 74% eWireless

Denmark That Use EDI 74% Finland Source: UK Department of Trade and Industry, 2000 France

Germany

Italy As a result of this high level of internet penetration in businesses, virtually

The Netherlands all major Italian industrial groups are developing e-commerce solutions, Norway and ISPO forecasts that by 2004, at least half of all company purchases will Poland be via the internet. For example, automotive manufacturer Fiat has made Russia major investments in Fast Buyer - - an e-procurement company formed Spain

Sweden jointly with General Motors- -, and it is also discussing joining the mega- United Kingdom portal Covisint, together with GM, Ford and Daimler-Chrysler. Other major Index of Charts cases of B2B e-commerce include the tire manufacturer Pirelli, which will be part of the marketplace RubberNetwork.com together with 5 other major international tire manufacturers.

Comparative Estimates: eCommerce in Italy, 2000–2004 (in billions) 2000 2001 2002 2003 2004 eMarketer B2B $1.4 $3.0 $6.7 $13.9 $28.2 B2C $0.3 $0.4 $0.8 $1.5 $2.8 Computer Economics B2B $94.9 $189.7 $237.1 $334.4 Forrester Research B2B $6.7 $14.6 $31.6 $67.0 $134.0 Forrester Research B2C $0.5 $1.1 $2.2 $4.4 $8.4 Source: eMarketer, 2000; various, as noted

eCommerce in Italy, 1999 & 2003 (in billions) B2C 1999 $0.3 B2C 2003 $6.4 B2B 1999 $1.4 B2B 2003 $46.9 Source: EbusinessEurope.com, 2000

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Methodology F.eFinance Economy,Infrastructure, Users eCommerce eAdvertising eBanking eFinance J.P. Morgan estimates there were 1.2 million online bank accounts in Italy eWireless

Denmark by year-end 2000 and anticipates that this number will increase to 7

Finland million by 2003.

France Germany Online Banking Accounts in Italy, 2000-2003 (in Italy millions) The Netherlands Norway 2000 1.2 Poland

Russia 2001 3.5 Spain 2002 5.0 Sweden

United Kingdom 2003 7.0

Index of Charts Source: JP Morgan, 2000

Datamonitor contends online banking usage is low in Italy with just 190,000 customers and will grow moderately, to 1.7 million customers by 2004, approximately 3% of the country’s population.

Online Banking Customers in Italy, 2000-2004 (in millions)

2000 0.19

2001 0.40

2002 0.76

2003 1.20

2004 1.70

Source: Datamonitor, 2000

eInvesting In Italy, conversion to the Euro led to a substantial fall in traditionally high government bond yields. Brokerages benefited as a result of the shift of capital away from the bond market to the equity market. J.P. Morgan estimates 300,000 shareholders, 7.2% of Italy’s 4.2 retail shareholders, were online brokerage customers in 2000. By 2003, J. P. Morgan predicts online brokerage customers will comprise one-third or 2.1 million, of Italy’s 6.3 million retail shareholders.

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Methodology

Economy,Infrastructure, Users Retail Shareholders and Online Brokerage Customers eCommerce in Italy, 2000-2003 (in millions) eAdvertising 2000 2001 2002 2003 eFinance Retail 4.2 4.8 5.5 6.3 eWireless shareholders Denmark Online 0.3 0.7 1.4 2.1 Finland brokerage France customers Germany % of retail 7.2% 14.6% 25.5% 33.3% Italy shareholders The Netherlands

Norway Source: JPMorgan, 2000

Poland Russia Like J.P. Morgan, BNP Paribas also estimates that there were 300,000 online Spain brokerage accounts in Italy for the year 2000. By 2005, BNP Paribas Sweden forecast that there will be 2.5 million Italian online traders. United Kingdom

Index of Charts Online Brokerage Accounts in Italy, 2000-2005 (in millions)

2000 0.3

2001 0.6

2002 1.1

2003 1.7

2004 2.1

2005 2.5

Source: BNP Paribas Equities, 2000

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Methodology G. eWireless Economy,Infrastructure, Users eCommerce Although the fixed-line telecommunications market in Italy remains stable eAdvertising (while other European countries are showing a decline in fixed-line eFinance subscribers and revenues), the wireless market is showing the best eWireless

Denmark performance among all telecommunications services. Prepaid cards and

Finland fixed monthly cellular rates have helped to boost the wireless market. And, France the wireless market will continue to expand as increased competition Germany reduces the cost of voice and data telephony. Italy Italy leads Europe in the number of wireless subscriptions. Penetration The Netherlands

Norway rates are among the highest in the region and will only climb higher in the Poland years to come. Forrester Research has estimated that 1.05 million people Russia used wireless internet services in 2000, accounting for only 4% of the Spain entire Italian wireless market. Sweden

United Kingdom Comparative Estimates: Wireless Subscribers in Italy, Index of Charts 2000 (in millions)

The Strategis Group 38.2

World Bank 28.4

CIT-Online 36.0

Salomon Smith Barney 24.0

ABN Amro Bank 40.3

Merrill Lynch 39.1

FT Mobile Communications 25.0

Forrester Research* 28.8

Notes: Figures based on estimate of 50% penetration and a base population of 57.6 million people of all ages Source: various, as noted, 2000

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Methodology

Economy,Infrastructure, Users Comparative Estimates: Wireless Subscribers in Italy, eCommerce 2000–2004 (in millions) eAdvertising 2000 eFinance 39.1 eWireless

Denmark 40.3

Finland 28.4

France 2001 Germany

Italy 46.9

The Netherlands 44.5 Norway 31.2 Poland

Russia 2002

Spain 53.9 Sweden 47.7 United Kingdom 33.5 Index of Charts 2003 56.0 50.9 35.3

2004 56.8 54.2 36.6

Merrill Lynch ABN Amro Bank World Bank Source: various, as noted, 2000

As a testament to the pervasiveness of the Italian wireless market, mobile revenues almost matched those of the fixed-line industry.

Information Service Revenues in Italy, 2000 (in billions and as a % share of total)

Leased Line $1.9 (6%) Internet $3.1 (10%)

PSTN $15.7 (48%)

Mobile $11.7 (36%)

Total = $32.4 Source: Worldbank, 2000

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Methodology Over the next few years, new wireless services (such as wireless internet Economy,Infrastructure, Users and telematics) and speedier access options will be offered by a number of eCommerce competing telecommunications operators. As a result, Italy will experience eAdvertising eFinance a marked decrease in the cost of voice telephony and a subsequent decrease eWireless in the growth rate of the cellular market. Worldbank projects that the Denmark growth rate of the cellular market will slow down and by 2002 revenues Finland will actually decrease. What’s more, revenue from other information France

Germany services such as PSTN, leased line, and the internet will also suffer revenue

Italy losses in the near future.

The Netherlands Norway Cellular Revenues in Italy, 2000–2005 (in billions) Poland 15 Russia

Spain $11.7 $11.8 $11.7 $11.6 $11.2 (4%) (1%) (-1%) (-2%) $10.8 Sweden (-3%) (-4%) United Kingdom

Index of Charts 9

3

2000 2001 2002 2003 2004 2005 Source: World Bank, 2000

Similarly, CIT-Online predicts that Italy will see a decline in voice-based revenues with data becoming a major revenue stream around the middle of the decade.

Voice and Data Revenues, 2000, 2005 & 2010 (in billions)

Voice $13.3 $12.5 $10.7

Data $0.6 $3.2 $6.2

2000 2005 2010 Source: CIT-Online, 2000

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Methodology: The eMarketer Difference

I Economy,Infrastructure and Users

II eCommerce

III eAdvertising

IV eFinance

V eWireless

VI Denmark

VII Finland

VIII France

IX Germany

X Italy XI The Netherlands 255 A. Overview 256 B. Internet Users 257 C. eDemographics 259 XID. B2C eCommerce 263 E. B2B eCommerce 265 F.eFinance 266 G. eWireless 267

XII Norway

XIII Poland

XIV Russia

XV Spain

XVI Sweden

XVII United Kingdom

Index of Charts

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Methodology A. Overview Economy,Infrastructure, Users eCommerce eAdvertising QuickStats: Netherlands, 2001 eFinance Total population (in millions)1 16.0 eWireless 1 Denmark Population 14+ (in millions) 13.2 2 Finland Population living in urban areas (1999) 89% France GDP (PPP adjusted, in billions) (1999)3 $365 Germany GDP per capita (PPP adjusted) (1999)3 $23,100 Italy 4 The Netherlands PCs per 100 inhabitants (1999) 35.97 4 Norway Main telephone lines per 100 inhabitants (1999) 60.64 Poland Cellular subscribers per 100 inhabitants (1999)4 43.54 Russia ISPs (1999)3 70 Spain

Sweden Internet users (in millions) 4.4 United Kingdom Internet users as % of pop. 14+ 33% Index of Charts Compounded annual growth in users, 2001–2004 6% Total e-commerce (in billions) $5.33 Compounded annual growth in e-commerce, 2001–2004 141% B2B e-commerce (in billions) $3.82 B2C e-commerce (in billions) $1.49 Source: eMarketer, 2001; 1) US Census Bureau, 2001 (interpolated by eMarketer); 2) World Bank, 2000; 3) CIA World Fact Book, 2000; 4) International Telecommunication Union (ITU), 2000

The Netherlands has a very successful trading economy, with per capita international trade around twice that of Germany, France or the UK. With an overall substantial use of computer technology and a multilingual population (with 13.2 million adults), the country is among the best positioned in Europe to succeed in the digital economy.

Adult Population 14+ in the Netherlands, 2000–2004 (in millions)

2000 13.2

2001 13.2

2002 13.3

2003 13.4

2004 13.5

Source: eMarketer, calculated based on data from the US Census Bureau, 2000

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Methodology The Dutch economy is entering its 6th year of expansion, combining strong Economy,Infrastructure, Users GDP growth with decreasing unemployment and modest inflation. The eCommerce Dutch economy expanded by 3.6% in 1999 and 4% in 2000. Economic eAdvertising eFinance growth in 1999 was driven predominantly by investment and consumer eWireless spending, with large income gains resulting from a boom in asset prices. Denmark With job growth largely outpacing an expansion of the labor force, Finland unemployment in 1999 fell to less than 3% of the labor force, a level not France

Germany seen since the early 1970s.

Italy The Organization for Economic Cooperation and Development (OECD) The Netherlands forecasts a 4% growth in 2001, although the Netherlands Central Bank and Norway some economists estimate a GDP growth for 2001 of approximately 3.5%. Poland A reduction in foreign demand caused by a US slowdown may diminish Russia

Spain this expected growth rate to 2.5%.

Sweden

United Kingdom

Index of Charts B. Internet Users The Netherlands’ healthy economy, solid telecommunications infrastructure, and multilingual, technophiliac population have resulted in an internet penetration rate of 31% in 2000 that will grow to 39% in 2004. As is true for all internet penetration estimates, our internet user forecast below is contingent on continued economic growth. A deep recession would mean a slower expansion of the internet market.

Active Internet Users 14+ in the Netherlands, 2000–2004 (in millions)

2000 4.0

2001 4.4

2002 4.8

2003 5.0

2004 5.2

Source: eMarketer, 2001

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Methodology

Economy,Infrastructure, Users Comparative Estimates: Internet Users in the eCommerce Netherlands, 1999–2004 (in millions) eAdvertising 1999 2000 2001 2002 2003 2004 eFinance eMarketer – 4.0 4.4 4.8 5.0 5.2 eWireless ITU 3.0 –– – – – Denmark

Finland Angus Reid Group, Inc. 4.9 –– – – – France empirica 4.6 –– – – – Germany Pan European Monitor 2.3 4.8 –––– Italy Forrester Research 3.2 4.3 5.4 6.3 7.0 7.5 The Netherlands

Norway Institut de l'Audiovisuel

Poland et des Télécommunications en Europe (IDATE) – 4.1 –––– Russia

Spain Taylor Nelson Sofres – 5.6 –––– Sweden Computer Industry United Kingdom Almanac (CIA) 2.9 –– – – – Index of Charts eTForecasts – 4.3 –––– ABN Amro Bank 3.0 5.1 –––– Source: eMarketer, 2001; various, as noted, 2000

Internet Penetration in the Netherlands, 2000–2004 (active internet users 14+ as a % of population 14+)

2000 31%

2001 34%

2002 36%

2003 37%

2004 39%

Source: eMarketer, 2001

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Methodology C. eDemographics Economy,Infrastructure, Users eCommerce The Dutch internet is heavily skewed towards young internet users. eAdvertising Approximately three-quarters of those under 30 report using the internet, eFinance according to survey research conducted by empirica. eWireless

Denmark Internet Use in the Netherlands by Age, 1999 (as a % Finland of respondents in each age range reporting internet France use) Germany

Italy <18 73.9% The Netherlands Norway 18–29 75.0% Poland Russia 30–49 61.6% Spain

Sweden 50–64 31.3%

United Kingdom

Index of Charts >64 10.7% Source: empirica, 1999

Data collected by Collective Wisdom indicate that two-thirds of the internet users in the country are under the age of 35. A large population of young surfers suggests deep and wide diffusion of the internet as the population matures.

Internet Use in the Netherlands by Age, 2000 (as a % by age category)

45 + 11% 16–24 31% 35–44 22%

25–34 35%

Note: does not add to 100% due to rounding Source: Collective Wisdom, 2000

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Methodology The Netherlands is one of the most heavily male-dominated internet Economy,Infrastructure, Users markets in Europe, with men comprising 75% of those online. It is unclear eCommerce what accounts for this disparity, but one thing is certain – a huge eAdvertising eFinance opportunity exists for the firms that can provide internet services that eWireless appeal to women. Denmark Finland Internet Use in the Netherlands by Gender, 2000 France

Germany Male Female

Italy 75% 25% The Netherlands Norway Source: Collective Wisdom, 2000

Poland

Russia

Spain With 78% of Dutch citizens speaking English as a second language, access

Sweden to the vast amount of English on the web is not a problem. Most Dutch United Kingdom surfers – who tend to be educated – will be able to navigate the internet Index of Charts fairly easily.

Three Most Widely Spoken “Second” Languages in the Netherlands, 2000 (as a % of population) English 78% German 57% French 14% Source: Eurobarometer 52, 2000

Dutch internet users tend to be online more frequently per month, and consequently for a longer total number of hours, than many other internet users in Europe. The time spent per website visited and the duration of individual surfing sessions are comparable to other countries, however.

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Methodology

Economy,Infrastructure, Users Duration and Frequency of Internet Access in the eCommerce Netherlands, 2000 eAdvertising Number of sessions per month 14 eFinance Number of unique sites visited 20 eWireless Time spent per site (minutes) 19 Denmark

Finland Time spent per month (hours and minutes) 6:28 France Time spent during surfing session (minutes) 27 Germany Duration of a page viewed (seconds) 43 Italy

The Netherlands Active internet universe 3,783,861

Norway Current internet universe estimate 7,281,547 Poland Source: Nielsen//NetRatings, 2000 Russia

Spain

Sweden More Dutch internet users access the web from home compared to their

United Kingdom workplace, as is the case throughout Europe.

Index of Charts Home and Work Internet Users in the Netherlands, Year-End 1999 (as a % of all users)

Home 70%

Work 43%

Source: International Data Corp. (IDC), 2000

eMail is as popular in the Netherlands as in most other countries around the world. However, the Dutch seem to be more apt to bank online than other Europeans. The Eurobarometer survey results below show that engaging in “bank operations” is an activity practiced by 40% of the population – far more than in most European countries. Moreover, the percentage of survey respondents reporting a book or CD purchase is higher than in other European countries.

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Methodology

Economy,Infrastructure, Users Online Activities in the Netherlands in Last 3 Months, eCommerce 2000 eAdvertising eMailed family, friends, or colleagues 63% eFinance Downloaded free software 57% eWireless Searched for information about specific product 46% Denmark

Finland Searched for vacation information 44% France Searched for educational material and documents 40% Germany Carried out bank operations 40% Italy

The Netherlands Searched for sports or leisure information 36%

Norway Searched for health information 29% Poland Read newspaper articles 26% Russia Searched for job opportunities 24% Spain

Sweden Visited website of government 21%

United Kingdom Listened to radio or music using RealAudio,

Index of Charts Windows Media, or QuickTime 21% Visited website of museum 20% Played computer games 19% Bought a CD 15% Bought a book 15% Visited website of local authority 10% Answered a public opinion survey or market research survey 10% Built own website 9% Visited website of political party 8% Bought stocks 8% Watched TV channels on internet 8% Bought software 6% Made a telephone call via internet 4% Something else 4% Don't know 4% Made a bid in online auction 3% Held video conferencing over internet 0% Source: European Commission, Eurobarometer 53, 2000

Online Activities in the Netherlands, 2000 (as a % of internet users engaging in each activity)

eMailing 80%

Information searching 70%

Surfing without a goal 61%

Downloading files 55%

Source: Pro Active, May 2000

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Methodology Five US-based web properties make it into the Dutch top ten list, perhaps a Economy,Infrastructure, Users result of the large percentage of Dutch citizens who can speak English. eCommerce Netherlands-based VNU is the most popular, with a reach of 59%. eAdvertising eFinance eWireless Top 10 Web Properties in the Netherlands as of

Denmark November 2000 Finland Property Unique Audience (in millions) Reach % France 1. VNU 2.2 59.0% Germany 2. KPN 1.9 51.2% Italy

The Netherlands 3. MSN 1.9 49.2% Norway 4. Microsoft 1.4 36.4% Poland 5. Yahoo! 1.2 31.1% Russia 6. Lycos Network 1.1 29.6% Spain

Sweden 7. AOL 0.8 21.5% United Kingdom 8. &Wanadoo 0.7 19.7% Index of Charts 9. FortuneCity 0.7 18.7% 10. AltaVista 0.7 17.7% Source: Nielsen//NetRatings,2000

D. B2C eCommerce

B2C eCommerce Revenues in the Netherlands, 2000–2004 (in billions)

2000 $0.8

2001 $1.5

2002 $3.3

2003 $7.0

2004 $14.9

Source: eMarketer, 2000

Several factors inhibit B2C e-commerce growth. Local telephone use is metered, so long surfing sessions are expensive. Debit cards are by far the most widely used form of payment in the Netherlands and there are only a relatively limited number of credit card holders. With dense geography and shops located in close proximity to residents, web shopping is not a logistical advantage to many Dutch residents. Catalog retail has not been very popular.

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Methodology Among Dutch consumers, the Internet is still mostly used as a pre-purchase Economy,Infrastructure, Users source of information. According to Trendbox research approximately 20 eCommerce percent of Dutch Internet users are said to have actually purchased via the eAdvertising eFinance net (13% according to the OECD), although privacy and security of eWireless financial transactions are still limiting the growth. Among the most Denmark popular products purchased on the Internet are: books, music, computer Finland hardware and software. Travel, tickets for events, gifts, pharmaceuticals France

Germany and financial products are growing categories. Some 35% of Dutch

Italy eCommerce purchases are reportedly made outside the Netherlands, at least The Netherlands 15–20 percent in the United States. Norway Poland Internet Users Shopping Online, 1999–2001 Russia

Spain 1999 1999 2000 2001

Sweden ECaTT (% of internet users) 22.4% – 41.2% United Kingdom Angus Reid (% of all adults) – 11% – Index of Charts Source: various, as noted, 2000

Several programs have been put into place that may have the effect of stimulating e-commerce. In 1999, a non-governmental organization, the Consumer Society, introduced a “Web Trader” logo providing consumers with certain internet purchase guarantees. The Dutch government launched a campaign in April 2000 to increase people’s use of computers, to improve government services by bringing them online, and by stimulating internet use by small and medium sized companies. Online banking and paying of bills has long been popular in the Netherlands. More recently, the Dutch have started to invest via the net. About 3 percent of Dutch investors are said to perform transactions over the Internet. The three largest financial organizations in the Netherlands, ABN Amro Bank, ING Bank and Insurance Group, and Rabo Bank offer web-based services.

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Methodology E. B2B eCommerce Economy,Infrastructure, Users eCommerce eAdvertising B2B eCommerce Revenues in the Netherlands, eFinance 2000–2004 (in billions) eWireless Denmark 2000 $1.9 Finland

France 2001 $3.8

Germany

Italy 2002 $10.0

The Netherlands 2003 $26.2 Norway

Poland 2004 $59.7 Russia

Spain Source: eMarketer, 2000

Sweden

United Kingdom

Index of Charts Recent reports by the Economist Intelligence Unit (EIU) rank the Netherlands fifth — after the U.S. and Scandinavian countries — on the list of countries offering a good business environment and infrastructure for e-commerce. Approximately two-thirds of companies had internet access by the end of 1999, according to Gartner Group. About one-third of Dutch companies are engaged in e-commerce. eCommerce revenues in the country are expected to grow from $2.7 billion in 2000 to $75 billion in 2004.

Comparative estimates: B2B revenues in the Netherlands, 2000–2004 (in billions) 2000 2001 2002 2003 2004 eMarketer B2B $1.9 $3.8 $10.0 $26.2 $59.7 B2C $0.8 $1.5 $3.3 $7.0 $14.9 Computer Economics B2B $31.0 $62.0 $77.5 $109.2 – Forrester Research B2B $6.0 $13.4 $28.6 $55.7 $92.7 Source: eMarketer, 2000; various, as noted

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Methodology F.eFinance Economy,Infrastructure, Users eCommerce eAdvertising eBanking eFinance In the Netherlands, J.P. Morgan estimates online banking accounts will eWireless

Denmark triple in number from 1 million in 2000 to 3 million by 2003.

Finland

France Online Banking Accounts in the Netherlands, Germany 2000-2003 (in millions)

Italy

The Netherlands 2000 1.0

Norway 2001 1.4 Poland Russia 2002 2.1 Spain 2003 3.0 Sweden United Kingdom Source: JP Morgan, 2000 Index of Charts Datamonitor counts only 490,000 online banking customers in the Netherlands in 2000, growing to 1.7 million by 2004.

Online Banking Customers in the Netherlands, 2000-2004 (in millions)

2000 0.49

2001 0.85

2002 1.20

2003 1.50

2004 1.70

Source: Datamonitor, 2000

eInvesting In the Netherlands, J. P. Morgan expects the number of online brokerage customers to grow seven-fold from 200,000 in 2000 to 1.4 million in 2003.

Retail Shareholders and Online Brokerage Customers in the Netherlands, 2000-2003 (in millions) 2000 2001 2002 2003 Retail 2.1 2.4 2.6 2.8 shareholders Online 9.5% 16.6% 30.8% 50.0% brokerage customers Source: JP Morgan, 2000

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Methodology G. eWireless Economy,Infrastructure, Users eCommerce The Netherlands enjoys an open telecommunications market that welcomes eAdvertising investment from both foreign and domestic interests. The Dutch eFinance government encourages competition and privatized the mobile eWireless

Denmark telecommunications market in 1995 and the fixed-line market in 1996. As

Finland a result, the Netherlands boasts a mature mobile telecommunications France market that readily embraces new technology. Germany Both The Strategis Group and Pro Active International offer similar Italy estimates for the number of wireless subscribers in the Netherlands. Pro The Netherlands

Norway Active estimates that 248,000 people used wireless internet services and Poland sent 3.72 million short messages in 2000. Russia Spain Comparative Estimates: Wireless Subscribers in the Sweden Netherlands, 2000 (in millions) United Kingdom Index of Charts The Strategis Group 4.9

Pro Active International 5.6

Source: various, as noted, 2000

Sales of the PDAs remain at modest levels in the Netherlands, but Datamonitor foresees considerable growth in the handheld computer segment in the years to come.

