Thirty Percent of Home PCs Bought in Past Six Months Purchased Through the Internet or Directly From Manufacturers, Reports Odyssey's Homefront Study - Industry Trend or Event

Edge: Work-Group Computing Report, Oct 11, 1999

Odyssey's latest Homefront study of home computing trends revealed that 30 percent of the PCs bought in the past six months were purchased through the Internet or directly from the manufacturer via a website, catalog, or 1-800 phone number, as compared to only 22 percent of those purchased more than six months ago.

Odyssey conducts the Homefront study every January and July. Based on random-digit-dial telephone surveys with 2,500 U.S. households, Homefront is the most reliable source of information about PCs, online services, and other home entertainment and information products.

"PC purchasers are increasingly turning to direct purchase channels to find the value and service they crave," said Odyssey President and CEO Nick Donatiello. "The proliferation of PCs into the majority of households has created a more educated customer base, one focused on getting exactly what they want from a PC, while avoiding crowded stores and pushy salespeople."

Following a strong 5 percentage point gain from July 1998 to January 1999, PC penetration remains statistically unchanged at 52 percent, compared with 50 percent six months earlier. Despite insignificant changes in PC penetration over the past six months, penetration of online services continued to rise steadily. Homefront reports that online penetration is currently at 37 percent of U.S. households, up from 33 percent in January 1999.

Although the PC industry has used price slashing effectively over the past two years to generate demand, the proportion of non-PC households that cite price as an important factor in their decision not to purchase a PC has decreased significantly over the past six months -- from 31 percent to 25 percent. During this time, the proportion of non-PC households who report that they either have no need for a PC or no interest in buying one has increased from 30 percent to 41 percent, once again becoming the most commonly stated barrier to PC ownership. "The challenge that PC manufacturers currently face is giving non-PC households a reason to buy a PC. Manufacturers need to better communicate the benefits of the PC as an entertainment, communication and information medium if they hope to convert these reluctant buyers," said Mr. Donatiello.

      Market Penetration of Home Computers and Related Products
                     (Percent of U.S. Households)
               July      Jan.      July      Jan.      July   Jan.
               1999      1999      1998      1998      1997   1997

Computers       52%       50%       45%       42%       39%    37%
CD-ROM Drives   41%       41%       36%       31%       26%    23%
Online(a)       37%       33%       27%       23%       19%    17%

               July      Jan.      July      Jan.      July
               1996      1996      1995      1995      1994

Computers       36%       35%       32%       31%       27%
CD-ROM Drives   20%       15%       13%        9%        6%
Online(a)       14%       11%        9%        7%        6%

(a) Includes the Internet, World Wide Web, and commercial online
services.

            Percentage of Home PCs Bought Directly from the
                 Manufacturer or through the Internet
             (Via website, catalog or 1-800 phone number)

Jan-July '99      July '98-Jan. '99     Prior to July '98

30%               19%                   23%

Odyssey is the nation's only independent market research firm dedicated exclusively to studying the complex and changing relationship between consumers, technology, and at-home entertainment, information, communication, and commerce. The Homefront study -- conducted every six months -- seeks to understand what is happening with home PCs, CD-ROM drives, and online services and is designed to provide reliable data on this important market. The study consists of a national telephone survey of 2,500 households based on a random-digit-dial computer-generated sample that is representative of all U.S. households.

In addition to Homefront, twice a year Odyssey conducts the Breadbox survey, a study of consumers' attitudes towards and usage of e-commerce. This random-digit-dial survey is based on interviews with 3,000 households and is designed to find out who's shopping online, what they're buying and how satisfied they are with the online shopping experience. Findings from the first wave will be released in October.

Odyssey also conducts the largest and most comprehensive research study of consumers and the home media landscape. This massive effort includes a national survey of 6,000 households. The objectives are to determine the relevant market segments for at-home entertainment, information, communication, and commerce and to understand what motivates consumers to adopt new media products and services.

Odyssey is based in San Francisco, California.