,The Boston Consulting Group (BCG) is a global management,consulting firm and the worlds leading advisor on business strategy. We partner with clients from the private, public, and not-for-profit sectors in all regions to identify their highest-value opportunities, address their most critical challenges, and transform their enterprises. Our customized approach combines deep insight into the dynamics of companies and markets with close collaboration at all levels of the client organization. This ensures that our clients achieve sustainable competitive advantage, build more capable organizations, and secure lasting results. Founded in 1963, BCG is a private company with 75 offices in 42 countries. For more information, please visit bcg.com.,The Connected World,THE INTERNET ECONOMY in the G-20,THE $4.2 TRILLION GROWTH OPPORTUNITY,DAVID DEAN,SEBASTIAN DIGRANDE,DOMINIC FIELD,ANDREAS LUNDMARK,James ODay,JOHN PINEDA,PAUL ZWILLENBERG,March 2012 | The Boston Consulting Group,2 | The Internet Economy in the G-20,CONTENTS,3 6 10 12 14 17 18 53,INTRODUCTION THE INTERNETS ECONOMIC IMPACT THE INTERNETS FURTHER ECONOMIC IMPACT CONSUMERS (EVERYWHERE) KNOW A GOOD DEAL WHEN THEY SEE IT FROM HIGH-WEB TO NO-WEB: OPPORTUNITIES FOR SMALL AND MEDIUM ENTERPRISES DONT BLINK: THE FUTURE IS RUSHING STRAIGHT AT US COUNTRY PROFILES NOTE TO THE READER,T,The Boston Consulting Group | 3,he January 2012 report in our Connected World series examined how companies and countries can win in the digital economy. This follow-up report provides a more comprehensive analysis of how the scale and speed of Internet-driven economic growth is changing countries, cultures, and companies around the world. It includes national snapshots capturing the economic impact of the Internet as well as in-depth looks into consumer and business usage in the G-20 countries.1 A forthcoming report will discuss how companies and countries can best build up their digital balance sheets and create digital advantage.,Since the day the first domain was registered in 1985, the Internet has not stopped growing. It has sailed through multiple recessions and one near-collapse and kept on increasing in use, size, reach, and im- pact. It has ingrained itself in daily life to the extent that most of us no longer think of it as anything new or special. The Internet has be- come, quite simply, indispensible.,By 2016, there will be 3 billion Internet users globallyalmost half the worlds population. The Internet economy will reach $4.2 trillion in the G-20 economies. If it were a national economy, the Internet economy would rank in the worlds top five, behind only the U.S., China, Japan, and India, and ahead of Germany. Across the G-20, it al- ready amounted to 4.1 percent of GDP, or $2.3 trillion, in 2010sur- passing the economies of Italy and Brazil. The Internet is contributing up to 8 percent of GDP in some economies, powering growth, and cre- ating jobs.,The scale and pace of change is still accelerating, and the nature of the Internetwho uses it, how, and for whatis changing rapidly too. Developing G-20 countries already have 800 million Internet users, more than all the developed G-20 countries combined. Social net- works reach about 80 percent of users in developed and developing economies alike. Mobile devicessmartphones and tabletswill ac- count for four out of five broadband connections by 2016.,The speed of these developments is often overlooked. Technology has long been characterized by exponential growthin processing speed, bandwidth, and data storage, among other thingsgoing back to Gor- don Moores observation nearly five decades ago. The Intel 80386 mi- croprocessor, introduced in the same year as that first domain name, held 275,000 transistors. Today, Intels Core i7 Sandy Bridge-E proces- sor holds 2.27 billion transistors, or nearly 213 times as many. As the growth motors along, it is easy to lose track of just how large the ex- ponential numbers get.,INTRODUCTION,2015,2005,From developed to developing markets Internet users in the G-20 countries (millions),238,508,672,1,390,573,2,134,966,2,707 total,2,062 total,746 total,167,30,From xed to mobile Consumer broadband connections (millions),From basic content to a data explosion Global Internet trac (exabytes per year),Fixed connections Mobile connecti