Sales of Handheld Computers in the Netherlands, 2000–2005 (in millions)

2000 0.9 7.7

2001 8.4

2002 9.2

2003 10.0

2004 11.0

2005 12.0

Pro Active International1 Datamonitor2 Notes: 1) PDAs only; 2) All handhelds Source: various, as noted, 2000

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The eEurope Report

Methodology: The eMarketer Difference

I Economy,Infrastructure and Users

II eCommerce

III eAdvertising

IV eFinance

V eWireless

VI Denmark

VII Finland

VIII France

IX Germany

X Italy

XI The Netherlands XII Norway 269 A. Overview 270 B. Internet Users 271 C. eDemographics 273 XIID. B2C eCommerce 276 E. B2B eCommerce 277 F.eWireless 278

XIII Poland

XIV Russia

XV Spain

XVI Sweden

XVII United Kingdom

Index of Charts

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Methodology A. Overview Economy,Infrastructure, Users eCommerce eAdvertising QuickStats: Norway, 2001 eFinance Total population (in millions)1 4.5 eWireless 1 Denmark Population 14+ (in millions) 3.7 2 Finland Population living in urban areas (1999) 75% France GDP (PPP adjusted, in billions) (1999)3 $111 Germany GDP per capita (PPP adjusted) (1999)3 $25,100 Italy 4 The Netherlands PCs per 100 inhabitants (1999) 44.99 Norway Main telephone lines per 100 inhabitants (1999)4 71.2 Poland Cellular subscribers per 100 inhabitants (1999)4 61.75 Russia ISPs (1999)3 21 Spain

Sweden Internet users (in millions) 1.9 United Kingdom Internet users as % of pop. 14+ 51% Index of Charts Compounded annual growth in users, 2001–2004 8% Total e-commerce (in billions) $2.20 Compounded annual growth in e-commerce, 2001–2004 141% B2B e-commerce (in billions) $1.56 B2C e-commerce (in billions) $0.64 Source: eMarketer, 2001; 1) US Census Bureau, 2001 (interpolated by eMarketer); 2) World Bank, 2000; 3) CIA World Fact Book, 2000; 4) International Telecommunication Union (ITU), 2000

The Norwegian government controls key areas of the economy, such as the petroleum sector (through large-scale state enterprises), and its extensive welfare system accounts for more than 50% of the country’s GDP. As a major shipping nation, Norway is highly dependent on international trade and the export of raw materials and semi-processed goods. The country has enormous natural resources – from petroleum to fish and forest products — and is highly dependent on its oil production and international oil prices. Only Saudi Arabia exports more oil than Norway. Growth was only 0.8% in 1999 because of weak private consumption and slow investment activity in the oil and other sectors. Higher oil prices in 2000 helped to boost GDP, and growth is expected to pick up in 2001. However, as in any economy dependent on oil revenues, the country’s economic health depends on the state of the international economy and the price of oil. Like the rest of Scandinavia, Norway has superb technological infrastructure, that, along with moderately priced internet access, has given Norway one of the highest internet user penetrations in the world. However, like other Nordic countries, Norway has a small population (with 3.6 million adults), and its average disposable income as a result of high taxes isn’t much higher than in other Northern European countries.

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Methodology

Economy,Infrastructure, Users Adult Population 14+ in Norway, 2000–2004 (in eCommerce millions) eAdvertising eFinance 2000 3.64 eWireless 2001 3.66 Denmark Finland 2002 3.68 France Germany 2003 3.70 Italy The Netherlands 2004 3.73 Norway Source: US Census Bureau, 2000; eMarketer extrapolation Poland

Russia

Spain

Sweden United Kingdom B. Internet Users Index of Charts eMarketer estimates that in 2000, 1.6 million Norwegians (age 14 and older) were active internet users. This population of users is expected to increase to 2.4 million by 2004, as the following figure illustrates. At that point, two-thirds of the adult Norwegian population will be connected to the internet, surfing an hour or more each week.

Active Internet Users 14+ in Norway, 2000–2004 (in millions)

2000 1.6

2001 1.9

2002 2.2

2003 2.3

2004 2.4

Source: eMarketer, 2001

eMarketer’s estimate for 2000 is slightly more modest than other research firms such as the Pan European Monitor and Norsk Gallup. Forecasting 4 years into the future, Forrester predicts that 3.1 million Norwegians will be online, some 84% of the total adult population. eMarketer’s estimate of 2.4 million (a 66% penetration rate) represents a more plausible growth rate.

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Methodology

Economy,Infrastructure, Users Comparative Estimates: Internet Users in Norway, eCommerce 1999–2004 (in millions) eAdvertising 1999 2000 2001 2002 2003 2004 eFinance eMarketer – 1.6 1.9 2.2 2.3 2.4 eWireless ITU 2.0 ––––– Denmark

Finland Nielsen//NetRatings – 1.3 –––- France Pan European Monitor – 1.7 –––– Germany Forrester Research 1.5 1.9 2.3 2.7 2.9 3.1 Italy Taylor Nelson Sofres – 1.9 –––– The Netherlands

Norway Gallup Norway – 2.0 –––– Poland Merrill Lynch 0.8 ––––– Russia Source: eMarketer, 2001; various, as noted, 2000 Spain

Sweden United Kingdom Internet Penetration in Norway, 2000–2004 (active Index of Charts internet users 14+ as a % of population 14+)

2000 45%

2001 53%

2002 59%

2003 63%

2004 66%

Source: eMarketer, 2001

As the following illustrates, internet estimates can vary substantially based on one’s definition of internet use. According to Gallup Norway, less than half of those who have internet access in Norway – 1.1 million — use the internet daily.

Internet Use in Norway by Intensity of Use, 2000 (in millions)

Internet access 2.4

Use within past month 2.0

Use every day 1.1

Source: Gallup Norway, 2000

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Methodology More Norwegians use the internet from home than from their workplaces, Economy,Infrastructure, Users according to survey data from Gallup Norway and the International Data eCommerce Corp. (IDC). This trend is consistent with usage patterns across Europe. eAdvertising eFinance eWireless Location of Internet Access in Norway, 2000 (in

Denmark millions)

Finland

France Home 1.9

Germany Work 1.3 Italy

The Netherlands School 0.4 Norway

Poland Source: Gallup Norway, 2000

Russia

Spain

Sweden Home and Work Internet Users in Norway, Year–End

United Kingdom 1999 (as % of all users)

Index of Charts Home 71%

Work 51%

Source: International Data Corp. (IDC), 2000

C. eDemographics While the internet penetration rate among young Norwegians is high – as it is in most other countries – there is a high penetration rate (of 56%) among those in the 40 to 59 age range, according to Gallup Norway. This distribution of internet users among a wider portion of the population is one of the reasons internet use is so high throughout the country.

Internet Use in Norway by Age, 2000

13–19 79%

20–39 69%

40–59 56%

60+ 9%

Source: Gallup Norway, 2000

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Methodology According to Gallup, more men than women access the internet in Norway. Economy,Infrastructure, Users However, the difference – 69% compared with 61% — is not a significant eCommerce gap. eAdvertising eFinance eWireless Internet Access in Norway by Gender, 2000

Denmark

Finland Men 69%

France Women 61% Germany Italy Source: Gallup Norway, 2000 The Netherlands Norway Internet access in Norway is divided along socioeconomic strata as it is in Poland much of the word. On one measure – educational attainment – there is a Russia

Spain significant difference in the number of users with university degrees than

Sweden with merely a high-school level education, as the following indicates.

United Kingdom Index of Charts Educational Level of Internet Users in Norway, 2000

University 69%

High school 47%

Middle school 39%

Source: Gallup Norway, 2000

Norwegians are average internet users in terms of hours spent online and the duration of internet surfing sessions. This is not surprising, given that the cost of 20 hours of internet access in Norway happens to be the median cost for Europe.

Duration and Frequency of Internet Access in Norway, 2000 Number of sessions per month 13 Number of unique sites visited 17 Time spent per site (minutes) 20 Time spent per month (hours and minutes) 5:33 Time spent during surfing session (minutes) 24 Duration of a page viewed (seconds) 37 Active internet universe 1,324,373 Current internet universe estimate 2,218,375 Source: Nielsen//NetRatings, 2000

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Methodology Scandinavia Online and Telenor, two Norwegian ISPs, are the most popular Economy,Infrastructure, Users properties in Norway, reaching two-thirds of the country’s internet users. eCommerce US-based MSN, Yahoo! and Lycos are also in the top ten. eAdvertising eFinance eWireless Top 10 Web Properties in Norway as of November

Denmark 2000 Finland Property Unique Audience (in thousands) Reach % France 1. Scandinavia Online 877 66.2% Germany 2. Telenor 868 65.5% Italy

The Netherlands 3. MSN 606 45.8% Norway 4. Schibsted 506 38.2% Poland 5. Microsoft 500 37.7% Russia

Spain 6. Yahoo! 444 33.5%

Sweden 7. Lycos Network 440 33.2% United Kingdom 8. Everyday.com 296 22.3% Index of Charts 9. Dagbladet 263 19.8% 10. TV2 253 19.1% Source: Nielsen//NetRatings, 2000

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Methodology D. B2C eCommerce Economy,Infrastructure, Users eCommerce eAdvertising B2C eCommerce Revenues in Norway, 2000–2004 eFinance (in billions) eWireless Denmark 2000 $0.3 Finland France 2001 $0.6 Germany

Italy 2002 $1.5

The Netherlands

Norway 2003 $2.9

Poland 2004 $5.2 Russia Spain Source: eMarketer, 2000 Sweden

United Kingdom

Index of Charts B2C e-commerce is growing in Norway. With as many as 19% of internet users shopping online (according to Taylor Nelson Sofres), we forecast that B2C revenues will grow from $328 million in 2000 to $5.2 billion in 2004. Interestingly, one of the country’s largest online retailers is the Post Office’s portal “escape.no.” After spending $1.5 million developing the portal, in August 2000, Escape secured an agreement with the other Nordic postal services to provide the e-retail marketing and logistics tracking services for the whole Nordic region, and will serve as the main channel through which packages from the US will be ordered and delivered into the region. Security remains a large barrier to the expansion of B2C e-commerce. Norwegians tend to own debit cards, not credit cards. Consequently, Norwegians are more reluctant to give out card details on the net. Other Norwegian shopping portals operate Nordic wide, such as YaTack.no and Letsbuyit.com. There are also specialist online businesses for travel, sporting equipment, books, watches, CDs, DVDs, games and videos, toys, electronics and more. As in the US, pure-play dot coms in Norway like Letsbuyit.com have been forced to downsize by some 20% over the past year. To address security issues, Norway has developed a website called www.nsafe.no — a cooperative venture between the Norwegian Consumer Protection Council, Forbrukerraadet, and the E-retailers Trade Association “Eforum” to certify online companies as legitimate and to identify them with a special website logo.

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Methodology E. B2B eCommerce Economy,Infrastructure, Users eCommerce eAdvertising B2B eCommerce Revenues in Norway, 2000–2004 eFinance (in billions) eWireless

Denmark 2000 $0.8

Finland

France 2001 $1.6

Germany 2002 $4.0 Italy

The Netherlands 2003 $10.8 Norway Poland 2004 $25.6 Russia

Spain Source: eMarketer, 2000

Sweden

United Kingdom

Index of Charts A survey carried out in 2000 by the Norwegian Statistics Bureau showed that 10% of companies with more than 10 employees generated sales from e-commerce in 1999. The proportion of eCommerce revenue to total revenue was quite low, however – less than 10% percent for 69% percent of the companies. Only 8% obtained 25% or more of their sales from e-commerce. B2B e-commerce might be stimulated by online ventures designed to facilitate trade in the oil industry. As the second largest largest oil exporting nation, Norway’s market for equipment and services is estimated to be $9–12 billion. One e-marketplace, called the Achilles system – helps to identify qualified suppliers and facilitate procurement for oil ventures. The largest Norwegian oil company, Statoil, however, has decided to invest $4.5 million to develop a more integrated e-marketplace called Trade Ranger. Through this system, Statoil expects to cut costs by 2–5 percent on procurement. Government procurement is another avenue to stimulate online business in Norway. The Norwegian Government has initiated a programto establish an electronic market place for the government to procure goods and services online, as well as for companies wishing to do business with the government an easier way to submit bids.

Comparative Estimates: B2B eCommerce Revenues in Norway, 2000–2004 (in billions) B2B 2000 2001 2002 2003 2004 eMarketer $0.8 $1.6 $4.0 $10.8 $25.6 Computer Economics $11.8 $23.6 $29.5 $41.7 – Forrester Research $2.7 $6.1 $13.0 $24.4 $38.1 Source: eMarketer, 2000; various, as noted

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Methodology F.eWireless Economy,Infrastructure, Users eCommerce In order to meet EU requirements for entry, the Norwegian government in eAdvertising 1998 deregulated their state-held monopoly on telecommunications eFinance services. Although Telenor (the former state-run telecommunications eWireless

Denmark operator) still controls most of the telecommunication infrastructures in

Finland Norway, competitors may lease landlines to participate in the market. France Because the wireless market is built upon spectrum allocation, and not Germany landline infrastructures, the wireless industry in Norway has been able to Italy thrive in this otherwise limited telecommunications market. The Netherlands

Norway Norway has the second highest mobile penetration rate in Europe and in Poland the world. This is not entirely surprising, considering that Norway also Russia boasts the highest internet penetration rate – 45% for year-end 2000. The Spain ITU estimates that 62% of Norwegians subscribed to mobile Sweden telecommunications services. United Kingdom

Index of Charts Comparative Estimates: Wireless Subscribers in Norway, 1999–2000 (in millions)

The Strategis Group 2.92

McKinsey & Co. 2.40

OECD 2.24

ITU 2.24

1999 2000 Source: various, as noted, 2000

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Methodology: The eMarketer Difference

I Economy,Infrastructure and Users

II eCommerce

III eAdvertising

IV eFinance

V eWireless

VI Denmark

VII Finland

VIII France

IX Germany

X Italy

XI The Netherlands

XII Norway XIII Poland 279 A. Overview 280 B. Internet Users 281 C. eDemographics 282 XIIID. B2C eCommerce 289 E. B2B eCommerce 290 F.eWireless 291

XIV Russia

XV Spain

XVI Sweden

XVII United Kingdom

Index of Charts

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Methodology A. Overview Economy,Infrastructure, Users eCommerce eAdvertising QuickStats: Poland, 2001 eFinance Total population (in millions)1 38.6 eWireless 1 Denmark Population 14+ (in millions) 32.1 2 Finland Population living in urban areas (1999) 65% France GDP (PPP adjusted, in billions) (1999)3 $277 Germany GDP per capita (PPP adjusted) (1999)3 $7,200 Italy 4 The Netherlands PCs per 100 inhabitants (1999) 6.2 4 Norway Main telephone lines per 100 inhabitants (1999) 25.99 Poland Cellular subscribers per 100 inhabitants (1999)4 10.21 Russia ISPs (1999)3 161 Spain

Sweden Internet users (in millions) 2.1 United Kingdom Internet users as % of pop. 14+ 7% Index of Charts Compounded annual growth in users, 2001–2004 17% Total e-commerce (in billions) $0.32 Compounded annual growth in e-commerce, 2001–2004 108% B2B e-commerce (in billions) $0.28 B2C e-commerce (in billions) $0.04 Source: eMarketer, 2001; 1) US Census Bureau, 2001 (interpolated by eMarketer); 2) World Bank, 2000; 3) CIA World Fact Book, 2000; 4) International Telecommunication Union (ITU), 2000

Poland (along with the Czech Republic and Hungary) has made significant strides toward developing its fledgling market economy. Poland is, to a great extent, one of the most successful economies in Central and Eastern Europe. Today, as much as 70% of Poland’s economic activity takes place in the private sector. Poland became a member of NATO in 1999 and will likely join the European Union between 2003 and 2005. During the last 4 years, Poland’s economic output has expanded at rates of 6% to 7%, inflation has declined gradually and living standards have improved. Deregulation and privatization have led to the emergence of a vibrant sector of small- and medium-sized enterprises. Poland’s economy is expected to expand at a rate of 5% in 2001, according to Deutsche Bank. Per capita income in Poland (on a purchasing power parity basis) has risen from 31% of the average level in the EU in 1993 to 39% in 1998. Both the unemployment rate and the inflation rate have been declining from very high levels in the early 1990s.

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Methodology B. Internet Users Economy,Infrastructure, Users eCommerce Currently, 2.6 million Polish adults are active internet users – comparable eAdvertising to an estimate by the Pan European Monitor. By 2004, the number of eFinance internet users will grow to 3.8 million, comprising 11% of the adult eWireless

Denmark population.

Finland

France Active Internet Users 14+ in Poland, 2000–2004 (in

Germany millions)

Italy

The Netherlands 2000 2.6

Norway 2001 3.1 Poland

Russia 2002 3.4 Spain Sweden 2003 3.6 United Kingdom Index of Charts 2004 3.8

Source: eMarketer, 2001

Comparative Estimates: Internet Users in Poland, 1999–2004 (in millions) 1999 2000 2001 2002 2003 2004 eMarketer 2.6 3.1 3.4 3.6 3.8 ITU 2.8 eTForecasts 3.5 European Information Technology Observatory (EITO) 2.4 3.5 4.7 6.1 7.0 8.0 Pan European Monitor 2.6 Angus Reid Group, Inc. 5.7 Institut de l'Audiovisuel et des Télécommunications en Europe (IDATE) 3.1 empirica 3.6 Forrester Research 3.2 4.9 7.3 9.9 12.6 15.0 Nielsen//NetRatings 4.6 Estrategias 3.6 Taylor Nelson Sofres 4.9 Fletcher Research 8.0 Pyramid Research 1.6 Morgan Stanley Dean Witter 5.2 Source: eMarketer, 2001; various, as noted, 2000

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Methodology

Economy,Infrastructure, Users Internet Penetration in Poland, 2000–2004 (active eCommerce internet users 14+ as a % of population 14+) eAdvertising eFinance 2000 7% eWireless 2001 9% Denmark Finland 2002 10% France Germany 2003 10% Italy The Netherlands 2004 11% Norway Source: eMarketer, 2001 Poland

Russia

Spain

Sweden United Kingdom C. eDemographics Index of Charts In emerging economies, some of the most voracious users of the internet are very young people. In Poland, most internet users are college-age, between 18 and 25, as the following indicates.

Comparative Estimates: Age of Internet Users in Poland, 2000 15–17 ARC Rynek i Opinia Internet Monitor 9% 18–25 46% 44% 26–35 25% 22% 36–45 15% 14% 46–55 13% 10% 55–65 1% 1%

Source: various, as noted, 2000

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Methodology Estimates for the share of males in the internet population range from 65% Economy,Infrastructure, Users (Poland Today) to 81.3% (the Economic Academy in Cracow). Broken down eCommerce by the internet portals preferred by men and women, this gender disparity eAdvertising eFinance becomes clear. Only three of 13 internet portals studied had more female eWireless than male users. Denmark Finland Preferred Internet Portal in Poland by Gender, 2000 France Portal Male Users Female Users Germany

Italy Onet 62.1% 37.9% The Netherlands Wirtualna Polska 67.7% 32.3% Norway Yahoo! 79.9% 20.1% Poland AltaVista 71.6% 28.4% Russia

Spain Netscape 40.1% 59.9% Sweden TP Internet 38.0% 62.0% United Kingdom Interia 60.6% 39.4% Index of Charts AOL 45.8% 54.2% YoYo 100.0% 0.0% Go 60.9% 39.1% GoTo 53.9% 46.1% Excite 80.6% 19.4% Internet Ventures Poland 61.5% 38.5% Source: Osrodek Badania Opinii Publicznej (OBOP), 2000

The gender disparity is even greater when one examines online shoppers; 80% of internet shoppers are made up of men.

Gender of Online Shoppers in Poland, 2000 Male Female

80.1% 19.9%

Source: Osrodek Badania Opinii Publicznej (OBOP), 2000 k kt

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Methodology Internet users in Poland have larger household incomes than the average Economy,Infrastructure, Users Polish citizen, according to the following data. The income level is highest eCommerce ($662) for the heaviest internet users (3 times per week) compared with the eAdvertising eFinance lightest internet users ($464). eWireless Denmark Mean Monthly Net Household Income in Poland by Finland Average Citizens and Internet Users, 2000 France PLN (Polish Zloty) US$ Germany Average Polish Citizens 1,776 $405 Italy

The Netherlands Internet users (once/month) 2,584 $588

Norway Heavy users (3 times/week) 2,909 $662 Poland Moderate users (1–2 times/week) 2,854 $650 Russia Light users (1–3 times/month) 2,037 $464 Spain

Sweden eShoppers 3,641 $829 United Kingdom Urban Poles (in cities of 500,000 or more people) 2,017 $459 Index of Charts Private entrepreneurs 2,378 $541 Source: Osrodek Badania Opinii Publicznej (OBOP), Polish Central Statistical Office (CSO), 2000

Students are avid internet users worldwide, but in Poland they constitute the largest share of internet users. According to Internet Monitor, office professionals and employees together account for 34.9% of Polish internet users, yet students are the largest slice of the pie with 43.7% of the internet user market.

Professional Status of Internet Users in Poland, 2000 Qualified workers Senior officers/managers 5.1% 4.1%

Private Other entrepreneurs 5.2% 7.0% Students 43.7% Office/administration employees 15.2%

Professionals 19.7%

Source: Internet Monitor, 2000

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Methodology Internet use is heavily weighted towards those with higher educational Economy,Infrastructure, Users attainment. Certain portals, such as Interia, obviously appeal to those with eCommerce lower levels of education, but overall, those with at least secondary school eAdvertising eFinance education are the predominant internet users. eWireless Denmark Internet Portal Use by Educational Level of Internet Finland Users in Poland, 2000 France Portal University Secondary Less than Germany school secondary Italy school The Netherlands Onet 30.5% 46.5% 23.1% Norway

Poland Wirtualna Polska 26% 45.4% 28.6%

Russia Yahoo! 33% 53.3% 13.8% Spain AltaVista 52.9% 33.4% 13.8% Sweden Netscape 69.2% 25.8% 5.0% United Kingdom

Index of Charts TP Internet 29.3% 50.2% 20.5% Interia 28.3% 33.7% 38.1% YoYo 33% 53.2% 13.8% Go 19.1% 80.9% 0% GoTo 35.4% 64.6% 0% Internet Ventures Poland 38.5% 61.5% 0% Source: Osrodek Badania Opinii Publicznej (OBOP), 2000

Most Polish internet users are “newbies” who have been online for less than 2 years. As it typically takes time for new internet users to advance to internet services like online shopping, the preferred online pastimes of Polish internet users are likely to evolve in the next several years.

