One-Quarter of US Households Online

The household Internet penetration rate in the US is at 25 percent, and should be close to 67 percent by the end of 2003, according to The Yankee Group.

US consumers will spend $56 billion on Internet access over the next five years, The Yankee Group reports, and the market will grow at a compound annual rate of 21 percent over the same time period. By the end of 1999, approximately one-third of US households will be online.

Americans are being driven to the Internet by affordability and Web ubiquity, The Yankee Group found. PCs are getting cheaper, and The Yankee Group reports that Internet access in the No. 1 reason consumers are buying computers.

Household PC penetration jumped from 43 to 49 percent between June and December of 1998, and household Internet penetration leapt to 37 percent in that time, according to Inteco. By the end of 2003, Inteco found that PC penetration in the US will reach 65 percent and household Internet access will hit 58 percent. Inteco analyst Mark Snowden predicts the numbers will level off there.

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“By then, just about every home that wants a PC or Internet access will have it,” Snowden said. The unprecedented growth rates seen at the end of 1998 simply cannot be sustained over the next five years.”

Snowden suggests that Internet companies surround their customers by delivering content via every means possible, PCs, digital TVs, and phones.

America Online is clearly the leader in consumer Internet access. The Yankee Group gives AOL a 57 percent share of the US market. That leaves plenty of opportunity for other ISPs.

“Any company serious about obtaining double-digit market share must focus on the ‘newbie’ market,” said The Yankee Group’s Emily Meehan.