Zonat takes a look at the market potentials and growth forecasts of the German Internet Industry from 2020 until 2025 based on Market Segments.

The study “The German Internet Industry” created by The Association of the German Internet Industry, eco. e.V., in partnership with the International Management Consultancy Arthur D. Little has been updated.

The study required the development of various layers and segments for the German Internet Industry. The potential projections included look at the overall market’s potential, trends and the value contributed during the period 2020 to 2025. The impact of the coronavirus crisis has been taken into consideration for this study when looking at Web Hosting Services, the Internet Industry and German Domains.

The study produced almost a 70-page document divided into the following topics:

  • Accuracy of statements made in the last study covering the period from 2015 to 2019.
  • The German Internet Industry broken down into facts and figures highlighting its impact on the overall German Industry Location.
  • Layer projections according to the underlying Internet Industry Model, including (1) Network, Infrastructure and Operations – (2) Services and Applications – (3) Aggregations and Transactions – (4) Smart Industries and Paid Content, and their respective segments.
  • Predictions to potential hypothetical scenarios of Germany’s digital infrastructure in 2030.

Market Segments with the most potential

The study suggests that the market segments Colocation and Housing (Layer 1) and Public Cloud Computing (IAAS, PAAS, and SAAS) (Layer 2) have both experienced rapid growth as of recent and are still rated as particularly attractive. New segments added to the current study both operate on Layer 2 are Cybersecurity and Edge / Fog Computing. Layer 4 models of application industries (Smart Industries) have been gaining momentum and importance over recent years within digital business. It is predicted that Smart Industries in particular are going to constantly see an increasing share of the internet sector in the near future.

Internet Industry study
source: Denic

Temporary impact of COVID-19 on Hosting and German Domains

According to the study, the Web Hosting and German Domains segment (Layer 2) is in a very mature market development state. The study suggests that the Layer 2 Market Life Cycle is in its central growth phase while scoring the highest growth rate of the 4 layers. Layer 2 assumes a comparatively unimportant role in regard to value only accounting for 8% of share sales.

Although in Germany the rate of websites and domains owned by enterprises has been increasing over the last 5 years. In fact, in 2019, 90% of all German companies had their own website. Taking into consideration the already high market penetration and downward trend in web hosting prices websites are quickly becoming a German Commodity Product.

Impact on value added services

The study predicts that Value Added Services such as Web Server Management, System Upgrades, Managed Cloud Backups and helpdesk Support Services will develop into essential German Companies.

Ecommerce Prospects

While the demand for e-commerce is rising and the number of business creations increasing, Germany it will lead to stable growth in the forecasted period up to 2025. In 2019 the German Internet Industry contributed 10% in the E-commerce B2C segment and around 3% in the B2B segment.

With the coronavirus pandemic the study predicts a temporary positive effect on the Web Hosting and German Domain segments. An increased demand for pandemic related information within German society will potentially lead the increase for newly registered German Domains.

Meanwhile, website penetration level may surge for a short period of time as a result of the coronavirus crisis. Partly because businesses are unable to interact with customers as normal due to partial lockdowns. And, many companies who existed without websites are now adjusting their approach. As a result, a complete market penetration of websites will continue to accelerate with the current trend which is temporarily increasing sales.

Denic Projections for .de

Registration figures provided by DENIC clearly show that development. The DENIC figures indicate Internet Increase usage of .de German Domains has exceeded 200,000 within the first eight months of the year 2020. This is almost a 1.3% increase from last year compared to figures realised by DENIC for 2019 which showed a 0.7% increase.

The number of German Domains under management has surpassed 16.5 Million.

Potential Scenarios for Digital Germany in 2030

The study is concluded with two potential hypothetical scenarios for Germany’s Digital Infrastructure by the end of the decade 2030. The first basic scenario presumes the framework conditions are optimal to allow a comprehensive dynamic infrastructure mix to be maintained and expanded by 2030. The second scenario expects stagnation with widely dispersed infrastructure initiatives that anticipates conditions to slow down or prevent the expansion of the infrastructure mix by 2030.