Length of Time Internet Users Have Been Online in Poland, 2000

<1 month 1 to 3 3.0% Don’t months remember 7.9% 3 to 6 20.4% months 14.7% Over 2 years 6 to 12 18.8% months 1 to 2 15.7% years 19.5%

Source: Internet Monitor, 2000

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Methodology Most Polish internet users (66.5%) are online for up to 5 hours per week – Economy,Infrastructure, Users with a quarter reporting that they are connected for less than 1 hour. This eCommerce means that surfing sessions are typically limited and activities that take eAdvertising eFinance brief periods, such as checking e-mail, are more likely to be popular. eWireless Denmark Length of Time Spent Online per Week in Poland, 2000 Finland 21 to 50 hours Over 50 hours 1.1% France 3.9% Germany Don’t know/ Italy 11 to 20 hours 6.9% difficult to say The Netherlands 5.0% Norway Less than 1 hour Poland 25.4% Russia 6 to 10 hours 16.4% Spain

Sweden United Kingdom 2 to 5 hours Index of Charts 41.1%

Note: does not add to 100% due to rounding Source: Internet Monitor, 2000

With low per capita incomes, computer availability is limited and surfing from home can be costly. Unlike most European countries, more Poles surf from work than from home, according to two recent surveys. Internet cafes are particularly popular in Poland; 14.5% of those surveyed report accessing the internet from a cafe.

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Methodology

Economy,Infrastructure, Users Comparative Estimates: Internet Access Location of eCommerce Internet Users in Poland, 2000 eAdvertising Home eFinance 31.0% eWireless 38.0% Denmark Work Finland

France 35.0%

Germany 43.2% Italy University The Netherlands 25.0% Norway 33.1% Poland Friends Russia 15.0% Spain 29.5% Sweden

United Kingdom Internet Cafe

Index of Charts 8.0% 14.5% Other 2.0% 2.0%

Polish Market Review Internet Monitor Source: Polish Market Review, 2000 (multiple answers allowed); Internet Monitor, 2000

Surfing and communication (i.e., e-mail) are the major reasons Poles use the internet, according to research from the Cracow University of Economics. Because students in Poland constitute such a large portion of internet users, it is not surprising that “education” is the third most popular reason for using the internet.

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Methodology

Economy,Infrastructure, Users Online Activities in Poland, 2000 eCommerce Looking for information eAdvertising 80% eFinance Communication eWireless 75% Denmark

Finland Education

France 59%

Germany Entertainment

Italy 59% The Netherlands Work/business Norway 44% Poland Getting information about goods Russia 41% Spain Leisure activity Sweden 38% United Kingdom Shopping Index of Charts 9% Other 2% Note: multiple answers allowed Source: Cracow University of Economics, 2000

Onet.pl is the most popular Polish portal, used “most often” by 28% of internet users surveyed. US-based Yahoo!, AltaVista and Netscape are also in the top five in popularity.

Most Popular Portals in Poland, 2000 % Reporting % Reporting % Reporting ever used used in most often- previous month used portal Onet.pl 51% 45% 28% Wirtualna Polska 46% 35% 15% Yahoo! 36% 21% 14% AltaVista 34% 22% 11% Netscape 21% 8% 5% Interia 18% 14% 5% Panorama Firm 18% 9% 4% Internetia 13% 5% 3% TP Internet 9% 7% 2% Arena 9% 10% 2% Source: Osrodek Badania Opinii Publicznej (OBOP), 2000

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Methodology D. B2C eCommerce Economy,Infrastructure, Users eCommerce eAdvertising eCommerce: B2C Revenues in Poland, 2000–2004 eFinance (in millions) eWireless Denmark 2000 $20.2 Finland

France 2001 $35.0

Germany

Italy 2002 $71.8

The Netherlands 2003 $127.4 Norway

Poland 2004 $229.3 Russia

Spain Source: eMarketer, 2000

Sweden

United Kingdom

Index of Charts Consumer sales over the Internet are still small – some $20 million. Furthermore, sales by online retail businesses represent only a small percentage of the total retail sales of those businesses. One estimate, by Gfk Polonia, suggests that only 5% of regular Polish internet users have ever bought anything online. (Taylor Nelson Sofres estimates the figure is 3%.) Of all internet users surveyed, none (0%) reported that the most important purpose of the internet was to buy products or conduct financial transactions online. Credit cards are still rare in Poland, and cash-on- delivery is still a common but cumbersome practice for paying for goods ordered through the Internet.

Credit and Debit Cards in Poland, 1999 (in thousands) Europay pay now* 427 Europay pay later** 253 Total Europay 680 Visa Electron 71 Visa other 289 Total Visa 360 Total cards 1,040

Source: European Card Review, 2000

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Methodology Approximately 80% of online buyers in Poland are male and come from Economy,Infrastructure, Users comparatively upper echelons of Polish society. The mean household eCommerce income in this group is $ 830. In comparison, the average income of a eAdvertising eFinance Polish household in 1999 amounted to $ 405. eWireless One new Polish policy is likely to spur business use of the internet. Polish Denmark companies are required by the government to provide social security Finland information on employees online. It is expected to result in a large number France

Germany of new companies starting to use the Internet, becoming regular users, and

Italy taking advantage of e-commerce applications. The Netherlands According to IDC, 1999 Polish B2C e-commerce revenues amounted to Norway US$ 3.4 million (IDC’s sample included 320 largest online businesses). IDC’s Poland figures mean that the average Internet user spent a paltry $14 (PLN 56) in Russia

Spain online purchases. The average yearly turnover of an online retailer

Sweden amounted to about $14,000 (PLN 56,000). United Kingdom The items most often purchased in online shops were books (34%), tapes Index of Charts and CDs (27%) and computer programs (22%). The most popular form of payment in online shops was collect on delivery (COD), followed by money transfers to the shop’s account and debit card payments.

E. B2B eCommerce

B2B eCommerce Revenues in Poland, 2000–2004 (in billions)

2000 $0.2

2001 $0.3

2002 $0.5

2003 $1.1

2004 $2.6

Source: eMarketer, 2000

B2B e-commerce is much larger, at $182 million. Only 40% of Polish companies have internet access, according to ISPO, and only about 400 companies are actively selling through the internet. Inadequate infrastructure along with limited access to high-speed connections is a major hindrance.

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Methodology F.eWireless Economy,Infrastructure, Users eCommerce Although Poland boasts the most mature telecommunications market in eAdvertising Eastern Europe (with the exception of Estonia), it still lags far behind its eFinance western neighbors in both fixed-line and mobile telecommunications eWireless

Denmark development. However, the Polish government is committed to globalizing

Finland its economy and the liberalization of the telecommunications industry is a France major component of this effort. Germany Telekomunikacja Polska, the nation’s largest telecom operator, was recently Italy privatized by the Polish government and has been partly acquired by The Netherlands

Norway France Telecom. Industry analysts predict that the influence of foreign Poland investments in the Polish telecommunications market will result in the Russia rapid penetration of new technology and in the expansion of current Spain services to new users. Sweden

United Kingdom

Index of Charts Wireless Subscriptions, Users, and Penetration The World Bank expects the wireless subscriber market to more than double from 4.5 million users in 2000 to 9.3 million by 2004.

Wireless Subscribers in Poland, 1999–2004 (in millions and as a % of population 14 and older) 35 9.3 (29%) 8.1 (25%) 6.9 (21%) 5.7 21 (18%) 4.5 (14%) 3.3 (10%)

7

1999 2000 2001 2002 2003 2004 Source: World Bank, 2000

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Methodology Poland had the two largest mobile phone operators as of the first quarter of Economy,Infrastructure, Users 2000, while a third experienced the greatest quarterly growth (from year- eCommerce end 1999 through March 2000) of any Eastern European operator. eAdvertising eFinance Penetration rates are low relative to the rest of Europe, but the wireless eWireless infrastructure is growing more quickly than fixed-lines. Denmark Finland Top 10 Eastern European Mobile Operators Ranked by France Subscriber Base, 2000 Germany Operator Country Subscribers Quarterly Italy March Year-End Growth The Netherlands 2000 1999 Norway Polska Poland 2,000,000 1,750,000 14.3% Poland Telefonia Russia Cyfrowa Spain Polkomtel Poland 1,692,000 1,523,000 11.1% Sweden

United Kingdom EuroTel Czech Republic 1,262,000 1,070,000 17.9% Praha Index of Charts Matav Hungary 1,115,000 940,000 18.6% Group Radiomobil Czech Republic 1,050,000 875,000 20.0% Centertel Poland 970,000 780,000 24.4% Mobifon Romania 765,000 702,000 9.0% MobilRom Romania 760,000 640,000 18.8% Pannon Hungary 751,000 668,000 12.4% GSM Mobitel Slovenia 714,000 594,000 20.2% Source: CIT-Online, 2000

Wireless Revenues

Wireless Industry Revenues in Poland, 2000–2005 (in billions and year-to-year growth rate)

2000 $1.6 (25%)

2001 $2.1 (27%)

2002 $2.6 (25%)

2003 $3.1 (19%)

2004 $3.5 (13%)

2005 $3.7 (6%)

Source: World Bank, 2000

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Methodology Additionally, the World Bank estimates that the mobile industry accounts Economy,Infrastructure, Users for more than half of all information service revenues in 2000. This is eCommerce particularly illustrative of the strength of the mobile market in Poland, eAdvertising eFinance considering that no other European country in the Worldbank’s analyses eWireless captures such a high percentage of the total information market. Denmark Finland Information Service Revenues in Poland, 2000 (in France billions and as a % share of total) Germany

Italy

The Netherlands Internet Leased $0.1 (1%) Norway Line Poland $0.03

Russia

Spain PSTN Sweden Mobile $3.6 (51%) $3.4 (48%) United Kingdom

Index of Charts Total = $7.1 Source: World Bank, 2000

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The eEurope Report

Methodology: The eMarketer Difference

I Economy,Infrastructure and Users

II eCommerce

III eAdvertising

IV eFinance

V eWireless

VI Denmark

VII Finland

VIII France

IX Germany

X Italy

XI The Netherlands

XII Norway

XIII Poland XIV Russia 295 A. Overview 296 B. Internet Users 297 C. eDemographics 299 XIVD. B2C eCommerce 301 E. B2B eCommerce 305 F.eWireless 306

XI Spain

XII Sweden

XII United Kingdom

Index of Charts

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Methodology A. Overview Economy,Infrastructure, Users eCommerce eAdvertising QuickStats: Russia, 2001 eFinance Total population (in millions)1 145.5 eWireless 1 Denmark Population 14+ (in millions) 122.4 2 Finland Population living in urban areas (1999) 77% France GDP (PPP adjusted, in billions) (1999)3 $620 Germany GDP per capita (PPP adjusted) (1999)3 $4,200 Italy 4 The Netherlands PCs per 100 inhabitants (1999) 3.74 4 Norway Main telephone lines per 100 inhabitants (1999) 19.71 Poland Cellular subscribers per 100 inhabitants (1999)4 0.92 Russia ISPs (1999)3 83 Spain

Sweden Internet users (in millions) 3.8 United Kingdom Internet users as % of pop. 14+ 3% Index of Charts Compounded annual growth in users, 2001–2004 28% Total e-commerce (in billions) $0.35 Compounded annual growth in e-commerce, 2001–2004 108% B2B e-commerce (in billions) $0.30 B2C e-commerce (in billions) $0.04 Source: eMarketer, 2001; 1) US Census Bureau, 2001 (interpolated by eMarketer); 2) World Bank, 2000; 3) CIA World Fact Book, 2000; 4) International Telecommunication Union (ITU), 2000

Russia’s economy has improved substantially since facing a major currency crisis in 1998. GDP grew in the first half of 2000 at an annual rate of approximately 7.5% on the year. However, significant economic obstacles remain. Russia’s economy remains shackled by debt, poor governance and widespread crime and corruption. Russia’s economic output per capita is a mere 16% of the European average. The average worker takes home just$60 per month. Many factory workers and soldiers have gone without a paycheck for months. Barter is common; some teachers are even paid in vodka, according to Radio Free Europe. More than 60 million Russians, roughly half the population, are believed to live under the poverty level, defined as a monthly income of less than $34. Only 1% of the Russian population has an annual household income higher than $10,000.

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Methodology Overall, Russia’s telecom infrastructure remains underdeveloped. There are Economy,Infrastructure, Users five people for every phone line in Russia, roughly twice as many as the eCommerce European average. Sharp differences remain between Moscow and St. eAdvertising eFinance Petersburg and the regions: In some rural areas, for example, the ratio of eWireless people to phone lines is as high as ten to one. Growing demand for Denmark telephone services, coupled with the severe shortage of telephone lines, has Finland led to high access prices. Given the low wages in Russia, few people can France

Germany afford access to the internet unless they go online at a university or at

Italy work. Estimates for average access costs vary, ranging from at least $120 The Netherlands per month (Brunswick Warburg) to as high as $400 to $1,500 per month, Norway plus a 20% tax per month charge for a leased line (Intellibridge). Poland Russia Adult Population 14+ in Russia, 2000–2004 (in millions) Spain

Sweden 2000 121.9 United Kingdom Index of Charts 2001 122.4

2002 122.9

2003 123.3

2004 123.5

Source: US Census Bureau, 2000; eMarketer extrapolation

B. Internet Users In the years to come, a decline in telecom charges and ISP access fees should support growth in the online population. Approximately 2.9 million Russian adults are active internet users. By 2004, this figure should rise to 7.9 million. In a nation of some 122 million adults, however, the percentage of the population actively using the internet will remain in the single digits for the foreseeable future.

Active Internet Users 14+ in Russia, 2000–2004 (in millions)

2000 2.9

2001 3.8

2002 5.0

2003 6.4

2004 7.9

Source: eMarketer, 2001

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Methodology

Economy,Infrastructure, Users Comparative Estimates: Internet Users in Russia, eCommerce 1999–2004 (in millions) eAdvertising 1999 2000 2001 2002 2003 2004 eFinance eMarketer – 2.9 3.8 5.0 6.4 7.9 eWireless eTForecasts – 2.6 –– –– Denmark

Finland Deutsche Banc 2.1 ––5.8 –– France Terrabay – 5.4 –– –– Germany Brunswick UBS Warburg 2.2 – 15.1 – Italy Oxir Investments – 2.3 –– –– The Netherlands

Norway Foreign Broad Information

Poland Service (Rocit) 1.8 ––– –– Russia Gallop Media 1.5 –– –– Spain Angus Reid Group 4.3 ––– –– Sweden Comcom 1.3 2.8 –– –– United Kingdom

Index of Charts International Data Corp. (IDC) 2.0 ––– –– Monitoring.ru – 1.8 –– –– Taylor Nelson Sofres – 4.0 –– –– Computer Industry 5.0 ––– –– Almanac (CIA) Source: eMarketer, 2001; various, as noted, 2000

Internet Penetration in Russia, 2000–2004 (active internet users 14+ as a % of population 14+)

2000 2%

2001 3%

2002 4%

2003 5%

2004 6%

Source: eMarketer, 2001

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Methodology C. eDemographics Economy,Infrastructure, Users eCommerce Most Russian internet users are young. The age distribution is more skewed, eAdvertising in fact, than in any other European country, with 70% of Russia’s internet eFinance users under the age of 35. eWireless

Denmark

Finland Internet Users in Russia by Age, 2000

France

Germany

Italy

The Netherlands 35 + 30% Norway

Poland

Russia

Spain 18–34 70% Sweden

United Kingdom

Index of Charts

Source: Kan, Galina. “The Internet in Russia.” Working Paper. Vanderbilt University, May 8, 2000

There is a serious gender gap among Russian internet users. According to research from Vanderbilt University, some 81% of Russian internet users are male. In a nation that has placed such a great emphasis on gender equality in the professions, with many female engineers, scientists and doctors, this disparity is surprising.

Internet Users in Russia by Gender, 2000 Male Female

81% 19%

Source: Kan, Galina. “The Internet in Russia.” Working Paper. Vanderbilt University, May 8, 2000

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Methodology As expected, most internet users (80%) are in college or have graduated Economy,Infrastructure, Users from university. Those with a high-school or lower level of education eCommerce account for only 20% of internet users. eAdvertising eFinance eWireless Educational Level of Internet Users in Russia, 2000

Denmark

Finland

France High School/ not HS Grad Germany 20% Italy

The Netherlands

Norway Poland Graduated college/ Russia college students 80% Spain

Sweden

United Kingdom

Index of Charts Source: Kan, Galina. “The Internet in Russia.” Working Paper. Vanderbilt University, May 8, 2000

As in Poland, internet users in Russia report accessing the internet more from work than from home, probably because they have fewer home computers with modems than citizens in more developed countries, as well as the relatively high cost of dialing in from home.

Primary Internet Access Location in Russia, 2000

Work 48%

Home 41%

Source: Kan, Galina. “The Internet in Russia.” Working Paper. Vanderbilt University, May 8, 2000

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Methodology Information gathering is the main preoccupation of internet users in Economy,Infrastructure, Users Russia. A third of all users report reading news and getting scientific or eCommerce other educational material online. Online buying was reported as an eAdvertising eFinance activity by only 6% of the respondents surveyed. eWireless Denmark Online Activities of Internet Users in Russia, 2000 Finland News 32% France

Germany Science/education 32%

Italy Entertainment (games, jokes) 25% The Netherlands Music, literature 23% Norway Chatting 22% Poland

Russia Business, finance 20% Spain Information about goods and services 14% Sweden Erotic/porno sites 12% United Kingdom Sport 12% Index of Charts Purchasing goods and services 6% Medicine 5% Source: Kan, Galina. “The Internet in Russia.” Working Paper. Vanderbilt University, May 8, 2000

D. B2C eCommerce

B2C eCommerce Revenues in Russia, 2000–2004 (in millions)

2000 $19.5

2001 $37.5

2002 $76.8

2003 $136.3

2004 $245.4

Source: eMarketer, 2000

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Methodology In Russia, weak consumer purchasing power, an extremely low penetration Economy,Infrastructure, Users of credit cards, mistrust in the banking system (following its near collapse eCommerce in 1998), and a poor postal delivery system have been significant obstacles eAdvertising eFinance to B2C e-commerce. eWireless Denmark Credit and Debit Cards in Russia, 1999 (in thousands) Finland Europay pay now* France

Germany 838 Italy Europay pay later** The Netherlands 40 Norway

Poland Total Europay Russia 878 Spain Visa Electron Sweden

United Kingdom 662 Index of Charts Visa other 166 Total Visa 828 Total cards 1,706

Source: European Card Review, 2000

In addition to the lack of PCs, inadequate telecommunications infrastructure hinders e-commerce. Telephone lines are fairly obsolete, and less than 1/3 of urban telephone lines were digital as of 1999. Dial-up internet users complain about disruptions, busy signals, and slow connection speeds.

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Methodology

Economy,Infrastructure, Users Online Activities of Russian Internet Users, 1999 (as a eCommerce % reporting use of activity) eAdvertising News eFinance 32% eWireless Science/education Denmark 32% Finland Entertainment (games, jokes) France 25% Germany

Italy Music, literature

The Netherlands 23%

Norway Chats Poland 22% Russia Business, finance Spain 20% Sweden Information about goods and services United Kingdom 14% Index of Charts Erotic/porno sites 12% Sport 12% Purchasing goods and services 6% Medicine 5% Source: Vanderbilt University, 2000

eCommerce retail sales are a mere $20 million (in a country with 122 million people 14 and older). Nevertheless, B2C efforts are moving forward. By the summer 2000, Russia had approximately 500 online stores. Major B2C projects include Ozon.ru, an Amazon.com wannabe, XXL.ru, an online supermarket, Dostavka.ru for computers, and Torg.ru, an online shopping mall. As the following figure illustrates, the Economist and BCG are far more sanguine about B2C e-commerce in Russia.

B2C eCommerce in Russia, 1999–2002 (in millions)

1999 40

2000 65

2001 130

2002 265

Source: The Economist and Boston Consulting Group cited by V. Koznetsov, e-commerce.ru, Oct. 26, 2000

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Methodology

Economy,Infrastructure, Users Products Purchased Online in Russia, 2000 (as a % of eCommerce revenue and % of transactions) eAdvertising Books, video, CD, DVD eFinance 29% eWireless 78% Denmark Computer equipment Finland

France 54%

Germany 7% Italy Food, household supplies The Netherlands 17% Income share Norway 15% Transactions Poland Source: www.raexpert.ru, 2000 Russia

Spain Sweden Types of Websites Viewed by Russian Internet Users United Kingdom (as a % of internet users), 2000 Index of Charts News 32% Science/education 32% Entertainment (games, jokes) 25% Music, literature 23% Chats 22% Business, finance 20% Information about goods and services 14% Erotic/porno sites 12% Sport 12% Purchasing goods and services 6% Medicine 5% Source: www.monitoring.ru, 1999

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Methodology Despite Russia’s financial troubles in 1998 and lack of consumer Economy,Infrastructure, Users confidence in the banking industry, several Russian banks are trying to eCommerce develop online services. Autobank launched an Internet Service Bank, eAdvertising eFinance which clients may use to pay utility bills and transfer money from one’s eWireless bank account to a debit/credit card, and is planning to offer a full-line Denmark service in the future. Platina Bank developed Cyberplat, an online Finland processing infrastructure primarily for B2B commerce, where market France

Germany participants from different industries trade in the virtual marketplace and

Italy use one bank for all transactions. The Netherlands In June 2000, the Russian Ministry of Communications developed a Norway program on electronic commerce development for 2001–2006, targeted at Poland the development of a regulatory framework for electronic transactions, Russia

Spain including electronic signature legislation, establishment of an eCommerce

Sweden innovation zone with B2B and B2C pilot projects for domestic and United Kingdom international trade, and certification centers for equipment and software. Index of Charts

E. B2B eCommerce

B2B eCommerce Revenues in Russia, 2000–2004 (in billions)

2000 $0.2

2001 $0.3

2002 $0.6

2003 $1.2

2004 $2.8

Source: eMarketer, 2000

Large Russian corporations are investing in B2B e-commerce solutions, particularly in basic industries like mining, metallurgy, and oil drilling and refining. Companies are trying to integrate their business processes online and to market commodities globally through the internet. For example, Surgutneftegas oil company is planning to build a site for corporate purchases. Oil pipeline monopoly Sibneft, Transneft, the Ministry of Railways, and Transtelecom announced the formation of the Energy Trading System, a $100–million project to establish an electronic commodity exchange for oil, petroleum products, electricity, and natural gas.

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Methodology

Economy,Infrastructure, Users eCommerce Penetration in Russian Businesses, eCommerce November 1999 eAdvertising Aware of business-to-business electronic commerce eFinance 56% eWireless 64% Denmark

Finland Aware of business-to-consumer electronic commerce

France 44%

Germany 58% Italy Ready to use electronic commerce in their business The Netherlands 50% Norway 45% Poland

Russia Bigger Companies (>1000 employees)

Spain Smaller Companies (<1000 employees) Sweden Source: The Algorithm Group, November 1999 United Kingdom

Index of Charts Internet sites to trade commodities, including steel, metals, oil products, and grain have been developed, such as Zerno Online (grain), Oil Online, Europe-Steel.com, Emetex (metals), and Business.ru.

