Tuesday, June 05, 2007

Internet Market Space in India

The Business Today edition of June 03, 2007 has a special on the Internet Market in India. There is huge inflow of money as well as fierce competition
lined up in the next few years.

Here are some notes from the articles :

How does the internet market look like in India?
Currently, India has more than 50 million internet users, just a little over 2 million broadband connections and an online advertising market worth Rs 240 crores. The current market is not attractive but it is likely to become a big market in the future.

How can we say that the market would become attractive?
In 1997, in the US online ad spend was jus around $65 million. Today, it is more than $10 billion. In India, in 2006, 27 dotcoms were funded whereas in 2005 there were just two. The market in India is growing at close o 100 percent year on year, and over the next three years or so, the user base is expected to touch 100 million broadband connections. The bandwidth costs are falling by half every 18 months and those of storage costs, every 12 months. The government has plans of setting up 100,000 cyber cafes to bridge the digital divide. Today only 2% of the ad spend is online, but even if that goes to 4 %, there should be enough opportunity for folks. Around 12,800 people in India use eBay as their primary source of revenue and there is a growing number of such sellers specifically for the smaller towns

What are the trends of the internet market space in India?
•Companies have been using internet for some advertising and promotion. Advertisers want more bang for their buck. And eventually advertisement through online medium will provide them that. Remember, more information on the behavior, description, and forecast of the customer can be done through the web. Maruti has a micro site for its newly launched Sedan SX4. Procter and Gamble has also created an online interactive community for teen girls between 14 and 19 years of age, www.beinggirl.co.in
•Travel websites may struggle in the future for the sole reason that people gather information from their site and then book the tickets at the relevant airway’s website. As the Indian market is in its infancy as yet , it is believed that Indians don’t have any strong loyalty to any specific portal ( remember switching cost is zero in the internet space)
•The market in the future lies in regional language offerings. Localizing content to meet the needs of different states and various different Indian languages is going to be the key. For example , Blogger.com has a Hindi translation service
•Old media that earlier only provided contents online is now giving a fresh look at its online market. Bennett and Coleman & Co , which publishes Economic Times and the Times of India now has a new digital venture called Times Internet. A few portals that it owns are times jobs.com, magicbricks.com, simply marry.com. The Old Media will have to look ( or are looking at) at their online business as a “stand alone” business and not just as an extension of their print business
•There might be a tendency to follow social networking sites (such as Orkut, Facebook etc) to create markets with customized offerings there.

In short, “The next wave is about customization of content in terms of geography and language and there is going to be shift from universal search to local search. “

There was a dotcom craze in 2000-01 but why did that fail?
a)Low internet penetration resulting in small user base
b)Lack of differentiation, marketing resulting in low visibility.

An interesting perspective provided by Janakiraman of Bharat Matrrimony
“In a country of one billion, search for a job, especially a suitable one is an ongoing quest. The moment you have one, matrimony is a natural corollary, which in turn leads to purchase of real estates” Hence, you will find portals and websites catering to these needs in the Indian market.

Different methods of revenue generation by Google and MSN?
Google is using Adwords to generate revenue; MSN is using the “desktop TV” on its homepage. Here instead of selling the standard click per model, MSN sells airtime on these desktop TVs which run ads

Who are the big players in the Indian Internet Space?
Foreign Players Google, Yahoo, AOL and MSN
Home players: Rediff, Sify

What about mobile internet?
A hidden latent market of internet users involves about 100 million mobile users in India , as well as a market that is offline currently, due to connectivity issues and the lack of regional language applications.

Rajesh Jain of the blog http://emergic.org says
"The PC based wire line has 45 million users with a majority of the users using cybercafés. With only 07 million computers in Indian homes, this internet is still a long way from becoming a utility in people’s lives. The mobile centric wireless internet can reach potentially reach a significant portion of 170 million cell phone users in India. However, the reality is hat other than voice, there are only two services that touch a large fraction of this user base – SMS and ring back tones. To make mobile internet a reality in India, two chances have to be made. And they have to be made by the mobile operators since they are the “gatekeepers”. First, an open publishing platform is needed to allow anyone to create a mobile website that is accessible by everyone just like on the PC internet. Second, mobile operators need to change their billing philosophy for value added services."



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