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Landscape of the Mature Digital Marketplace

The Internet is revolutionizing the way we live, work, communicate, access information, and entertain ourselves. IDC recently found that more than 70 percent of Americans are using the Internet on a daily basis for personal and business use.

Providing a quick and convenient way to exchange goods and services globally, the Internet has created a new economic ecosystem -- which IDC calls the Digital Marketplace -- that has become the virtual main street of world commerce.

According to IDC, the Digital Marketplace has reached a tipping point and will see double-digit growth rates until at least the end of this decade.

"The tipping point is being driven by increased consumer sophistication, commercial maturity, and technology readiness," said Rachel Happe, research manager for IDC's Digital Marketplace program. "This will jump-start a new wave of adoption and growth, particularly in rich media content and social networking applications."

With close to two trillion dollars exchanged just in online transactions for goods and services in 2006, businesses operating in the Digital Marketplace as well as businesses in the traditional economy cannot afford ignorance when it comes to the economic ecosystem of the Internet.

Some businesses are successfully leveraging this ecosystem to achieve phenomenal growth while other businesses are struggling to adapt quickly enough to maintain their current size. IDC believes that the Digital Marketplace is forcing businesses to learn and adapt like never before, putting their flexibility and speed to the test.

The popularity of the Internet makes it an effective medium for businesses to communicate and have influence with its customers, partners, and employees. IDC believes the Digital Marketplace is creating a virtual environment rich in participation, content, and revenue for all businesses, not just those operating online.

That's why IDC stresses that it is more important than ever for all businesses to understand online user behavior and traffic flows, business models, and application infrastructure. Ironically, based upon my experience, most small businesses seem to be much better able to embrace e-commerce, perhaps because they have fewer experts who are trapped in a legacy mindset.

Clearly, small business leadership is good for the U.S. economy -- because according to the last U.S. government study, more than 99 percent of all American businesses are small. These businesses create 75 percent of the net new jobs in the economy, and employ more then half of the nation's nonfarm workers.

Unfortunately, small businesses have little influence in guiding government policy, and that's one of the reasons why the U.S. still trails the Asia-Pacific and European commercial applications of broadband services -- the essential infrastructure of what I call the Global Networked Economy.

Instead of attempting to shield declining large American businesses from advancing global competition, the U.S. government should focus its policy efforts on enabling small businesses to compete -- by stop protecting the longstanding broadband duopoly.

Moreover, the U.S. is still one of the few developed nations in the world that doesn't have a meaningful national public policy for driving economic development via telecom infrastructure. No policy, no plan, and therefore no change is apparent.

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