F.eWireless The Russian telecommunications sector is the fastest growing area of the Russian economy. Underscoring this is a tremendous demand for telephone and mobile service. The fixed-line market suffers from severely inadequate fixed-line infrastructure, outmoded switchgear, and inadequate investment. The need for telephone service is so high that in 1999, 7 million Russians were on a waiting list that could take up to 5 years. Many of the individuals seeking telephone installation are rural or suburban residents who have never had a telephone. Intuitively, it would seem that wireless access would be the most immediate remedy to this problem. However, the wireless telecom industry is barely penetrating users outside major Russian cities like Moscow and St. Petersburg. And, the burgeoning Russian economy is such that the costs of handsets and access fees are luxuries most rural families can’t afford. Mobile access costs aside, the great expanse of Russia is an even greater limitation to the mobile telecommunications market. Large land mass, low population density, and low urbanization are key barriers to the penetration of mobile telecommunications outside of a few urban centers. Simply put, the average Russian mobile user needs more square miles of wireless coverage in comparison to users in France, Germany, or the UK.

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Methodology Russia, should it emerge from its current economic chaos, could become a Economy,Infrastructure, Users major driver of wireless subscriptions in the European region. However, at eCommerce present, wireless penetration is abysmally low: the 2.4 million subscribers eAdvertising eFinance estimated by The Strategis Group represent less than 1% of the population. eWireless Given the tremendous economic inequities that plague the country, most Denmark people cannot afford the luxury of cellular service. Finland France Comparative Estimates: Wireless Subscribers in Germany Russia, 2000–2005 (in millions) Italy The Netherlands 2000 Norway 3.1 Poland 2.4 Russia

Spain 2001 Sweden 4.7 United Kingdom

Index of Charts 2002 6.3

2003 7.7

2004 9.1

2005 10.5

HSBC Securities The Strategis Group Source: various, as noted, 2000

Despite the mobile industry’s lackluster subscription volume, it is a strong economic force within the entire telecommunications sector. As a testament to the high cost of access, the Russian mobile market accounts for 40% of all telecommunications revenues—although having less than 1% penetration.

Information Service Revenues in Russia, 2000 (in billions and as a % share of total) Leased Line $0.2 (4%) Internet $0.2 (4%)

Mobile PSTN $1.9 (40%) $2.5 (52%)

Total = $4.8 Source: World Bank, 2000

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The eEurope Report

Methodology: The eMarketer Difference

I Economy,Infrastructure and Users

II eCommerce

III eAdvertising

IV eFinance

V eWireless

VI Denmark

VII Finland

VIII France

IX Germany

X Italy

XI The Netherlands

XII Norway

XIII Poland

XIV Russia XV Spain 309 A. Overview 310 B. Internet Users 311 C. eDemographics 312 XVD. B2C eCommerce 319 E. B2B eCommerce 321 F.eFinance 322 G. eWireless 324

XVI Sweden

XVII United Kingdom

Index of Charts

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Methodology A. Overview Economy,Infrastructure, Users eCommerce eAdvertising QuickStats: Spain, 2001 eFinance Total population (in millions)1 40.0 eWireless 1 Denmark Population 14+ (in millions) 34.6 2 Finland Population living in urban areas (1999) 77% France GDP (PPP adjusted, in billions) (1999)3 $678 Germany GDP per capita (PPP adjusted) (1999)3 $17,300 Italy 4 The Netherlands PCs per 100 inhabitants (1999) 12.18 4 Norway Main telephone lines per 100 inhabitants (1999) 41.81 Poland Cellular subscribers per 100 inhabitants (1999)4 31.2 Russia ISPs (1999)3 49 Spain

Sweden Internet users (in millions) 3.1 United Kingdom Internet users as % of pop. 14+ 9.0% Index of Charts Compounded annual growth in users, 2001–2004 7% Total e-commerce (in billions) $1.28 Compounded annual growth in e-commerce, 2001–2004 110% B2B e-commerce (in billions) $1.13 B2C e-commerce (in billions) $0.15 Source: eMarketer, 2001; 1) US Census Bureau, 2001 (interpolated by eMarketer); 2) World Bank, 2000; 3) CIA World Fact Book, 2000; 4) International Telecommunication Union (ITU), 2000

With a relatively low GDP per capita and low PC penetration rates, Spain has a reputation for being somewhat of a technological backwater in Western Europe. However, the sheer size of the population suggests a market of great opportunities when internet adoption accelerates.

Adult Population 14+ in Spain, 2000–2004 (in millions)

2000 34.5

2001 34.6

2002 34.7

2003 34.7

2004 34.8

Source: US Census Bureau, 2000; eMarketer extrapolation

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Methodology B. Internet Users Economy,Infrastructure, Users eCommerce In 2001, only approximately 9% of the adult Spanish population are eAdvertising actively using the internet.While we forecast internet use to increase to 3.8 eFinance million adults by 2004, or 11% of the population, the number online pales eWireless

Denmark in comparison to Northern European nations.

Finland

France Active Internet Users 14+ in Spain, 2000–2004 (in

Germany millions)

Italy

The Netherlands 2000 2.6

Norway 2001 3.1 Poland

Russia 2002 3.4 Spain Sweden 2003 3.6 United Kingdom Index of Charts 2004 3.8

Source: eMarketer, 2001

Comparative Estimates: Internet Users in Spain, 1999–2004 (in millions) 1999 2000 2001 2002 2003 2004 eMarketer – 2.6 3.1 3.4 3.6 3.8 ITU 2.8 –– ––– eTForecasts – 3.5 – ––– European Information Technology Observatory (EITO) 2.4 3.5 4.7 6.1 7.0 8.0 Pan European Monitor – 2.6 – ––– Angus Reid Group, Inc. 5.7 –– ––– Institut de l'Audiovisuel et des Télécommunications en Europe (IDATE) – 3.1 – ––– empirica 3.6 –– ––– Forrester Research 3.2 4.9 7.3 9.9 12.6 15.0 Nielsen//NetRatings – 4.6 – ––– Estrategias – 3.6 – ––– Taylor Nelson Sofres – 4.9 – ––– Fletcher Research –––––8.0 Pyramid Research 1.6 –– ––– Morgan Stanley Dean Witter – 5.2 – ––– Source: eMarketer, 2001; various, as noted, 2000

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Methodology

Economy,Infrastructure, Users Internet Penetration in Spain, 2000–2004 (active eCommerce internet users 14+ as a % of population 14+) eAdvertising eFinance 2000 7% eWireless 2001 9% Denmark Finland 2002 10% France Germany 2003 10% Italy The Netherlands 2004 11% Norway Source: eMarketer, 2001 Poland

Russia

Spain

Sweden United Kingdom C. eDemographics Index of Charts Most Spanish internet users are young, as the following figures illustrate. However, NetValue’s data suggest that the biggest group of internet users are not typical 20–somethings, but 35- to 49–year-olds.

Home Internet Users in Spain by Age, 2000 15–24 25.0% 25–34 26.7% 35–44 23.6% 45–54 16.8% 55–64 5.2% Over 65 2.7%

Source: TGI Europa, 2000

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Methodology

Economy,Infrastructure, Users Internet Use in Spain by Age, 1999 (as a % in each age eCommerce range reporting internet use) eAdvertising eFinance <18 36.4% eWireless 18–29 41.3% Denmark Finland 30–49 18.2% France Germany 50–64 9.5% Italy The Netherlands >64 2.3% Norway Source: empirica, 1999 Poland

Russia Spain Internet Use in Spain by Age, 2000 (as a % of internet Sweden users in each age range) United Kingdom

Index of Charts <15 4.2%

15–24 29.8%

25–34 28.8%

35–49 31.8%

50–64 5.1%

>64 0.03%

Note: does not add to 100% due to rounding Source: NetValue, 2000

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Methodology The following data show that although internet access is skewed toward Economy,Infrastructure, Users those aged 14 to 34, this group represents a relatively smaller percentage of eCommerce the total population. eAdvertising eFinance eWireless Population in Spain, 2000 (by age and as % of

Denmark population with internet access) Finland 14–19 France 8.7% Germany 14.0% Italy 20–24 The Netherlands 9.4% Norway

Poland 17.5%

Russia 25–34 Spain 19.1% Sweden 34.8% United Kingdom 35–44 Index of Charts 17.4% 17.5% 45–54 14.2% 10.8% 55–64 11.6% 4.1% 65+ 19.1% 1.3% Population People with internet access Source: Asociación de Usuarios de Internet (AUI), 2000

The Spanish internet is male dominated, with men representing 65% of internet users according to NetValue and TGI Europa, and 59% according to the Asociación de Usuarios de Internet (AUI). As in most countries, over time this difference should disappear as the internet develops and diffuses to the general population.

Internet Users in Spain by Gender, 2000 Male Female

65% 35% Source: NetValue, 2000

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Methodology

Economy,Infrastructure, Users Internet Users in Spain by Gender, 2000 eCommerce Male eAdvertising 48.6% eFinance 58.9% eWireless Female Denmark

Finland 51.4%

France 41.1%

Germany Total Population Internet Users Italy

The Netherlands Source: Asociación de Usuarios de Internet (AUI), 2000

Norway

Poland Home Internet Users in Spain by Gender, 2000 Russia

Spain

Sweden

United Kingdom Index of Charts Women 35%

Men 65%

Source: TGI Europa, 2000

Wealthy persons are disproportionately represented among internet users. Compared with the general population, upper-class Spaniards represent 7% of the population but 23.1% of internet users. Lower-class citizens represent 10.5% of the population but only 2% of internet users.

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Methodology

Economy,Infrastructure, Users Population of Spain and Population with Internet eCommerce Access by Income Level, 2000 eAdvertising Upper eFinance 7.0% eWireless 23.1% Denmark Upper-middle Finland

France 15.2%

Germany 27.2% Italy Middle The Netherlands 42.1% Norway 38.1% Poland Lower-middle Russia 25.2% Spain 9.6% Sweden

United Kingdom Lower

Index of Charts 10.5% 2.0%

Population Population with internet access Source: Asociación de Usuarios de Internet (AUI), 2000

Spaniards have among the most limited command of second languages in Europe. According to the Eurobarometer, only 17% of Spaniards speak English as a second language. Fortunately, Spanish internet content is growing steadily thanks to the development of Latin American websites. However, such content is oriented towards Latin American citizens and may not have a very strong appeal – besides being comprehensible — to Spaniards.

Three Most Widely Spoken “Second” Languages in Spain, 2000 (as a % of population) English 17% Spanish 9% Other* 9% *Other = none of EU 11 Languages nor Russian or Arabic Source: Eurobarometer 52, 2000

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Methodology Home is the main place of access for Spanish internet users, according to Economy,Infrastructure, Users research from the Asociación de Usuarios de Internet. The university plays eCommerce an important role in providing internet access for 18% of users, and other eAdvertising eFinance locations like cybercafes fill an important need for those without home or eWireless office access. Denmark Finland Location of Internet Access in Spain, 2000 France Germany Home 52.5% Italy The Netherlands Work 40.7% Norway

Poland University 18.2%

Russia

Spain Other 9.0% Sweden Source: Asociación de Usuarios de Internet (AUI), 2000 United Kingdom

Index of Charts

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Methodology The most popular activity of internet users in Spain is e-mail, reported as Economy,Infrastructure, Users an online activity by 71% of those surveyed by the Eurobarometer. Online eCommerce banking was a relatively popular activity carried out by one-fifth of those eAdvertising eFinance surveyed. eWireless Denmark Online Activities in Spain in Last 3 Months, 2000 Finland eMailed family, friends, or colleagues 71% France

Germany Searched for educational material and documents 58% Italy Searched for sports or leisure information 50% The Netherlands Read newspaper articles 43% Norway Searched for information about specific product 38% Poland

Russia Downloaded free software 36% Spain Played computer games 31% Sweden Searched for vacation information 30% United Kingdom

Index of Charts Listened to radio or music using RealAudio, Windows Media, or QuickTime 30% Visited website of museum 23% Visited website of local authority 21% Searched for job opportunities 20% Carried out bank operations 20% Built own website 20% Made a telephone call via internet 20% Searched for health information 19% Bought a CD 17% Bought a book 14% Visited website of government 13% Held video conferencing over internet 12% Answered a public opinion survey or market research survey 11% Visited website of political party 9% Bought software 7% Bought stocks 7% Don't know 6% Watched TV channels on internet 4% Something else 1% Made a bid in online auction 0% Source: European Commission, Eurobarometer 53, 2000

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Methodology Terra.es is the top domain in Spain, reaching nearly 70% of the internet Economy,Infrastructure, Users population. US-based Yahoo! and MSN are also popular domains. eCommerce eAdvertising eFinance Top 10 Domains in Spain, 2000 eWireless Top 10 Domains Reach (%) Unique visitors (in thousands) Denmark terra.es 69.0% 1,656 Finland yahoo.com 56.5% 1,344 France

Germany msn.com 48.5% 1,150

Italy microsoft.com 37.8% 898 The Netherlands eresmas.com 30.1% 715 Norway yahoo.es 27.5% 65 Poland

Russia msn.es 26.1% 621 Spain real.com 24.7% 587 Sweden ya.com 24.3% 578 United Kingdom arrakis.es 23.9% 567 Index of Charts Source: NetValue, 2000

D. B2C eCommerce

B2C eCommerce Revenues in Spain, 2000–2004 (in billions)

2000 $0.0

2001 $0.2

2002 $0.3

2003 $0.6

2004 $1.1

Source: eMarketer, 2000

The B2C sector is estimated to have generated sales of $96 million in 2000. As in other European countries, Spaniards are reluctant to make major purchases through the internet, fearing fraud. According to Taylor Nelson Sofres, 7% of Spanish internet users purchased something online within the month prior to being surveyed. A law passed in 1999 regulating the use of electronic signatures has helped to increase consumer confidence, as has the establishment of the Council of Spanish Chambers of Commerce’s e- commerce certification program, Camerfirma.

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Methodology

Economy,Infrastructure, Users Shopping Online in Spain, 1999–2001 eCommerce 1999 2000 2001 eAdvertising ECaTT (% of Internet Users) 5.9% – 15% eFinance eWireless Angus Reid (% of all Adults) – 2% –

Denmark Sources: various, as noted, 2000

Finland France The Spanish eCommerce Association estimates that the most successful Germany sectors for online sales by Spanish firms are entertainment and leisure Italy

The Netherlands (22%), followed by hotel and travel reservations (17%) and financial Norway information(14%). However, the items preferred by Spanish online Poland consumers are books (20%), software (19%) and music (11%). When it Russia comes to methods of payment, Spanish consumers prefer credit cards (65 Spain

Sweden percent), payment upon receipt (20.43 percent) followed by bank transfers

United Kingdom (8.71 percent).

Index of Charts Online Shoppers Buying, by Category, in Spain 2000 PC software 41% Books 35% Music 24% Leisure travel 24% Tickets 24%

Source: Taylor Nelson Sofres, July 2000

Most Spanish banks and leading brokers in Spain now have online facilities for their clients. Spain’s leading bank, Banco Santander Central Hispano (BSCH), has acquired a 75 percent interest in a leading financial web site, Patagon.com, and has joined forces with EDS-CoNext to expand and improve the site. La Caixa (Spain’s largest savings bank) has signed an agreement with Telefonica and BBVA and increased its share in Endesa which has in turn created one of Spain’s largest B2B systems.

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Methodology E. B2B eCommerce Economy,Infrastructure, Users eCommerce eAdvertising B2B eCommerce Revenues in Spain, 2000–2004 eFinance (in billions) eWireless

Denmark 2000 $0.6

Finland

France 2001 $1.1

Germany 2002 $2.6 Italy

The Netherlands 2003 $5.3 Norway Poland 2004 $10.8 Russia

Spain Source: eMarketer, 2000

Sweden

United Kingdom

Index of Charts One of the barriers to e-commerce diffusion in Spain is the preponderance of small and medium sized businesses in Spain. Only 0.1% of all Spanish companies are considered very large firms; most are the kinds of firms that have the hardest time switching business practices, financing new technologies, and supporting e-commerce platforms. As a result, the internet penetration rate in companies is only 47%, according to ISPO. Traditional companies such as Endesa (utility), FCC (construction, environment), Dragados (construction), Telefonica (telecommunications), Sol Melia (tourism) and Campofrio (food), not to mention the leading banks, are investing heavily in B2B platforms.

B2C Commerce in Spain, 1998–2005 (in billions)

2000 $0.2

2001 $0.5

2002 $2.0

2005 $5.2

Source: Spanish eCommerce Association (AECE, 2000)

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Methodology F.eFinance Economy,Infrastructure, Users eCommerce eAdvertising eBanking eFinance Despite low PC and internet penetration rates, Spain is fast becoming the eWireless

Denmark model of online banking and therefore has become a paradox to most

Finland banking analysts. Not only has Spain’s largest bank invested heavily in France their internet initiatives, but foreign banking groups such as ING of the Germany Netherlands, Société Générale of France and Lloyds TSB from the UK have Italy all launched online operations in this country. The Netherlands

Norway

Poland Russia “[Spain] is an odd choice for a laboratory.” Spain — Inigo Lecubarn, banking analyst, Schroder Salomon Smith Barney Sweden

United Kingdom

Index of Charts For all this activity, you would expect to hear online banking numbers like those seen in Germany, but, J.P. Morgan believes Spain will only have 4.5 million online bank accounts by 2003.

Online Banking Accounts in Spain, 2000-2003 (in millions)

2000 1.7

2001 2.6

2002 3.7

2003 4.5

Source: JP Morgan, 2000

Datamonitor also foresees little, albeit steady, growth in the number of online banking customers in Spain. They estimate online banking customers will double from 1.3 million in 2000 to 2.6 million by 2004.

Online Banking Customers in Spain, 2000-2004 (in millions)

2000 1.3

2001 1.8

2002 2.2

2003 2.5

2004 2.6

Source: Datamonitor, 2000

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Methodology Bankiter, with about 380,000 customers, controls less than 2.4% of the Economy,Infrastructure, Users banking market in Spain. Yet, 43% of their customers have online accounts eCommerce with the bank. Internet and electronic banking transactions conducted by eAdvertising eFinance these customers make up 39% of all banking transactions for the bank— eWireless equal to the number of transactions conducted at their branches. Denmark Finland Transactions by Channel at the Bankiter in Spain, France 2000 Germany Italy Branches 39% The Netherlands

Norway Internet Banking 22%

Poland Electronic Banking 17% Russia Spain Telephone 18% Sweden

United Kingdom Cards 4%

Index of Charts Source: J. P. Morgan, 2000

eInvesting J.P. Morgan forecasts high penetration rates of online brokerage customers among retail shareholders in Spain. By 2003, J. P. Morgan predicts more than half (51.6%) of retail shareholders will be customers at online brokerages.

Retail Shareholders and Online Brokerage Customers in Spain, 2000-2003 (in millions) 2000 2001 2002 2003 Retail 2.4 2.6 2.9 3.1 shareholders Online 0.2 0.5 0.9 1.6 brokerage customers % of retail 8.3% 19.2% 31.0% 51.6% shareholders Source: JP Morgan, 2000

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Methodology BNP Paribas also foresees steady, although slower, growth in Spain— Economy,Infrastructure, Users increasing from 200,000 online trading accounts in 2000 to 1.6 million in eCommerce 2005. eAdvertising eFinance eWireless Online Brokerage Accounts in Spain, 2000-2005 (in

Denmark millions)

Finland

France 2000 0.2 Germany 2001 0.4 Italy

The Netherlands 2002 0.6

Norway 2003 0.9 Poland Russia 2004 1.3 Spain 2005 1.6 Sweden United Kingdom Source: BNP Paribas Equities, 2000 Index of Charts

G. eWireless In December 1998, Spain liberalized its telecommunications market and has since awarded 25 telecommunications licenses. Unlike many of its European counterparts, Spain does not auction off its next-generation licenses, but rather awards them on the basis of the operator’s business plan. Yet, despite this seemingly open and competitive market, Spain’s cellular subscription rates are one of the highest in Europe. As in many other Western European nations, wireless in Spain is projected to reach nearly 100% of the population in several years.

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Methodology

Economy,Infrastructure, Users Comparative Estimates: Wireless Subscribers and eCommerce Penetration Rates, 2000–2004 (in millions and as a % of eAdvertising total population) eFinance 2000 eWireless 21.8 (55%) Denmark

Finland 23.4

France 20.7 Germany 20.4 Italy

The Netherlands 2001

Norway 29.4 (74%) Poland 26.8 Russia

Spain 2002

Sweden 35.2 (89%) United Kingdom 29.4 Index of Charts 2003 37.5 (95%) 31.5

2004 38.1 (96%) 33.7

Merrill Lynch ABN Amro Bank The Strategis Group CIT Source: various, as noted, 2000

Voice and Data Revenues, 2000, 2005 & 2010 (in billions)

Voice $7.1 $7.7 $6.3

Data $0.2 $1.9 $4.0

2000 2005 2010 Source: CIT-Online, 2000

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The eEurope Report

Methodology: The eMarketer Difference

I Economy,Infrastructure and Users

II eCommerce

III eAdvertising

IV eFinance

V eWireless

VI Denmark

VII Finland

VIII France

IX Germany

X Italy

XI The Netherlands

XII Norway

XIII Poland

XIV Russia

XV Spain XVI Sweden 327 A. Overview 328 B. Internet Users 329 C. eDemographics 330 XVID. B2C eCommerce 332 E. B2B eCommerce 334 F.eFinance 335 G. eWireless 336

XVII United Kingdom

Index of Charts

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Methodology A. Overview Economy,Infrastructure, Users eCommerce eAdvertising QuickStats: Sweden, 2001 eFinance Total population (in millions)1 8.9 eWireless 1 Denmark Population 14+ (in millions) 7.4 2 Finland Population living in urban areas (1999) 83% France GDP (PPP adjusted, in billions) (1999)3 $184 Germany GDP per capita (PPP adjusted) (1999)3 $20,700 Italy 4 The Netherlands PCs per 100 inhabitants (1999) 45.14 4 Norway Main telephone lines per 100 inhabitants (1999) 66.46 Poland Cellular subscribers per 100 inhabitants (1999)4 57.83 Russia ISPs (1999)3 29 Spain

Sweden Internet users (in millions) 4.3 United Kingdom Internet users as % of pop. 14+ 58% Index of Charts Compounded annual growth in users, 2001–2004 6% Total e-commerce (in billions) $4.98 Compounded annual growth in e-commerce, 2001–2004 141% B2B e-commerce (in billions) $3.73 B2C e-commerce (in billions) $1.24 Source: eMarketer, 2001; 1) US Census Bureau, 2001 (interpolated by eMarketer); 2) World Bank, 2000; 3) CIA World Fact Book, 2000; 4) International Telecommunication Union (ITU), 2000

Sweden has a strong economy based on a modern distribution system, excellent information and communications technologies, and a skilled labor force. Like other Nordic countries, Sweden has well-developed telecommunications infrastructure, a high PC penetration rate and a well- educated, prosperous population that fits the description of internet adopters. A Merrill Lynch survey in August 2000 reported Sweden as a leader in the emerging digital economy. A more recent European Commission survey into business climate and entrepreneurship singled out Sweden and Finland as more aggressive than the rest of the EU — and even the US — in applying for patents for high-tech applications.

