Internet business valued at US$1.93t: AT Kearney

Moreover, 64 per cent of C-level executives (the top officers in a company: CEO, CFO, COO, CIO, etc) make six or more searches a day for business information.

The total Internet market size

'This is our estimate of the total Internet market size, or Internet-related revenues generated by companies around the world. Out of this, 60 per cent comes from business-related services and the rest from consumer services.'

He adds that the figure can be further broken down by the different parts of the Internet value chain, of which the largest (60 per cent) is online services - which includes sectors such as VOIP (Voice over Internet Protocol), portals, search, entertainment, and e-commerce - followed by connectivity (provided by Internet service providers and backbone service providers), and user interfaces (such as PCs and handsets) which are each about 15 per cent of the total Internet market size.

AT Kearney expects the Internet market to grow at 10 per cent per annum over the next five years, with the fastest growth segments being online services, content rights, and enabling technologies. 'We expect connectivity and user devices to grow slower due to significant pricing pressure,' says Mr Chua.

He agrees that from a business perspective - from the way that the Internet has evolved - highly profitable business models, and the advantage, primarily reside with US-based online players. 'It is harder for Asian players to scale up due to the more fragmented markets in Asia (both nationality and language), the lower spending power per Internet consumer, and the slower embrace of Internet-related innovations by Asian businesses, with the possible exception of Japan and Korea.'

However, things are changing and this is best reflected by the fortunes of Chinese Internet players such as Tencent Holdings (which owns QQ, which has 78 per cent of China's instant messaging market), Baidu (China's version of Google with about 70 per cent share of search), and Alibaba.com (which owns the largest China online shopping site in Taobao. com).

The 10 most valuable Internet companies globally

Mr Chua reckons that these three players are already among the 10 most valuable Internet companies globally by market capitalisation, reflecting the strong growth prospects expected of these players as they dominate the huge Chinese market.

'For example, the Chinese portal Sohu.com released very strong results recently, with an impressive 25 per cent profit margin which is significantly higher than what the likes of Yahoo! and AOL are currently achieving with similar business models.

'Naver and CJ Internet, two of Korea's leading online portal operators, recently announced profit margins of 40 per cent and 22 per cent. And Rakuten Ichiba, Japan's leading online e-commerce player, has operating margins of above 50 per cent.'

The most exciting Internet market in the world

Asia is the most exciting Internet market in the world, with rapid growth driven by booming broadband penetration and demand for online services (for example, 34 per cent of Chinese consumers now shop online or play online games).

'The trends we are seeing are very much in line with what is happening in Western markets. In the largest and most talked- about market in China, local players are taking advantage of cultural and language differences (and the business environment) to steal a march on the likes of Google and Facebook who have so easily penetrated most other markets.'

'Local content delivery network (CDN) China Cache, which provides the technology necessary to efficiently deliver high bandwidth content such as video over the Internet infrastructure, recently issued an IPO (initial public offering) on Nasdaq, with the stock climbing 95 per cent on its debut.'