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Internet services: Who’s smiling now?
Internet traffic is slowing down. A joint study by McKinsey and J. P. Morgan suggests that in the United States, it will grow at a compound annual rate of just 88 percent through 2005, far below the industry's previous performance. This is bad news for the many new companies that gambled on reaching profitable scale on the back of continued explosive growth in Internet traffic.
The take-away: The shifting mix and overall slowing of US Internet traffic will put traditional players such as AT&T, IBM, and EDS in the driver's seat, leaving behind upstarts that lack the scale and expertise to meet the demand of large enterprises for help in managing streaming media and the applications (such as databases and systems integration) now moving onto the Internet.
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