Adult Population 14+ in Sweden 2000–2004 (in millions)

2000 7.35

2001 7.38

2002 7.41

2003 7.43

2004 7.47

Source: US Census Bureau, 2000; eMarketer extrapolation

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Methodology B. Internet Users Economy,Infrastructure, Users eCommerce Swedes are information technology enthusiasts, and early adopters of eAdvertising shopping, banking and investing online. However, in recent months, it has eFinance become clear that Sweden’s economic growth (along with much of eWireless

Denmark Europe’s) is slowing. The sharp decline in technology shares has affected

Finland much of the economy. The IT sector in particular has been beset with dot- France com failures and economic problems in Sweden’s biggest company, Germany Ericsson. Nevertheless, internet adoption will continue apace. In fact, in the Italy last eEurope Report we were too pessimistic about the internet penetration The Netherlands

Norway rate, forecasting 3.08 million Swedish users in 2000. Based on additional Poland data, we have increased the 2000 estimate to 3.9 million, or 53% of the Russia adult population. Spain Sweden Active Internet Users 14+ in Sweden, 2000–2004 (in United Kingdom millions) Index of Charts 2000 3.9

2001 4.3

2002 4.6

2003 4.9

2004 5.1

Source: eMarketer, 2001

Comparative Estimates: Internet Users in Sweden, 1999–2004 (in millions) 1999 2000 2001 2002 2003 2004 eMarketer – 3.9 4.3 4.6 4.9 5.1 ITU 3.7 –––– – Forrester Research 3.2 4.1 5.0 5.6 6.1 6.4 HSBC 1.1 –––– – Media Metrix 2.5 –––– – Pan European Monitor – 3.9 ––– – Angus Reid Group, Inc. 3.6 –––– – Institut de l'Audiovisuel et des Télécommunications en Europe (IDATE) – 3.6 ––– – empirica 3.4 –––– – Nielsen//NetRatings – 4.5 ––– – Source: eMarketer, 2001; various, as noted, 2000

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Methodology By 2004, we forecast that more than two-thirds of the Swedish adult Economy,Infrastructure, Users population will be actively using the internet. eCommerce eAdvertising eFinance Internet Penetration in Sweden, 2000–2004 (active eWireless internet users 14+ as a % of population 14+)

Denmark 2000 53% Finland

France 2001 58% Germany Italy 2002 63% The Netherlands Norway 2003 66% Poland

Russia 2004 68%

Spain Source: eMarketer, 2001 Sweden

United Kingdom

Index of Charts

C. eDemographics Young Swedes are avid internet users, as the data from empirica and American Express indicate. The empirica survey found that, as of the end of 1999, over 90% of those under 30 had used the internet. American Express’ survey found that 35% of all Swedish internet users are under 35.

Internet Use in Sweden by Age, 1999 (as a % of respondents in each age range reporting internet use)

<18 95.9%

18–29 92.0%

30–49 74.8%

50–64 42.0%

>64 8.6%

Source: empirica, 1999

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Methodology

Economy,Infrastructure, Users Internet Use in Sweden by Age, 2000 (as a % of eCommerce respondents in each age range reporting internet use) eAdvertising eFinance 65+ eWireless 12% Denmark Under 35 Finland 55–64 35% France 15%

Germany

Italy The Netherlands 45–54 Norway 19% 35–44 Poland 19%

Russia Note: average age = 43 Spain Source: American Express, 2000 Sweden

United Kingdom

Index of Charts According to MMXI Europe, Sweden has not reached gender parity, but has the highest proportion of women online in Europe at 44%, followed by the UK with 43% and Denmark with 42%.

Internet Users in Sweden by Gender, 2000 Male Female

56% 44%

Source: MMXI Europe, 2000

Most Swedes speak English as a second language, followed by German, according to the Eurobarometer survey. Among internet users, who tend to be younger, well-educated, and from higher socioeconomic backgrounds, it is likely that the percentage able to read websites in English is even higher. Accordingly, Swedish internet users should have reasonably good access to most of the content on the web.

Three Most Widely Spoken “Second” Languages in Sweden, 2000 (as a % of population that speaks them) English 77% German 24% Danish/French 6% Source: Eurobarometer 52, 2000

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Methodology Although internet penetration is high in Sweden, individuals spend an Economy,Infrastructure, Users average amount of time on the web per month and per site. According to eCommerce MMXI Europe, Danes and Germans log on more frequently per month than eAdvertising eFinance Swedes. eWireless Denmark Duration and Frequency of Internet Access in Finland Sweden, 2000 France Number of sessions per month 12 Germany Number of unique sites visited 12 Italy

The Netherlands Time spent per site (minutes) 27 Norway Time spent per month (hours and minutes) 5:19 Poland Time spent during surfing session (minutes) 26 Russia Duration of a page viewed (seconds) 37 Spain

Sweden Active internet universe 3,003,705 United Kingdom Current internet universe estimate 5,001,130 Index of Charts Source: Nielsen//NetRatings, 2000

Most Swedes – more than three-quarters — access the internet from home. With internet access costs below the median for Europe, home internet use is not as expensive as in the UK, for instance, where only 69% of internet users access the web from home.

Home and Work Internet Users in Sweden, Year–End 1999 (as a % of all users)

Home 76%

Work 46%

Source: International Data Corp. (IDC), 2000

D. B2C eCommerce

B2B eCommerce Revenues in Russia, 2000–2004 (in billions)

2000 $0.6

2001 $1.2

2002 $2.9

2003 $6.5

2004 $13.9

Source: eMarketer, 2000

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Methodology According to ECaTT, 27% of Swedish Internet users shopped online, a Economy,Infrastructure, Users figure supported by an American Express survey that found 28% currently eCommerce or in the near future will shop via the internet. In 2000, online B2C sales eAdvertising eFinance amounted to $644 million, growing to nearly $14 billion by 2004. eWireless Swedish consumers are still timid about using credit cards for online Denmark payments, however. Fully 70% stated that they were concerned about Finland security and privacy issues when buying online, according to an American France

Germany Express survey. Swedes buy less on TV and through mail order compared to

Italy U.S. consumers and therefore have less experience remotely paying for The Netherlands products. Hence, less than 20% of online purchases are paid by credit cards. Norway Another obstacle is the fact that home delivery services are underdeveloped Poland and very costly. Russia

Spain A factor that is deterring Swedes from extended internet surfing is the Sweden still comparatively high cost of surfing, whichis charged on a per-minute United Kingdom basis. Telecom companies and ISPs are beginning to offer more attractive Index of Charts packages such as Dutch Chello that offers a flat monthly rate. In addition, a number of initiatives are being implemented to expand broadband services throughout the country. According to the Swedish government, approximately 40% of the population would have broadband access by 2005.

Anticipated Online Purchases in Sweden, 2000 (by purchase item) Event tickets (e.g. sports, theatre, concerts) 66% Books 46% CDs, videos or computer games 33% Stocks and shares 50% Electronics (e.g. cameras) 20% Household items (e.g. appliances) 17% Toys 14% Clothes 21% Groceries 15% Jewelry/watches 7% Source: American Express Global internet survey October 2000

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Methodology

Economy,Infrastructure, Users Online Shopping in Sweden, 1999–2001 eCommerce 1999 2000 2001 eAdvertising ECaTT (% of Internet Users) 25.7% – 54.2% eFinance eWireless Angus Reid (% of all adults) – 21% –

Denmark Source: various, as noted, 2000

Finland

France The largest online retailers are Bokus (books), Boxman (music), Letsbuyit Germany

Italy (wide variety of consumer goods), Bidlet (auctions), and Buyonnet

The Netherlands (computers and telecom products), and Netonnet (audio,video, household Norway appliances.) Poland There are an estimated 1.6 million online banking customers in Sweden Russia as of 2000, according to Swedish/Finnish bank Merita-Nordbanken. Spain

Sweden American Express estimates that 46% of internet users currently or intend United Kingdom to bank online (or roughly 1.8 million). By 2001, the bank estimates that Index of Charts one-third of Sweden’s bank customers will be connected to internet services and that brokers will have approximately 500,000 online customers.

E. B2B eCommerce

B2B eCommerce Revenues in Sweden, 2000–2004 (in billions)

2000 $1.8

2001 $3.7

2002 $9.4

2003 $24.5

2004 $55.8

Source: eMarketer, 2000

In Sweden, large numbers of manufacturers and distributors are engaged in B2B e-commerce, resulting in B2B revenues of $1.8 billion in 2000. This is the sector of Sweden’s internet economy with the largest potential for growth. However, with only a 75% internet penetration rate for businesses, according to ISPO, there is much room for growth.

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Methodology

Economy,Infrastructure, Users Business Internet Penetration in Sweden, 2000 eCommerce Percent Using EDI eAdvertising 27% eFinance eWireless Percent with Internet Access Denmark 91% Finland Percent with Marketing Website France

Germany 76% Italy Percent of Customers Allowed to Order Online The Netherlands 25% Norway

Poland Source: UK online, 2000

Russia

Spain

Sweden

United Kingdom

Index of Charts F.eFinance

eBanking For Sweden, J.P. Morgan estimates there were 1.8 million online bank accounts in 2000 and that this number will grow to 3.5 million by 2003.

Online Banking Accounts in Sweden, 2000-2003 (in millions)

2000 1.8

2001 2.4

2002 2.8

2003 3.5

Source: JP Morgan, 2000

Datamonitor contends that Sweden had 1.2 million online banking customers in 2000 and that the number will increase by 200,000 each year to total 2 million by 2004.

Online Banking Customers in Sweden, 2000-2004 (in millions)

2000 1.2

2001 1.4

2002 1.6

2003 1.8

2004 2.0

Source: Datamonitor, 2000

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Methodology It is important to note, however, that neither J.P. Morgan nor Datamonitor Economy,Infrastructure, Users take into account Finnish-Swedish banking group MeritaNorbanken. eCommerce Merita has 6.5 million customers with about 3.8 million described as active. eAdvertising eFinance About one-third of these customers reside in Sweden. Already Merita eWireless boasts 1.1 million online banking customers, and they anticipate a 70%- Denmark 75% penetration rate amongst their customer base once they have put their Finland Web TV product and full mobile banking products in place. France

Germany

Italy The Netherlands eInvesting Norway Sweden is the most sophisticated market for online investment products in Poland Western Europe, according to J. P. Morgan. J. P. Morgan expects online Russia

Spain brokerage customers in this country to grow from 500,000 in 2000 to 1.8 Sweden million in 2003, representing 10.8% and 38.3% of all retail shareholders United Kingdom respectively. Index of Charts Retail Shareholders and Online Brokerage Customers in Sweden, 2000-2003 (in millions) 2000 2001 2002 2003 Retail shareholders 4.6 4.6 4.7 4.7 Online brokerage customers 0.5 1.0 1.5 1.8 % of retail shareholders 10.8% 21.7% 31.9% 38.3% Source: JP Morgan

G. eWireless Liberalized long before most other EU countries, the Swedish telecommunications market is responsive to new operators and customers readily switch to alternative providers. Telia, Sweden’s incumbent wireless operator, recently lost out in the country’s administrative beauty contest to gain UMTS licenses, becoming the first incumbent to do so. This result was all the more shocking because the Swedish government is the largest shareholder in Telia. As notorious early adopters and home to the world’s leading wireless technology company (Ericsson), Swedish users enjoy the latest wireless products and are globally seen as the test market for new technology. What’s more, given the Swedish government’s investments ($976 million in broadband expansion alone) and a welcoming competitive market, analysts predict that the already high mobile market will surge as 3G technologies are rolled out in 2002.

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Methodology The Strategis Group, which reported figures as of mid-year 2000, noted 6.4 Economy,Infrastructure, Users million subscribers, considerably higher than the year-end total forecasts eCommerce by IDC, FT Mobile Communications and Merrill Lynch. Projections have the eAdvertising eFinance wireless market in Sweden approaching saturation point by 2004, when eWireless 86% of the population is expected to have a mobile subscription. Denmark Finland Wireless Subscribers and Penetration Rates in France Sweden, 2000–2004 (in millions and as a % of Germany population) Italy The Netherlands 2000 6.1 (68%) Norway

Poland 2001 6.7 (75%)

Russia 2002 7.3 (82%) Spain Sweden 2003 7.5 (84%)

United Kingdom 2004 7.7 (86%) Index of Charts Source: Merrill Lynch, 2000

The Swedish National Post and Telecom Agency, PTS, tabulated 5.75 million wireless subscribers as of the middle of 2000, of which 2.36 million were on prepaid plans. 97% were on 2G GSM systems, while the remaining 3% remained on analog systems. The majority of subscribers were private users, but PTS did register 1.51 million subscribers who used their mobile devices for business purposes. Growth for the half year was approximately 12%, roughly equivalent to the 25% growth in the subscriber base that PTS observed in 1999.

Wireless Subscribers in Sweden, 2000 (in millions)

Prepaid 2.4 (41%)

Postpaid 3.4 (59%)

Total = 5.8 Source: PTS, "The Swedish Telecommunications Market: The first half-year 2000," 2000

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Methodology

Economy,Infrastructure, Users Comparative Estimates: Wireless Subscribers, 2000 (in eCommerce millions) eAdvertising eFinance The Strategis Group 6.4 eWireless Merrill Lynch 6.1 Denmark

Finland PTS 5.8

France IDC 5.4 Germany Italy FT Mobile Communications 4.0 The Netherlands

Norway Source: various, as noted, 2000

Poland Russia Although prepaid plans account for 41% of all subscribers, PTS found that Spain they generate approximately 10% of all wireless revenues. Thus, in Sweden Sweden as elsewhere, prepaid subscribers have a low ARPU in relation to those on a United Kingdom

Index of Charts monthly plan. PTS views SMS as a significant source of revenue for wireless operators. SMS generated approximately $29.2 million in the first half of 2000, equal to around 4% of total wireless revenues in Sweden. As the following chart from CIT-Online illustrates, data transmission will become an increasingly important revenue generator for wireless operators.

Voice and Data Revenues, 2000, 2005 & 2010 (in billions)

Voice $2.1 $1.9 $1.8

Data $0.2 $0.7 $1.3

2000 2005 2010 Source: CIT-Online, 2000

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Methodology The number of short messages being sent via cellular phones has been Economy,Infrastructure, Users increasing steadily since 1999. Usage is particularly high among young eCommerce people. PTS estimates that the number of SMS increased from 141 million eAdvertising eFinance in all of 1999, to over 160 million in just the first half of 2000 alone. eWireless Denmark Number of SMS Sent in Sweden, 1999–2000 (in Finland millions) France Germany 1999 141 Italy 2000 161 The Netherlands Norway Source: PTS, "The Swedish Telecomminications Market: The first half-year Poland 2000", 2000 Russia

Spain

Sweden

United Kingdom

Index of Charts

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The eEurope Report

Methodology: The eMarketer Difference

I Economy,Infrastructure and Users

II eCommerce

III eAdvertising

IV eFinance

V eWireless

VI Denmark

VII Finland

VIII France

IX Germany

X Italy

XI The Netherlands

XII Norway

XIII Poland

XIV Russia

XV Spain

XVI Sweden XVII United Kingdom 341 A. Overview 342 B. Internet Users 343 C. eDemographics 345 XVIID. B2C eCommerce 353 E. B2B eCommerce 357 F.eFinance 358 G. eAdvertising 361 H. eWireless 363

Index of Charts

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Methodology A. Overview Economy,Infrastructure, Users eCommerce eAdvertising QuickStats: United Kingdom, 2001 eFinance Total population (in millions)1 59.6 eWireless 1 Denmark Population 14+ (in millions) 49.2 2 Finland Population living in urban areas (1999) 89% France GDP (PPP adjusted, in billions) (1999)3 $1,290 Germany GDP per capita (PPP adjusted) (1999)3 $21,800 Italy 4 The Netherlands PCs per 100 inhabitants (1999) 30.64 Norway Main telephone lines per 100 inhabitants (1999)4 55.69 Poland Cellular subscribers per 100 inhabitants (1999)4 40.76 Russia ISPs (1999)3 364 Spain

Sweden Internet users (in millions) 19.1 United Kingdom Internet users as % of pop. 14+ 39% Index of Charts Compounded annual growth in users, 2001–2004 8% Total e-commerce (in billions) $17.75 Compounded annual growth in e-commerce, 2001–2004 147% B2B e-commerce (in billions) $13.32 B2C e-commerce (in billions) $4.44 Source: eMarketer, 2001; 1) US Census Bureau, 2001 (interpolated by eMarketer); 2) World Bank, 2000; 3) CIA World Fact Book, 2000; 4) International Telecommunication Union (ITU), 2000

The UK has large coal, natural gas and oil reserves, and primary energy production accounts for 10% of the country’s GDP, one of the highest shares of any industrial nation. Yet services, particularly banking, insurance and business services, account for the largest proportion of GDP by far, while traditional industry continues to decline in importance. The UK’s economy grew steadily in 2000, led by the service sector. Growth is anticipated to average 2.5% in 2001. Inflation in the UK, at approximately 2.2%, is fairly low. A continued slowdown in the economy next year — particularly if US economic conditions worsen – may result in a GDP growth rate of only 1.5%. The UK, along with Germany, is one of the most important internet markets in Europe due to the country’s strong technology infrastructure, liberalized and competitive telecommunications market, strong content industries and a relatively large, English-speaking population. With 49 million adults, it can be a large source of e-commerce dollars as well.

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Methodology

Economy,Infrastructure, Users Adult Population 14+ in the UK, 2000–2004 (in millions) eCommerce eAdvertising 2000 49.0 eFinance 2001 49.2 eWireless

Denmark 2002 49.4 Finland France 2003 49.6 Germany Italy 2004 49.9 The Netherlands Source: US Census Bureau, 2000; eMarketer extrapolation Norway

Poland

Russia

Spain Sweden B. Internet Users United Kingdom

Index of Charts Recent data suggest that UK residents are continuing to flock to the internet to a greater extent than forecast in the previous eGlobal Report. In 2000, 16.1 million UK adults, or one-third of the population, were active internet users. Unfortunately, the UK has its own digital divide. Despite continued growth of the internet in the UK, the gap between information haves and have-nots remains substantial. According to two recent surveys by the UK Office of National Statistics, UK internet users are sharply divided by income, gender and location.

Active Internet Users 14+ in the UK, 2000–2004 (in millions)

2000 16.1

2001 19.1

2002 21.4

2003 22.8

2004 24.0

Source: eMarketer, 2001

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Methodology There is a wide range of comparative internet market forecasts for the UK. Economy,Infrastructure, Users While eMarketer’s estimate is higher than that of eTForecasts and the eCommerce European Information Technology Observatory, Jupiter is more sanguine eAdvertising eFinance about the UK internet. According to their forecasts, 18.8 million people in eWireless the UK are regular internet users. Denmark Finland Comparative Estimates: Internet Users in the UK, France 1999–2004 (in millions) Germany 1999 2000 2001 2002 2003 2004 Italy

The Netherlands eMarketer – 16.1 19.1 21.4 22.8 24.0 Norway National Statistics – 5.7 –––– Poland Omnibus Survey Russia eTForecasts – 13.4 –––– Spain International 12.5 –––– – Sweden Telecommunication United Kingdom Union (ITU) Index of Charts European Information 9.7 12.5 15.5 17.7 19.8 21.8 Technology Observatory (EITO) NetValue 8.5 9.9 –––– National Opinion Poll 14.2 17.5 20.7 –– Forrester Research – 18.8 –––– e-MORI Technology Tracker – 16.2 –––– Continental Research – 14.0 –––– Nielsen//NetRatings – 19.5 –––– CommerceNet 12.5 –––– – Jupiter Research 9.4 18.8 22.6 25.5 27.8 29.6 World Bank’s InfoDev 15.8 20.3 23.9 26.9 29.6 29.2 ACNielsen 12.5 –––– – Internet Industry Almanac – 17.0 –––– Fletcher Research 12.5 15.7 ––18.0 – Media Metrix – 10.6 –––– ABN Amro Bank 13.9 ––20.7 –– Pan European Monitor – 16.1 –––– Angus Reid Group 14.9 –––– – Institut de l'Audiovisuel et – 7.1 –––– des Télécommunications en Europe (IDATE) empirica 12.0 –––– – Morgan Stanley Dean Witter – 17.0 –––– Ernst & Young – 17.1 –––– Source: eMarketer, 2001; various, as noted, 2000

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Methodology

Economy,Infrastructure, Users Internet Penetration in the UK, 2000–2004 (active eCommerce internet users 14+ as a % of population 14+) eAdvertising eFinance 2000 33% eWireless 2001 39% Denmark Finland 2002 43% France Germany 2003 46% Italy The Netherlands 2004 48% Norway Source: eMarketer, 2001 Poland

Russia

Spain

Sweden United Kingdom C. eDemographics Index of Charts The internet in the UK is also dominated by young users. Approximately 66% of 16- to 44-year-olds (82% of those age 16 to 24) reported using the internet, compared with only 4% of those age 75 and older, based on survey data from the UK government. A similar distribution of internet users by age group was found in surveys conducted by empirica in 1999 and Booz-Allen & Hamilton with Continental Research in 2000.

Age Distribution of Internet Users in the UK, 2000 (as a % of those who have ever used the internet) 16–24 82% 25–44 60% 45–54 50% 55–64 28% 65–74 14% 75 years and older 4%

Source: UK Office of National Statistics, Omnibus Survey, Oct. 2000

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Methodology

Economy,Infrastructure, Users Internet Use in the UK by Age, 1999 (as a % of eCommerce respondents in each age range reporting internet use) eAdvertising eFinance <18 75.0% eWireless 18–29 69.8% Denmark Finland 30–49 44.7% France Germany 50–64 28.7% Italy The Netherlands >64 9.9% Norway Source: empirica, 1999 Poland

Russia Spain Online Population in the UK by Age, 2000 (as a % Sweden online and % of population) United Kingdom Over 64 Index of Charts 4% 19% 55–64 14% 12% 45–54 28% 16% 35–44 30% 17% 25–34 32% 20% 15–24 45% 15%

Percent Online Percent of Population Source: Booz–Allen & Hamilton and Continental Research, 2000

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Methodology Research by e-MORI, on the other hand, found that the age distribution of Economy,Infrastructure, Users UK internet users was not quite as skewed. eCommerce eAdvertising eFinance Internet Users in the UK by Age, 2000 eWireless Denmark 55+ Finland 11% 15–24 22% France

Germany 45–54 18% Italy

The Netherlands

Norway

Poland 25–34 35–44 26% Russia 23% Spain

Sweden Source: e-MORI, 2000 United Kingdom Index of Charts Internet use in the UK is still a male-dominated activity, as the following three figures illustrate. Probably the most reliable and up-to-date figures come from the UK Office of National Statistics, which found that 52% of men were online compared with only 39% of women.

