MARKET RESEARCH: Financial Planning Industry Conducting More And More Business Online

EDP Weekly's IT Monitor, Jan 25, 1998

More financial planners and broker-dealers logged onto the Internet for business in 1998 than in 1997; and when they did, an increasing percentage were logging into intranets or extranets. This, according to the Third Annual Internet and Extranet Survey conducted by Amicus Networks Inc. For the third year, the Amicus survey indicates Internet use is continuing to grow in the financial planning industry. Not only did a higher percentage of respondents say they were using the Internet for business (96.6 percent in 1998 compared to 90 percent in 1997), they said they were logging on more often. Among financial planners as well as broker-dealers, 75 percent of respondents use the Internet daily for work. In fact, half said the Internet is a required tool for their business. What are they doing online? Respondents named e-mail as their primary use for the Internet (83.3 percent), followed closely by research (81.7 percent). When asked to rank a 16-item list of capabilities or features they would provide, or want to access, via the Internet, responses were consistent across all segments. The top-ranking choices were communication system, financial product information, forms, and investment research. The most significant change over previous years is the reported increase in intranets/extranets. More than 80 percent of respondents said their company was currently using or planning to implement an intranet or extranet, compared to only 37.5 percent in 1997. This represents a 122 percent increase in respondents who reported currently using or planning to implement an intranet/extranet. The figures are not surprising, says Dennis Passovoy, CEO of Amicus. "When proprietary LANs and WANs were the only means of networking, it was not cost-effective for a broker-dealer to provide network access for all of its reps, especially in the independent market. The growing use of the Internet, however, has made if affordable for B/Ds to provide online, 24-hour access to information, forms and even online trading capabilities. They are discovering that with extranets -- secure, private Internet sites used for business interaction with external audiences, such as field agents and brokers -- they can provide a higher level of service at reduced administrative costs." Amicus is a leading provider of online communication solutions to the financial services industry.

Windows NT Server Leads Server Operating Environment Sales For 2nd Consecutive Year

Just released figures from International Data Corp. (IDC) confirm Microsoft's Windows NT Server operating system as the fastest-growing, commercially marketed server operating system in the industry. According to IDC, Microsoft shipped 1.56 million new server software licenses in 1998, nearly 50 percent more than Novell NetWare and twice as many as the combined versions of UNIX. "Last year, shipments of Windows NT Server licenses grew faster than the growth rate for worldwide unit sales of all new server operating systems combined," says Jean Bozman, a software analyst at IDC. "Unit growth rate for Windows NT Server was twice that of NetWare and more than six times that of combined UNIX." IDC expects license shipments of NT Server to have a compound annual growth rate of nearly 23 percent through 2002, versus 11.2 percent for UNIX and seven percent for NetWare. IDC's UNIX category includes Sun's Solaris, Hewlett-Packard Co.'s HP-UX, IBM Corp.'s AIX, Compaq's Digital UNIX, SCO OpenServer and SCO UnixWare.

Video Compression Creates Opportunities For Encoder/Decoder Vendors To Flourish

Driven by the euphoria over Internet-related products and technologies, video compression is a vital piece of the puzzle that pushes the Internet to new heights in terms of viability as a communications and multimedia vehicle. Video compression enables high-quality video to be enjoyed by a wide swath of end users, from an individual watching Titanic on DVD from his or her home to a student in Europe watching a live lecture of a business class being taught at the University of California at Berkeley. Video compression dramatically reduces large video files into smaller ones so that they may be distributed over such media as the Internet, CD-ROMs, or the corporate intranet. The most common codec (compressor/decompressor) is that of the MPEG standard. More specifically, MPEG-1 is designed for data rates of 1.5 Mbps and a frame rate of 30 fps. MPEG-2, on the other hand, can handle data rates ranging from 2 Mbps to 10 Mbps. MPEG-2 is the standard embodied in DVD video. According to World Video Compression Technologies Market, a new report from Frost & Sullivan, the video compression market is a developing one with room for much growth. Despite the relative obscurity of video compression technology, an increasing number of end users are just now beginning to realize the benefits of encoders and decoders and are buying products incorporating video compression technology. Already, there is a salient trend toward the installation of DVD-ROMs shipped in PCs, which is a boon to the software decoder market. And, the advent of streaming technology and video-on-demand have proven to be solid applications for hardware encoders and decoders. The competitive landscapes for the encoding and decoding markets are relatively consolidated. This is especially so for the software space. Roughly half a dozen companies comprise the market for software encoders and only four companies account for 90 percent of the market for software decoders. Hardware vendors, on the other hand, are characterized by more players, but they tend to find their own niches to play in. Thus, even within niches, the competition is sparse. As a result, vendors are able to stay afloat financially by generating enough revenues from their particular space. "The key drivers of the video compression market are the continued growth of the Internet, the desire for better quality video, and the emergence of DVD as the next standard in digital distribution," explains Norvin Leong, an F&S IT analyst. "Conversely, major challenges lurk in bandwidth insufficiencies, a lack of consumer understanding about video compression, and lingering patent issues."