Silicon Valley 2: Is Higher Technology's Future Heading South?

"In too many countries the lack of competition and surcharges for Internet access are tragically slowing down markets," said keynote speaker Gene DeRose, CEO of New York market research firm Jupiter Communications. DeRose strongly advocated telecom reform in India to bring about better and more affordable services for Internet connectivity.

India is well equipped with technical and English-language skills, but its Internet economy is being held back by inadequate infrastructure and lack of progressive political will regarding Internet policies.

Electronic commerce via the Internet in India totaled only $2.8 million in 1997, according to Ravi Sangal, president of market research firm IDC India, but could reach $160 million by 2001 if leased- line costs drop sharply.

Hotmail founder and CEO Sabeer Bhatia, an Indian citizen reared in Bangalore and Poona, was treated almost like a folk hero thanks to the astonishing success of his free-mail service, started in 1996 and now accounting for 23 million users worldwide, thus making it the largest e-mail service in the world.

"Just think: Hotmail could just as easily have been based in India, but conditions turned out to be more favorable in Sunnyvale, California," Bhatia said in an interview. Bought for an estimated $400 million by Microsoft late last year, Hotmail plans to launch French, German, and Japanese versions of its service before venturing into the embryonic Indian-language Internet market.

Internet marketing consultant William Hunt said Indian companies can tap unpenetrated foreign markets in Europe and Asia by means of multilingual ads and localized content. He suggested Indian tourism agencies and Indian pharmaceuticals companies producing herbal medicines could tap the Japanese market by using multilingual Web sites.

Ross Veitch, producer of Yahoo! Asia, said Indian online publications had useful content for portals like Yahoo! "We also are looking for online ad representatives for Yahoo! in India," he said.

Experts like Intranet consultant Mellanie Hills, author of the best-seller Intranets as Groupware, urged Indian companies to move with their business partners beyond stand-alone consumer-oriented Web sites and to interlocked extranets

"Gartner Group studies indicate 80 percent of e-commerce transactions will be done on extranets. And 80 percent of e-commerce in the future will be on intranets and extranets," Hills said. As of now, almost 70 percent of U.S. companies are setting up either intranets or extranets, according to Hills.

Indian companies like Mumbai-based Aptech are making rapid forays into the Internet training and online education markets. The education market on the World Wide Web will grow to $100 billion by 2001, according to Ganesh Natrajan, CEO of Aptech. Numerous other Indian companies are emerging as Web solutions providers or as outsourcing houses for U.S. Internet companies like Cybercash.

Chandrababu Naidu, chief minister of the southern state of Andhra Pradesh, is one of the few Internet-savvy forward-looking politicians on the Indian Internet scene. His Vision 2020 program includes provision for Internet kiosks in every village, an Indian Institute of Information Technology, intranets in most government departments, toll-free long-distance access to the Net, and online by ordinary citizens, tourists, and foreign investors-access to vital information.

Naidu’s government is already working on alliances with Singapore Network Services, McKinsey Consulting, the World Bank, and Carnegie Mellon University for Internet-related projects.

The half-million-user Internet market in India still has to mature via formation of Internet industry associations, third-party services for traffic audits, and lobbies for progressive cyberlaws. For instance, advertising revenues of Indian online publications are expected to really take off only when audit data that captures the amount of traffic to those sites becomes available.