Internet Use in the UK by Gender, 2000 Male Female

57.7% 42.3%

Source: NetValue, 2000

Internet Use in the UK by Gender, 2000 Male Female

63% 37%

Source: e-MORI, March 2000

Internet Use in the UK by Gender, 2000

Male 52%

Female 39%

Source: UK Office of National Statistics, Omnibus Survey, 2000

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Methodology Levels of internet access also correspond to differing levels of income. Economy,Infrastructure, Users Internet access among households with the lowest incomes is in the single eCommerce digits, while 62% of households in the highest 10% income bracket eAdvertising eFinance reported having internet access. When measured based on occupation, eWireless those households headed by someone in a profession were far more likely Denmark to have internet access (71%) than households headed by someone working Finland in an unskilled occupation (25%). France

Germany

Italy Households with Internet Access in the UK by Gross

The Netherlands Income Decile, Oct. 1999–Sept. 2000 Norway Lowest 10% Poland 7% Russia Second decile Spain 5% Sweden Third decile United Kingdom 8% Index of Charts Fourth decile 9% Fifth decile 18% Sixth decile 23% Seventh decile 30% Eighth decile 41% Ninth decile 51% Highest decile 62% Source: UK Office of National Statistics, Family Expenditure Survey, 2000

Internet Use by Economic Status of Household Head in the UK, 2000

Professional 71%

Intermediate 57%

Skilled, non–manual 46%

Skilled, manual 33%

Partly skilled 28%

Unskilled 26%

Source: UK Office of National Statistics, Omnibus Survey, 2000

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Methodology Both e-MORI and Booz-Allen & Hamilton, who report internet penetration Economy,Infrastructure, Users rates broken down by socioeconomic category, have reported this eCommerce socioeconomic disparity. eAdvertising eFinance eWireless Socioeconomic Status of Internet Users in the UK,

Denmark 2000 (as a % of users in each socioeconomic category)

Finland France Low Germany 11% Italy

The Netherlands Medium-Low High

Norway 15% 40%

Poland

Russia

Spain

Sweden Medium-High 34% United Kingdom

Index of Charts Source: e-MORI, 2000

Socioeconomic Status of Internet Users in the UK, 2000 (as a % of users in each socioeconomic category)

High 48%

Low 7%

Source: Booz–Allen & Hamilton and Continental Research, 2000

UK citizens are among the least linguistically diverse Western Europeans. Only 9% speak French as a second language, while only 5% speak German as a second language. Since much of the content on the web is in English, most UK internet users get along fine online without being polyglots.

Three Most Widely Spoken “Second” Languages in the UK, 2000 (as a % of population that speaks them) French 9% German 5% English 3% Source: Eurobarometer 52, 2000

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Methodology The viability of non-PC access devices depends on the applications for Economy,Infrastructure, Users which they are used. Checking e-mail on the fly is likely to be a popular use eCommerce of internet-enabled phones and PDAs. Currently, e-mail is the “killer” eAdvertising eFinance application, used by 73% of UK internet surfers. A substantial 36% of eWireless respondents reported using the internet mostly or exclusively for e-mail. Denmark Browsing is likely to be a more limited activity on tiny mobile screens. Finland Approximately 64% of adults use the internet for general surfing, 66% to France

Germany find information about goods or services, and 33% to buy goods or

Italy services. These applications are likely to remain PC- or Web TV-based for The Netherlands the foreseeable future. Norway Poland Online Activities in the UK, 2000 (as a % of those who Russia have ever accessed the internet) Spain Finding information about goods or services 66% Sweden

United Kingdom Using e-mail 73% Index of Charts General surfing 64% Finding information related to education 34% Buying or ordering tickets, goods, or services 33% Personal banking or investment 22% Looking for work 20% Playing games or downloading software including games 21% Using chat rooms or sites 18% Playing or downloading music 17% Using government or official services 18% Other 5% Source: UK Office of National Statistics, Omnibus Survey, Oct. 2000

UK residents use the internet more sparingly than other Europeans. For example, UK internet users have significantly fewer sessions per month than Germans (11 compared with 16, according to Nielsen//NetRatings). According to Jupiter MMXI, the average UK user is online for 9 days per month, compared with 11.4 days per month for German internet users.

Duration and Frequency of Internet Use in the UK, 2000 Number of sessions per month 11 Number of unique sites visited 16 Time spent per site (minutes) 19 Time spent per month (hours and minutes) 5:10 Time spent during surfing session (minutes) 29 Duration of a page viewed (seconds) 46 Active internet universe 9,770,460 Current internet universe estimate 19,985,033 Source: Nielsen//NetRatings, 2000

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Methodology

Economy,Infrastructure, Users Days Online per Month in Selected European eCommerce Countries, 2000 eAdvertising eFinance Germany 11.4 eWireless Denmark 11.2 Denmark

Finland Sweden 10.8 France Germany France 9.3 Italy The Netherlands UK 9.0 Norway

Poland Spain 6.8

Russia Source: Jupiter MMXI, 2000 Spain

Sweden United Kingdom Internet users in the UK go online from home far more than from any other Index of Charts location. According to the UK government, 72% log on from home, compared with 38% surfing from work. Public access locations are important sources of internet access, with 7% using the library and 9% using internet cafes to surf.

Location of Internet Access, Oct. 2000 (as a % of users accessing from each location) Respondent’s own home 72% Another person’s home 34% Respondent’s workplace 38% A school, college, university or other educational institution 24% A public library 7% An internet cafe or shop 9% A community or voluntary organization 1% A government office 1% A post office 1% Somewhere else 2% Source: UK Office of National Statistics, Omnibus Survey, Oct. 2000

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Methodology Some of the most popular websites in the UK are American-based Economy,Infrastructure, Users companies like Yahoo!, MSN and Lycos, as the following table indicates. eCommerce According to recent data from Nielsen//NetRatings, MSN and Yahoo! are eAdvertising eFinance the two most popular web properties. eWireless Denmark Popular Websites in the UK, April 2000 Finland Reach % Unique Average Average France (04–00) visitors days per minutes Germany (000) visitor per month Italy Yahoo.com 36.7% 3,538 3.4 20.1 The Netherlands Freeserve.com 35.7% 3,435 4.2 12.8 Norway

Poland MSN.com 35.2% 3,388 4.2 30.6 Russia Microsoft.com 32.6% 3,135 1.6 4.4 Spain MSN.co.uk 19.6% 1,885 4.2 21.6 Sweden Passport.com 19.2% 1,846 5.0 8.1 United Kingdom

Index of Charts Yahoo.co.uk 19.0% 1,831 3.6 17.9 Lycos.com 16.2% 1,560 2.3 12.7 BBC.co.uk 16.2% 1,556 1.8 13.5 Demon.co.uk 14.5% 1,394 2.1 6.1 AOL Proprietary 13.2% 1,276 9.6 284.1 AOL.com 12.4% 1,195 1.7 3.8 Altavista.com 11.4% 1,100 2.5 11.2 Virgin.net 11.3% 1,085 4.0 14.9 BTinternet.com 11.1% 1,072 4.1 27.5 Excite.co.uk 10.9% 1,055 3.7 9.5 MSN Messenger 10.8% 1,041 10.7 51.3 Amazon.co.uk 9.5% 918 1.9 17.6 Askjeeves.com 9.2% 885 1.6 15.3 Lineone.net 9.0% 868 3.7 18.2 Askjeeves.co.uk 8.9% 858 1.7 15.8 Netscape.com 8.4% 807 3.4 15.1 Lycos.co.uk 8.4% 805 1.7 6.5 BT.co.uk 8.2% 793 1.7 8.4 Go.com 8.0% 769 1.4 6.6 Source: Merrill Lynch Internet Research and MMXI Data, May 2000

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Methodology

Economy,Infrastructure, Users Top 10 Web Properties in the UK as of November 2000 eCommerce Property Unique Audience Reach % eAdvertising 1. MSN 4,080,278 41.8% eFinance eWireless 2. Yahoo! 3,953,829 40.5%

Denmark 3. AOL Websites 2,680,092 27.4% Finland 4. Lycos Network 2,569,064 26.3% France 5. Freeserve 2,427,195 24.8% Germany

Italy 6. British Telecom 2,291,494 23.5%

The Netherlands 7. Microsoft 2,254,484 23.1% Norway 8. Excite@Home 1,671,588 17.1% Poland 9. Amazon 1,591,401 16.3% Russia

Spain 10. Ask Jeeves 1,575,980 16.1% Sweden Source: Nielsen//NetRatings, 2000 United Kingdom

Index of Charts

D. B2C eCommerce

B2C eCommerce Revenues in the UK, 2000–2004 (in billions)

2000 $1.8

2001 $4.4

2002 $10.2

2003 $23.1

2004 $53.5

Source: eMarketer, 2000

American Express found that one-quarter of British internet users currently shop online or expect to in the near future. The UK supermarket chain Tesco is reported to have over 160,000 subscribers to its online shopping service, with annual online revenues of nearly $200 million.Sainsbury, a similar merchant, has invested $45 million a year to catch up with Tesco. Retailers Arcadia and Boots (drugs and toiletries) have developed portal sites (zoom.co.uk and handbag.com respectively).

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Methodology

Economy,Infrastructure, Users Internet Users Shopping Online, in the UK 1999–2001 eCommerce 1999 2000 2001 eAdvertising (estimated) eFinance ECaTT (% of Internet Users) 17.0% – 32.4% eWireless Angus Reid Group (% of All Adults) – 12.0% – Denmark

Finland Source: various, as noted, 2000

France Germany Approximately 18% of UK internet users have purchased online during the Italy month prior to being surveyed by Taylor Nelson Sofres, and according to The Netherlands ECaTT, by next year more than 32% of internet users may be shopping Norway

Poland online.

Russia Spain Online UK Buyers, 2000 (by gender) Sweden

United Kingdom Male Female Index of Charts 69% 31%

Source: Ernst & Young, 2000

A much more optimistic view of online B2C commerce in the UK is presented by research firm NOP. According to a September 2000 survey of a representative sample of British adults (15 and older) conducted by NOP, 3.3 million adults in Britain bought something online within the previous month. Half (51%) of those who had shopped online had bought something from a website they had bought from before. A whopping 94% reported that they intend to shop online in the future, with 75% of online shoppers claiming they will be spending more money on online shopping by the summer of 2001. Approximately 90% gave their credit or debit card details online. However, a recent National Consumer Council report indicated that 35% of British consumers consider the internet to be the most insecure place to conduct a transaction. A survey by American Express found that 78% of British internet users expressed concern about the security and privacy of shopping online. One effort to counter this fear is an industry initiative entitled “TrustUK,” which serves as an accreditation system for e-commerce sites.

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Methodology

Economy,Infrastructure, Users Online Shopping in the UK, 2000 (by category) eCommerce Books eAdvertising 38% eFinance eWireless Music Denmark 19% Finland PC hardware France

Germany 13% Italy PC software The Netherlands 13% Norway

Poland Clothes Russia 10% Spain

Sweden Source: Taylor Nelson Sofres, July 2000

United Kingdom Index of Charts B2C Sales in UK by Product Category, 1999 (in millions*) Computers $264 Travel $240 Books $121 Food and wine $90 Auction $21 Brokerage $21 Music/video $20 Apparel $19 Tickets $18 Consumer electronics $11 Home and garden $11 Automotive $10 Flower, cards, gifts $8 Toys $4 Note: *Converted from euros at .88 euros/d ollar Source: Boston Consulting Group, The State of Online Retailing in the UK, Feb. 2000

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Methodology Approximately 17% of internet users engage in or expect to engage in Economy,Infrastructure, Users online banking, according to a recent American Express survey. As a result eCommerce of a shift to online banking, bank branches have closed throughout the eAdvertising eFinance UK.Barclays Bank has been reported to have closed 171 in response to eWireless internet (and ATM) banking. Denmark Finland Reasons Why People in the UK Do Not Shop Online, France 2000 Germany

Italy Uncomfortable sending credit card information

The Netherlands 59% Norway Prefer to see product before purchasing Poland 57% Russia

Spain No credit card Sweden 12% United Kingdom Can’t get enough information about products to make decision Index of Charts 12% Not confident with online merchants 20% Can’t talk to salesperson 7%

Source: Ernst & Young, 2000

The most significant change to spur e-commerce is the unbundling of British Telecom’s local loop infrastructure and the introduction of low-cost broadband access using either ADSL or cable modem technology.

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Methodology E. B2B eCommerce Economy,Infrastructure, Users eCommerce eAdvertising B2B eCommerce Revenues in the UK, 2000–2004 eFinance (in billions) eWireless Denmark 2000 $7.0 Finland

France 2001 $13.3

Germany

Italy 2002 $34.2

The Netherlands 2003 $87.0 Norway

Poland 2004 $214.0 Russia

Spain Source: eMarketer, 2000

Sweden

United Kingdom

Index of Charts Business to business e-commerce is expanding rapidly in the UK. While only 62% of UK companies have internet access, according to research by Spectrum, a recent survey found that over 55% of UK firms planned to implement e-procurement mechanisms by the end of 2000. Leading European multinationals like UK-based BP plan to switch most of their purchasing on-line. BP will soon buy $4 billion worth of supplies and equipment annually, according to CEO John Browne. The company plans to conduct as much as 95% of its purchases through e-procurement systems. According to a survey conducted by MORI, however, European companies are still conducting the majority of their transactions offline. Not surprisingly, larger companies are more likely to be using EDI for transactions – on average companies with over 3000 employees conduct 18% of their transactions via EDI while those with 250–499 employees only conduct 6%. MORI found that the majority of companies using the web for B2B transactions are actually conducting few transactions by this method, with one-third to one-half conducting less than 50 per month. Moreover, of those transactions being conducted, many are of a low value, particularly in retail and public sector. According to the study, security is less of an obstacle to B2B e-commerce than budget constraints, the lack of adequate information technology integration, and the limited use of the technology by suppliers and partners.

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Methodology For businesses, the government has introduced schemes to encourage small Economy,Infrastructure, Users and medium sized enterprises to use IT, including tax breaks to cover eCommerce equipment purchases and loan schemes to encourage employees to use PCs eAdvertising eFinance at home. Additional government services made available online include eWireless filing tax returns (encouraged by discounts for electronic filing and Denmark payment); small business services (tailored advice based on company size, Finland location and sector); employment services (job vacancies on-line); and VAT France

Germany registration, declarations and other returns to HM Customs and Excise.

Italy The growth in industry-sponsored business-to-business exchanges is The Netherlands also accelerating. The automotive, airline, chemicals and textile industries Norway are expected to have exchanges up and running by 2001. On-line market Poland specialists Ariba and Commerce One are extremely active in the UK and Russia

Spain media interest in the field is intense. Earlier this year, the supermarket

Sweden chain Sainsbury made headlines when it announced that it had sourced its United Kingdom entire quarterly supply of cheddar cheese using an Internet auction. Index of Charts Comparative Estimates: eCommerce in the UK, 2000–2004 (in billions) 2000 2001 2002 2003 2004 eMarketer B2B $7.0 $13.3 $34.2 $87.0 $214.0 B2C $1.8 $4.4 $10.2 $23.1 $53.5 Computer Economics B2B $0.1 $0.2 $0.3 $0.4 – Forrester Research B2B $ 0.0 $0.0 $0.1 $0.2 $0.3 Source: eMarketer, 2000; various, as noted

F.eFinance

eBanking At 4.5 and 10 million online banking accounts in the years 2000 and 2003 respectively, the United Kingdom ranks second in Western Europe, behind only Germany, in the number of online accounts, according to J.P. Morgan.

Online Banking Accounts in the United Kingdom, 2000-2003 (in millions)

2000 4.5

2001 7.0

2002 9.0

2003 10.0

Source: JP Morgan, 2000

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Methodology

Economy,Infrastructure, Users Online Banking Customers in the United Kingdom, eCommerce 2000-2004 (in millions) eAdvertising eFinance 2000 2.0 eWireless 2001 3.0 Denmark

Finland 2002 3.9

France 2003 4.9 Germany Italy 2004 5.3 The Netherlands

Norway Source: Datamonitor, 2000

Poland Russia Yet, according to Datamonitor’s IMPACT 2000 survey, better than 65% of Spain the UK population use branches as part of their regular account Sweden

United Kingdom management.

Index of Charts Management of Bank Accounts by Channel in the UK, 2000

Branch 65.2%

Telephone 44.1%

Post 23.5%

PC-based internet 8.7%

Interactive TV 0.9%

Source: Datamonitor, 2000

Indeed, even the majority of online banking customers still want access to branch office. According to the November 1999 Forrester Research UK Internet User Monitor, 45% of online bankers said they never go into a branch. Further still, Sir Brian Pitman, Chairman of Lloyds TSB, has claimed his bank’s physical distribution network is one of its biggest competitive advantages, with 70% of Lloyds TSB customers visiting a branch at least once a month. While banks in the United Kingdom (and elsewhere in Europe) are convinced that the internet is important to survival, their customers’ actions have demonstrated that the internet is so far just another delivery channel stirred into the mix.

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Methodology “Relationship banking is still deeply ingrained in the Economy,Infrastructure, Users culture of both bank and customer. ‘My’ bank but eCommerce eAdvertising not ‘my’ supermarket or ‘my’ hardware store in any eFinance European language. eWireless — Tim Sweeney, General Director, The British Bankers Association Denmark

Finland

France

Germany eInvesting Italy Despite much higher individual share ownership than most other European The Netherlands countries, the UK is well behind in terms of online brokerage penetration Norway rates among retail shareholders. Account holdings have also been Poland

Russia hampered by high costs that include a 0.5% stamp duty, arcane settlement

Spain systems and, maybe, just a little too much regulation. Sweden J. P. Morgan estimates only 500,000 of the United Kingdom’s 13.5 United Kingdom million retail shareholders were online brokerage customers in 2000, which Index of Charts adds up to a mere 3.7%. By 2003, J. P. Morgan forecasts a 17% penetration rate amongst shareholders as online brokerages maintain accounts for 2.7 million of the 15.8 million retail shareholders.

Retail Shareholders and Online Brokerage Customers in the UK, 2000-2003 (in millions) 2000 2001 2002 2003 Retail shareholders 13.5 14.3 15.1 15.8 Online brokerage 0.5 1.0 2.0 2.7 customers % of retail 3.7% 7.0% 13.2% 17.1% shareholders Source: JP Morgan, 2000

BNP Paribas also expects less than staggering growth for online brokerages. In 2000, BNP Paribas estimates the existence of only 400,000 online brokerage accounts. By 2005, they forecast 3.8 million online accounts.

Online Brokerage Accounts in the United Kingdom, 2000-2005 (in millions)

2000 0.4

2001 0.9

2002 1.5

2003 2.2

2004 3.0

2005 3.8

Source: BNP Paribus Equities, 2000

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Methodology UK-based consultant Allegra Strategies also contends that adoption of Economy,Infrastructure, Users online brokerages has been slow, as they claim online trading accounts will eCommerce grow from 300,000 in 2000 to 2.4 million in 2004. eAdvertising eFinance eWireless United Kingdom Online Trading Accounts, 2000 & 2004

Denmark (in millions)

Finland

France 2000 0.3

Germany 2004 2.4 Italy The Netherlands Source: Allegra Strategies, 2000 Norway

Poland Unfortunately, for most US brokerages that entered Europe via the United Russia

Spain Kingdom, the slow growth in the UK has meant they now lag behind many

Sweden European brokerages, which were once their students in the school of United Kingdom online trading. Index of Charts “The problem for the American players is that they arrived in the UK by default. They thought it would be easier because there is no language barrier. Well, the UK was the one [European] market that didn’t develop. The American companies have egg on their face.” — Christian Ossig, e-finance analyst, J. P.Morgan

G. eAdvertising The United Kingdom was one of the early adopters of internet technology and is a leader in e-advertising in Europe. eMarketer expects e-advertising spending in the UK to grow from $242 million in 2000 to over $1.6 billion in 2005.

eAdvertising Spending in the United Kingdom, 1998-2005 (in millions)

1998 $26.0

1999 $98.8

2000 $241.9

2001 $409.2

2002 $669.4

2003 $974.0

2004 $1,177.9

2005 $1,631.9

Source: eMarketer, 2000

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Methodology Other estimates of UK web ad spending in 2000 range from $128 million Economy,Infrastructure, Users (Jupiter) to $720 million (AdZone) eCommerce eAdvertising eFinance Comparative Estimates: eAdvertising Spending in the eWireless United Kingdom, 1998-2005 (in millions) Denmark Source 1999 2000 2001 2002 2003 2004 2005 Finland 24/7 $122.0 – – – – – – France Media Germany AdZone – $720.0 – – – – – Italy

The Netherlands eMarketer $98.8 $241.9 $409.2 $699.4 $974.0 $1,177,9 $1,631.9 Norway Fletcher $79.7 – $456.0 $763.9 – $1,195.5 – Poland Research Russia Forrester $81.0 $177.0 $347.0 $597.0 $955.0 $1,414.0 – Spain Research Sweden Goldman $104.0 $238.0 $382.0 – – – – United Kingdom Sachs Index of Charts Internet $69.4 – – – – – – Advertising Bureau/ Price Cooper Jupiter – $128.4 $319.0 – – – – Commun- ications Zenith – $185.4 – – – – – Media Zenith $165.6 $378.6 $608.1 – – – – Media Source: various, as noted

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Methodology H. eWireless Economy,Infrastructure, Users eCommerce British wireless operator Vodaphone is one the few companies poised to eAdvertising have a truly worldwide presence. In 2000, it took a stake in Verizon eFinance Wireless, one of the US’ largest wireless carriers, and purchased Germany’s eWireless

Denmark Mannesmann AG, giving Vodaphone a major presence in both continental

Finland Europe and the US. Vodaphone has also maneuvered to acquire the Eircell France wireless unit from the Irish phone company Eircom and has taken a Germany significant stake in Japan Telecom, which has a controlling interest in J- Italy phone, Japan’s third largest wireless operator. The Netherlands

Norway According to the British Office of Telecommunications (OFTEL), the Poland number of subscribers has been increasing rapidly, largely driven by a rise Russia in prepaid subscribers. Subscriptions rose 83% from the first quarter of Spain 1999 to 2000. At the same time, average MOU has been declining in the Sweden

United Kingdom UK, due mainly to the rapid increase in the number of prepaid subscribers,

Index of Charts whose monthly usage tends to be much lower than those on annual contracts. OFTEL registered 30.7 million wireless subscribers as of Q1 2000, of which 12.4 million were postpaid and 18.3 were prepaid. Merrill Lynch forecast 33.5 million subscribers by the end of 2000, but given the phenomenal growth in the subscriber base, the year-end total should be considerably higher.

Wireless Subscribers in the UK, 2000 (in millions)

Prepaid 18.3 (60%) Postpaid 12.4 (40%)

Total = 30.7 Source: OFTEL, 2000

Comparative Estimates: Wireless Subscribers in the UK, 2000 (in millions)

The Strategis Group 31.6

CIT 32.0

Source: various, as noted, 2000

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Methodology

Economy,Infrastructure, Users Comparative Estimates: Wireless Subscribers and eCommerce Penetration Rates, 2000–2004 (in millions and as % of eAdvertising population) eFinance 2000 eWireless 33.5 (56%) Denmark

Finland 35.5 France 2001 Germany 41.9 (65%) Italy

The Netherlands 41.5 Norway 2002 Poland 50.3 (73%) Russia 45.8 Spain Sweden 2003 United Kingdom 57.8 (78%) Index of Charts 48.9

2004 63.6 (82%) 50.7

Merrill Lynch ABN Amro Bank Source: various, as noted, 2000

A major growth segment is among the 14- to 16-year-olds, 66% of whom have access to a wireless phone according to a survey by the NOP Research Group. Girls outnumber boys among teen wireless users and are more likely to carry a wireless device around at all times.

Sales of Handheld Computers, 2000–2005 (in millions)

2000 23.8

2001 27.1

2002 30.7

2003 34.9

2004 39.6

2005 45.0

Source: Datamonitor, 2000

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Methodology

Economy,Infrastructure, Users Information Service Revenues in the UK, 2000 (in eCommerce billions and as a % share of total) eAdvertising eFinance Internet eWireless $4.1 (11%) Denmark Leased Line $3.6 (10%) Finland PSTN France $19.8 (53%)

Germany

Italy Mobile $10.1 (27%) The Netherlands

Norway

Poland Total = $37.6 Russia Source: World Bank, 2000 Spain

Sweden United Kingdom Mobile Industry Revenue in the UK, 2000–2005 (in Index of Charts billions)

2000 $10.1

2001 $11.2

2002 $11.8

2003 $11.9

2004 $11.8

2005 $11.5

Source: World Bank, 2000

Voice and Data Revenues, 2000, 2005, & 2010 (in billions)

Voice $13.8 $14.1 $9.8

Data $0.3 $4.3 $9.1

2000 2005 2010 Source: CIT-Online, 2000

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Methodology UK-based Orange has become the first wireless operator to launch location- Economy,Infrastructure, Users based services for WAP users. The service will give users access to ATM eCommerce locations, restaurants, movie theaters, hospitals, police stations, and local eAdvertising eFinance driving directions. eWireless A telephone survey conducted by the NOP Research Group in September Denmark 2000 among 1,008 wireless subscribers found that 23% of mobile phone Finland users were likely to purchase a handset allowing wireless internet access. France

Germany Teenagers, particularly those in the 16 to 17 age range were more likely

Italy than others (38%) to purchase a WAP-enabled handset. However, wireless The Netherlands operators will have to overcome users’ lack of awareness of WAP services: Norway 59% of those surveyed did not know what services were available. Poland Accessing banking information, e-mail, travel information and telephone Russia

Spain directories are likely to be among the market drivers among WAP users.

Sweden According to OFTEL, the number of short messages sent increased an United Kingdom astounding 794% from the beginning of 1999 to the first quarter of 2000, Index of Charts from 159 million SMS to 1.4 billion. As in many other European countries, transmission of short messages has begun to generate an increase in operators’ revenues.

Number of SMS Sent in the UK, 1999–2000 (in billions)

1999 0.16

2000 1.4

Source: OFTEL, 2000

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Methodology: The eMarketer Difference

I Economy,Infrastructure and Users

II eCommerce

III eAdvertising

IV eFinance

V eWireless

VI Denmark

VII Finland

VIII France

IX Germany

X Italy

XI The Netherlands

XII Norway

XIII Poland

XIV Russia

XV Spain

XVI Sweden

XVII United Kingdom Index of Charts 367

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Index of Charts The eMarketer Difference: Methodology I Economy, Infrastructure and Users A. Population and Economy Outlook for Western European GDP Growth, 2001 Population of Western Europe, 2000 (in millions) Population of Eastern Europe, 2000 (in millions) Population of Adults 14+ in Core European Countries, 2000–2004 (in millions) B. Technology Infrastructure Dial-Up Access Main Telephone Lines per 100 Inhabitants in Selected European Countries, 1999 Cost of Internet Access for 20 Hours at Peak Times, 2000 (in purchasing power parity) Broadband Access Households with TV and Cable and Number of Subscribers, in Europe, 2000 & 2005 (in millions) Broadband DSL and Cable Internet Subscribers in Europe, 2003 (in millions) Access Devices: Personal Computers PCs per 100 Inhabitants in Selected European Countries, 1999 Household and Business PC Penetration in the US and Western Europe, 2000 Online and Offline PCs in Selected European Countries, 1999 Access Devices: Television Digital Cable Market in Europe, 1999–2005 (in millions) Interactive TV-Capable Households in Europe, 2000 & 2005 (in millions) Households with Digital TV in the US and Europe, 1999–2005 (in millions) Leading Countries in Digital TV Adoption, 2000 (as a % of worldwide market) Worldwide Online Advertising and eCommerce Revenues for PC, Digital TV and WAP,2003 (as a % of total revenues) Access Devices: Mobile Telephones “Celledensity” Rate:Number of Cellular Mobile Subscribers per 100 Inhabitants in Selected European Countries, 1999 Total Number of Cellular Subscriptions in Europe, 2000–2005 (in millions) Growth in Use of WAP-Enabled Phones in Western Europe, 1999–2003 (in millions) Total Number of WAP-Enabled Subscriptions in Europe, 2000–2005 (in millions) Western European Mobile Internet Users, 1999–2019 (in millions) Leading Markets for 2.5G and 3G Products, 2006 (in millions) Global Users of 3G Wireless Data, 2011 (in millions) WAP-Enabled Bank Accounts in Western Europe, 2000–2004 (in millions of accounts)

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Index of Charts Percentage of WAP-Enabled Banking in Western Europe, 2000 (as a % of total number of accounts) Other Internet Access Devices Internet Access Devices in Europe, 2000 Internet Appliances in Western Europe, 2000, 2002, & 2005 (in millions) Households with Internet Appliances in Europe and the US, 1999–2005 (in millions) Internet Infrastructure Bandwidth in the US and Europe, 1999 (Mbps) Internet Hosts per 1,000 People in Selected European Countries, January 2000 Hosts per 1,000 in OECD Member Nations with Metered and Unmetered Internet Access, Jan. 2000 Most and Least eCommerce-Ready Countries in Europe, March 2000 (by secure servers per million inhabitants) Secure Servers per Million Inhabitants in Scandinavia and the US, 1997–2000 Secure Servers per Million Inhabitants in Unmetered and Metered OECD Countries, 1997–2000 Websites per 1,000 Inhabitants in the US and Selected European Countries, 2000 Multimedia Content on the Internet in the US and Selected European Countries, 1999 Multimedia Content on the Internet in Europe, 2000 (as a % of countries with metered and unmetered internet access) C. Internet Users Active Adult Internet Users 14+ in Europe, 2000–2004 (in millions) Comparative Estimates: Internet Users in Europe, 1999–2005 (in millions) Growth Rate of Internet Users in Europe, 2000–2004 (in millions) Internet Users by Country Internet Users by European Country, 2000–2004 (in millions) Active Internet Users 14+, 2000–2004 (as a % of population 14+) Active Internet Users 14+ Worldwide, 2000–2004 (as a % of active internet users worldwide) II eCommerce A. Overview eCommerce in Europe, 2000–2004 (in billions) Europe’s Share of Global eCommerce Revenues, 2000–2004 (in billions) European eCommerce Revenues by Country, 2000–2004 (in billions) European eCommerce Revenues, 2000–2004 (by % share of country) European eCommerce, 2000 (by % share of country) eCommerce Revenues by Country, 2000–2004 (in billions) eCommerce Revenues in Europe, 2000–2004 (in billions) eCommerce Revenues in Europe, 1999–2003 (in billions)

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Index of Charts eCommerce Revenues in Selected W. European Countries, 2000 (in billions) eCommerce Revenues by European Country, 2002 (in billions) eCommerce in Europe, 2000 (in billions) B. B2C eCommerce European B2C eCommerce Revenues, 2000–2004 (in billions) Online Activities of Europeans in EU, 2000 Internet Users in Europe Engaging in eCommerce-Related Activities, 1999 & 20011 % of European Internet Users Who Have Shopped Online in 1999 and Who Say They Intend to Shop Online in 2001 Internet Users Shopping Online in Selected European Countries,1998–2002 % of Adults Who Have Shopped Online, 2000 Internet Users Age 16+ Browsing and Shopping Online within Previous 6 Months, 2000 % of Internet Users Who Have Bought Goods or Services Online within Previous Month, 2000 Online Buyers in Selected Countries, Year-End 1999 (as % of internet users) Percent of Internet Users Who Have Ever Purchased Online, 2000 Internet Buyers, 2000–2003 (as % of all internet users in W. Europe) Web Users and Web Buyers in Major European Countries 2002, (in millions) Number of Active Internet Users in Europe Purchasing Online, 2000–2004 (in millions) Average Annual B2C Expenditure per Year per Internet User in Europe, 2000–2004 Average Monthly and Yearly B2C Online Spending per Buyer in Selected Countries, 1999 Average Annual per Capita Internet Spending by European Country, 2000–2004 B2C Share of Total eCommerce in Europe, 2000–2004 eCommerce Revenues, by Country B2C eCommerce Revenues by Country, 2000–2004 (in billions) eCommerce Expenditures by Product in Western Europe, 1999 (as a% of total B2C expenditures) Purchases among Internet Users Who Have Shopped Online during Previous Month, 2000 (as a % of users purchasing items) Online Shopping Expenditure by Online Buyer, 1999 Projected Average Quarterly Online Spending per Internet Buyer by Country, 2002 Comparative Estimates: B2C eCommerce Revenue in Europe, 1999–2005 (in billions) Worldwide Mobile Commerce Revenues, 2000–2005 (in billions) Worldwide Mobile Commerce Revenues, 2000–2005 (in billions)

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Index of Charts Average Monthly per-Subscriber mCommerce Purchase in Western Europe, 2000–2005 C. B2B eCommerce European B2B eCommerce Revenues, 2000–2004 (in billions) B2B Share of Total eCommerce in Region, 2000–2004 B2B eCommerce Revenues by Country, 2000–2004 (in billions) B2B eCommerce Revenues by Country, 2000 (as a % of total B2B e- commerce in Europe) B2B eCommerce by Country (as a % of GDP) Comparative Estimates: B2B eCommerce, 1999–2005 (in billions) D. eCommerce Barriers and Drivers Barriers Secure Servers per 1 Million Inhabitants, March 2000 % Difference in the Cost of Goods Bought Online vs. Traditional Retailers, UK vs. US, 1999 Interest in Online Shopping among Non-Users of Online Services, 1999 Number of Cards with Debit or Credit Function per 1,000 Inhabitants, 1998 (by country) Respondents Providing Credit Card Information Online at Time of Purchase in US and Western Europe, 2000 Drivers Growth in European Online PC and Interactive TV Households, 1999–2005 (in millions) B2B eCommerce Drivers and Barriers Relative IT Spending Growth, 1997–1999 % of Small- and Medium-Sized Businesses with B2B eCommerce Technologies Ranking of Countries by How eCommerce-Ready Their Small- and Medium-Sized Enterprises Are, 2000 % of Small- and Medium-Sized Businesses That Use the Internet for the Following Activities, 2000 % of Executives Reporting That eCommerce Enables Sales to Consumers across Europe, 1999 B2B eCommerce Drivers and Barriers Executive Survey: Plans and Attitudes toward eCommerce, 1998–1999 Proportion of European Businesses Using eMail, Internet, and Intranet, 1999 (by business size) % of Businesses with Internet Access, 2000 % of Businesses with Websites and Internet Access by Country, 2000 % of Companies with a Website, 1999 % of Businesses That Have a Marketing Website in Selected Countries, 2000 % of Businesses That Allow Customers to Make Online Payments, 2000 % of Businesses That Allow Customers to Order Online, 2000 % of Customer’s Purchases Ordered Online (by value of purchases)

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Index of Charts % of Businesses Ordering Supplies Online, 2000 Access to Internet by White-Collar Workers in Europe, 1999–2004 Average % of Employees Using the Internet at Least Monthly % of Various Business Divisions Using eCommerce in Selected Countries Business Use of the Internet, 2000 III eAdvertising A. Overview eAdvertising Spending in Europe, 1998–2005 (in billions) Comparative Estimates: eAdvertising Spending in Europe, 1998–2005 (in billions) eAdvertising Spending in Europe, 1998–2005 (in billions and a % ofglobal spending) B. Advertising Spending by Country eAdvertising in Europe by Country, 1998–2005 (in millions eAdvertising Spending in Europe by Country, 1998–2005 (% of total) IV eFinance A. eBanking Bank Delivery Channel Used Most Often by European Households, 2000 Delivery Channels Used by European Household in 3 Month Period, 2000 Retail Transactions Conducted via the Internet and Via Branches, 2000 & 2003 (as a % of All Transactions) European Banking Transaction Costs by Distribution Channel (in euro) eMail Queries Unanswered Within 8 Hours by Online Banks in the US and Europe, 2000 Western Europe Western European* Internet Users and Online Banking Customers (in millions), 2000–2004 Source Comparisons Online Banking Accounts in Europe* (in millions), 2000–2003 Online Banking Accounts in Europe, 1999–2003 (in millions) European Online Banking Customers, 2000–2004 (in millions) European iTV Banking Customers, 2000–2004 (in thousands) Mobile Phone Banking Customers, 2000–2004 B. eInvesting European Online Traders’ Medium Preference, 2000 European Banking Customers Involved With Buying or Researching Shares, 2000 C. IT Spending IT Spending by European Financial Services Institutions Dedicated to PC- Internet Development, 1999 & 2003 (in % of total IT spending) IT Spending by European Financial Services Institutions Dedicated to Mobile Devices and iTV, 1999 & 2003 (in % of total IT spending) IT Spending on Knowledge Management Systems by European Banks, 2000 & 2004 (in millions)

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Index of Charts Online Banking Solution Expenditures by Selected Western European Countries, 1999 (in millions) Online Banking Expenditures in Western Europe, 2004 (in millions) Global Strategic IT Spending by Region, 2001 (in billions) D. Expectations: Supply-Side Vs. Buy-Side The Sell-Side Perspective Financial Services Institutions’ Objectives for Their eCommerce Development, 1997 & 2000 Ineffective Use of CRM Solutions by European Banks, 2000 The Buy-Side Perspective European Consumers’ Stated Importance of Banking Channels by Selected Countries, 2000 European Consumers’ Stated Importance of Investment Channels by Selected Countries, 2000 V eWireless A. Overview B. Technology Infrastructure Top Markets for 2.5/3G Subscribers, 2006 (in millions) Base Station Market Share by Country, 2007 Number of Installed Data and Voice Switches, 2000–2007 Worldwide Wireless Infrastructure Revenue by Manufacturer Market Share, 2000–2004 Cellular Phones Nations with More Mobile Than Fixed Telephone Subscribers, Year-End 1999 (in thousands) Comparative Estimates: Wireless Subscribers in Europe, 2000–2004 (in millions) European GSM Subscribers as a Percentage of GSM Subscribers Worldwide, 2000–2004 (in Millions) Mobile Phones in Use in W. Europe by Country, 2000 Mobile Subscribers per 100 Inhabitants by Region, 1999 Comparative Estimates: Mobile Phone Penetration in Europe, 2000–2004 Top 20 Nations in Mobile Cellular Penetration, 1999 Mobile Subscribers per 100 Inhabitants in European OECD Countries, 1990, 1995, & 1999 “Cellular Density”: Number of Cellular Mobile Subscribers per 100 Inhabitants in Selected European Countries, 1999 Share of Population with Mobile Telephones in Selected European Countries, 1999 Share of Population with Mobile Telephones in Selected European Countries, 2000 Mobile Subscriptions per 100 Inhabitants in Eastern Europe, 1999 (by country) Prepaid Cellular Subscribers in Selected European Countries, 2000 Telematics/Telemetry Total Revenue from Telematics, Telemetry, and Other Machine Applications, 2005–2010 (in billions)

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Index of Charts Handset Sales Cellular Handset Sales in W. Europe, by New and Replacement Phones, 2000–2005 (in millions and as % of total sales) Cellular Handset Sales in Europe, 2000–2004 (in millions) Worldwide Mobile Phone Sales Estimates, Q2 2000 (in millions and as % of total market share) Worldwide Handset Market Share by Company, 2000–2003 Wireless Charges Cellular Tariffs in Selected European Countries, 1999 Average Monthly Expenditure Comparison between Prepaid, Postpaid, and Fixed-Line Services in Europe, 2000 European Wireless Operator ARPU/Month*, 2000, 2005, & 2010 European Wireless Operator Revenues from Voice and Data, 2000, 2005, & 2010 C. Mobile Internet Users and Usage Short Messaging SMS Messages per Month in Selected European Countries, April 1999 (in millions) Number of SMS per Subscriber per Month in Selected European Countries, 2000 Growth in Number of SMS Sent via Mobile Phone in Western Europe, 1999–2000 (in billions) SMS Users in Western Europe, 2000–2004 (in millions and as % of total users and population) Reassessing WAP WAP Users in Western Europe, 2000–2004 (in millions and as % of total users and population) Internet-Enabled Mobile/Handheld Computers in Europe, 2000–2003 (in millions) Data Users in Western Europe, 2000–2004 (in millions and as % of total users and population) European Wireless Internet Users as a Percentage of Wireless Internet Users Worldwide, 2000–2005 (in millions) WAP-Enabled Subscriptions in Europe, 2000–2005 (in millions) Unique WAP Users in Europe, 2000–2003 (as % of total population) WAP Users in Europe, 2000–2003 (as % of total mobile phone owners) Mode of Connecting to the Internet Worldwide, 1998 & 2002 (as a % of households) D. mCommerce European Mobile Commerce Revenue, 2000–2004 (in billions) Mobile Commerce Revenues in Western Europe, 2000–2005 (in billions) Mobile Commerce Revenues in Europe, 2000–2003 (in billions) Mobile Commerce Revenues in Europe by Country, 2003

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Index of Charts Average Monthly per-Subscriber Purchase in North America and W. Europe, 2000–2005 Mobile Commerce Revenues per Subscriber, 2000–2003 Wireless Gaming Revenues in Western Europe and the US, 2000–2005 (in billions) E. mFinance Projected Users of Wireless Financial Services, 2000 & 2005 (in millions) Mobile Bank Accounts in Western Europe, 2000 & 2004 (in millions) WAP-Enabled Mobile Banking Accounting in W. Europe, 2000 WAP-Enabled Mobile Phone Banking Customers in Europe, 2000 – 2004 (in Thousands) Projected IT Spending on Wireless Financial Services, 2000 & 2004 (in millions) F.mAdvertising Global Mobile Advertising Spending, 2000–2005 (Millions) Worldwide Mobile Advertising Spending by Region, (in Millions and % of Total), 2004 European Wireless Revenues Per Application (in $ millions), 2000–2010 Average Mobile Advertising Revenue Per User, by European Country, 2000–2010 Average Mobile Advertising Revenue Per User in Europe, 2000–2010 VI Denmark A. Overview QuickStats: Denmark, 2001 Adult Population 14+ in Denmark, 2000–2004 (in millions) B. Internet Users Comparative Estimates: Internet Users in Denmark, 1999–2004 (in millions) Internet Penetration in Denmark, 2000–2004 (active internet users 14+ as % of population 14+) C. eDemographics Internet Use by Age in Denmark, 1999 (as a % of respondents in each age range reporting internet use) Internet Use by Age in Denmark, 2000 (as a % of internet users in each age range) Gender of Internet Users in Denmark, 2000 Use of Internet or Other Online Services in Denmark, 1999 (by level of education) Three Most Widely Spoken “Second” Languages in Denmark, 2000 (as a % of the population that speaks them) Average Duration and Frequency of Internet Access in Denmark, 2000 Average Number of Days and Hours Connected to the Internet per Month in Denmark, 2000 Home and Work Internet Users in Denmark, Year-End 1999 (as a % of all users)

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Index of Charts Percentage of Internet Users in Denmark Engaging in Various Online Activities, 2000 Online Activities in Denmark in Last 3 Months, 2000 Top 10 Web Properties in Denmark as of November 2000 D. B2C eCommerce eCommerce: B2C Revenues in Denmark, 2000–2004 (in billions) Comparative Estimates:eCommerce in Denmark, 2000–2004 (in billions) eCommerce in Scandinavia, 1999 & 2003 % of Danish Internet Users Shopping Online, 1999 & 2001 Barriers to Online Selling, 1999 E. B2B eCommerce B2B eCommerce Revenues in Denmark, 2000–2004 (in billions) Business Internet Penetration, Year-End 1999 F.eWireless Comparative Estimates: Wireless Subscribers (in millions) and Subscribers per 100 Inhabitants, 2000 VII Finland A. Overview QuickStats: Finland, 2001 Adult Population 14+ in Finland, 2000–2004 (in millions) B. Internet Users Active Internet Users 14+ in Finland, 2000–2004 (in millions) Comparative Estimates: Internet Users in Finland, 1999–2004 (in millions) Internet Penetration in Finland, 2000–2004 (active internet users 14+ as % of population 14+) C. eDemographics Non-Work Use of Computers and Internet in Finland, 1999 (by gender and age group) Internet Use by Age in Finland, 1999 (as a % of respondents in each age range) Internet Use in Finland by Age, November 2000 (as a % of population accessing internet) Internet Use in Finland by Gender, November 2000 (as a % of population accessing internet) Three Most Widely Spoken “Second” Languages in Finland, 2000 (as a % of population speaking them) Duration and Frequency of Internet Access in Finland, 2000 Frequency of Internet Use in Finland, 1999–2000 (in millions) Home and Work Internet Users in Finland, Year-End 1999 (as a % of all users) Number of Weekly Internet Users in Finland by Location of Access, 2000 (in thousands) Top 10 Web Properties in Finland as of November 2000 D. B2C eCommerce B2C eCommerce Revenues in Finland, 2000–2004 (in billions)

376 ©2001 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission. Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information. The eEurope Report

Index of Charts % Shopping Online, 1999–2001 Comparative Estimates:eCommerce in Finland, 2000–2004 (in billions) Barriers to B2C Sales E. B2B eCommerce B2B eCommerce Revenues in Finland, 2000–2004 (in billions) Business Internet Penetration F.eWireless Comparative Estimates: Wireless Subscribers and Penetration Rates in Finland, 1999–2000 (in millions and as % of total population) Voice and Data Revenues, 2000, 2005, & 2010 (in millions) VIII France A. Overview QuickStats: France, 2001 Adult Population 14+ in France, 2000–2004 (in millions) B. Internet Users Active Internet Users 14+ in France, 2000–2004 (in millions) Comparative Estimates: Internet Users in France, 1999–2004 (in millions) Internet Penetration in France, 2000–2004 (active internet users 14+ as a % of population 14+) C. eDemographics Internet or Other Online Service Use by Age in France, 1999 (as a % of respondents in each age range reporting internet use) Internet Use in France by Age, 2000 (as a % of internet users in each age range) Internet Users in France by Age, 2000 (in thousands) Home Internet Use in France by Gender and Age, 2000 (as a % of internet users in each age range) Internet Users in France by Gender, 2000 Internet Users in France by Gender, 2000 (in thousands) Three Most Widely Spoken “Second” Languages in France, 2000 (as a % of the population that speaks them) Duration and Frequency of Internet Access in France, 2000 Average Number of Days and Hours Connected to the Internet per Month in France, 2000 Frequency of Internet Use in France, 2000 (users 15+ in thousands) Location of Internet Access in France, 2000 (in thousands) Online Activities in France in Last 3 Months, 2000 Online Activities of Internet Users in France, 2000 (as a % engaging in each activity) Most Popular Internet Service Providers in France, 1999 Top 10 Domains in France, 2000 Top 10 Web Properties in France, as of November 2000 D. B2C eCommerce B2C eCommerce Revenues in France, 2000–2004 (in billions)

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Index of Charts Ten Leading eCommerce Sites in France, July 2000 % of Online Shoppers Buying, 2000 (by category of purchase) Unique Visitors to Online eCommerce Sites in France, Germany, and the UK, July 2000 (in millions) % Shopping Online, 1999–2001 Purchasing Behavior of Internet Users, 2000 Number of French Internet Users Having Made a Direct or Indirect Online Purchase, 1998–1999 Online Buyers in France, 2000 (by gender) Actual Purchases among Internet Users Who Have Shopped Online during Past Month in France, 2000 Why French Internet Users Choose Not to Shop Online, 2000 E. B2B eCommerce B2B eCommerce Revenues in France, 2000–2004 (in billions) eCommerce in France, 2000–2004 (in billions) eCommerce in France, 1999 & 2003 (in billions) % of French Businesses That Use EDI, 1999–2000 % of Businesses with Internet Access in France, 1997–2000 Internet Penetration in Businesses, Year-End 1999 F.eAdvertising eAdvertising Spending in France, 1998–2005 (in millions) Comparative Estimates: eAdvertising Spending in France, 1998–2004 (in millions) Online Banking Accounts in France, 2000–2003 (in millions) Online Banking Customers in France, 2000–2004 (in millions) G. eFinance eInvesting Retail Shareholders and Online Brokerage Customers in France, 2000–2003 (in millions) Online Brokerage Accounts in France, 2000–2005 (in millions) H. eWireless Comparative Estimates: Wireless Subscribers in France, 1999–2000 (in millions) Comparative Estimates: Wireless Subscribers and Penetration Rates in France, 2000–2004 (in millions and as % of total population) Sales of Handheld Devices in France, 2000–2005 (in millions) Information Service Revenues in France, 2000 (in billions and as % share of total) Voice and Data Revenues in France, 2000, 2005, 2010 (in billions) Mobile Commerce Revenue in France, 2003 (in billions and as % of Europe) IX Germany A. Overview QuickStats: Germany, 2001 Adult Population 14+ in Germany, 2000–2004 (in millions)

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Index of Charts B. Internet Users Active Internet Users 14+ in Germany, 2000–2004 (in millions) Comparative Estimates: Internet Users in Germany, 1999–2004 (in millions) Internet Penetration in Germany, 2000–2004 (active internet users 14+ as % of population 14+) C. eDemographics Internet Users in Germany by Age, 1999(as a % of respondents in each age range reporting internet use) Internet Users in Germany by Age, 2000 (as a % of internet users in each age range) Internet Users in Germany by Age, 2000 (as a % of internet users in each age range) Internet Users in Germany by Gender, 2000 (as a % of internet users) Days Online per Month by Internet Users in Germany, 2000 (by gender) Net Monthly Income of Internet Users in Germany, 2000 Employment of Internet Users in Germany, 2000 (in millions) Educational Level of Internet Users in Germany, 2000 Three Most Widely Spoken “Second” Languages in Germany (as a % of population that speaks them) Duration and Frequency of Internet Access in Germany, 2000 Days Online per Month in Selected European Countries, 2000 Frequency of Internet Use in Germany, 2000 Time of Last Internet Use among Internet Users in Germany, 2000 (as a % of internet users) Average Time Spent Surfing the Internet in Germany, 2000 Location of Internet Access in Germany, 2000 Location of Internet Access in Germany, 2000 Ten Most Popular Online Activities in Germany, 2000 Online Activities in Germany in Last 3 Months, 2000 Types of Internet Users in Germany, 2000 Popular Web Portals in Germany,Year-End 1999 Top 10 Domains in Germany, 2000 Top 10 Web Properties in Germany, as of November 2000 D. B2C eCommerce B2C eCommerce Revenues in Germany, 2000–2004 (in billions) % of Germans Shopping Online, 1999–2001 Comparative Estimates:eCommerce in Germany, 2000–2004 (in billions) eCommerce in Germany, 1999 & 2003 (in billions) B2C Spending at German Sites, 1997–2002 (in billions) Most Important Reasons for Using the Internet for Purchases Demographics of German Internet Shoppers 1999–2000 % Products and Services Ordered Online

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Index of Charts Actual Purchases among Internet Users Who Have Shopped Online in the Last Month in Germany, 2000 eConsumer attitudes & behavior Reasons for Abandoning Online Order, 2000 Online Payment Methods in Germany, 2000 E. B2B eCommerce B2B eCommerce Revenues in Germany, 2000–2004 (in billions) % of Businesses in Germany with Internet or EDI (1997–2000) F.eAdvertising eAdvertising Spending in Germany, 1998–2005 (in millions) Comparative Estimates: eAdvertising Spending in Germany, 1998–2004 (in millions) G. eFinance eBanking Online Banking Accounts in Germany, 2000–2003 (in millions) Online Banking Customers in Germany, 2000–2004 (in millions) Online Banking Customer Growth in Germany, Q2 1999 & Q2 2000 (in millions) Retail Shareholders and Online Brokerage Customers in Germany, 2000–2003 (in millions) Online Brokerage Accounts in Germany, 2000–2005 (in millions) Online Brokerage Customer Growth in Germany, as of Q3 1999 & Q3 2000 (in millions) Online Brokerage Customer Loss in Germany, 1999 & 2000 H. eWireless Comparative Estimates: Wireless Subscribers in Germany, 1999–2000 (in millions) Comparative Estimates: Wireless Subscribers and Penetration Rates in Germany, 2000–2004 (in millions and as % of population) Sales of Handheld Devices in Germany, 2000–2005 (in millions) Cellular Industry Revenues in Germany, 2000–2005 (in billions and as a % share of all information services) Information Service Revenues in Germany, 2000 (in billions and as a % share of total) Voice and Data Revenues, 2000, 2005, & 2010 (in billions) X Italy A. Overview QuickStats: Italy, 2001 B. Internet Users Active Internet Users 14+ in Italy, 2000–2004 (in millions) Comparative Estimates: Internet Users in Italy, 1999–2004 (in millions) Internet Penetration in Italy, 2000–2004 (active internet users 14+ as a % of population 14+) C. eDemographics

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Index of Charts Internet Use in Italy by Age, 1999 (as a % of respondents in each age range reporting internet use) Internet Use in Italy by Age, 2000 (as a % of respondents in each age range reporting internet use) Internet Users in Italy by Age, 2000 Internet Users in Italy by Gender, 2000 Population Online in Italy by Level of Household Income, 2000 Population Online in Italy by Level of Monthly Household Income, 2000 Internet Users in Italy by Profession, 2000 Three Most Widely Spoken “Second” Languages in Italy, 2000 (as a % of population) Duration and Frequency of Internet Use in Italy, 2000 Percent of Population Online in Italy by Location of Access, 2000 Online Activities in Italy in Last 3 Months, 2000 Online Activities in Italy, 2000 Top 10 Web Properties in Italy as of November 2000 D. B2C eCommerce B2C eCommerce Revenues in Italy, 2000–2004 (in billions) % Shopping Online, 1999–2001 Online Italian Buyers, 2000 (by gender) B2C Revenue in Italy, 2000 (by products and services) B2C Purchases in Italy (as a % of products) Anticipated Online Purchases in Italy Reasons for Not Shopping Online in Italy, 2000 E. B2B eCommerce B2B eCommerce Revenues in Italy, 2000–2004 (in billions) % of Businesses in Italy with Internet or EDI, 2000 Comparative Estimates: eCommerce in Italy, 2000–2004 (in billions) eCommerce in Italy, 1999 & 2003 (in billions) F.eFinance eBanking Online Banking Accounts in Italy, 2000–2003 (in millions) Online Banking Customers in Italy, 2000–2004 (in millions) eInvesting Retail Shareholders and Online Brokerage Customers in Italy, 2000–2003 (in millions) Online Brokerage Accounts in Italy, 2000–2005 (in millions) G. eWireless Comparative Estimates: Wireless Subscribers in Italy, 2000 (in millions) Comparative Estimates: Wireless Subscribers in Italy, 2000–2004 (in millions) Information Service Revenues in Italy, 2000 (in billions and as a % share of total) Cellular Revenues in Italy, 2000–2005 (in billions)

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Index of Charts Voice and Data Revenues, 2000, 2005, & 2010 (in billions) XI The Netherlands A. Overview QuickStats: The Netherlands,2001 Adult Population 14+ in the Netherlands, 2000–2004 (in millions) B. Internet Users Adult Population 14+ in the Netherlands, 2000–2004 (in millions) Active Internet Users 14+ in the Netherlands, 2000–2004 (in millions) Comparative Estimates: Internet Users in the Netherlands, 1999–2004 (in millions) Internet Penetration in the Netherlands, 2000–2004 (active internet users 14+ as a % of population 14+) C. eDemographics Internet Use in the Netherlands by Age, 1999 (as a % of respondents in each age range reporting internet use) Internet Use in the Netherlands by Age, 2000 (as a % by age category) Internet Use in the Netherlands by Gender, 2000 Three Most Widely Spoken “Second” Languages in the Netherlands, 2000 (as a % of the population) Duration and Frequency of Internet Access in the Netherlands, 2000 Home and Work Internet Users in the Netherlands, Year-End 1999 (as a % of all users) Online Activities in the Netherlands in Last 3 Months, 2000 Online Activities in the Netherlands, 2000 (as a % of internet users engaging in each activity) Top 10 Web Properties in the Netherlands as of November 2000 D. B2C eCommerce B2C eCommerce Revenues in the Netherlands, 2000–2004 (in billions) % of internet Users Shopping Online, 1999–2001 E. B2B eCommerce B2B eCommerce Revenues in the Netherlands, 2000–2004 (in billions) Comparative estimates: B2B revenues in the Netherlands, 2000–2004 (in billions) F.eFinance eBanking Online Banking Accounts in Netherlands, 2000–2003 (in millions) Online Banking Customers in Netherlands, 2000–2004 (in millions) eInvesting Retail Shareholders and Online Brokerage Customers in Netherlands, 2000–2003 (in millions) G. eWireless Comparative Estimates: Wireless Subscribers in the Netherlands, 2000 (in millions) Sales of Handheld Computers in the Netherlands, 2000–2005 (in millions)

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Index of Charts XII Norway A. Overview QuickStats: Norway, 2001 Adult Population (14+) in Norway, 2000–2004 (in millions) B. Internet Users Active Internet Users 14+ in Norway, 2000–2004 (in millions) Comparative Estimates: Internet Users in Norway, 1999–2004 (in millions) Internet Penetration in Norway, 2000–2004 (active internet users 14+ as a % of population 14+) Internet Use in Norway by Intensity of Use, 2000 (in millions) Location of Internet Access in Norway, 2000 (in millions) Home and Work Internet Users in Norway,Year-End 1999 (as % of all users) C. eDemographics Internet Use in Norway by Age, 2000 Internet Access in Norway by Gender, 2000 Educational Level of Internet Users in Norway, 2000 Duration and Frequency of Internet Access in Norway, 2000 Top 10 Web Properties in Norway as of November 2000 D. B2C eCommerce B2C eCommerce Revenues in Norway, 2000–2004 (in billions) E. B2B eCommerce B2B eCommerce Revenues in Norway, 2000–2004 (in billions) Comparative Estimates: B2B eCommerce Revenues in Norway, 2000–2004 (in billions) F.eWireless Comparative Estimates: Wireless Subscribers in Norway, 1999–2000 (in millions) XIII Poland A. Overview QuickStats: Poland, 2001 B. Internet Users Active Internet Users 14+ in Poland, 2000–2004 (in millions) Comparative Estimates: Internet Users in Poland, 1999–2004 (in millions) Internet Penetration in Poland, 2000–2004 (active internet users 14+ as a % of population 14+) C. eDemographics Comparative Estimates: Age of Internet Users in Poland, 2000 Preferred Internet Portal in Poland by Gender, 2000 Gender of Online Shoppers in Poland, 2000 Mean Monthly Net Household Income in Poland by Average Citizens and Internet Users, 2000 Professional Status of Internet Users in Poland, 2000 Internet Portal Use by Educational Level of Internet Users in Poland, 2000

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Index of Charts Length of Time Internet Users Have Been Online in Poland, 2000 Length of Time Spent Online per Week in Poland, 2000 Comparative Estimates: Internet Access Location of Internet Users in Poland, 2000 Online Activities in Poland, 2000 Most Popular Portals in Poland, 2000 D. B2C eCommerce eCommerce: B2C Revenues in Poland, 2000–2004 (in millions) Credit and Debit Cards in Poland, 1999 E. B2B eCommerce B2B eCommerce Revenues in Poland, 2000–2004 (in billions) F.eWireless Wireless Subscriptions, Users, and Penetration Wireless Subscribers in Poland, 1999–2004 (in millions and as % of population 14 and older) Top 10 Eastern European Mobile Operators Ranked by Subscriber Base, 2000 Wireless Revenues Wireless Industry Revenues in Poland, 2000–2005 (in billions and year-to- year growth rate) Information Service Revenues in Poland, 2000 (in billions and as % share of total) XIV Russia A. Overview QuickStats: Russia, 2001 Adult Population 14+ in Russia, 2000–2004 (in millions) B. Internet Users Adult Population 14+ in Russia, 2000–2004 (in millions) Active Internet Users 14+ in Russia, 2000–2004 (in millions) Comparative Estimates: Internet Users in Russia, 1999–2004 (in millions) Internet Penetration in Russia, 2000–2004 (active internet users 14+ as a % of population 14+) C. eDemographics Internet Users in Russia by Age, 2000 Internet Users in Russia by Gender, 2000 Educational Level of Internet Users in Russia, 2000 Primary Internet Access Location in Russia, 2000 Online Activities of Internet Users in Russia, 2000 D. B2C eCommerce B2C eCommerce Revenues in Russia, 2000–2004 (in millions) Credit and Debit Cards in Russia, 1999 Online Activities of Russian Internet Users, 1999 (as a % reporting use of activity) B2C eCommerce in Russia, 1999–2002 (in millions)

384 ©2001 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission. Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information. The eEurope Report

Index of Charts Products Purchased Online in Russia, 2000 (as a % of revenue and % of transactions) Types of Websites Viewed by Russian Internet Users (as a % of internet users), 2000 E. B2B eCommerce B2B eCommerce Revenues in Russia, 2000–2004 (in billions) eCommerce Penetration in Russian Businesses F.eWireless Comparative Estimates: Wireless Subscribers in Russia, 2000–2005 (in millions) Information Service Revenues in Russia, 2000 (in billions and as a % share of total) XV Spain A. Overview QuickStats: Spain, 2001 Adult Population 14+ in Spain, 2000–2004 (in millions) B. Internet Users Active Internet Users 14+ in Spain, 2000–2004 (in millions) Comparative Estimates: Internet Users in Spain, 1999–2004 (in millions) Internet Penetration in Spain, 2000–2004 (active internet users 14+ as a % of population 14+) C. eDemographics Home Internet Users in Spain by Age, 2000 Internet Use in Spain by Age, 1999 (as a % in each age range reporting internet use) Internet Use in Spain by Age, 2000 (as a % of internet users in each age range) Population in Spain, 2000 (by age and as % of population with internet access) Internet Users in Spain by Gender, 2000 Internet Users in Spain by Gender, 2000 Home Internet Users in Spain by Gender, 2000 Population of Spain and Population with Internet Access by Income Level, 2000 Three Most Widely Spoken “Second” Languages in Spain (by % of the Population) Location of Internet Access in Spain, 2000 Online Activities in Spain in Last 3 Months, 2000 Top 10 Domains in Spain, 2000 D. B2C eCommerce B2C eCommerce Revenues in Spain, 2000–2004 (in billions) % Shopping Online in Spain, 1999–2001 % of Online Shoppers Buying by Category, 2000 E. B2B eCommerce B2B eCommerce Revenues in Spain, 2000–2004 (in billions)

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Index of Charts B2C Commerce in Spain, 1998–2005 (in billions) F.eFinance eBanking Online Banking Accounts in Spain, 2000–2003 (in millions) Online Banking Customers in Spain, 2000–2004 (in millions) Transactions by Channel at the Bankiter in Spain, 2000 eInvesting Retail Shareholders and Online Brokerage Customers in Spain, 2000–2003 (in millions) Online Brokerage Accounts in Spain, 2000–2005 (in millions) G. eWireless Comparative Estimates: Wireless Subscribers and Penetration Rates, 2000–2004 (in millions and as a % of total population) Voice and Data Revenues, 2000, 2005, & 2010 (in billions) XVI Sweden A. Overview QuickStats: Sweden, 2001 Adult Population 14+ in Sweden 2000–2004 (in millions) B. Internet Users Active Internet Users 14+ in Sweden, 2000–2004 (in millions) Comparative Estimates: Internet Users in Sweden, 1999–2004 (in millions) Internet Penetration in Sweden, 2000–2004 (active internet users 14+ as a % of population 14+) C. eDemographics Internet Use in Sweden by Age, 1999 (as a % of respondents in each age range reporting internet use) Internet Use in Sweden by Age, 2000 (as a % of respondents in each age range reporting internet use) Internet Users in Sweden by Gender, 2000 Three Most Widely Spoken “Second” Languages in Sweden, 2000 (as a % of population that speaks them) Duration and Frequency of Internet Access in Sweden, 2000 Home and Work Internet Users in Sweden, Year-End 1999 (as a % of all users) D. B2C eCommerce B2B eCommerce Revenues in Russia, 2000–2004 (in billions) Anticipated Online Purchases in Sweden, 2000 (by purchase item) % Shopping Online, 1999–2001 E. B2B eCommerce B2B eCommerce Revenues in Sweden, 2000–2004 (in billions) Business Internet Penetration in Sweden, 2000 F.eFinance eBanking

386 ©2001 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission. Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information. The eEurope Report

Index of Charts Online Banking Accounts in Sweden, 2000–2003 (in millions) Online Banking Customers in Sweden, 2000–2004 (in millions) eInvesting Retail Shareholders and Online Brokerage Customers in Sweden, 2000–2003 G. eWireless Wireless Subscribers and Penetration Rates in Sweden, 2000–2004 (in millions and as % of total population) Wireless Subscribers in Sweden, 2000 (in millions) Comparative Estimates: Wireless Subscribers, 2000 (in millions) Voice and Data Revenues, 2000, 2005, & 2010 (in billions) Number of SMS Sent in Sweden, 1999–2000 (in millions) XVII United Kingdom A. Overview QuickStats: United Kingdom, 2001 Adult Population 14+ in the UK, 2000–2004 (in millions) B. Internet Users Active Internet Users 14+ in the UK, 2000–2004 (in millions) Comparative Estimates: Internet Users in the UK, 1999–2004 (in millions) Internet Penetration in the UK, 2000–2004 (active internet users 14+ as a % of population 14+) C. eDemographics Age Distribution of Internet Users in the UK, 2000 (as a % of those who have ever used the internet) Internet Use in the UK by Age, 1999 (as a % of respondents in each age range reporting internet use) Online Population in the UK by Age, 2000 (as a % online and % of population) Internet Users in the UK by Age, 2000 Internet Use in the UK by Gender, 2000 Internet Use in the UK by Gender, 2000 Internet Use in the UK by Gender, 2000 Households with Internet Access in the UK by Gross Income Decile, Oct. 1999–Sept. 2000 Internet Use by Economic Status of Household Head in the UK, 2000 Socioeconomic Status of Internet Users in the UK, 2000 (as a % of users in each socioeconomic category) Socioeconomic Status of Internet Users in the UK, 2000 (as a % of users in each socioeconomic category) Three Most Widely Spoken “Second” Languages in the UK, 2000 (as a % of population that speaks them) Online Activities in the UK, 2000 (as a % of those who have ever accessed the internet) Duration and Frequency of Internet Access in the UK, 2000 Days Online per Month in Selected European Countries, 2000

387 ©2001 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission. Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information. The eEurope Report

Index of Charts Location of Internet Access, Oct. 2000 (as a % of users accessing from each location) Popular Websites in the UK, April 2000 Top 10 Web Properties in the UK as of November 2000 D. B2C eCommerce B2C eCommerce Revenues in the UK, 2000–2004 (in billions) % of Internet Users Shopping Online, 1999–2001 Online UK Buyers, 2000 (by gender) Online Shopping in the UK (by category) B2C Sales in UK by Product Category, 1999 (in millions*) Reasons Why People in the UK Do Not Shop Online, 2000 E. B2B eCommerce B2B eCommerce Revenues in the UK, 2000–2004 (in billions) Comparative Estimates: eCommerce in the UK, 2000–2004 (in billions) F.eFinance eBanking Online Banking Accounts in the United Kingdom, 2000–2003 (in millions) Online Banking Customers in the United Kingdom, 2000–2004 (in millions) Management of Bank Accounts by Channel in the UK, 2000 eInvesting Retail Shareholders and Online Brokerage Customers in the UK, 2000–2003 (in millions) Online Brokerage Accounts in The United Kingdom, 2000–2005 (in millions) United Kingdom Online Trading Accounts, 2000 & 2004 (in millions) G. eAdvertising eAdvertising Spending in the United Kingdom, 1998–2005 (in millions) Comparative Estimates: eAdvertising Spending in the United Kingdom, 1998–2005 (in millions) H. eWireless Wireless Subscribers in the UK, 2000 (in millions) Comparative Estimates: Wireless Subscribers in the UK, 2000 (in millions) Comparative Estimates: Wireless Subscribers and Penetration Rates, 2000–2004 (in millions and as % of total population) Sales of Handheld Computers, 2000–2005 (in millions) Information Service Revenues in the UK, 2000 (in billions and as a % share of total) Mobile Industry Revenue in the UK, 2000–2005 (in billions) Voice and Data Revenues, 2000, 2005, & 2010 (in billions) Number of SMS Sent in the UK, 1999–2000

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Also Available from eMarketer eDemographics Report User demographics worldwide Age, gender, and race Income, education, and occupation Usage patterns eAdvertising Report eAdvertising revenues worldwide Spending by ad format (banner ads, sponsorships, e-mail, etc.) Spending by industry category Measurements and standards (click-through rates, CPMs, ROI) eMail Marketing Report eMail marketing revenues worldwide eMail users and user demographics Permission, opt-in, and opt-out eMail marketing techniques and strategies eCommerce: B2C Report eCommerce: B2C revenues worldwide Top B2C categories Online shoppers, buying frequency, and size of transactions eConsumer attitudes and behaviors eCommerce: B2B eCommerce: B2B revenues around the world, country by country eCommerce: B2B by industry Internet penetration among businesses Online marketplaces, auctions, and exchanges eBanking Report Online banking around the world (US, Europe, Asia) Mobile banking Electronic bill presentment and payment eInvesting Report Online brokerages Online mutual funds Online asset management Online investment advice Privacy & Security Report Consumer attitudes and behavior toward online privacy Online fraud Credit card security Corporate security (hacking and denial-of-service attacks) Virus attacks ASP Report Market size and growth Industry leaders Usage patterns Customer satisfaction

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eWireless Report Mobile internet use around the world, country by country mCommerce mFinance mAdvertising Broadband Report Users by access method (dial-up, fiber, DSL, cable, satellite, wireless) Residential and business usage User demographics Growth drivers (ITV, streaming media, online gaming) Interactive Television Report User forecast Revenue forecast Business attitudes and behavior User attitudes and behavior eGlobal Report Internet infrastructure, by region Users and usage, by region eDemographics, by region eCommerce, by region eEurope Report Economy and infrastructure Internet users and demographics eCommerce, eFinance, and eAdvertising Country profiles eAsia Report Economy and infrastructure Internet users and demographics eCommerce, eFinance, and eAdvertising Country profiles eLatin America Report Economy and infrastructure Internet users and demographics eCommerce, eFinance, and eAdvertising Country profiles

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390 ©2001 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission. Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information.